'Significantly' more money needed to meet Wales' 20,000 social homes target, report finds

210722 Merthyr Tydfil housing
A new report says the Welsh Government will miss their social homes target without more funding. Credit: PA

A target of 20,000 social homes won't be met without significantly more spending, Audit Wales has said.

The Welsh Government’s Programme for Government for 2021 to 2026 says it will build 20,000 new low carbon social homes for rent.

But a newly released report from Audit Wales says that delivery of the Welsh Government's target has been slower than initially expected, partly due to pressures outside of the Welsh Government's control.

It added that, regardless of funding, there aren't enough pipeline schemes to meet the target by March 2026.

By the end of 2023-24, three years into the five-year programme, the Welsh Government estimates that it had secured fewer than half of the 20,000 social homes.

The report says that, despite trying to offset this slow progress by acquiring existing properties, the 19,913 homes delivered or in the pipeline for delivery by March 2026 falls just short of the target.

It added that there is a high probability that some of the riskier schemes in the pipeline will not deliver in time or at all, regardless of funding.

Rising costs have meant that spending on affordable housing has been higher than initially expected. Credit: PA

In 2021, the Welsh Government estimated it would spend around £1.6 billion on core capital schemes to deliver the target.

However, between 2021-22 and 2023-24 it had spent £1.1 billion on the core schemes, with a further £730 million notional budget for 2024-25 and 2025-26.

Audit Wales estimates that the Welsh Government could need as much as £580 million to £740 million on top of existing budget assumptions to get close to meeting the target by March 2026.

Without additional funding, it estimates between 15,860 and 16,670 homes could be delivered by that date.

Auditor General, Adrian Crompton said: “Price inflation has hit the affordable housing programme hard. The Welsh Government now faces difficult choices about its funding priorities and approach if it remains committed to meeting or getting close to its 20,000 social homes target by March 2026.

"How the Welsh Government responds will further test its application of the ways of working expected under the Well-being of Future Generations (Wales) Act 2015. This includes how it balances short-term and long-term needs, builds on its collaborative approach, and looks to maximise positive outcomes from the significant public expenditure in this area."

Hayley Macnamara, head of policy and external affairs at Community Housing Cymru, said:

“Increasing the supply of decent homes that support people to live well is the ultimate answer to the housing crisis. Which is why Welsh housing associations have remained focused on building and developing at pace and scale, despite the multiple and extensive challenges that all UK homebuilders continue to face.

“Alongside this, they have looked at how they can make the best use of existing properties, and converting or upgrading them to meet the needs of people in their communities.

The Welsh Government say inflation has put a strain on reaching its building targets. Credit: PA

“While housing associations have managed to deliver 70-80% of Wales’s new social homes over the past few years, as this report shows, there are some different ways of working that may help ensure the sector can reach the 20,000 target.

"Providing certainty and overcoming delivery constraints is crucial to unlock the existing barriers in place - so we support the report’s recommendations to develop a long-term approach to funding and delivering social housing.

“Housing associations look forward to continuing to work with Welsh Government to deliver the social homes that Wales desperately needs.”

The Welsh Government say record inflationary pressures have made achieving the target even more challenging but that they will work with the housing sector to deliver more homes.

A spokesperson said: “We thank Audit Wales for their report into affordable housing in Wales and we will be considering its findings and recommendations and will respond in due course.

“There are a range of factors impacting housing supply, not least the recent sustained period of record inflationary pressures, which has made achieving the target even more challenging. We continue to work with the housing sector to deliver more homes.

“Tackling homelessness and delivering more homes is a key priority for this government and we have set a challenging target and allocated record levels of funding to housing supply in this Senedd term, with more than £1.4bn invested so far.”

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