Social homes target Welsh Government’s target of 20,000 new low carbon social homes for rent by 2026 will not be met without significant extra capital investment, says Audit Wales in a new report published today (Thursday).
The watchdog estimates that between 15,860 and 16,670 homes that count towards the 20,000 target will be delivered by March 2026 and that additional capital investment of between £580 million and £740 million will be needed on top of existing budget assumptions to hit the target.
The report concludes that delivery has been slow and more expensive than initially expected, partly due to pressures outside of the Welsh Government’s control
Regardless of funding, there are not quite enough pipeline schemes to meet the March 2026 target and some of these are considered risky.
The Welsh Government’s Programme for Government for 2021 to 2026 says that it will build 20,000 new low carbon social homes for rent by March 2026. In practice, it counts some homes that are not new builds and that are not low carbon.
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. It has sought to offset slow progress in building new homes with an increased focus on acquiring existing properties. However, the 19,913 homes delivered or in the pipeline for delivery by March 2026 falls just short of the target. And Audit Wales says 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 mean spending has been higher than initially expected. In 2021, the Welsh Government estimated it would invest around £1.6 billion on core capital schemes to deliver the target. 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 says there are options to make funding go further, including shifting the balance towards more acquisitions of existing homes, but these may not offer value for money over the longer-term.
The watchdog says there are positive aspects to the underpinning governance and management arrangements for delivering the social homes target. These include a collaborative approach and the core processes for managing grant funding. There are also areas for improvement around a more long-term approach to need, planning and funding, and doing more to ensure investment in affordable housing contributes to wider policy objectives.
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.
‘While housing associations have managed to deliver 70-80 per cent 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.’