Andy Burnham’s commitment to spending £39bn on new social housing will add to the taxpayer’s burden and may only deliver between 14,335 and 15,494 homes per year, according to new research published today by the Centre for Policy Studies.
The argues that the £39bn over ten years pledged by Andy Burnham may deliver only 5% of the government’s annual housing target. The Housing Forum recently estimated that given construction prices and housing regulations, the cost of building an average-sized, three-bedroom, semi-detached house now comes to £251,700, even if the land is provided for free.
This would imply that Burnham’s £3.9 billion per year will cover just 15,494 houses. However, the numbers could in fact be even lower. In London, where the need for new homes is greatest, Sadiq Khan’s Affordable Homes Programme only began construction on 14,335 homes with a similar amount of funding.
Social housing is both explicitly and implicitly subsidised further by the taxpayer in a variety of ways.
First, social homes are let out at a cost below what it costs to maintain them, meaning the taxpayer is continually forced to plug the gap and the upfront cost of building is never repaid.
The average English social rent home charges £5,942 a year but costs £6,280 a year in maintenance and management costs, creating a small ongoing liability. In London, the average social rent home has a rent of £7,380 a year but costs £8,720 a year to maintain. That means that each London social rent home will never recover the initial capital investment, instead creating an ongoing liability of £1,340 a year.
Second, in 2024/25, the UK spent £36 billion on housing benefit and the Universal Credit Housing Element. England accounted for £32 billion of this housing subsidy. The UK already spends the highest percentage of GDP on housing allowances of any OECD country, double the French rate. As Mayor of Greater Manchester, Burnham called for the government to increase the Local Housing Allowance. If he pursues this policy as Prime Minister, it would drive these record-high subsidy figures even higher.
Third, the average social home is let out for £10,250 less than the average privately rented property – despite being on average newer, less densely occupied, and in London, larger. Across England’s roughly 4.2 million social homes, this amounts to an implicit subsidy of £43 billion a year in 2025.
Once you add together the explicit and implicit subsidies for public housing, it is costing the country an astonishing £79 billion a year in England alon
