The Housing Secretary, Steve Reed, is secretly working on plans for a state-owned housing developer, according to sources close to The Guardian. This bold move would see the government create its own housebuilding entity, capable of borrowing at lower rates than private developers and associations.
The proposed body would benefit from reduced borrowing costs, allowing it to acquire land and commission new projects more cheaply. However, any formal announcement or implementation will be delayed until after a new government takes office, following a directive from the Cabinet Secretary.
Despite the current government's promises of 1.5 million new homes, affordable housing starts have failed to keep pace with targets, with just 130,170 new projects underway in the past year. High construction costs and borrowing expenses – exacerbated by global conflicts – are being cited as major barriers to progress.
Under the plans being considered by Mr Reed, funds earmarked for Homes England could be redirected to establish this new independent body. The organisation would oversee land purchases and development projects, potentially placing it in direct competition with established private sector housebuilders. It would also take on some of the responsibilities currently held by housing associations, many of which are struggling financially.
The initial rollout is envisioned as a pilot scheme in a limited area, with assurances that its growth would be managed to avoid undermining the private sector. Critics argue this could create significant debt for the government and potentially distort the market.