NAO: New housing investment needs clear priorities to unlock the homes the country needs

• The Ministry of Housing, Communities & Local Government (MHCLG) has allocated £10.5bn over the last decade to several unlocking land programmes intended to create capacity for 713,000 homes
• Currently 33,300 (5%) of the 713,000 homes expected to be built over the next decades have been built on land the ministry helped unlock – although MHCLG and Homes England do not currently track the number of homes ultimately built on all the land they open up
• MHCLG has committed £21bn to a National Housing Delivery Fund (NHDF) due to open from April this year, which will combine and continue the funding and work of their previous programmes for unlocking land. MHCLG expects the scope of the NHDF to be broader than unlocking land programmes alone
• The National Audit Office (NAO) says for the NHDF to be successful MHCLG needs to clearly set out its purpose and ambitions, and track both the land unlocked, and the number of homes built

Since 2016, MHCLG has allocated £10.5 billion to unlock land for an estimated 713,000 homes and is currently preparing to launch a new National Housing Delivery Fund. A new report from the NAO finds that to deliver value for money the ministry will need to swiftly build on the work it has started to set up the new fund, so it is ready to deliver the homes the country needs.

The independent public spending watchdog has published its latest report – Unlocking land for housing – examining whether MHCLG's programmes to increase the supply of suitable land for housing development are supporting government's ambitions to help deliver 1.5 million new homes by July 2029.

Unlocking land programmes are where MHCLG, Homes England and other delivery partners intervene on sites to remove the barriers that mean the site is not profitable or attractive enough for the market to develop without government help.

MHCLG plans to launch the NHDF to provide a single gateway to the full range of the ministry's financial support for unlocking land and set up a housing bank created as a subsidiary of Homes England, from 1 April 2026.

Through a variety of programmes since 2016-17, that utilise different funding types, including grants, loans and equity investments, MHCLG and Homes England have so far committed £8.4 billion of the £10.5 billion allocated funding to projects, of which £5.7 billion has been spent.

MHCLG's programmes have funded work on 768 sites and have supported a broad range of projects including:

• 20 larger projects receiving over £100 million, each aiming to deliver land for around 7,000 homes on average. 
• 410 smaller projects receiving £1 million or less, each aiming to deliver land for around 20 homes on average.

So far 141 of 768 projects have completed their unlocking works, with the remainder expected to continue through to 2034. Some housebuilding on unlocked sites will continue until 2050. Currently, 128 (36%) projects launched between 2016-2021 have completed their unlocking work, compared with 13 (3%) of those funded since 2021.

Just over 33,000 homes are known to have been built on land unlocked by MHCLG funds. However, MHCLG did not set out to track the number of homes built on three of its programmes that between them aim to contribute half of the expected 713,000 homes. However, MHCLG is now working with Homes England to track homes built across all its funds.

Preparing land for development is complex and often delivered in stages, on occasions MHCLG's funding only provides a portion of the funds to unlock a site or is designed to help encourage others to invest in the site to fully unlock it ready for housebuilding.

MHCLG and Homes England have been reviewing how their land-unlocking programmes work and applied these lessons to improve their intervention strategies. This includes changing how they work with local areas and developers, using continuous market engagement processes to allow bids to come forward when they are ready rather than meeting fixed application windows. They have also changed how they assess projects, for example by looking at whether a project supports deprived communities or has environmental benefits.

The NAO reports that a lot of the legacy activity will still be ongoing when MHCLG launches the NHDF, and recommends that it, alongside Homes England, ensures that this activity continues and delivers its intended benefits.

For the National Housing Development Fund to be successful and deliver value for money the NAO recommends MHCLG swiftly builds on the work it has started to:

• Set out clear expected impacts, agreeing with its delivery partners performance measurement of site progress and the build‑out of unlocked land, using proxy data where needed.
• Establish long‑term evaluation and monitoring to generate timely evidence from both legacy programmes and early NHDF activity, improving understanding of what interventions are likely to succeed.
• Clarify funding priorities for the NHDF and engage proactively with the evolving local government landscape, being transparent about which areas are prioritised and what support exists for non‑priority places.
• Adopt and share a clear risk appetite and management approach cross MHCLG, Homes England and delivery partners to support consistent, deliberate decision‑making across the NHDF portfolio.

Gareth Davies, head of the NAO, said:

“The success of the new National Housing Delivery Fund will depend on government setting clear ambitions and priorities for investment alongside its approach to risk management, so that public spending genuinely helps unlock the homes the country needs.”

ENDS
Notes to editors

The £21bn for the National Housing Delivery Fund consist of £16bn of resources for the new National Housing Bank (which will operate as a subsidiary of Homes England) which includes £10.5bn of investment capital and £5.5bn for housing guarantees. The remaining £5bn consists of grant funding to be delivered by Homes England and other delivery partners. MHCLG expects the scope of the NHDF to be broader than unlocking land programmes alone.