UK housebuilders have expressed major concern that the government is just not supporting new build enough and letting down all those desperate to buy their first home.

In a week that saw new-build construction output falls to lowest level since June 2022 and the UK’s biggest housebuilder Barratt Developments predict a 25% drop in completions for 2024, news that the Department for Levelling Up will hand back £1.9bn to the Treasury originally meant to tackle England’s housing has clearly ruffled some feathers.

As reported in Mortgage Strategy on Wednesday, the  Department for Levelling Up admitted it was handing back a large chunk of its budget (about one third) as it was ‘struggling’ to find projects to spend it on.

Federation of Master Builders chief executive Brian Berry told Mortgage Strategy: “Given the country is facing a severe housing crisis with 1.2 million families on social housing waiting lists and most young people having given up hope of ever owning their own home it is incredible that the Department for Levelling Up is handing back a third of its budget (£1.9bn) to the Treasury simply because it doesn’t know how to spend it!”

“It seems the Government has given up on its own housing policy. This year only 120,000 new homes are expected to be built despite the Government’s stated aspiration to build 300,000 new homes each.

Berry insists the surplus money would be better spent on building more affordable homes and tackling the barriers to housebuilding such as financing overstretched planning departments and improving access to finance.

Joshua Bond, founder and managing director of Bond Land says the revelations from Michael Gove’s department only repeated the message that housing is simply not a priority for this government.

He told Building Magazine: “It is the latest blow to housing developers following scrapped housing targets and a failure to tackle a planning system that’s not fit for the modern age head on. Projects simply won’t get built without central government support for the sector and, in particular, freeing up high-quality land for development.”

And it is not just builders and developers who are angered by the return of budget funding.

Just Mortgages financial services director John Doughty argues that it is counterproductive in a challenging housing market to remove funding earmarked for new housing.

“It’s another perplexing decision following the move last year to scrap mandatory housebuilding targets. A change to voluntary targets removes the incentive for local councils to push ahead with housing plans.

“If the government does want to make home ownership a reality for more people, removing considerable funding – including £1.2bn allocated for Help to Buy is not the answer. This only exacerbates the ongoing supply challenges and makes it much harder for first-time buyers, who help to drive the entire market with their activity.