Housing experts have called for a £1.3bn fund to convert existing properties into affordable homes.

The Affordable Housing Commission, chaired by Lord Best, has urged the government to establish a ring-fenced pot of money to buy up homes and upgrade them to boost low-cost housing supply rather than targeting all funding towards buying land for new developments.

In a report published today, the Commission suggest two main ways that a housing conversion fund could operate.

It says: “The first is targeting funds to purchase homes on the secondary (existing) market. It examines which housing markets – in broad terms – the investment might be best aimed at, factoring in how it could help improve housing condition and support jobs and growth.

“This option could be weighted to support weaker housing markets by providing a floor for the market and helping those struggling and desperately needing to sell.

“Funding could be made contingent on investing in a property to raise standards.”

The Commission argues that by focusing on low-demand housing areas a higher proportion of the investment would target jobs and growth rather than land costs in high-demand places, where the economic rationale is weaker.

The second option in its plan proposes giving additional funding to social landlords to purchase homes from housebuilders to provide affordable housing.

It says: “With sites stalled and the prospect of construction workers losing their jobs, this approach would meet the strategic objective of making more housing affordable, as well as the shorter-term goal of supporting the recovery.

“It would also ensure that capacity and capabilities within the housebuilding industry is not lost due to the downturn but retained for when a recovery materialises.”

The Commission argues that the overarching case for a National Housing Conversion Fund rests not only on the urgent need to increase social and affordable housing and rebalance the housing system, but also as a quick and cost effective way of supporting the economy through the pandemic.

It adds: “Such a scheme could also improve housing conditions and contribute to the government’s strategic ambitions to level up the economy and reduce carbon emissions.”