Rising costs threaten Wales’ plan to build 20,000 new social homes

The Auditor General for Wales has raised concerns that the Welsh Government is unlikely to meet its target of delivering 20,000 new low-carbon social homes by March 2026 without significant additional spending.

In a new report, the auditor highlighted that rising construction costs and a shortage of pipeline schemes are hindering progress, putting the government’s ambitious housing commitment at risk.

According to the auditor, three years into the Welsh Government’s five-year programme, fewer than half of the 20,000 targeted social homes have been secured.

In response to these challenges, the government has shifted its focus to acquiring existing properties rather than building new ones.

However, the total number of homes delivered or planned for delivery by March 2026 is just 19,913, which falls short of the target.

The auditor notes that some of these schemes are considered high-risk, which could further reduce the final count.

The report reveals that the cost of delivering the social housing programme has been higher than initially expected.

The Welsh Government originally estimated a budget of £1.6 billion for core capital schemes.

However, between 2021-22 and 2023-24, it has already spent £1.1 billion, with an additional £730 million planned for the following two years.

The auditor estimates that to meet the 20,000 homes target, the government might need an extra £580 million to £740 million beyond current budget plans.

Without this additional funding, the auditor predicts that the government and its partners will only be able to deliver between 15,860 and 16,670 homes by the 2026 deadline—well below the original goal.

While there are options to make the budget go further, such as focusing more on acquiring existing homes, the auditor cautions that this may not provide long-term value for money.

Despite these financial pressures, the auditor acknowledges some positive aspects of the Welsh Government’s approach.

These include effective governance and management frameworks for delivering social homes, such as a collaborative approach and robust grant management processes.

However, the report also calls for improvements in strategic planning and funding.

It urges the government to ensure that investments in affordable housing contribute to broader policy objectives.

Adrian Crompton, Auditor General for Wales, stated, “Price inflation has hit the affordable housing programme hard.”

“The Welsh Government now faces difficult choices about its funding priorities and approach if it remains committed to meeting or getting close to its 20,000 social homes target by March 2026.”

“How the Welsh Government responds will further test its application of the ways of working expected under the Well-being of Future Generations (Wales) Act 2015.”

“This includes how it balances short-term and long-term needs, builds on its collaborative approach, and looks to maximise positive outcomes from the significant public expenditure in this area.”