Housebuilding could 'grind to a halt'

Housebuilders could be hit by a massive drop in the number of new homes built in the UK, a new report suggests.

The National Housing Federation (NHF) said the number of new affordable homes built this year could slump by 65%.

Funding cuts and changes to the planning system could see as few as 20,390 homes built, the group said.

The NHF has written to Housing Minister Grant Shapps urging the government to honour its spending commitments on new housing schemes.

But Mr Shapps said: "Houses cannot be built by targets that don't work with money that doesn't exist."

He said the government was planning to introduce incentives for new developments and communities would be be able to "develop their own vision" for what they wanted built in their local area.

In the letter NHF's chief executive David Orr wrote: "The building of affordable homes could potentially grind to a halt this year - with all housebuilding, including private developer construction, falling off a cliff."

The cuts could have a "catastrophic impact" on housebuilding, the federation added.

The housing minister warned last week that around 150 social housing projects were under threat because of a £610m "black hole" in the government's finances, the group said.

Mr Shapp further countered the NHF's claims and said: "With £780m in unfunded spending commitments made by the previous administration, I have instructed the Homes and Communities Agency to conduct a review.

"And we have made £170 million available to build 4,000 otherwise unfunded social rented homes this year, safeguarding around 3,500 jobs."

Housebuilders suffered badly when the property market slumped during the downturn.

This is the second time in a matter of days that the government's housing policies have been called into question.

They came under fire after Mr Shapps announced on Friday that the government would be scrapping plans for tougher regulation of the letting industry.

A landlords register and new regulation of letting agents were to be introduced by the previous Labour administration.

The Association of Residential Letting Agents said cutting the plans would aid rogue landlords. Citizen's Advice also criticised the decision.