Housebuilder says its proposal to bypass housing associations could save government £500m in public funds

The government could have an additional £500m a year to invest in social housing construction if it adopted the sales process being proposed by the country’s largest housebuilder.

Barratt Homes’ idea is to sell the affordable homes built by Britain’s volume housebuilders directly to public sector workers at a discounted rate rather than to housing associations, as is currently the case.

David Pretty, Barratt’s chief executive, said the scheme would save about £500m in public funds that would otherwise have been spent by associations to buy homes from housebuilders to then sell to key workers. He said this money could instead be spent on building more social housing.

Pretty, whose company will build 14,000 homes this year, of which 2000 will be affordable, added that the ODPM would also have to agree to classify homes sold in this way as social housing so as to satisfy planning rules.

Barratt’s intervention came after the Treasury announced on Wednesday a shared equity scheme where the government would in effect take on part of a keyworker’s mortgage in order to help them onto the property ladder.

Pretty said: “If the government used the funds freed up [by Barratt’s scheme] to build more social housing then as an industry we would have the capacity to build about 30,000 units of social housing each year. Potentially this is about 30% more than is being built at present with the same money.

“This scheme is quick and implementable. The homes would have to be kept as key worker housing so nobody could sell them to make a quick buck.”

Housing associations would be freed up to concentrate on providing homes for people in the most need, such as the homeless, Pretty added. He said associations would still have a role in managing the homes sold direct to key workers.

Mary Lynch, director of strategy at affordable housebuilder Lovell, said: “It seems hard to argue with this idea. For us, everyone we sell to tends to be what you would call key workers so there is an obvious market there.

“On the face of it anything that cuts out the middle-man sounds sensible, especially if it frees up housing associations to concentrate more on providing social housing.”

However, Jim Coulter, chief executive of the National Housing Federation, the body that represents 1400 housing associations, said: “This is a policy cul-de-sac frankly. It is imperative that associations provide multi-tenure not mono-tenure estates. This idea would impact adversely on the whole sustainability agenda.”

An ODPM spokesperson said: “We are pleased that the construction industry is trying to think of innovative ways to deal with the current shortages of affordable housing.”