More than two-thirds of the Housing Infrastructure Fund remains unspent, despite UK housing crisis

building a timber frame house
The UK is undergoing a housing supply crisis but councils are still not using all available funding in order to support homebuilding projects (Image credit: stock.adobe.com)

More than two-thirds of a £4.2 billion financial incentive to make building a house in areas with poor housing supply easier has not been spent in the six years since it was launched.

The Housing Infrastructure Fund was created to deliver new physical infrastructure to support new and existing communities and make more land available for housing in high-demand areas in England.

However, the fund has only seen £1.3 billion spent so far, despite a shortage of plots and a shortfall of new homes in England.

What is the Housing Infrastructure Fund?

The Housing Infrastructure Fund (HIF) is a government capital grant programme that aims to deliver up to 270,000 new homes in England.

The funding is awarded to local authorities to unlock new homes in the areas of greatest housing demand.

The money has been earmarked by the Department for Levelling Up, Housing and Communities to deliver new physical infrastructure, such as serviced plots, and free up more land for housing.

Billions left unused with housing targets still falling short

Illustration of house on self build plot

The HIF is made available in order to free up plots of land to be used for housing by local councils (Image credit: Getty)

A Freedom of Information request requested by the Financial Times states that just £1.3bn of the fund has been spent so far - despite a UK-wide housing crisis.

Homebuilding and Renovating reported on how housebuilding targets fell short again in 2023 by 60,000, begging the question why this fund has not been used to its fullest extent.

Marcus Dixon, director of UK residential research at the real estate firm JLL, told the FT that spiralling building costs and regulations had discouraged developers.

He said: "Schemes that had secured funding began to face shortfalls, in some cases in the tens of millions of pounds, which would need to be plugged for development to start as planned."

 Why has the money not been spent? 

This is not the first scandal involving councils not using suitable funding to support homebuilding after it was revealed that £2.8 billion worth of unspent Section 106 payments had been left by councils that could have supported developments. 

However, a spokesperson for the Department for Levelling Up, Housing and Communities said it was confident the full £4.2 billion of the HIF would be distributed among councils across England.

It added: “Major infrastructure projects understandably take time to deliver and we recognise the challenging backdrop that capital programmes have experienced.

"We continue to work very closely with Homes England to make sure all the programme budget is spent and the maximum possible housing capacity is unlocked."

Sam Webb

Sam is based in Coventry and has been a news reporter for nearly 20 years. His work has featured in the Mirror, The Sun, MailOnline, the Independent, and news outlets throughout the world.  As a copywriter, he has written for clients as diverse as Saint-Gobain, Michelin, Halfords Autocentre, Great British Heating, and Irwin Industrial Tools. During the pandemic, he converted a van into a mini-camper and is currently planning to convert his shed into an office and Star Wars shrine.