Wednesday, 26 October 2016

Associations defy development fears

The largest developing housing associations have added 7,377 homes to their pipelines since last June, defying expectations that thousands of homes would be left unbuilt in response to the 1% rent cut.

Inside Housing’s exclusive research reveals that the Top 50 Biggest Builders by pipeline have in total boosted their development pipelines for 2015/20 by 4.4%. In June 2015, they expected to build 168,442 by 2020. This pipeline has now increased to 175,819.

In the immediate aftermath of the 1% rent cut introduced in July last year at the summer Budget, many housing associations put developments on hold and the National Housing Federation (NHF) warned that the policy would result in the cancellation of 27,000 new homes.

Reacting to Inside Housing’s new numbers, Adam Morton, policy leader at the NHF, said: “Associations have revised their building plans and driven even greater efficiency in their organisations in order to retain their ambitious plans to keep building across a range of tenures.”

The Department for Communities and Local Government welcomed the findings and said associations “are a key part” of the government’s pledge to build a million homes by 2020.

However, not every housing association’s development pipeline has withstood the financial pressure.

Two in three of the Top 50 cut their number of completions for this year. Twenty-four out of the Top 50 cut their pipelines for 2015/18, and 18 out of the 50 reduced their building plans for 2018/20.

Most put the cuts down to the 1% rent cut. WDH has made some of the most aggressive cuts, slashing more than 40% from its pipeline.

Martyn Gorton, director of investment at WDH, said: “We hope to restructure our loan facilities in order to provide additional capacity from 2018 onwards.”

Associations are also planning to build more market sale homes to cross-subsidise future affordable and social rent homes. The number of affordable rent starts is set to drop from 45% in the 2014/15 financial year to 37% in 2015/16.

Of the 819 homes started by housing association Swan in 2015/16, 60% will be for private sale. Geoff Pearce, its executive director of regeneration and development, said: “The only way to generate the subsidy required is to develop homes for private sale.”

Top 50 Biggest Builders survey check-in

Top five biggest % increases% increase in pipelineJune 2015 prediction (number of homes to be built 2015/20)March 2016 prediction (number of homes to be built 2015/20)
Wales & West57.4%9911,560
Places for People46.4%6,6319,707
Longhurst Group35.6%1,8532,512

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