Sunday, 05 July 2015

Shapps in spotlight over supply crisis

Housing associations fail to secure land for new homes as affordable housing starts plunge by 68 per cent

The number of affordable housing starts slumped 68 per cent to 15,698 last year and social landlords have lined up just half the land they need to fulfil their building commitments by 2015.

Research by Inside Housing revealed that the top 50 developing housing associations have lined up enough land to build 49,978 homes by April 2015 - out of 99,604 homes they have said they will deliver. Sites have yet to be found for 16 per cent of the 29,931-homes landlords plan to build next year.

The official start figures from the Homes and Communities Agency put housing minister Grant Shapps in the spotlight at the Chartered Institute of Housing conference in Manchester.

‘It’s a trend that will need to be reversed pretty swiftly, otherwise you will see completions in later years fall off a cliff,’ said Steve Douglas, a partner at consultancy Altair.

Meanwhile, another source of new affordable housing is also under threat, as an Inside Housing investigation showed a dramatic rise in councils accepting money from private developers in lieu of including affordable homes in their developments.

Housing associations blamed the overhaul of how homes are subsidised for the collapse in construction starts, claiming they went on ‘hiatus’ as they negotiated contracts to build affordable homes under the 2011/15 subsidy programme, which will be let at up to 80 per cent of market rent.

Mark Rogers, chief executive of Circle which started 63 homes last financial year, down 92 per cent on the previous year, said ‘the key thing in 2011 was to try to secure the right deal with the HCA on affordable rent’, rather than to start construction on new homes.

Family Mosaic started just 160 homes last financial year - a significant drop from the 1,478 homes it started in 2010/11.

Dick Mortimer, group director of asset management and development at the 23,000 home association, said uncertainty over future rental income because of housing benefit caps and securing finance with reduced grants also played a part. To get grant funding, homes must be completed by the end of March 2015.

Pat Ritchie, chief executive of the HCA, confirmed she was in discussions with the government over bringing forward some spend on the affordable homes programme to increase development. She added: ‘As this is the first year of a four-year programme we will naturally want to look at the delivery profile over the next three years to maintain momentum, in particular to build delivery in years two and three.’

Linda Convery, a partner at law firm Lewis Silkin, said: ‘In the south east we’re getting a number of registered providers competing for sites. It’s boosting up [land] prices.’

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