How do we fund affordable housing in the centre of London?

Of course, some wholesale policy changes and an increase in funding are the real answer to the housing market’s woes, and a clean slate with a new government this summer offers the potential to turn this course on its head and deliver the quality, affordable housing the UK so desperately needs.

But promises have been made before, targets have been set and not met. In the meantime, housing associations can and are using creative means to continue to deliver on their mission to ensure housing – and all the consequent economic, physical and mental health benefits – continues to be refurbished and developed.  

For those housing associations with diverse portfolios, commercial assets offer a sustainable source of income that can be reinvested into residential offerings. At Soho Housing, we leverage our commercial estate to the maximum, with every penny ploughed back into refurbishing existing homes or building more.  

“We are bringing back underused storage spaces, unused garages and basements across our portfolio to really sweat our commercial assets to support development and investment in our homes”

A great example of this is our recently launched new gallery space for hire in Grade II-listed 36 Great Pulteney Street, one of our first housing association homes. The building was dilapidated when we purchased it in the 1970s, but like many in the area, was occupied by a surprising range of tradespeople who lived and worked in the same rooms. It now has five affordable homes above the gallery and three light and airy gallery spaces for hire, returning it to its original mixed-used state, bringing artisan activity back to the area and increasing our rental stream.

We are bringing back underused storage spaces, unused garages and basements across our portfolio to really sweat our commercial assets to support development and investment in our homes. 

Soho Housing continues to believe that it’s not just OK, but crucial for people to live in the heart of London. Without them, it becomes nothing but a sterile visitor destination. This objective is as important today as it was 50 years ago. Uniquely at that time, the association had to deal with mixed-use buildings, and while that brought challenges then, it has reaped great rewards today, helping us to grow an asset base which protects the social housing we own.  

Solutions are not one size fits all, of course – and more often than not, there will be a variety of methods that will help housing associations continue to deliver their services for tenants.

Using some form of internal subsidy, whether from sales, market rents or commercial income, is one way that housing associations have supported development in recent years, but there are so many more demands on these limited resources. Alternative solutions will be the only way to continue to invest in existing homes and to develop new ones.

There may be some hard choices ahead and the reinvest vs disposal debate rumbles on. The current tax treatment of refurbishment costs for housing properties may mean it is simply not economically viable to refurbish rather than dispose, at the cost of reduced affordable housing provision. Changing the VAT treatment of property refurbishment by registered providers would be high up the wish list for many housing associations and could do much to stimulate reinvestment in existing homes alongside the development of new ones.

Building effective partnerships will be another item in the funding toolbox, not only with private registered providers or through tried-and-tested joint-venture routes, but working closely with local authority partners where there is a joint desire and, indeed, imperative to develop new homes.

“Building effective partnerships will be another item in the funding toolbox, not only with private registered providers or through tried-and-tested joint-venture routes, but working closely with local authority partners”

For smaller housing associations, there are huge advantages in working alongside other smaller providers, perhaps as part of a development consortium, to improve access to grant funding, and pool and strengthen development expertise. Effectively pooling resources will mean smaller associations can continue to deliver small individual development programmes, benefiting local communities, at the lower costs associated with larger providers.

In London in particular, the competition for space continues to drive prices up. In the post-COVID landscape, the potential to develop different types of property such as empty office space into residential provision is a promising development. However, maintaining housing quality through these redevelopment schemes will be crucial.

Housing provision is in a dire state across the UK, and not just in the social and affordable housing sector. Prices have rocketed and, year on year, we continue to miss targets for delivering the new homes we so urgently need.

But while it is important we use our voices to call for government-level solutions, we cannot ignore the plight of those currently in temporary accommodation or low-paid workers having to commute hours from the edge of cities because they cannot afford to live near their place of work.

We cannot wait in hope for a silver-bullet solution, but need to apply innovative solutions to diversify portfolios and identify alternative routes to deliver quality housing affordable for all.

Barbara Brownlee, chief executive, Soho Housing