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Grant insufficient to drive development ambitions, say sector chief executives
The current forms of funding for social homes are not sufficient and more grant is required if the sector is to build at the scale needed, bosses from some of the country’s largest developing associations have said.
Chief executives representing associations with combined development pipelines in the tens of thousands have added their voices to calls for increased grant, outlining why current rates and a reliance on the cross-subsidy model was inadequate.
The G15 and Greater London Authority have worked together to submit a case to the government showing that grant levels for affordable homes need to rise from between 15% and 20% to around 49% of the property cost. This will be part of their lobbying ahead of the multi-year Spending Review next year.
Helen Evans, chair of the G15 and chief executive of Network Homes, said: “This will be needed if we are to have a sustainable and counter-cyclical programme.”
On Monday, Clare Miller, chief executive at Clarion, sat alongside other housing association leaders at a select committee meeting and called for more grant funding.
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Ms Miller broke down the extent of the funding shortfall faced by associations in London, particularly when delivering homes for social rent.
She said that despite the average property cost in London being £400,000, associations would only be able to make around £100,000 through social rent over a 30-year period and access only £60,000 in grant, leaving a funding shortfall of £240,000. Ms Miller said: “the current level of grant for social rent homes is insufficient for us to have the scale of programme we would like.”
Victor da Cunha, chief executive of Bath-based Curo, added that the cross-subsidy model, which in many cases is supposed to help cover the shortfall, is no longer effective.
He said: “The world has moved on, the market is getting harder and while we will never really lose [cross-subsidy] as a tool… the truth is that grant has to pick up the slack.”
Earlier this week, writing in Inside Housing, David Montague, chief executive at L&Q, said that “more grant and higher grant rates” were needed to maintain and increase supply.
Housing secretary Robert Jenrick told Inside Housing last week that he was in talks with chancellor Sajid Javid over a “strong successor” to the £9bn Affordable Homes Programme.
Kate Henderson, chief executive of the National Housing Federation, said the only way to build enough social housing was with government grant funding
She added: “Cross-subsidy can play a role, but it will only go so far. Now, as the private housing market slows, its limits are clear to see."
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