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Sector calls on government to ‘take action now’ after Khan’s no-deal Brexit warning
The housing sector has called on government to “take action now”, after Sadiq Khan issued an urgent call for ministers to pledge money and support in the event of a no-deal Brexit.
In a letter to ministers yesterday, the London mayor called for a series of interventions, including £5.2bn of additional grant, sales guarantees to private builders and direct control of the materials supply chain should the UK crash out of the EU without a deal next month.
Associations have been coming under increasing pressure from a stalling sales market in the capital as the continuing uncertainty over Brexit puts a brake on transactions.
Paul Hackett, chair of the G15 group of large associations and co-signatory to the mayor’s letter, told Inside Housing: “With previous market downturns in the early 1990s and 2008, the government support came quite late. What we would argue is take action now while the market is still moving.
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“If the wider housing market is affected and there are schemes stalling around the country, developers end up in trouble and we risk widespread insolvency in the supply chain. The government can use housing associations as a conduit to inject liquidity into the construction sector.
“You have already got a vehicle there and [ministers] just need to understand subsidy rates need to reflect trading conditions.”
The £5.2bn of grant called for by Mr Khan would pay for the conversion of 9,000 homes built for market sale to social rent, support the planned development of 30,000 homes scheduled over the next 18 months and potentially also “derisk” sales of shared ownership units.
John Hughes, development director at Notting Hill Genesis which was revealed last week to have 400 unsold units on its books, added: “The model is completely reliant on sales products… we can’t build our properties for sale and when we can’t do that, we can’t build affordable homes.
“The model isn’t working now and we need to rethink it. Transaction levels have decreased by a third if not more and it’s the level of transaction that is the constraining factor for us now.
“We would call for an announcement from the government on new grant sooner rather than later, we would welcome an announcement as quickly as possible.”
He said grant rates of around £200,000 per unit would be necessary to cope with the downturn, the current rate is set at £60,000.
The call follows news from the Regulator of Social Housing this week that the sector has some 7,000 unsold units of housing on its books, and Mr Khan describing the cross-subsidy model – which depends on market sale income to fund the building of affordable homes – as “broken”.
Darren Rodwell, executive member for housing at London Councils and leader of Barking & Dagenham Council, said: “We do need some certainty that the housebuilding programme in London can continue because without that certainty I think London is on a knife edge for stopping the supply of housing for the people that truly need it the most.”
In response, the Ministry of Housing, Communities and Local Government said it still expects the UK to secure a “good deal” over Brexit.
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