Housing associations in England have cut their planned spending on new affordable homes in 2024 in the face of budget presures, threatening to worsen the UK’s acute shortage of social housing.  Investment planned for 2024 fell by 9 per cent, or £1.5bn, according to plans drawn up last year, while funding over the coming decade was cut by £20bn, or 15 per cent, according to research by Centrus, a financial adviser that works with housing associations. 

The number of homes English housing associations expect to build over the next five years has also dropped by 64,000 since last year, according to official figures.  About 1.2mn households in England are on a waiting list for social homes. In the decade to 2022 there was a net loss of 165,000 social homes, as sales and demolitions outpaced new supply. A record 279,400 people are now stuck in temporary accommodation, according to housing charity Shelter.  Housing associations completed 40,000 homes across the UK in the year to March, while local authorities built 4,000, according to the latest data from the Office for National Statistics.

Alistair Smyth, policy director at the National Housing Federation (NHF), which represents housing associations, said the decline in planned building was “obviously concerning . . . at a time when we should be building as many social and affordable homes as possible”.

READ ALSO: Federal Ministry of Work and Housing Opens Applications for National Housing Program Sales Review

“Housing associations are still doing as much as they can . . . but we are going through a challenging period,” he added.  The decline in planned investment reflects mounting pressure on housing association budgets from inflation and higher interest rates at a time when they need to spend more on upgrading existing homes.

  Housing associations have been under intense pressure to tackle mould and damp issues after the death of toddler Awaab Ishak in 2020 was attributed to prolonged exposure to mould that the local housing association had failed to address.  Repair and maintenance spending rose to £7.7bn in the year to March 2023, according to the latest government figures, a 20 per cent increase on record spending the year before, on top of £6bn spent on building safety. Clare Miller, chief executive of Clarion, the UK’s largest housing association, said that while she supported improving building safety and maintenance, and the push for greater energy efficiency.

READ ALSO: Addressing the need for Affordable Housing in Rural areas of Maine

“these are all things that bring with them additional cost, and there is no additional income coming”. The pressure on budgets has forced cuts in new construction, underscoring the challenge of delivering more homes at a time when housing is high on the political agenda. Labour’s deputy leader Angela Rayner has promised the “biggest boost to affordable housing for a generation” if the party wins the next general election. 

John Tattersall, managing director at Centrus, cautioned that the cuts to planned funding would store up problems for the future.

“Houses take time to build . . . this will be a slow ship to turn around,” he said. 

Housing associations say a 63 per cent cut in government funding for affordable housing in 2010 forced them to rely more on private sector borrowing to fund construction, and has left them short of resources.

Source: Ft.com  

The post Spending on affordable housing in England to be slashed in 2024 appeared first on Housing TV Africa.

Pension Insurance Corporation (PIC), a specialist insurer of defined benefit pension schemes, is the latest to enter the market. It is building 125 affordable homes in Kingston upon Thames, south-west London, in partnership with the developer London Square and its affordable housing subsidiary, Square Roots.

The £50m project, which is due to be completed by November 2025, is backed by a £4.9m grant from the mayor of London’s affordable housing programme. It is the firm’s first direct investment in affordable housing. PIC intends to invest £500m over the next five years to build about 1,000 affordable homes across England and Wales.

“For every pension scheme that we take on, we need to back each of those schemes with a portfolio of assets,” said Allen Twyning, PIC’s lead manager on the Kingston project.

“What [affordable housing] offers is very predictable rental cashflows linked to inflation, a lot of these driven by central government policy. They are sustainable investments. They’re there for the long term; it is a really good match for what we’re trying to do in terms of paying pensioners and helping create homes for people who desperately need them.”

PIC, which insures 339,900 pension scheme members at FTSE 100 companies and in the public sector and has £44.9bn in financial investments, has also invested in build-to-rent developments, student accommodation and senior living.

READ ALSO:World Cities Day: FG Set to invest in Affordable Housing to address Urbanization Challenges

Across the West Midlands, Legal & General pledged last year to construct 3,000 affordable homes over five years, starting with The Junction, a brownfield site which has been empty for two decades. Partnering with Lovells, L&G is in discussions about creating affordable 1,000 homes in the region. The total programme is backed by L&G’s £138m grant from Homes England.

In Kingston, the homes will be built on the site of an NHS clinic that closed two years ago, with 44 apartments to be made available at London affordable rent, and 81 apartments for shared ownership. The former will be set at rents that the mayor of London views as “genuinely affordable”.

About 340,000 new homes are needed in England each year, of which 145,000 should be affordable homes, according to research commissioned by the National Housing Federation and the homeless charity Crisis from Heriot-Watt University.

However, only about 50,000 affordable homes were built each year on average between 1991 to 2022, according to government figures. Last year, 59,175 affordable homes were completed in England, up by 13% on the previous year, and similar to pre-pandemic levels.

Housing associations have built most of those homes in the past, but this has slowed dramatically because of high inflation hitting construction and operating costs, rising borrowing costs and rent caps introduced by the government.

The king’s speech last week contained no new measures to tackle rising homelessness and lack of affordable social housing. However, Labour’s deputy leader, Angela Rayner, has said the party will create the biggest increase in affordable housing “in a generation” by getting tough on developers and reforming planning rules, if it wins the next general election.

Source: The Guardian

The post UK pension funds step in to build affordable homes appeared first on Housing TV Africa.