G15 warns of funding squeeze in evidence to Select Committee inquiry
The combined impact of government changes to rent policy will see around £19bn in resources lost to G15 members.
In evidence submitted to the Levelling-Up, Housing & Communities Select Committee’s inquiry into the finances of the social housing sector, the group of leading housing associations has warned reduced resources and challenges, such as building safety, will reduce the number of new affordable homes that can be built.
In its evidence, the G15 highlights that the social housing sector remains financially resilient and has increased investment in existing homes to improve conditions. However, resources and capacity are under significant strain. Rising costs, inflation, and higher interest rates are adding to this pressure.
Geeta Nanda OBE, G15 Chair and Chief Executive of MTVH, said:
“Despite ever-more challenging circumstances, housing associations have shown incredible versatility and innovation to continue meeting the range of priorities we and the people we provide homes to have.
“However, with the loss of £6.6bn in resources for investment since 2016 due to government rent policy changes, and over 60% cuts to funding for new affordable homes, our capacity is being put under growing pressure.
“We need a proper conversation about how the priorities we all share are going to be achieved in the coming years. At the heart of the challenge is that these priorities are all interlinked. Investment in existing homes is rightly the first priority, but without housing associations’ contribution to building new affordable homes, issues like overcrowding aren’t going to be dealt with, which in turn impact the conditions of existing homes. It’s too simplistic to suggest we can pick investment in existing homes over new build – we need both. Housing associations build almost 1 in 4 new homes, and if we reduce our programmes to meet costs like building safety and retrofit, I am really worried that the gap won’t be filled and its people in dire housing need that will suffer.
“A long-term plan for social housing is desperately needed. At its heart must be certainty on rent policy and a commitment to funding to build many more of the most affordable homes that are desperately needed.”
The combined impact of government changes to rent policy since 2016 (the 2016-20 -1% annual rent reduction and the first year of the 7% social rent cap in 2023/24) will reduce G15 members’ re-investable income by £6.6bn by 2024.
Over members’ 30-year business plans, the combined impact of the 2023/24 rent cap, voluntary capping of shared ownership rents in 2023/24, and the absence of the rent convergence mechanism, will see a further £12.4bn of re-investable resources that would otherwise have been available lost to G15 members.
Without additional funding and support to build homes or to meet other costs, many G15 members are likely to reduce development programmes to meet challenges and to prioritise investment in existing homes in the coming years.
To help to overcome these challenges, the G15 is calling for a number of measures to be implemented by government, including:
- Long-term rent settlement
- Reintroduction of rent convergence
- Specific grant funding for regeneration
- A fit for purpose Decent Homes Standard supported by funding
- A requirement to release land for affordable housing
- Remove VAT on housing association activity
- Recycled Capital Grant Fund (RCGF) flexibilities