Affordable housing can boost growth, says new G15 report
Housing associations can boost economic growth with increased affordable housing supply, says new G15 and Savills Research report.
- Affordable home building in England could increase to 60,000 homes a year with a package of government policy support and funding for housing associations.
- A significant increase on the current five-year average of new homes delivered of 43,000 a year.
New research, ‘Mind the Gap: not-for-profit housing associations’ role in delivering new affordable homes’, published today by the G15 and Savills Research, found that this growth is possible if the government backs new affordable home building, but is at risk due to the mounting challenges facing the sector.
Just 31% of the new affordable homes that experts have said are needed across England, and 59% of all new build homes, were delivered over the last five years. Building on existing research (Professor Glen Bramley, 2018), the report shows that the shortage of affordable housing is most severe in areas with the highest housing costs, with more than half of new affordable homes needing to be delivered in London and the South East to meet need.
The report demonstrates the vital role of housing associations to the delivery of new affordable homes and to the economic growth this generates. Overall, housing associations delivered 22.6% of all new housing supply in England 2016-2021, compared to the 4% provided by local councils and for-profit registered providers.
However, rising inflation, borrowing costs, costs of building new homes jumping by 23%, and increased need for investment into existing homes will make it hard for housing associations to maintain current new homes delivery targets without support.
Alongside the £4bn G15 members alone are forecast to spend on addressing building safety issues by 2036, the report highlights the investment required to decarbonise existing homes and help the government hit the target of net zero-carbon by 2050. It would cost £35bn to bring all housing association properties up to EPC Band C by 2030 and to replace gas heating by 2050.
Ceilings on rent increases currently being consulted on by the government would reduce development capacity further, as could planning policy changes, such as the proposed Infrastructure Levy.
The research argues that increased long-term grant funding will be key to ensuring housing associations can maintain and expand their development programmes, and highlights the ‘counter-cyclical boost’ housing associations can provide in difficult economic times.
Geeta Nanda, G15 Chair and Chief Executive of MTVH, said: “Everyone deserves to live in a safe, decent, and affordable home. That’s why G15 members invested £900m last year in the homes we provide. However, we absolutely must keep building new affordable homes to meet growing need and there are real risks facing the sector at the moment.
“Not-for-profit housing associations built over a fifth of all new homes in the last five years, and with the right support can be at the forefront of meeting the homes challenge the country faces. This would not only help many more people to benefit from all that a new affordable home provides, but would also provide a massive boost to the economy at a critical time.
“The question government faces is not whether we can afford to grant fund the delivery of more affordable homes, it’s whether we can afford not to.”
Emily Williams, Director at Savills Residential Research, said: “There are a range of pressures facing housing associations. Residential build cost inflation and planned changes to the Section 106 system will also add to the challenges of growing affordable housing delivery.
“However, our research shows the important role housing associations continue to play in economic growth. This can be enhanced through partnership working with the government to ensure continued grant funding and policy stability.
“The current Affordable Homes Programme has represented a step forward for housing associations, both in the amount of grant per unit, and in providing clarity over a longer time frame. This is enabling them to compete in the land market and build up their development pipelines.”
Emily added: “In addition, recognition that the initial bids for the current AHP were made in a different economic environment and that housing associations may need increased flexibility, would be a welcome step.”
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