In response to budgetary pressures, housing associations in England cut their spending plans on new affordable homes for 2024. This could worsen the acute shortage of social houses in the UK.
According to Centrus, an adviser who works with housing associations, plans drawn up last summer cut investment by 9 percent, or £1.5bn. Funding for the next decade was also cut by £20bn or 15%.
Official figures show that the number of homes English housing association expects to build in the next five-year period has also fallen by 64,000 from 2022.
Around 1.2mn English households are waiting for homes for social housing. There was a loss of 165,000 homes in the decade up to 2022, due to sales and demolitions exceeding new supply. Shelter, a housing charity, reports that a record number of 279,400 people have been confined to temporary accommodation.
According to the Office for National Statistics, housing associations built 40,000 homes in the UK during the year ending March. Local authorities constructed 4,000.
Alistair Smyth is the policy director of the National Housing Federation which represents housing associations. He said that the decline in planned construction was “obviously worrying”. . . “At a time when it is important to build as many affordable and social homes as we can”.
“Housing associations still do everything they can to help. . . But we are in a difficult period,” he said.
The decrease in planned investments reflects the mounting pressure on budgets of housing associations due to inflation and rising interest rates, at a time where they are required to spend more money on upgrading existing homes.
Housing associations are under pressure to deal with mould and damp problems after the death in 2020 of Awaab Awaab, whose prolonged exposure to mold was blamed on the failure by the local housing association to resolve the issue.
According to the latest figures from the government, repair and maintenance expenditures rose to £7.7bn for the year ending March 2023. This represents a 20% increase over the previous year’s record-breaking spending, plus the £6bn that was spent on building security.
Clare Miller, CEO of Clarion, UK’s largest Housing Association, stated that she supports improving building safety, maintenance and energy efficiency. However, “these things all bring additional costs, and there is not additional income coming”.
Budget pressures have forced new construction to be cut, highlighting the challenge of providing more homes in a period when housing is a high priority on the political agenda.
Angela Rayner, Labour’s deputy-leader, has pledged to give affordable housing the “biggest boost in a generation” should the party win the next general elections.
John Tattersall from Centrus warned that cuts in planned funding will cause future problems. “Houses are built over time. . . This will be a slow ship that turns around.”
Housing associations claim that a reduction of 63 percent in government funding in 2010 for affordable housing forced them to borrow more from the private sector to fund construction, leaving them with fewer resources.
Tattersall stated that “high interest rates have soaring costs of new capital which is the way housing associations finance the vast majority their projects.”
The NHF stated that England needed 145,000 affordable homes per year. To achieve this, there must be an increase in funding directly, reforms to planning and certainty about the rents that housing associations can charge.
The UK Housing Department said that the government has delivered 696.100 new affordable housing units since 2010. It added that it “will deliver thousands” more through its £11.5bn Affordable Home Programme. The UK housing department said that the government had announced £1.25bn of funding in December to help decarbonise public housing.