Thousands of additional new ‘affordable homes’ to be built

17 Nov Thousands of additional new ‘affordable homes’ to be built

The Communities Secretary Sajid Javid has given a speech praising the decision of the Office for National Statistics to remove housing association debt from the UK balance sheet, suggesting a much more “stable investment environment” for the providers of affordable homes.

New powers to fund house-building have also been announced, with more announcements expected in next weeks budget.

Housing associations will be reclassified as private bodies allowing their £70bn debt to be removed from the government’s balance sheet.

They said the technical change would allow them to build more affordable homes.

Housing associations were classified as public bodies in 2015 because of the way they were funded. This raised concerns it would hamper their ability to fund new house-building.

In 2015, the Office for National Statistics shocked the government by announcing that ministerial control of housing associations had become so intrusive. This required them to be no longer seen as charities or private businesses; immediately all their borrowing was added to the public debt.

The National Housing Federation, which represents housing associations, said it strongly supported the reclassification. Although they built nearly 50,000 new homes last year, including social and affordable rental properties, many more are required.

House building in the UK is currently a hot political topic, with the housing crisis being close to the top of Theresa May’s list of priorities to address, especially with a  younger generation amongst the most affected and being very politically engaged and mobilised by a resurgent opposition.

Although house building is up by 27,700 on 2015-16 figures showing 217,350, “additional dwellings” in England last year, which includes new builds, conversions and changes of use, it has still not returned to pre financial crisis levels.

From that total only around 130,000 were actual newly constructed homes against an estimated requirement of 250,000.

These new funding powers will be a welcome boost but a coherent policy and strategy to meet the housing demands going forward will surely need to include exploring and investing in new methods of building and delivery such as off-site construction.

by Michael Low | Partner | TCC