What the Delivery of Affordable Housing Means for Housing Organisations Today

Shariq Kochhar

Understand the role your organisation could play in building more affordable housing communities.

The Government has set out ambitious plans to address the UK housing shortage, with a goal of delivering 300,000 homes a year by the mid-2020s. 

Housing providers are eager to contribute to the government’s supply ambitions for affordable housing.

The market needs forces to unite in making this ambitious goal a reality. 

For engaged organisations, we believe there’s a great opportunity. But obstacles relating to funding and operational efficiency stand in the way. 

Join us on this retrospective as we examine the key government green paper theme of increasing affordable housing supply, how to overcome obstacles and why we see a change coming sooner than you might think.

There is a big shortage of affordable housing supply.

From a purely numerical perspective, the affordable housing supply in England has fallen over 180,000 homes short of what is needed. Housing benefit might provide some relief to housing providers, but cannot insulate a tenant from what appears to be a broken housing market. A skewed definition of ‘affordable’ rents isn’t a great companion to the key problem here either, because they wipe out any real income growth in low-income households.

Grant funding, or rather the lack of it, has further added uncertainty to the future of affordable housing in England. In the early 90s, grants supported close to 75% of sub-market housing development costs. Following the financial crash, and the subsequent Affordable Homes Programme (2011-15), this same grants could only bolster close to 40% of the development, and today this figure is even lower.

Yes, this has meant a greater burden on social housing providers and their tenants, because how do you ensure adequate levels of service and also contribute to the supply of housing for low-income communities?*

And indeed, housing benefit expenditure has also shot up (from £9 billion in the early 90s to £24 billion today) to somewhat manage this constrained funding.

Permit us to make this most obvious of statements - an (immediate) step change is required in delivering additional social homes across the nation.

However, if the government green paper is any indication, this doesn’t seem as far away. An important question the paper raises is:

What level of additional affordable housing, over existing investment plans, could be delivered by social housing providers if they were given longer-terms certainty over funding?”

…which is reassuring, because by asking this question, the Government recognises the role of social housing providers in boosting housing supply and how uniquely placed they are to deliver large-scale, genuinely affordable and high-quality homes.

Now let’s evaluate how this can be achieved, both in isolation or as a partnership with government support.

*If you want a genuine solution to this problem, keep reading. But if you’re in a real hurry, we won’t tell anyone that you skipped to the end. Just this time.

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The government is investing in progress.

The government is stepping up. It stated that £1.67bn of new funding was made available in June to build 23,000 new affordable homes and social homes.

Theresa May has also pledged an additional £2bn of funding which could develop 25,000 additional homes for social rent by 2021. The National Housing Federation is optimistic and believes that this figure could rise to between 50,000 and 60,000 with a further £3bn in public and private investment.

She has also been vocal in her support for better housing for everyone - such targets for developing affordable housing have not been seen since World War II.

Speaking at the Housing 2019 conference this year, she stated how social housing has fallen victim to a single-minded drive for home ownership and how she hopes to change all of that. She also emphasised that standards need to change and homes cannot be built at the expense of quality."I cannot defend a system in which owners and tenants are forced to accept tiny homes with inadequate storage," she said.

She takes pride in mentioning the change she has brought about during her tenure. In her own words: “We’ve ended the forced sale of higher-value council properties, put £2bn of extra funding into the Affordable Housing Programme with an explicit provision for building homes for social rent and abolished the [Housing Revenue Account] cap so that local authorities are free to build once more.”

These statements were backed up by an additional promise to publish an eagerly awaited action plan to the Social Housing Green Paper. We are very excited about this news. And it’s also a good segue into a discussion on the role of housing associations in making this change happen quicker. 

How Housing Providers are best placed to facilitate.

Clarion Housing, the largest housing association in the UK, welcomes government support in making housing more affordable and available for all communities. It has doubled its investment in new homes, (£196m in 2016/2017 to £427m in 2017/2018), embarking on an ambitious plan to deliver 50,000 new homes in the next decade.

It’s approach to buying homes from private landowners has shifted and Clarion is now developing land at scale in its own right. It’s current pipeline, as a result of this change, is already at 14,000 new homes.

However, it isn’t all smooth sailing. Land value capture is an issue to contend with, as current systems work in favour of private developers and don’t consider the added value of selling to housing association.

Amidst this is a universal sense of uncertainty that hangs over the social housing sector almost in perpetuity -

Funding. Yes, we realise we started with this, but there’s more to it than just grant funding, we assure you. Uncertainty around future rent levels means housing providers need to be extra careful about where to allocate their resources. There has already been a major slash in repairs and maintenance expenditure across the sector, which feels like a tough pill to swallow in a post-Grenfell landscape.

At this point, there is also no indication of any support to assist social residents in paying their rent through the welfare system. Without this certainty on capital grant, rent levels and support to cover rent, the sector will always be wary of cost pressures preventing investment in the supply of additional homes.

But it doesn’t have to be this way.

LEAD THE SUPPORT

Create cost headroom to better invest in more affordable homes

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We’re here to help.

We could tell why, but we think this quote from Andy Belton, COO of Notting Hill Genesis, puts it better than we ever could:

“Plentific offers a streamlined digital approach for maintaining properties that will save a great deal of valuable time and resources.”

Ok, now we can elaborate. We’re proud of our platform, which has made it possible for housing providers like Notting Hill Genesis to find essential cost headroom in their operations. We’ve showcased management savings, a reduction in maintenance costs and an even more significant savings in major repairs.

We’ve learnt from the most salient issues in the sector and provide a single solution to manage your entire property portfolio. It’s easy to use, easy to implement into your existing operations and comes backed by our curated marketplace of verified trade professionals - so that we can provide an affordable, high-quality and community-driven approach to your repairs and maintenance.

We could go on, but we’ll leave it at this: we’re leading the change in offering groundbreaking operational excellence to housing providers. Our transformative platform can streamline your supply chain, create efficiencies that lead to major cost savings which can be reinvested back into developing affordable homes for communities of the future.

Get in touch with us below and let’s chat about how we can help your housing organisation.

LEAD THE SUPPORT

Create cost headroom to better invest in more affordable homes

Book a meeting