Spring Forecast: What does it mean for social housing?

The social housing crisis is worsening, with fewer affordable homes being built at a time of rising demand. The only way to reverse this trend is to invest more public money to fix the system and create greater stability for registered providers (and fix the planning system so that it supports affordable housing development).

£2bn for the current Affordable Homes Programme

The £2 billion one-year boost to the current Affordable Homes Programme (AHP) (announced earlier this week) is welcome and it will provide some certainty in the short term. However, it isn’t anywhere near enough to address the growing shortage of social homes.

Registered providers can’t afford to buy land for development or invest to get new schemes underway because rising costs and other challenges have got in the way. They have been forced to reprioritise and redirect funds to maintenance and repair programmes, in order to provide safe, quality homes for existing tenants.

The fact that the money is tied to delivery during the current Parliament will help to prevent land banking by developers and might even limit house price increases.

Clarity is needed for the next affordable housing 2026 – 2031

Social landlords will have to wait until the spending review in June to see what the long-awaited multi-year new Affordable Homes Programme plan (AHP) might bring.

With the current AHP in England having revised down its targets and set to miss them by some 50,000-70,000 new homes, and with demand rising exponentially, the gap in the supply of affordable homes for disadvantaged and vulnerable people is bound to worsen.

A clear rent policy and ‘convergence mechanism’ are needed

A consultation on the Government’s new proposed social housing policy closed in December, but registered providers urgently need to know what’s coming next. Registered providers need the Government to deliver on the financial stability it promised before the election.

In many places there is a difference in the social rents payable between existing social rent tenants and new social rent tenants and permitting social landlords over time to address that imbalance (rent convergence) alongside certainty on rent increases would in some areas give registered providers the ability  to invest in land acquisition and kickstart development activity. The Government must intervene to introduce a convergence mechanism to allow registered providers to move their rents closer to the Government-controlled formula rent.

What next for Homes England?

It has been rumoured that the Government could be intending to abolish Homes England once the AHP has been devolved to combined authorities, but that could be a waste of valuable resources, which could be deployed to drive forward its new towns strategy.

Whilst most housing sector experts believe the Government’s pledge to build 1.5 million new homes in the current parliament is not achievable, accelerating the delivery of its new towns strategy, which aims to build the homes that communities need, could certainly make a significant dent.

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