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London is heading towards the worst decline in the supply of affordable housing in decades, as inflation, rising interest rates and building safety costs hit the finances of housing associations.
We warned the previous government of the coming abyss. “We are tearing it down now,” said Fiona Fletcher-Smith, chair of the 15 Greater London Housing Associations, non-profit groups that build and manage much of the UK's affordable housing.
Official data tracking housing starts, the main indicator of supply, shows a sharp decline in… London Starting last year, which providers warn is getting worse.
Affordable housing starts fell by 88 per cent during the year to March, from 26,386 to 3,156, according to figures released last month – the lowest level since records began in 2015. Various data showed that housing starts by local authorities and housing associations fell by 75%. percent during the year. Through June, the largest decline since 1990.
The lack of new affordable homes has increased homelessness and put pressure on local council resources. London boroughs spent a combined £4 million a day on temporary accommodation for people facing homelessness in the year to March, a 68 per cent increase on the previous year.
The supply of affordable housing – a broad category that includes schemes such as shared ownership as well as social rent properties offered by councils and government-controlled rental housing associations – has declined. All over the countryThis is largely due to high interest rates and high construction costs.
The shortage of these properties has pushed more people into the private rental sector, with rents rising at a record pace this year. In London, the high cost of housing is blamed for pushing low-income people out of the city and away from job opportunities.
Scandals regarding poor conditions in existing social care homes have led to stricter standards for providers Undo the new building To finance maintenance.
Will Givowitz, head of policy at the National Housing Federation, which represents housing associations, said these pressures were “worse in London than elsewhere” due to older housing stock and higher running costs in the capital.
But he said the “main driver” of the crisis in London was cost Construction safety work On high-rise buildings in the wake of the Grenfell Tower fire.
“London is significantly and disproportionately affected by building safety costs due to the number of buildings and the cost of repairing them. Combined, these two are perhaps the biggest factors hitting the finances of housing associations in London,” said Givowitz.
Fletcher Smith, chief executive of housing association L&Q, said her organization alone faces costs of hundreds of millions to repair hundreds of high-rise buildings.
Housing associations are struggling to find the money to buy the affordable homes that private builders are required to include in new developments, which has slowed these projects.
These issues highlight the government's impasse between its ambition to boost housing supply, especially social housing, and its promises to speed up safety-related construction work.
The government has promised more help with building safety costs, which it will announce in the spring alongside a new financing program for affordable housing. It has already boosted the existing program by £500 million, offering housing associations a five-year rent settlement of 1 per cent above the inflation rate.
Government grants cover 12% of the cost of building new affordable homes in London on average, according to the G15, compared with about 75% in 1990. The Conservative-Liberal Democrat coalition government of 2010-2015 cut funding by about two-thirds. .
“The finances of social landlords have been hit hard by four years of rent cuts and years of below-inflation rent settlements,” said Andy Hulme, chief executive of housing association Hyde Group.
The Greater London Authority, which oversees funding for more affordable housing in the city, said just 582 homes were started on its housing programs in the six months to September. These numbers are up from 142 the previous year, but are still down 80 percent compared to the average for this part of the year over the previous four years.
The city's mayor, Sadiq Khan, warned last month that London was facing “the most difficult period for house building…”. . . Since the global financial collapse of 2008.
A spokesman for the Mayor of London said: “Reversing the tide after 14 years of underinvestment will not happen overnight, but the Mayor of London is committed to working alongside the government to help create a better, fairer London for all.”
The decline in construction starts is expected to lead to a decline in home completions in the coming years, which will take years to change.
“The current crisis is not the result of a short-term cause. A crisis of this depth and breadth has been years in the making,” said Ian McDermott, chief executive of Peabody Housing Association. “In the short term, I think it will probably get worse.”
