London hit by record downturn in affordable housing

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London is heading for its worst slump in affordable housing supply in decades, as inflation, high interest rates and building safety costs hit housing associations’ finances.

“We warned the previous government of a cliff edge coming. We are reducing it now,” said Fiona Fletcher-Smith, chair of the G15 group at the Greater London Housing Association, the not-for-profit group that builds and runs most of the UK’s affordable housing.

Official data tracking housing starts, the main indicator of supply, all showed a sharp decline London Started last year, which providers warn is getting worse.

Affordable housing starts fell 88 percent from March, from 26,386 to 3,156, according to figures released last month – the lowest since records began in 2015. Various data released by local authorities and housing associations showed a 75 per cent drop in the year to June, the biggest fall since 1990.

A lack of new affordable homes has increased homelessness and added pressure on local council resources. London boroughs collectively spent £4m on temporary accommodation in the year to March, up 68 per cent on the previous year.

The supply of affordable housing – a broad category that includes shared ownership as well as schemes such as social rental properties offered by councils and housing associations at government-regulated rents – has declined. across the countryMainly due to high interest rates and rising construction costs.

This property shortage has pushed more people into the private rental sector, where rents have risen at a record pace this year. In London, high housing costs have been blamed for pushing people on low incomes out of the city and more from job opportunities.

Scandals surrounding poor conditions in existing social homes have led to stricter standards for providers, who New building pulled back Funds for maintenance.

Will Jeffowitz, head of policy at the National Housing Federation, which represents housing associations, said the pressures were “worse in London than elsewhere” due to aging housing stock and high operating costs in the capital.

But he said spending was the “key driver” of the crisis in London Construction safety work In high-rise buildings after the Grenfell Tower fire.

“London is heavily disproportionately affected by building protection costs because of the number of buildings and the cost of their remediation. These two things combined are probably the biggest factor in housing association funding in London,” says Jeffowitz.

Fletcher-Smith, who is chief executive of housing association L&Q, said her organization alone faced hundreds of millions in costs fixing hundreds of high-rise buildings.

Housing associations are struggling to find finance to buy affordable homes that private sector builders must include in new developments, which has slowed these projects.

These issues underscore the government’s ambition to increase housing supply, particularly social housing and its commitment to speed up construction safety work.

The government has pledged more help to build up protection costs, which it will announce in the spring alongside a new funding program for affordable housing. It has already topped the current program with £500mn and has offered housing associations a five-year rent settlement at 1 per cent above inflation.

According to the G15, government grants cover 12 per cent of the cost of building new affordable homes in London, compared to 75 per cent in 1990. .

Andy Hulme, chief executive of housing association Hyde Group, said: “Four years of rent cuts and years of under-inflation rent settlements have hit social landlords financially.

The Greater London Authority, which oversees the city’s most affordable housing fund, said just 582 homes were started on its housing program in the six months to September. That figure is up from 142 the year before, but still 80 percent below the average for this part of the year compared to the previous four years.

Mayor Sadiq Khan warned last month that London was facing “the toughest period for housebuilding . . . since the global financial crash of 2008”.

A spokesman for the Mayor of London said: “Turning the tide of 14 years of under-investment will not happen overnight but the Mayor is committed to working hand in hand with the Government to help create a better, fairer London for all. “

Start in starts are expected to be fed through the decline in home completions in the coming years, which will take years to turn around.

“The current crisis is not the result of a short-term factor. A crisis of this depth and breadth has been years in the making,” said Peabody Housing Association chief executive Ian McDermott. “In the short term, I think it’s probably going to get worse.”