Homes deficit from council rent cuts could be double – NHF
21st July 2015

Chancellor George Osborne’s plan to reduce social housing rents in England by 1% a year for four years may have nearly double the impact on the affordable homes target, according to the National Housing Federation.

The Office for Budget Responsibility had estimated that 14,000 fewer affordable homes will be built as a result to this change but a statement from the NHF replied: “We estimate this will prevent housing associations from building 27,000 homes, but in practice this figure could be much higher, particularly when considering other factors such as changes to working age benefits and extending the Right to Buy to housing association tenants.
“The impacts on housing associations are likely to be varied. We expect that:

• Most if not all associations will need to revisit their business plans
• Some may move developments away from affordable housing towards home ownership
• Loan covenant compliance may be under threat for some
• Increased perception of risk among some investors which may impact cost and availability of finance.”

The statement concludes: “We are making it clear that housing associations want to continue to work with the Government to meet its housing ambitions, but that the proposals announced in the Budget will make it much harder to do so.”

Industry analyst Glenigan previously forecast 14% decline in social housing starts by value this year and a further 10% drop next year but now says: “The latest changes mean that even this may be somewhat optimistic.”