industry news
Up to £300bn savings if more homes are built
The Government could save billions of pounds and achieve better value for taxpayers’ money if it built 100,000 new social rented homes a year new research has concluded. The report by think tank Capital
Economics, was commissioned by the National Federation for Arm’s-Length Management Organisations, the Association for Retained Council Housing, the Local Government Association and campaign group ‘Social Housing Under Threat’ looked at four post-Brexit scenarios for social housing, including weak and strong economic outlooks. It found the Government could generate
savings of between £102bn and £319bn over a 50-year period if it invested in building 100,000 new social rented homes a year. This is because the housing benefit bill would fall as a result of more people living in the social rented sector rather than the more expensive private rented sector. Even in a weak economic scenario −
where growth is weak and borrowing costs are high − the Government would still make savings compared with current housing policy, the authors concluded. This was based on a comparison of only 9,100 new social rented homes being built each year from 2018/19 onwards rather than 100,000 a year.
New homes
The think tank assumed just 9,100 new social homes a year because the current HCA investment programme for 2016/21 does not include any funding for social rented housing. It calculates all new social rented homes will be funded either by Section 106 planning payments or from landlords own resources. Funding the development of 100,000 homes a year would add more than four million homes to the UK’s housing stock over 50 years. They point out that providing new homes for low-income families has “knock-on” benefits, such as savings in health, education and productivity. The authors say that unlike other types of
infrastructure investment, social housing begins to pay for itself once it is built through rent payments. Hugh Broadbent, chair of the NFA, said:
“To complete a 100,000 new homes a year housebuilding programme would only cost £7billion − the equivalent of two weeks’ worth of spending in the NHS. But in the long-run, the return on this borrowing would deliver greater savings to the taxpayer and the economy. Critically the investment needed would be paid for through rental income and not from general taxation.”
Housing associations reported a 48 per cent increase in sales of social rented homes as they seek greater financial returns and value for money from their assets. This was the stand-out figure in a set of
recently published statistics that also revealed the number of homes owned by associations rose to 2.8 million homes at 31 March 2016, a two per cent increase on the figure from the year before. This is the largest growth in HA stock numbers since 2012. The Homes and Communities Agency’s
(HCA) statistical data return, showed English associations disposed of 4,406 homes in 2015/16, up from 2,982 in 2014/15. The HCA defines these disposals as the sale of social rented homes for ‘non-social housing use’. When all disposals (such as demolitions and
Right to Buy sales) are included, the total number of properties leaving the sector increased 16.6 per cent to 18,419 homes in the year – up from 14,803 in 2013. The figures pre-date the enforced one per
cent annual rent cut in April, which could force more landlords to sell properties to plug income shortfalls. Other sales could happen where properties are deemed too costly to maintain because of their location or condition, or they are subject to low demand. Associations increased their rents by an
average of two per cent in 2015/16, the last year before the first annual rent cut imposed by the Government. The rent rise was in line with the 2.2 per cent increase in target rents.
Disposals
The HCA said the increase in disposals “is likely to be a combination of increased asset management activity by some providers, focusing on achieving value for money from
existing stock and securing resource for development programmes through the sale of existing assets”. The data release follows a warning from
Fiona MacGregor, executive director of regulation at the HCA, that associations risk damaging the sector’s reputation if they sell housing inhabited by tenants. A spokesman for the National Housing
Federation, said: “Housing associations regularly review their stock. In some instances, maximising the value and efficiency of stock will lead to disposals. This generates profits for them to reinvest in building new homes for rent as well as continuing to improve the already high quality of their existing stock.”
“Affordable rent stock numbers rose by 31 per cent between March 2015 and 2016”
General needs stock increased by 36,982
homes, some 70 per cent of the total increase in stock, while the number of non-social rented homes owned by HAs increased 7.5 per cent to 53,981. The HCA said this was “likely due to increases in market rental and student accommodation developments by a minority of providers”. Affordable rent stock numbers rose by 31
per cent between March 2015 and 2016 to 161,193. This was expected, as this was the main tenure funded through the 2015/16 and 2015/18 Affordable Homes Programmes. The statistical release was based on
responses from 95 per cent of English HAs, with 100 per cent of associations owning 1,000 homes or more responding.
www.housingmmonline.co.uk | HMM November 2016 | 15
Big rise in sales of social homes, but overall HA stock at record high
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