New research shows potential influence of longer-term funding on affordable housing supply
9 September 2020
Doubling the duration of Affordable Homes Programmes could have a ‘transformative effect’ on the number of homes built by housing associations, new research has revealed.
The research Double or Quits, commissioned by the CASE group of housing associations, the National Housing Federation and Shelter, shows the Government’s stop-start approach to grant funding has inevitably contributed to a more cautious approach by housing associations when it comes to building their development pipelines and limited the number of affordable homes they have been able to deliver.
The Affordable Homes Programme - Government's principal method for grant funding new affordable housing - has typically lasted for three to five years, offering housing associations only short-term certainty over the availability of grant.
This lack of certainty has affected their land purchasing behaviours, the nature of sites they have taken forward and their ability to collaborate with others. The overall effect has been to limit the number of affordable homes they have been able to deliver and produce pronounced peaks and troughs in delivery.
This major new piece of research shows a longer-term approach, specifically doubling the duration of Affordable Homes Programmes from five years to ten, would help address these problems and offer a level of funding predictability more conducive to tackling the chronic shortage of affordable homes.
If administered flexibly and accompanied by adequate grant rates across a variety of tenures including social rent, it could have a transformative effect on housing associations' development capacity. Ten-year Affordable Homes Programmes would enable housing associations to:
- Purchase more sites without planning permission and use the potential savings on land price to supply greater levels of affordable housing
- Take on larger and more complex sites, increasing the proportion of affordable homes delivered and the pace of delivery
- Invest in their development teams so they are better resourced to take the lead role in development and make the most of their place-making skills, rather than acquiring homes from private developers
- Intensify existing relationships and forge new ones with building contractors, local authorities and private developers with benefits for the pace and scale of housebuilding.
Dr Stanimira Milcheva, the lead researcher behind the report and associate professor at the Bartlett School of Construction and Project Management at UCL said,
"When talking to chief executives and development directors from a wide range of housing associations, it became clear that the current grant funding model is not optimal and housing associations are desperately looking for some certainty regarding grant funding. There is a strong case for a longer-term approach which can lead to optimising the development pipeline of affordable and social housing provided by housing associations."
The report Double or Quits adds to a growing body of evidence suggesting long-term funding would benefit not only housing associations and their future residents, but also the housebuilding industry and the taxpayer.
Image: aerial photography of city with houses, Piqsels