London sees 91% collapse in mayor-funded affordable housing starts
Published on Tuesday (12 November), the Greater London Authority (GLA)’s Housing in London report said 2,358 affordable homes funded by City Hall got under way in 2023 until the end of Q2 2024.
That is 91 per cent down on the 25,658 affordable homes which made headway in the capital with GLA money in 2022-23.
In 2024, a grand total of 528 GLA-funded affordable homes began construction in the capital between March and September, data published on Tuesday also revealed. Of that number, 364 appeared to be for social rent.
Explaining the dramatic fall in affordable housing delivery, the GLA said financial challenges faced by housing associations and councils were one of ‘several reasons’, alongside rising borrowing and material costs.
The report also blamed ‘competing pressures from remediation and refurbishment’ of existing stock, and changes to regulation – in an apparent nod to the impact of updated fire safety regulations – as factors behind the collapse.
Source:GLA Housing and Land: Housing in London 2024 report
Responding to the GLA report, Bell Phillips founder Hari Phillips told the AJ: ‘The council housing sector has almost entirely fallen away, with live projects indefinitely shelved and very few new projects emerging.’
Phillips continued: ‘The figures coming out of the GLA reflect my own experience on the ground.
‘Like all housing developers, local authorities have been wrestling with the uncertainty, additional complexity and impact on costs resulting from the new fire regulations, in addition to rising construction costs and rising interest rates negatively impacting their borrowing. Furthermore, councils are suffering severe budgetary constraints in the aftermath of the COVID pandemic.’
Of the 2,358 affordable homes begun with GLA support in the 12 months up until the end of Q2 2024, council homes accounted for 939. The GLA said that was down from a high of 10,267 in the previous 12-month period for 2022-23.
Meanwhile, affordable homes funded from all sources, including both GLA and central government accounted for 15,768 homes in 2022-23, the same report said. That figure is 30 per cent higher than in 2021-22.
Steve Beard, partner at affordable housing appraisals firm Beacon Partnership, said the collapse in affordable housing starts showed that you can’t have affordable construction costs and ‘still have met the current quality, design, and performance criteria’.
He argued: ‘I would guess that the starts may be lower this year. It is not a popular view, but surely it is time to look at modifying design requirements with a view to reducing build costs [and] For the first time, I am seeing developments within zone 2 in London where the construction costs and fees alone [without land costs] are higher than the open market value of the completed home.’
Beard called for higher grant funding to keep up with the ‘approximately £200k to £250k of grant being requested to build one social rent home in London’.
At the end of last month, chancellor Rachel Reeves said the government would prop up the Affordable Homes Programme with a £500 million cash injection. The scheme, which was understood to be running out of cash, is due to be updated in the spring budget.
The GLA says it has received £4 billion from central government under the Affordable Homes Programme 2021-2026.
Sadiq Khan, the mayor of London, told the Centre for London’s annual conference this week: ‘If there was ever a time for more public investment in housing, then it’s now. And if there was ever a place to show how government still has the capacity to improve the condition of people’s lives, then it’s housing.’
Khan, whose GLA has been set a target of 80,000 new homes annually by the Labour government but delivered roughly 35,000 homes last year, has claimed to be ‘delivering the highest number of council homes since the 1970s’, with 23,000 council units started since 2018, he said in May last year.
Source:Shutterstock
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📅 Published on: 2024-11-15 10:35:00
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