Funding flexibility is key to support building new affordable homes, says NHF

The government should support building by housing associations and local authorities to help the UK economy, according to the National Housing Federation (NHF) and the Charted Institute of Housing (CIH).

Speaking at the NHF’s Brexit conference, representatives of the social housing sector called on the government to take pre-emptive action to combat a construction slowdown by introducing policies to encourage housing associations to build more homes as private developers build numbers fall due to post-Brexit uncertainty over future investment plans.

David Orr, chief executive of the National Housing Federation says: "The warning signs are flashing amber - housebuilding may be set for a slowdown - but housing associations have a track record of building through tough times. Demand for good quality rented homes remains high.”

The sector recommends other measures to boost the supply of new homes including government offering councils a refreshed deal which includes flexibility in caps that limit local authority borrowing for housing in return for specific commitments on new supply.

The NHF cited a Centre for Economics and Business Research analysis which suggests construction could slow following the Brexit vote because of the impact on the pound, financial markets and falling share prices in construction companies.

“Local authorities and housing associations are not dependent on shareholder sentiment,” says Terrie Alafat, chief executive at the CIH, which means they are “able to keep housing supply going when the private sector stalls without requiring extra government spending,” he continued.

The NHF notes that during the period of the financial crisis between 2007 and 2009, the non-profit housing association sector upped the number of homes it built by 22%, while private development dropped off 37%.

Housing associations want flexibility to be introduced into existing funding to allow them to build 300,000 homes to tackle the slowdown in construction by private developers caused by uncertainty over investment decisions by housebuilders’ post-Brexit.

The NHF wants the government to relax criteria on the tenure of homes so housing associations can respond to market conditions.

“Today, the sector puts forward a plan of action for the Prime Minister to keep the nation building and tackle the housing crisis. It is a plan that comes at no extra cost to the taxpayer. Uncertain times call for pragmatism and flexibility,” says Orr.

The sector has identified £7bn of planned funding that could be used in a different way and suggests that for every £1bn that the government invests flexibly, the sector could build 33,000 homes. It wants £2.3bn be used for making brownfield sites ready for starter homes to be built and £4.7bn to be invested in shared ownership properties.