Ever since the Spending Review was published in November there has been uncertainty about where this leaves the HCA’s Affordable Homes Programme. In finalising the UK Housing Review, out today, we’ve been disentangling what has happened. Here is a summary of our findings although, of course, some figures may change again as a result of the coming Budget or other announcements.
Let’s look first at the old programme that finished in March 2015. This eventually achieved 84,042 completions, 70% of them for Affordable Rent, 10% for social rent and the rest for homeownership. It represented a remarkable switch of emphasis, given that social rent made up two-thirds of completions in 2010/11. Although it drove down grant rates, it didn’t do this quite as much as expected – the outcome was an average grant of nearly £22,000 per unit compared with the less than £19,000 that had been expected.
Interestingly, the outturn is close to the figure (£21,091) for average grant levels agreed under the new AHP that began in April last year. By September, just over half the programme had been committed with just short of 60,000 grant-funded new homes expected, together with over 15,000 to be built without grant. This had begun to look like too high an average grant level if the programme’s target of 165,000 new homes were to be achieved. Nevertheless the split in output, around 20% shared ownership and the rest for sub-market rent, was also similar to the previous AHP.
All this changed in the Spending Review, which hid a nasty surprise for the current programme. It’s now going to be restricted very largely to the commitments already made. A recent estimate was that this would result in spending of just £1.8 billion compared with a planned £2.9 billion: more exact figures should be known soon once the HCA and GLA (which administers the programme in London) have done their sums.
What’s happening to the unallocated money? This is being added to the pot with the new finance that made the headlines after the Spending Review, planned to deliver massive new investment in shared ownership and in Starter Homes. The result (if it works) is that, of the government’s long-term target to secure the building of 400,000 ‘affordable’ homes between now and 2020, less than one-eighth (47,000) will be sub-market rented housing, while over 80% will be aimed at homeowners. The target of building 55,000 sub-market homes per year until 2020, set as recently as the 2014 Autumn Statement, has been abandoned after only twelve months. The Office for Budget Responsibility expects housing association output of new homes to reach over 40,000 this year, then fall away but climb back to 40,000 by 2020/21 (assuming, of course, that the new government likely to have taken office by then maintains the programme). By that stage, if current plans still apply, 90% of associations’ government-funded output will be for homeownership.
The AHP that finished last March was very different to its predecessor, the Labour government’s National Affordable Housing Programme, which finally wound down last year having produced a total of 173,900 homes, just over half for social rent. Yet the last AHP exceeded its target of 80,000 new homes, albeit that most were for letting at Affordable Rent and that it involved the conversion of over 76,000 social rented homes to higher rents, when they were relet. It changed the face of social landlords’ stock, with almost five per cent of ‘social’ housing now being let at Affordable Rents, quite a remarkable shift in just four years. Conversions from social rented lettings will of course continue, with more than 33,000 agreed to date by the HCA and GLA. Rules for the next, revamped AHP due to start in April and focussing on shared ownership, will presumably be announced in due course.
Remarkably, in a short time we’ve seen the virtual demise of building for social rent as well as the rise and near fall of its replacement, Affordable Rent.
Of course, the changes will take time to work their way through, and some building of both types of rented home will continue using landlords’ own resources such as capital receipts. A combination of conversions, right to buy and failure to replace stock saw the number of social rented homes fall by over 95,000 units in only three years, with losses now due to accelerate because of further conversions, the extended right to buy, high-value sales of council stock and regeneration of estates. But while the total of Affordable Rented homes has, partly as a result, reached over 123,000, its growth will now be curtailed. Proclaimed as a success by the coalition government when it replaced social renting, Affordable Rent is already being ditched by new government in favour of shared ownership and Starter Homes. Affordable Rent answered its sceptics by delivering the output expected of it over four years from 2011 onwards. In 2020, will the same be said after four years of the government’s new homeownership programmes?
Original blog: Social Housing