London is hit by a record downturn in affordable housing

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London is entering the worst downturn in affordable housing supply in decades, as inflation, high interest rates and building safety costs hit the finances of housing associations.

“We warned the previous government about the coming abyss. said Fiona Fletcher-Smith, chair of the G15 group of major London housing associations, the not-for-profit group that builds and runs the majority of affordable housing in the UK.

Official data tracking new housing starts, a leading indicator of supply, all show a sharp decline in housing stock. London starting last year, which providers warn is getting worse.

The number of new affordable homes built fell 88% in the year to March, from 26,386 to 3,156, according to figures released last month – the lowest level since records began in 2015. Various data show that construction starts by local authorities and housing associations fell by 75% in the year to June, the biggest fall since 2015. 1990.

The lack of new affordable homes has increased homelessness and put pressure on local council resources. London boroughs spent a total of £4m a day on temporary accommodation for people facing homelessness in the year to March, a 68% increase on the previous year.

The supply of affordable housing – a broad category that includes schemes such as shared ownership as well as social rental properties provided by councils and housing associations at government-controlled rents – has reduce across the countrylargely due to high interest rates and rising construction costs.

The lack of these properties has pushed more people into the private rental sector, where rents have risen at a record pace this year. In London, high housing costs are said to push low-income residents out of the city and away from job opportunities.

Scandals surrounding the poor conditions of existing social housing have led to stricter standards for suppliers, who retreat from the new building for maintenance costs.

Will Jeffwitz, head of policy at the National Housing Federation, which represents housing associations, said these pressures were “worse in London than elsewhere” because of aging housing stock and costs. Operating costs are higher in the capital.

But he said the “main driver” of the crisis in London was cost construction safety work on high-rise buildings after the Grenfell Tower fire.

“London is hit hard by building safety costs because of the number of buildings and the cost of remediating them. Those two things combined are probably the biggest factor holding back the financing of housing associations in London, says Jeffwitz.

Fletcher-Smith, chief executive of housing association L&Q, said her organization alone faced costs of hundreds of millions of dollars to repair hundreds of high-rise buildings.

Housing associations are struggling to find money to buy the affordable homes that private sector builders are required to include in new developments, which has slowed back to these projects.

These issues highlight the government’s bond between its ambitions to boost housing supply, especially social housing, and its promises to speed up construction safety work.

The government has promised more support for building safety costs, which will be announced in the spring alongside a new funding scheme for affordable housing. It has topped up the existing scheme with £500m and offers housing associations to pay five years’ rent at a rate 1% above inflation.

According to the G15, government grants cover on average 12% of the cost of building new affordable homes in London, compared with 75% in 1990. The Conservative-Liberal Democrat coalition government During the 2010-2015 period, funding was cut by about two-thirds.

Andy Hulme, chief executive of housing association Hyde Group, said: “Social landlords’ finances have been severely damaged by four years of rent cuts and years of underpayments. inflation level”.

The Greater London Housing Authority, which oversees most affordable housing funding in the city, said just 582 homes were started in its housing schemes in the six months to January. 9. These numbers are up from 142 the year before, but still down 80% from the average for this time of year over the previous four years.

Mayor Sadiq Khan warned last month that London was facing its “toughest period yet in housing construction. . . since the 2008 global financial crisis”.

A spokesperson for the Mayor of London said: “Turning around 14 years of underinvestment will not happen overnight but the Mayor is committed to working closely with government to help create a better London, more fair for everyone. ”

The decline in construction starts is expected to be followed by a decline in home completions in the coming years, and recovery will take years.

“The current crisis is not the consequence of a short-term cause. Ian McDermott, chief executive of housing association Peabody, said a crisis of this depth and breadth has been building for years. “In the short term, I think the situation is likely to get worse.”