A big reform of Britain’s housing associations could hit the poor

Chris Walker

Head of Housing, Planning and Urban Policy

“In recent years this happy public-private relationship has looked less healthy, however. In 2014/15 ground was broken on 32% fewer new affordable homes (defined as those sold or let below market rates) than in 2009/10. Reduced funding from the government may be partly to blame, says Neal Hudson of Savills, an estate agent. From 2008-11 the grant for social housing covered about 40% of the total cost of development, but in 2011-15 it accounted for just 14%. According to Policy Exchange, a think-tank, some housing associations are getting around this problem by taking on extra debt—about £100,000 for each new affordable rented house, compared with £70,000 a decade ago. But it is tricky to do this on a large scale: banks are unwilling to extend much credit to housing associations.

“What can be done about all this? Greg Clark, the secretary for local government, has spoken of a “package of deregulatory measures”. Mr Osborne may be keen on a more radical plan: to sell the government’s £45 billion stake in housing associations to investors and thus free the associations from Leviathan’s clasp (and, perhaps, also reduce the grant they receive). Chris Walker of Policy Exchange estimates that with more freedom to set rents and manage their existing stock, housing associations could build 100,000 houses a year; that would allow the government to hit its informal overall target of 200,000 a year.”

Join our mailing list