93% fall in UK affordable housing construction

[Tony Gosling]

Sharp fall in new affordable housing construction

Just 454 affordable houses were started in six 
months, compared with more than 13,000 in same period last year
http://www.guardian.co.uk/society/2011/nov/22/fall-new-affordable-housing-construction?newsfeed=true

James Ball and Randeep Ramesh - guardian.co.uk, 
Tuesday 22 November 2011 20.01 GMT

Construction workers move a hoarding outside a 
development of flats in Newquay. Photograph: Matt Cardy/Getty Images

Delays caused by protracted contract negotiations 
between local authorities and the government have 
resulted in just 454 new affordable houses being 
begun in the first six months of 2011/12 – 97% 
fewer than in the same period last year.

Work began on 56 new affordable homes in London, 
22 in the north-east, Yorkshire and the Humber, 
and none in the north-west between April and 
September. More than 13,000 affordable homes were 
initiated during the same time in 2010, including 4,000 in London alone.

The figures released by the Homes and Communities 
Agency show the number of new homes being built 
in England each year is failing to keep pace with 
the number of new households being created, 
currently running at 230,000 a year. The lack of 
affordable new housing means 1.8 million 
households are on a waiting list for a social 
home provided either by the council or a housing association.

Ministers have put in place a new system for 
funding social housing, under which grants have 
been cut and replaced with income paid directly 
from tenants' benefits. This scheme will make 
"near market" rents – up to 80% of the market 
rate – available to housing associations to build 
new properties. In April the average weekly cost 
of housing benefit to housing association tenants was £80.

It has taken months to negotiate new deals and 
get contracts signed with housing associations, 
who have argued that they are taking much more risk than under old system.

Gill Payne, director at the National Housing 
Federation, which represents housing 
associations, said: "Earlier this year the 
government introduced a radically different model 
for funding the building of new affordable homes, 
which significantly reduced grant rates.

"Given the added financial risk housing 
associations are taking on under the new system, 
it has understandably taken several months for 
contracts to be negotiated and agreed with the 
government. The vast majority of contracts have 
now been signed. Housing associations are still 
set to deliver 170,000 affordable homes over the 
next three years – despite the tough economic 
conditions and the fact the government has slashed funding by 63%."

A spokeswoman for the Homes and Communities 
Agency, the government agency responsible for 
delivering affordable housing, said the delays in 
new starts were due to contracts under the new 
housing schemes not yet being in place, which she 
said "inevitably impacted on housing start 
delivery numbers for the first six months of 2011/12".

However, she said, good progress was now being 
made on contracts. She stressed new programmes 
took time to get off the ground, and said the 
agency anticipated a substantial upturn in new 
housing starts in the second half of the year.

David Cameron and Nick Clegg have announced a new 
£400m fund intended to lead to the building of 
16,000 new homes and kickstart the private 
housing market. The scheme was criticised by some 
housing groups who said only 20% of the new homes 
built under the scheme would qualify as affordable.
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