In a heavily trailed Spending Review for the housing sector, there were no surprises this afternoon for housing leaders already expressing positive sentiments on an eye-catching £39bn Affordable Homes Programme – injecting £1.4bn of additional funding into house building annually.
There was also confirmation of a 10-year rent settlement for social housing that will be pegged to the Consumer Price Index (CPI) plus 1%, and news that a long-awaited consultation on rent convergence will also take place. G15 members have suggested that the suspension of the rent convergence process in 2015 has led to London’s 15 leading housing associations losing around £2bn in income over the last decade.
What was conspicuous by its absence in The Chancellor, Rachel Reeves’ speech, and in the accompanying detailed documentation, was a move to reclassify the social housing sector as ‘critical infrastructure’. This redesignation of the sector has been a vocal cause close to the heart of many housing leaders and there will undoubtedly be disappointment that a step widely supported by many in the sector was not taken on this occasion.
Market speculation, that also failed to make it into the Spending Review, was an idea to redesignate Homes England as a ‘public finance institution’ to enable it to create financial assets through major investments or large-scale lending. Although there was reference in the detailed review papers of ‘catalysing additional private investment to further boost house building by confirming £4.8 billion in financial transactions from 26-27 to 29-30. This additional capacity will be managed by Homes England in a manner consistent with the government’s Financial Transactions Control Framework.’
Lee Goodenough, Director at Harmony Fire, commented: “Housing sector leaders expecting a further ‘rabbit out of the hat’ moment during The Chancellor’s speech this afternoon were left wanting, however the scale of the £39bn investment in the Affordable Homes Programme had already seen universal approval as transformative and great news for the sector.
“This major investment in social housing will change the calculus for many organisations that have previously been scaling back their new-build programmes and redirecting funding to upgrading and modernising existing assets. Through this new commitment, housing associations and local authorities will now have the capital allocations to both continue on vital programmes to improve the safety and comfort of homes for residents, while simultaneously building new infrastructure to tackle the urgent housing crisis.”