Collectively we build 1 in 4 new homes in the Capital and have plans to build 93,000 new homes over the next 10 years. The Government has recently cut our funding significantly and set us a challenge to do more with less. Ultimately, hundreds of millions of pounds has been taken out of our development capacity. We are determined to stick to our values and continue to build by transforming our organisations to meet the challenge we have been set.
Our homes provide both a safety net for the Capital’s vulnerable and a springboard for working people with an aspiration to own their own home. We already build a mixture of affordable rented homes, shared ownership and homes for market sale to help meet the needs of all Londoners.
We don’t just build. Our job schemes help to boost family incomes, support aspiration and keep people off benefits. This work can only be continued if there is a strong a vibrant housing association sector in the capital and we want a constructive relationship with Government so that this can continue.
The Budget 2015
The Government has laid down a clear challenge to the housing association sector in the Budget by reducing the rents we charge to residents and welfare payments to many of our tenants. This income helps us to manage existing homes and build new ones so we will meet this challenge by looking at how we can further increase our efficiencies and continue to build, with less income.
Given g15 members have been responsible for building 1 in 4 new homes in the Capital if we collectively stopped building as a result of the cut in funding this would have a huge impact on affordable housing supply.
We are determined for this not to happen. Meeting the housing challenge in London is at the core of what we do and we will continue to build new homes by changing the way we operate.
We have always adjusted to change successfully. After grant was cut by 65% in 2010 we became more commercial to meet the shortfall. We use borrowing, our reserves and cross-subsidy from homes for sale to fund over 80% of the cost of each new affordable rented home. This has allowed us to build in record numbers while reducing the contribution of the taxpayer.
Earlier this year we committed to building 93,000 new homes over the next 10 years in London and the South East. This represented the largest building programme in London since the 80s. However this was predicated on the 10 year rent deal we agreed with Government that has now been changed after one year.
Lower rents are good for tenants but the Office for Budget Responsibility estimates that 14,000 fewer homes will be built as a result of the changes. All our members are reviewing their development plans to assess what can still be delivered in the current climate but we aim to limit any drop in development.
We can continue to develop but we will have to change the way we work with more shared ownership and open market sales to cross subsidise a smaller number of properties for affordable rent. This will be good for lower income working people seeking to own a home but there will inevitably be fewer homes built to house the poorest Londoners.
It is also likely that more development will happen outside of central London. Land is much more expensive in zones one and two and to ensure we can continue to build we must look at cheaper options.
Our collective values are defined by housing the poorest people in London and this will not change. However, the means by which we do this will have to change significantly if we are to meet the Government’s challenge.
There will be fundamental change within our organisations. Every g15 member is now carrying out a full review of their organisation looking at what needs to change to ensure they can continue to support residents and build new homes.
We are aiming to conclude these plans by the Autumn.
However we should not underestimate how tough this new settlement from Government is. There is a good chance that some smaller associations may not be able to rise to the challenge.
Housing Associations play a much wider role in communities than just housing people. Over the last three years we have assisted 10,404 people into jobs and spent over £11 million directly on employment and training initiatives.
We often work in some of the poorest communities in London. For example, AmicusHorizon‘s Motiv8 Lambeth is a £300,000, four year personal development programme supporting young people into employment, education or training.