Featured Sector: Social Housing

Strong growth in social housing project starts and in sector output during 2013 was in the face of deep cuts in central government capital budget and the introduction of a new funding regime for social housing provision. The ONS has continued to record strong output growth during the first half of 2014, with output 31% up on the first six months of 2013 as projects started last year are built out.

However, Glenigan has tracked a weakening in project approvals and starts during the current year. The underlying value of project starts in the social housing sector in the eight months to August 2014 was 3% down on a year ago. This will progressively weigh upon sector output over the coming months and the long-term prospects for social housing provision do not look good.

The Government has substantially cut its capital budget for new social housing provision and is looking to social housing providers to tap private sources to fund a greater proportion of new housing projects with the additional cost met through higher ‘affordable’ rents. 

The chart below illustrates the shift in funding support provided by the HCA through its various programmes. It illustrates the marked shift in provision generated by the new funding regime. Following the initial hiatus seen in 2011/12, HCA funded housing starts have largely consisted of properties for affordable rent or home ownership along with market priced properties which help to cross-subsidise the projects. Very few properties are being provided for letting at social rent levels.