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’s capital budget and the introduction of a new funding regime for social housing provision. In the face of these pressures, sector activity has continued to strength. The ONS continued to record strong output growth last year with output rising 27%, although the sector has subsequently seen a weak start to the current with output 3% down during January and February against the same period in 2014.

Furthermore Glenigan is tracking a weakening in development pipeline with falls in project approvals and starts which is expected to depress sector output over the coming years.. The value of underlying project starts in the social housing sector dropped 1% last year, while the value of underlying detailed planning approvals fell by 15%

The Government has 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. The latter will be recorded in the official starts data as private rather than social housing starts and provide RSLs with an opportunity to cross-subsidise their social housing provision.  Housing starts on site by Tenure, England (excluding non-HCA London delivery)