Double or Quits - New research released

Doubling the duration of Affordable Homes Programmes could have a ‘transformative effect’ on the number of homes built by housing associations, new research has revealed.

Double or Quits by the UCL’s Bartlett School of Construction and Project Management shows government’s stop-start approach to grant funding has limited the number of affordable homes housing associations have been able to build.

Commissioned by the CASE group of housing associations (of which Moat is a member), the National Housing Federation and Shelter, this major new piece of research shows doubling the duration of government funding programmes from five years to ten would facilitate a significant increase in the supply of affordable housing.

The Affordable Homes Programme – government’s principal method for grant funding new affordable housing – has typically lasted for three to five years, offering housing associations only short-term certainty over the availability of grant.

Successive programmes have had widely differing levels of overall funding, funding per home and the selection of tenures for which grant is available.

This lack of predictability has inevitably contributed to a more cautious approach by housing associations when it comes to building their development pipelines and limited the number of affordable homes they have been able to deliver.

Amongst other things, it has affected their land purchasing behaviours, the nature of sites they have taken forward and their ability to collaborate with others. This has been reflected in pronounced peaks and troughs in delivery, which have had knock-on consequences for development costs, build-quality and the productivity of the housebuilding industry.

Double or Quits shows a move to longer-term funding, specifically doubling the duration of Affordable Homes Programmes from five years to ten, would address these problems. If administered flexibly and backed up by a significant increase in funding for social housing, it could have a transformative effect on housing associations’ development capacity. Ten-year Affordable Homes Programmes would enable housing associations to:

  1. Purchase sites without planning permission more confidently and use the savings on land price to supply greater levels of affordable housing
  2. Take on larger and more complex sites, increasing the proportion of affordable homes delivered and the pace of delivery
  3. Invest in their in-house development teams so they are better resourced to take the lead role in development and make the most of their place-making skills, rather than acquiring homes from private developers
  4. Intensify existing relationships including joint ventures and forge new ones with building contractors, local authorities and private developers with benefits for the pace and scale of housebuilding.

The research arrives shortly after a report by the Cast consultancy showing that 10-year Affordable Homes Programmes could increase the productivity of the housebuilding industry by up to 70%. And it follows an earlier report by the Resolution Foundation, which argued that decade-long funding deals would increase the efficiency of public investment across a number of major policy areas including housing.

Double or Quits, therefore, adds to a growing body of evidence suggesting long-term funding would benefit not only housing associations and their future residents, but also the housebuilding industry and the taxpayer.

Elizabeth Austerberry, Moat chief executive and chair of CASE, said: “The need for everyone to have a place to call home has never been more important and we are desperately short of affordable homes. This report highlights the additional homes that could be built by housing associations if a longer-term approach to funding were adopted by the government.

“Housing associations would then be able to better plan for sustained development activity rather than trying to manage housing delivery in line with a series of short-term programmes against an uncertain future.”

Read the full report here.