The number of affordable houses being constructed has seen an enormous decline. Figures have recently shown that in the last six months just over 450 affordable homes have started to be constructed. Compared with the figure for last year this is a decline of over 12,000, a remarkable 97% drop in construction levels.
The Homes and Communities Agency are the body responsible for releasing the figures and they have shown that the number of affordable houses is simply not keeping up with the number of new households that are being created, the figure of which currently stands at nearly 250,000 a year. Not having affordable housing means that nearly 2,000,000 people in the UK are still waiting for a house to be provided by their local Housing Association or council.
A new system has been put in place by ministers for funding social housing and this means that the number of grants being offered to build affordable housing has fallen. The money for their construction is now being taken from the benefits that the tenants would normally receive and this means they are paying rents that are close to the market rate, something that many of them can’t afford. Current estimates say that social housing is currently costing around 80% of a typical market rate.
Housing associations have been working for months to sign new contracts and get deals going under the new system, the reason for the slow process has been that there is much more risk associated with the properties now that the funding system has changed.
The director of the National Housing Federation is Gill Payne, who has stated, “The new system by the government has significantly reduced the number of grants being offered for the construction of affordable homes. This means that housing associations are facing a greater financial risk and therefore it is taking a longer time for contracts to be drawn out.”
“Fortunately, most of these contracts have now been completed and over the next three years it is estimated that over 150,000 homes will be created for social housing. The government have been forced to cut the budget for social housing because of the state of the economy.”
The homes and communities agency, each is responsible for providing affordable housing and has commented that, “It’s inevitable that there are going to be delays as this new system gets put into place. Progress is being made on contracts being established and we fully expect there to be a significant increase in the number of affordable homes being constructed in the next six months.”
The coalition government have said that nearly half a billion pounds is being put aside for the construction of 16,000 homes, it is hoped that these will kickstart construction in the private market. Under the scheme, however,only one in every five of the 16,000 homes is going to be ‘affordable.’