Social housing plans

What social housing plans are coming up in 2021 and how will they be funded?

Since 2010, just 464,000 new affordable homes have been delivered in the UK. This is a long way off the Government’s aim to build 300,000 new homes per year by the middle of this decade. In Scotland, the aim was to develop 50,000 new affordable homes by March 2021 but due to the impact of the coronavirus outbreak this target will not be met. The next Scottish Government, elected in May, will set a target for new affordable homes over the next Parliament (2021–2026). With these figures in mind, how are social housing plans for development shaping up in 2021?

In our annual Health of the Sector survey, we asked 104 social housing leaders about their development programmes – and how they intend to fund them. 

Here’s what they told us about their building plans, and the role that government policy and access to funding will play. 

What would be the most significant factors affecting the size of future development programmes?

What would be the most significant factors affecting the size of future development programmes?

What would be the most significant factors affecting the size of future development programmes?
What would be the most significant factors affecting the size of future development programmes?

As in previous years, most respondents said the scale of their developments will depend largely on the availability of government grants. Whether the nearly £20bn worth of grants announced by the UK Government in 2020 will be enough to provide real stimulus, only time will tell.

An improved planning system and access to available land will also be crucial for many. The Planning for the Future White Paper aims to simplify and improve the planning system in England but, as we’ve seen, the sector is far from convinced that it’ll have the desired effect.

The UK Government has made the sale of public land an important part of its ambition to build 300,000 homes a year by 2025. A recent Church of England report also acknowledged that its land could have a ‘significant impact’ on the housing crisis. The sector will be keeping a close eye on progress here.

How do you expect to fund housing development plans?

How do you expect to fund housing development plans?

Responses to our question on funding are consistent with those on plans for diversification in 2021. The sector is mostly sticking to what it knows best: funding its plans with government grants, bank loans, and the surpluses accrued to date.

This almost certainly reflects a change in the way social housing organisations feel about risk. After a tumultuous 12 months, the sector has reduced its appetite for risk and is focusing on its core activity: the development of affordable homes for sale and rent.

Have you used any of the following alternative funding sources?

Have you used any of the following alternative funding sources?

Have you used any of the following alternative funding sources?
Have you used any of the following alternative funding sources?

As shown above, three quarters of all respondents are planning to use only traditional funding sources for their development programmes. Of the 37 per cent who will explore alternative sources, the relatively ‘safer’ options of corporate bonds and private placings will be most sought after.

Do you think the Social Housing White Paper will make a difference to your social housing development plans?

Do you think the Social Housing White Paper will make a difference to your social housing development plans?

The UK Government finally published its Social Housing White Paper in November 2020, including formalising its response to the 2017 Grenfell Tower tragedy. Also known as the Charter for Social Housing Residents, it explains what every social housing resident in England and Wales should expect from their landlord. 

The seven-point charter focuses mostly on tenant engagement and customer service, but the points on safety and quality could affect the way new homes are developed. 

At first glance, the responses to this question look like a rejection of the charter. Just four per cent of people said it will have a significant impact, good or bad, on their development plans and more than half (56 per cent) think it’ll make no difference whatsoever. 

But in reality, most social housing organisations have probably already made many of the proposed changes, as most of them were published in the original green paper back in August 2018. 

The UK Government published its Planning for the Future White Paper in November 2020, in which Prime Minister Boris Johnson promised a new planning system for England that:

is simpler, clearer and quicker to navigate… [and] actively encourages sustainable, beautiful, safe and useful development rather than obstructing it.

Under these plans, section 106 (s106) agreements and the Community Infrastructure Levy would be replaced by a new, nationally set flat rate levy on developers. The UK Government says the new levy will generate more money for affordable housing development than the current system. 

Will the proposed government changes to planning requirements impact your development programmes?

Will the proposed government changes to planning requirements impact your development programmes?

A further 47 per cent say it will cause them to scale back their plans, a view that is perhaps not surprising given that 49 per cent of all affordable homes built in 2018/19 were the result of s106 agreements. 

That leaves just three per cent who will increase their development plans in response to the proposed changes, which raises fundamental questions about the sector’s buy-in to the Government’s approach. 

Our English respondents have shown a complete lack of confidence in these plans. Half either don’t know what effect these changes will have on their developments, or say they’ll have no effect at all. 

How will the proposed Affordable Homes Programme affect the sector?

How will the proposed Affordable Homes Programme affect the sector?

The second five-year phase of the Government’s Affordable Homes Programme (AHP) got underway in September 2020, providing grant funding to develop affordable housing for rent or sale. Around £11.5bn is available, with £7.5bn earmarked for areas outside of London. In Scotland £712m was allocated for the delivery of social housing in the recent Scottish Budget.

As expected, our respondents are divided on the AHP. Large parts of the programme have polarised opinion, from the geographical spread of funding (and what’s seen as a budget cut for London), to the focus on shared-ownership developments over homes for social and affordable rent.

But the sector will certainly welcome the allocation of £11.5bn in grants. In our 2020 survey, 91 per cent of respondents said the availability of government grants would be the single biggest factor in the size of future development programmes. The Government appears to have listened.

And finally, something that will affect all English and Welsh housing associations, in November 2020, the National Housing Federation (NHF) published its first new Code of Governance since 2015. English and Welsh housing associations that adopt the code from 31 March 2021 will have a host of new and updated standards to adhere to.

Among them is the reduction of standard board member tenures from nine years to six. In our conversations with the sector, we’d heard murmurs of discontent about this change.

Some worried they’d lose valuable knowledge and experience just as it had been established, and that it would take years for those coming in to reach the level of understanding of those leaving. Others were concerned about the impact this would have on succession planning.

What are your views on board tenure reducing from the default of nine years to six years?

What are your views on board tenure reducing from the default of nine years to six years?

But our survey results don’t support the anecdotal evidence. Just over a third (36 per cent) do expect the impact to be negative, but a two thirds majority think it’ll be a good or neutral change.

Perhaps the sector is embracing the positives and seeing this as an opportunity to freshen up the leadership more often with new faces, ideas and energy.

Interestingly, when we asked Scottish respondents if they’d welcome a similar code of governance in Scotland, 52 per cent said yes and 48 per cent said no. Divided opinions all round, it seems. These findings are perhaps not surprising after the introduction of the Scottish Housing Regulator’s new Regulatory Framework in 2019, which requires all Scottish Registered Social Landlords to submit an Annual Assurance Statement confirming they comply, or otherwise, with the relevant requirements of the Regulatory Framework, including the Standards of Governance and Financial Management.

Contact us for support and advice

Keith Ward

Our social housing specialists can help you and your board decide how to tackle the big governance challenges facing your organisation.

Contact Keith Ward, our Head of Social Housing, to discuss your challenges. 


Get more insight from our 2021 survey

Want to know more about how the social housing sector has fared over the last 12 months? Interested in what social housing organisations have got planned for the months ahead?

Read the next articles in this series for a snapshot of the health of the sector in 2021:

Coronavirus in the social housing sector

How has coronavirus affected the social housing sector?
Find out how services for social housing residents and value for money initiatives have been affected by the coronavirus pandemic.

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social housing and brexit

How has Brexit impacted social housing organisations?
With the transition period over and a UK/EU trade deal in the bag, we find out if the social housing sector is any clearer about Brexit.

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