Four challenges facing affordable home builders

With the housing market in flux and private-sector confidence down, public-sector housing providers are under pressure to deliver the homes we desperately need. However, there are four major challenges facing affordable home builders: new fire safety regulations, net zero targets, the fallout from Brexit and now the Covid-19 pandemic.

These interrelated issues will fundamentally change the way we plan, design, build and maintain public-sector homes in the long term. To find a way forward, regional and local authorities and housing associations will need to consider all issues in the round: the sector will require new skills, knowledge, ways of working and finance models.

This webinar explored the impact of these interrelated pressures on housing development and finance in the capital, and took place in the wake of the November announcement of the Mayor’s new Affordable Homes Programme (AHP), 2021-2026.

The Programme provides £4bn of additional funding to developers who must meet ambitious new safety, sustainability and space standards to secure funds. Could this new programme help public-sector providers meet housing demand despite the major challenges they already face? During a lively debate, we discussed the programme and its potential impact on the public sector with our panel:

  • Rickardo Hyatt, Interim Deputy Executive Director for Housing & Land, and Assistant Director for Housing, Greater London Authority
  • Barbara Brownlee, Managing Director, Westminster Builds
  • Peter Denton, Chief Executive Officer, The Hyde Group

Webinar video

Housing sector resilience

“The public sector has demonstrated its resilience over the past 12 years,” says Rickardo Hyatt. Having weathered the 2008 financial crisis, more than a decade of austerity, overhaul of the welfare system, the Brexit referendum and Grenfell Tower tragedy to name just a few, Rickardo is confident the Climate Emergency and the Covid-19 crisis can also be overcome.

But it won’t be easy. Slashed local government budgets mean that boroughs, housing associations and the GLA must collaborate and act with one voice to secure further support from central government. The response to getting homeless people off the streets at the start of the pandemic shows what’s possible through joint working and the GLA’s Covid-19 Housing Taskforce hopes to work in the same way.

An immediate objective is to provide more certainty about what types of housing we need in the future, which is another major challenge according to Barbara Brownlee. Private sales in central London are way down, high rises in dense areas have become unpopular, vacant office and retail units are at risk of being permanently lost as they’re converted into homes without planning approval.

Brexit also has a part to play: threatening the stability of supply chains and the labour market at a time when there is greater demand for new materials, techniques and skills to deliver new net zero homes and retrofit existing stock. The cost of which could be prohibitive, and the City of Westminster estimates it will take at least £200m to bring existing homes up to new sustainability standards.

Borough builders

Despite the challenges, Barbara advocates for councils to take the lead in building more homes in their boroughs. A wholly owned housing company, such as Westminster Builds, can be agile and effective in times of crisis. The council backs the company, alleviating some of the cashflow concerns. They can also be tenure flexible – switching a development to build to rent when the sales market is poor and vice versa.

Barbara also feels that there is an opportunity to reimagine the city post-Covid, and local authorities are well-placed to lead the change. But funding this transition will need investment from Government, as well as new partnerships and skills.

Peter Denton also agrees that collaboration is the only way to build greater sector resilience. London’s housing sector is facing “a perfect storm” says Peter, which makes it difficult to look too far ahead. Peter believes we can only tackle these major challenges by first supporting the economic recovery. Without this, development viability is at risk due to costs of meeting important fire safety and net zero standards in the wake of Brexit and Covid-19.

Housing associations are all trying to solve these problems separately and can achieve much more by working together. For example, building net zero homes can be complex as net zero definitions and technology quickly evolve. Housing association partnerships can help pool specialist knowledge, skills and experience as well as balancing resources during peaks and troughs.

The same is true with local authority-housing association partnerships, as both share a common goal: “to build more, safe, energy efficient homes.” Hyde is currently working with Brighton & Hove City Council to deliver 1,000 new affordable homes from 2021 onwards, and this partnership could be a model for speeding up housing delivery in London as well.

Placemaking

Homes are a fundamental part of placemaking, says Peter, and can support local economic recovery. Many of London’s high streets are stretched or competing with nearby shopping centres. In a bid for distinct character and economic resilience, more affordable homes in town centres can help balance local economies and generate more vibrant places.

And with a larger number of vacant office and retail units, there is an opportunity to make that a reality. However, there are concerns that this approach could negatively impact on housing quality.

Rickardo’s housing team at the Greater London Authority authored the new Affordable Homes Programme and designed the prospectus to prioritise building quality, safety and space standards as well as delivering the number of homes required. But spread over six years, is the £4bn fund large enough to achieve its objectives?

No, says Barbara Brownlee. When costing the additional standards and dividing the funding between the boroughs, it isn’t nearly enough. Councils will need to buy up privately owned land to build the number of homes needed which is challenging in high land value areas.

Furthermore, the AHP and other public grants don’t apply to existing buildings, so the cost of retrofit is still shouldered by the home providers themselves. Peter argues that public grants save the government money in the long run and they should be more accessible, but the limitations on who can use them and how is a barrier to delivery.

Doing more with less

Public-sector collaboration is vital to meet these challenges with funding sources in limited supply. Collaboration could take the form of complex partnership agreements or it could be more informal reciprocal exchanges of knowledge and skills.

Future of London and others already provide platforms for borough and housing association teams to share common challenges, learn from one another and develop stronger relationships – see FoL’s Council-Led Housing Forum to find out more. Member organisations such as London Councils and G15 have also made it a priority to work more closely together in the future.

However it starts, big or small, collaboration is undoubtedly the best way to build trust and meet these major challenges together.


Learning From Crisis

This webinar was part of Future of London’s Learning From Crisis – a multi-media programme exploring Covid crisis response and recovery strategies with cross-sector practitioners, and a second event in a miniseries on housing delivery during the pandemic. Catch-up on the first event here.