Housing associations see partial recovery in development spend

Spending by housing associations on development recovered in the three months to September but is still nearly a fifth below the levels seen last year, according to official figures.

The quarterly survey of registered providers conducted by the sector’s regulator found that associations spent £2.4bn on development between July and September, up 30% on the severely covid-affected quarter between April and June.

However, the figure was still 18% below the nearly £3bn reported in the same quarter of 2019. While the majority of construction sites re-opened during the quarter, “providers reported a knock-on effect from earlier closures, and progress being slower than anticipated due to covid-secure working practices,” the survey said.

The latest quarter saw a strong recovery in the volume of completions of open market and affordable home ownership (AHO) properties. Open market completion had fallen to a record low of just 347 in the quarter to June, but recovered to hit 1,005 units in the latest quarter – albeit well below the average of 1,563 completions seen each quarter last year.

The number of AHO completions more than doubled to hit 3,652, compared to just 1,663 in the June quarter. Despite a record quarter for sales, which reduced the number of unsold homes overall, the volume of homes unsold for more than six months hit a record high of 3,973. It now accounts for more than half of the total number of unsold properties.

Earlier in the year the government extended the Affordable Homes Programme in response to construction delays caused by the coronavirus pandemic, allowing housing associations to build out schemes in 2021-22 which would originally have to have been completed by next March.

The survey found that housing associations now forecast spending of £16.6bn on acquisition and development of homes in the next 12 months, back to the levels forecast prior to the onset of the covid-19 crisis. The survey overall found the sector remained “financially strong with access to sufficient finance”.

Will Perry, director of strategy at the Regulator of Social Housing, said: “The social housing sector continues to maintain a good financial position with forecasted improvement.

“Considerable challenges still remain, and providers will need to manage risk effectively to ensure that they can maintain services to tenants and plan and invest for the future.”