NHF boss warns inflation may lead to development decrease

Kate Henderson has called for the government to provide certainty over rent-setting for housing associations or risk a dip in development due to inflation.

The chief executive of the National Housing Federation told a fringe session of the Conservative party conference that housing associations are currently facing “huge inflation”.

Henderson said: “It’s going to be really difficult because we are facing huge inflation. So our repairs and maintenance is currently at 14%.”

She said the housing association sector wants to build homes, but needs certainty over its future rental income in order to do so. She said: “Government could talk to us right now about how we can provide certainty and stability in terms of investment into the sector.”

She said housing associations would be up for talking to government about how they can be supported to deliver homes even if there is a contraction of the housing market. Housing associations build around one in four new homes in England each year. She said: “We cannot be up for that if our income is cut too far, too quickly with uncertainty.”

Social housing providers rent increases are limited by law. The settlement between 2020 and 2025 limited increases to the consumer price index measure of inflation for September plus one percent. However, due to the cost-of-living crisis, the government has proposed limiting the rent rise for next year to 5%, while there is no certainty of permitted rental income levels post-2025.

Hugh Owen, director of strategy and public affairs, said most large housing associations recognise the role they have in building new homes and said “it would be almost unthinkable to stop development” as it is in their DNA, although he conceded they may have to be some scaling down.

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Owen said: What we need to do is we need to look to government to create the conditions in which we can continue to develop, whether that’s through long term rental [certainty], or through subsidy and what the future of the affordable homes programme”

Natalie Elphicke, a Conservative MP and director of the non-profit Housing Finance Institute, said it was important to make sure the ‘incredibly profitable ’ housing association sector is developing.

She said: “We need to make sure that we’re looking at all the avenues and all the players to bring as much as we can to this excellent sector, but not just presume that what we’ve done in the past is always a way to do in the future.”