The Week in Housing: research reveals why the next government needs to act quickly on a long-term rent settlement

Good afternoon.

This week, the largest landlords in London warned that the end of rent convergence and lack of a long-term rent settlement is putting 300,000 social homes at risk of becoming financially unsustainable .

Over the next decade, this will mean G15 members miss out on ￡2bn of resources. In the long term, this growing gap in rents risks making these homes financially unsustainable.

This is because the current rent settlement does not cover the full cost of maintaining and investing in social housing. This is met by other activities carried out by landlords, such as building new homes and generating income elsewhere, as well as borrowing.

Inside Housing understands that without rents being put on a more sustainable path, providers will likely face a deeply regrettable choice about when they may be forced to sell some homes in order to protect their ability to continue providing much-needed social homes.

The warning about rents comes as annual starts in London fell off a cliff in the last financial year.?So much so that mayor Sadiq Khan called for a?￡2.2bn emergency stimulus for housebuilding in the capital. Affordable housing starts fell 90% over the 12-month period.

The recently re-elected mayor of London said the money was needed as the government’s investment in housing was too low. He claimed the dismal number of starts in the capital was because of delays to ministers signing off the latest Affordable Homes Programme for London.

The government denied that this was the case.

While senior politicians point the finger at each other, construction insolvencies continue to impact the delivery of affordable homes.

Inside Housing revealed how almost 500 affordable homes are at risk of development delays after a ￡117m-turnover firm entered into administration .

ARJ Construction filed a notice to appoint an administrator at the end of April, leaving housing associations scrambling to find new developers for several projects already underway.?Sovereign Network Group, Southern Housing, Greatwell Homes and Dacorum Borough Council have all confirmed development has halted on sites ARJ was working on.

There were mixed development and financial updates this week.

L&Q reported a post-tax surplus of 268% last year, but new home starts fell 70%.?The large London housing association?posted a post-tax surplus of ￡147m for the 2023-24 financial year, up 268% compared with the ￡40m it recorded in 2022-23.

Bromford recorded a post-tax surplus of ￡67m for 2023-24, a rise of 5% from ￡64m the previous year. However, the landlord narrowly missed its development target for a second year in a row .

The Tewkesbury-headquartered housing association completed 1,191 new affordable homes in 2023-24, almost half (551) of which were for social rent. The figure represented a slight fall of 6% from the 1,265 affordable completions recorded in 2022-23.

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