The influence of longer-term grant funding on affordable housing supply

09 September 2020

New reserach shows doubling the duration of government funding programmes from five years to ten would facilitate a significant increase in the supply of affordable housing.

This report was commissioned by the Consortium of Associations in the South East (CASE), the National Housing Federation and Shelter and published by Bartlett School of Construction and Project Management (UCL). 

Key findings

  • The Affordable Homes Programme (AHP) – Government’s principal method for grant funding new affordable housing – has typically lasted for three to five years, offering housing associations only short-term certainty over the availability of grant. Successive programmes have had widely differing levels of overall funding, funding per home and the selection of tenures for which grant is available.
  • This lack of predictability has inevitably contributed to a more cautious approach by housing associations when it comes to building their development pipelines and limited the number of affordable homes they have been able to deliver. Amongst other things, it has affected their land purchasing behaviours, the nature of sites they have taken forward and their ability to collaborate with others. This has been reflected in pronounced peaks and troughs in delivery, with ompletions skewed towards the end of Programmes, which has had knock-on consequences for development costs, build-quality and the productivity of the housebuilding industry.
  • A move to longer-term funding, specifically doubling the duration of Affordable Homes Programmes from five years to ten, would address many of these problems. If administered flexibly and accompanied by adequate grant rates across a variety of tenures including social rent, it could have a transformative effect on housing associations’ development capacity.
  • Ten-year Affordable Homes Programmes would enable housing associations to:
    • Purchase more sites without planning permission more confidently and use the savings on land price to supply greater levels of affordable housing
    • Take on larger and more complex sites, increasing the proportion of affordable homes delivered and the pace of delivery
    • Invest in their in-house development teams so they are better resourced to take the lead role in development and make the most of their place-making skills, rather than acquiring homes from private developers
    • Intensify existing relationships including joint ventures and forge new ones with building contractors, local authorities and private developers with benefits for the pace and scale of housebuilding.
  • Combined, these changed behaviours suggest the introduction of longer-term funding could help unlock a substantial – if as yet unquantifiable – increase in the delivery of homes across all tenures
    including those for Affordable and social rent.
  • A move to long-term funding would also increase housing associations’ ability to fulfil their traditional role in continuing to build through housing market downturns (sometimes known as counter-cyclical delivery). It would do so by accelerating the trend for greater levels of land-led development, whereby housing associations act as the lead developer on sites rather than acquiring homes from private developers more subject to buyer demand. And it would enable housing associations to build up longer and more consistent pipelines of development sites, which would help avoid some of the pronounced peaks and troughs in delivery that have been associated with previous Affordable Homes Programmes.

Download the full report here.