Funding uncertainty prompts housing associations to cancel or delay new homes

Updated: 
Housing white paper

Housing associations across the country have been forced to cancel or delay plans to build thousands of new homes due to uncertainty over future funding.

Projects for 8,800 new housing association homes have been cut to 1,350 after the Government floated plans to change the way housing benefits are allocated.

It wants to cap the benefits of everyone living in sheltered or supported housing from 2019.

Under the scheme, cash that would otherwise have been spent on a case-by-case basis will be passed on to local authorities.

Individual councils would then be responsible for plugging the funding gap created by the benefit cap.

But housing associations are concerned about how funding will be allocated, and that they may never receive the cash, according to research by industry body the National Housing Federation (NHF).

The NHF surveyed 69 housing associations, which together provide one third of supported or sheltered homes in England.

Respondents blamed their cautiousness on uncertainty surrounding the Government's future funding model and cuts to support services for their tenants.

The Government's plans were first aired in 2016 and a green paper into funding for these services has been due this spring but has now been delayed until after autumn.

Among the casualties of the Government's plans are 71 new-build schemes totalling 2,185 new homes that have been postponed indefinitely.

Nineteen new developments of 803 homes have been cancelled completely.

Elsewhere, 22 existing supported schemes and three sheltered schemes, amounting to 132 homes, are facing closure.

A total of 7,450 housing association homes have been cancelled or postponed in response to the benefit cap plans, the NHF said.

The NHF estimates supported and sheltered housing saves the health service around £3.5 billion annually.

A spokeswoman for NHF said that disabled and elderly tenants or those with mental health problems would otherwise have to be cared for in hospital or residential homes funded directly by the NHS.

The Riverside's Homeless Veteran Scheme in Colchester, Essex, which aims to provide 50 supported homes for ex-servicemen, is one of the projects placed on hold because of uncertainty over funding.

Under the Government's current plans, the annual shortfall for people living in a one-bedroom flat with high levels of support would be £116 a week.

The annual shortfall in rent in the first year of the operation would be £260,000, representing a total of 49% of total rental and service charge income, according to housing association the Riverside Group.

A scheme in Rochdale intended to deliver 101 homes has also been placed on hold, as tenants will face a shortfall in housing benefit amounting to 25% of their rent and service charges in a one-bedroom flat, and 18% in a two bedroom flat.

David Orr, chief executive of the NHF, said: "With social care in crisis, the role supported housing plays in alleviating pressures on the NHS is ever more important.

"These changes have not even come in yet and they have taken 7,000 homes for vulnerable people out of the pipeline.

"The proposed changes in funding bear no relation to the real cost of providing this type of housing.

"It is time for the Government to put support housing on a secure and sustainable footing."

John Glenton, executive director of care and support with the Riverside Housing Association, said: "Landlords like us have strong partnerships with local authorities, and are poised to begin developing much-needed additional supported housing.

"While this uncertainty over funding continues, a question mark hangs over development plans which would support some of society's most vulnerable people. Along with other landlords, we urge the Government to resolve this quickly."

Shadow housing secretary John Healey said: "For almost two years, Labour has warned the Government that its plan for cuts to supported housing are set to have a terrible impact on accommodation for elderly and vulnerable people.

"These figures prove that this is already happening with thousands of vital new specialist homes on hold or cancelled.

"Supported housing is vital for elderly and vulnerable people across the country.

"Before the damage gets any worse, ministers must halt these crude cuts and work with the housing sector to produce a new plan to put supported housing on a sustainable footing."