A call for grant funding – an open letter to Rishi Sunak

Last week, Tim Young, Equity Partner at John Rowan and Partners, sent an open letter to Rishi Sunak, calling for more grant funding for affordable housing.

If just 10% of the proposed furlough budget was spent on housing grants, it could deliver a further 100,000 homes – strengthening both the housing and construction industry while delivering much needed homes.

Dear Rishi Sunak

Even before the pandemic hit, new-build affordable housing schemes were feeling the pinch, with a slowing market and reduced funding.

The knock-on effect was being felt by the construction sector, too.

And now Covid-19 is putting extra pressure on projects, with many Housing Associations and Local Authorities putting schemes on hold, or Housing Associations pulling them altogether and looking to sell the land previously earmarked for social housing development.

This is bad news all-round. Demand for social housing isn’t going to go away. If anything, it is going to increase, as the four horsemen of the COVID apocalypse – lockdown, unemployment, repossessions and homelessness – all continue to gallop onwards.

Local Authorities all have targets for the provision of new housing and we think it is likely that most are going to see their targets slip away from their grasp as the pandemic and its impacts continue to reverberate around the sector.

The GLA, for example, has a goal of having started 116,000 affordable homes by March 2023. To achieve this, it needs to build 19,000 units a years. But between March and September of this year, it started work on only 1,634 properties, and only 1,201 have been finished.

This is likely to be the thin end of the wedge. Croydon has recently effectively declared bankruptcy, the second LA to have done so in recent times.  A report for the charity Shelter says that the Government’s target of delivering 300,000 homes a year in England by the mid 2020’s is being put at risk by coronavirus.

It estimates that in 2020-21, 171,000 homes will be delivered under the baseline scenario, a 33% fall from 2019-20 (84,000 fewer homes). If medical advances enable the economy to recover faster, it says 175,000 homes will delivered in 2020-21 and just 130,000 if the economy is harder hit (a 31% and 49% fall on 2019-20 levels respectively). The longer-term prognosis is not much better.

What’s to be done?

Our plea to you, the Chancellor of the Exchequer would be this: allocate additional grants for new affordable housing schemes, next week’s Spending Review is the perfect opportunity for you to make your mark on housing.

Grant increases of £100k or even £50k per social rented home could help restart stalled developments, as well as stimulating and encouraging new developments. This would generate jobs in the construction sector, provide much-needed homes, boost the local economy and help ensure a longer-term rental income stream for Housing Associations and Local Authorities.

The government says it is funding furlough to the tune of around £50bn. Just 10% of that directed towards the social housing sector could facilitate the building of 100,000 affordable homes. Just think what a difference this could make!

Yours sincerely

Tim Young

Equity Partner & Head of Innovation, John Rowan and Partners