London has been hit by a slump in affordable housing

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London is heading for its worst slump in affordable housing supply for decades, as inflation, high interest rates and building security costs erode housing associations’ finances.

“We were warning the previous government about the coming cliff. We are taking it down now,” said Fiona Fletcher-Smith, chair of the G15 group of London’s largest housing associations, the groups not-for-profits that build and run the majority of affordable housing in the UK.

Official data tracking housing starts, a key indicator of supply, all show a sharp decline in London starting last year, which donors warn is getting worse.

Affordable housing starts fell 88 percent in the year to March, from 26,386 to 3,156, according to figures released last month – the lowest since records began in 2015. Details various shown starts by local authorities and housing associations fell by 75 percent in a year. through June, the longest fall since 1990.

The lack of new affordable housing has increased homelessness and strained local council resources. London boroughs collectively spent £4mn a day on temporary accommodation for people facing homelessness in the year to March, an increase of 68 per cent on the previous year.

The distribution of affordable housing – a broad category that includes schemes such as shared ownership as well as public rental properties offered by councils and housing associations at rents regulated by the government – has fallen. across the countrymainly due to high profits and rising construction costs.

The shortage of these properties has pushed many people into the private rental sector, where rents have risen sharply this year. In London, high housing costs have been blamed for pushing low-income earners out of the city and beyond job opportunities.

Insults surrounding poor conditions in existing public housing have led to stricter standards for donors, who to draw a new building to finance.

Will Jeffwitz, head of policy at the National Housing Federation, which represents housing associations, said the pressures were “worse in London than elsewhere” due to older housing stock and the high cost of living in the city. elder.

But he said the “main driver” of the crisis in London​​​​ is the cost of building safety function in high-rise buildings after the Grenfell Tower fire.

“London is very affected by the cost of building safety due to the number of buildings and the cost of maintaining them. These two factors together are probably the biggest causes of financial loss for housing associations in London,” said Jeffwitz ​​said.

Fletcher-Smith, who is the chief executive of the housing association L&Q, said his association alone faced hundreds of millions of dollars in costs to repair hundreds of high-rise buildings.

Housing associations are struggling to find the money to buy the affordable housing that private sector builders need to include in new developments, delaying these projects.

These problems highlight the government’s commitment to increase the supply of housing, especially public housing, and its promises to speed up the work of building security.

The government has promised more help with the costs of building safety, which it will announce within the year along with a new funding program for affordable housing. It has already supplemented the current program with £500mn, and has given housing associations a five-year rent payment at 1% above inflation.

Government grants cover 12 per cent of the cost of building new affordable housing in London on average, according to the G15, compared to 75 per cent in 1990. The Conservative coalition government -The 2010-15 Liberal Democrats cut funding by almost two-thirds. .

“Social landlords’ finances have been badly hit by four years of rent cuts and record low rents,” said Andy Hulme, chief executive of housing association Hyde Group.

The Greater London Authority, which oversees the city’s most affordable housing fund, said just 582 homes were started on its housing programs in the six months to September. The number was up from 142 last year, but still down 80 percent from the average for this quarter over the past four years.

Mayor Sadiq Khan warned last month that London was facing “the most difficult period for housing . . . since the global financial meltdown of 2008”.

A spokesman for the Mayor of London said: “Reversing 14 years of under-investment will not happen overnight but the Mayor is committed to working hand in hand with the government to help create a better London , unfair for everyone.”

It is expected that the fall of the start will decrease until the decrease of the home completion in the coming years, which will take years to change.

“The current problems are not due to a temporary cause. A crisis of this magnitude has been years in the making,” said Ian McDermott, executive director of the Peabody housing association. “In the short term, I think that maybe it will get worse.”