Housing associations should be handed a slice of government money earmarked for housebuilders to avert a post-referendum crash in the output of homes, the National Housing Federation has said.
The call from the NHF – which represents the associations – was based on a think tank report arguing that they could keep building even if a Brexit-induced recession meant private housebuilders could not make effective use of housing funds, which have been reserved for shared ownership and Starter Homes.
Analysis for the NHF by the Centre for Economics and Business Research warned that a construction slowdown may be looming, with housebuilder share prices, exchange rates and financial markets all hit by post-referendum uncertainty.
CEBR housing infographic
It said the £4.7bn earmarked by the government for building shared ownership homes, and the £2.3bn for remediation of brownfield land for Starter Homes, could be diverted to associations to build homes of any tenure if a downturn meant builders could not use it.
The federation also said local authorities should be freed from restrictions on borrowing to build homes in return for meeting commitments on new supply.
NHF chief executive David Orr said: “The warning signs are flashing amber – housebuilding may be set for a slowdown but housing associations have a track record of building through tough times. Demand for good-quality rented homes remains high.”
Chartered Institute of Housing chief executive Terrie Alafat said: “There are already signs that the housing market is beginning to weaken. It is critical government takes action now to ensure the supply of new housing we need to address our national housing crisis does not falter.”
The CEBR report A Role for Housebuilding in Times of Economic Uncertainty said post-referendum economic uncertainty meant it would become “challenging” to meet the government’s Starter Homes and shared ownership targets.
“Housing associations have greater flexibility [than housebuilders] to move more rapidly, not least due to their sustainable business models,” the report said.
“Having housing associations assume a greater role in supply during the period of uncertainty would also help prevent the loss of momentum in the delivery of new homes that has been built up since the recession.”
It said the decline in housebuilders’ share prices was “an early indication of the loss of investor confidence in the UK construction sector and property market as an investment prospect…the future remains highly uncertain and the risks are on the downside”.
An analysis in Construction News this week by Gleeds partner Stuart Senior said the referendum vote had been “a hammer blow” for the industry.
However, housebuilder Barratt Developments said earlier this month it retained a positive outlook for the housing market but had contingency plans in place to reduce risk arising from referendum uncertainty, including reassessing land approvals.