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Benefit cap will ‘push’ housing associations to ramp up commercial homes

Proposed caps to UK benefits by the Conservative Party will “push” housing associations into delivering more homes for open market sale as they look for ways to fund their affordable units, experts have warned.

Chief executives of housing associations One Housing Group and Moat agreed that many groups would find it “difficult” to generate new affordable housing if benefits were capped at £23,000 per household – down from £26,000 at present – as proposed by the chancellor last month.

Speaking at the Conservative Party conference, Moat CEO Elizabeth Austerberry said the “biggest source of steady income” for housing associations was their rent, which could be jeopardised if the benefit cap decreased.

“I suspect it will make it very difficult to build two to three-bedroom homes in our areas and this will again push us to open market sale”

Elizabeth Austerberry, Moat

“We have 50 per cent of our residents who are on housing benefits and [I was] speaking to a larger housing association today who had 80 per cent of residents on housing benefits,” she said.

“So for [companies] like that it will be difficult to generate new housing, particularly if they haven’t got a strong housing market to generate homes.

“I suspect it will make it very difficult to build two to three-bedroom homes in our areas and this will again push us to open market sale.”

Many housing associations fund their social housing through homes for open market sale.

One Housing Group CEO Mick Sweeney agreed that the proposed benefit cap was a “big issue” for housing associations looking for ways to deliver new homes.

“About 50 per cent of our rental income comes from residents who are on benefits of some sort, and the risk of that is noticed by banks.

“And if the banks get nervous they won’t lend us money, and if they won’t lend us money we can’t build new homes.”

A member of the Hyde Housing Group said his company currently had a 50:50 split of affordable and commercial homes but questioned whether this even split would remain.

“From a London perspective we’re going to have to look at green belt… but this isn’t about building and concreting over the countryside”

Mick Sweeney, One Housing Group

He said: “The question is can social exist without commercial? Well it can’t on the numbers we’re operating at the moment.

“We have to be able carry out commercial activity in order to be able to meet our social objectives.”

Speaking to Construction News at a separate fringe event, Peabody chief executive Stephen Howlett said the 50:50 split between affordable and commercial homes would soon change across the board, seeing an increase in commercial units to fund social homes.

Mr Howlett also noted the need to free up more land for the delivery of homes in London and the South-east.

One Housing Group’s Mr Sweeney said freeing up brownfield land was “one answer” to constraints on land supply but that green belt would have to be released.

“From a London perspective we’re going to have to look at green belt… but this isn’t about building and concreting over the countryside.”

He said green belt land around the M25 was around 20 per cent “scrap land” and, if released, could relieve some of the pressure on the London housing market.

“We’ve got to look at parts of the green belt that really aren’t of any immediate value to anyone,” he said.

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