The government’s affordable housing programme is being threatened by a construction capacity crunch with too few contractors able to tender for new projects, the Housing Forum has warned.
The cross-industry network surveyed housing associations in its membership, each developing between 200 and 1,000 homes and with a portfolio of 250,000 homes between them. The Forum’s contractor members also contributed their views.
It revealed that social landlords are struggling to find contractors to bid for their projects: rather than getting in five or six tenders only two or three were willing to bid.
Landlords reported that more than 25% of contractors on their tender lists were not returning completed bids because of capacity issues.
And respondents also said that prices had risen by 5% outside of London and between 10% and 20% in London.
The Housing Forum is now concerned that delays, price hikes and bottlenecks will affect the delivery of much-needed new homes to be built under the government’s 2011-2015 Affordable Homes Programme, due to deliver 170,000 new homes by March 2015.
New schemes similar to William Cotton Court in London could struggle to find a contractor today as capacity to take on new work reduces
Stephen Gee, senior partner at construction consultancy John Rowan & Partners, has seen the problem at first hand. He told CM that the pattern of contractors becoming far choosier is being repeated across the social housing sector. “As well as the upturn in the private sector, a looming deadline for receiving grants in the 2011- 2015 affordable housing round has created a bottleneck and housing providers are struggling to attract all the bidders they would like,” said Gee.
The Forum argues that many HAs were unable to put schemes together in 2011 and 2012 due to depressed market conditions. Some developers negotiated reduced affordable housing numbers, leaving HAs to seek out alternative projects and sites. Coupled with a new grant funding regime, in reality it would not have been possible to deliver earlier, the Forum says.
Now, the rush to develop has coincided with an upturn in commercial housebuilding activity stimulated by the Help to Buy programme.
The Forum is now calling on the government to extend the deadline for the programme by 6-12 months, or risk a further reduction in the supply of affordable housing.
An extension would enable the market to respond efficiently and reassure providers they can still receive a share of the £1.8bn grant funding, it says.
Shelagh Grant, chief executive of The Housing Forum, said: “Artificially imposed timescales are not getting the best out of the programme. Our indications are that many housing providers have not even signed contracts yet and we urge the HCA to rethink its deadline. We desperately need more new homes, and landlords need the grant to help deliver them.”
The cross-housing body also warns that a rush by housing associations and contractors to meet the HCA’s deadline is leading to poorly designed solutions.
