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Social housing shake-up could release £125bn of extra funding

15 Oct 10 A radical shake-up of the affordable housing sector could unlock up to £125bn in investment for new homes, according to research by consultants EC Harris.

A radical shake-up of the affordable housing sector could unlock up to £125bn in investment for new homes, according to research by consultants EC Harris.

The analysis into the ownership and management of England's 4.2 million affordable homes was developed in response to Housing Minister Grant Shapps' call for more radical thinking and innovative approaches to bridging the public funding gap.

EC Harris has identified four sources from which it claims a total of £125billion could be unlocked:

  1. Up to £80bn could be released in equity from the appreciation in value of existing housing association and local authority stock.
  2. Up to £37bn could be available through replacing the public sector grant on the balance sheets of housing associations (in the form of social housing grant) with private finance.
  3. £6bn of additional borrowing could be leveraged through providing greater flexibility to manage housing portfolios more commercially, for example, by using half of the affordable housing stock that becomes vacant for intermediate rent.
  4. £2bn a year can be saved through achieving 20% operational efficiencies in the management and maintenance of stock.

EC Harris believes that unlocking just 10% of the potential £125bn it has identified could directly fund the construction of over 120,000 new homes.

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Rebecca Bennett Casserly, head of residential-affordable at EC Harris, said: “We believe that the adoption of a more commercial approach to the ownership and management of affordable housing, within an appropriate regulatory framework, would enable significant funds to be unlocked; funds which could be used to deliver more new homes to meet the housing needs of a wider range of income groups.

“We are aware that many clients in this sector are already seeking to address this challenge individually, but we believe an industry wide approach could have greater speed and impact.”

EC Harris carried out the analysis of the affordable housing sector during August and September 2010.

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