G15 urges government to leverage landlords’ private finance potential

Housing associations have sought more private capital after grants for new social and affordable homes have fallen over recent decades, from providing 75 per cent of housing association funding in the 1990s to just 12 per cent today, according to the report.

The G15 said that the government’s recent announcements on planning reform are a “very positive start” for more housebuilding in London. The report said that combined with the group’s development capability and long-term perspective, these reforms could be “transformational”.

However, the G15 said that with housing associations currently “stretched to their absolute capacity”, it would welcome indications that the government intends to introduce a long-term, inflation-linked rent settlement. The Financial Times reported in August that chancellor Rachel Reeves plans to introduce this in her Autumn Budget.

The G15 said that a long-term, inflation-linked rent settlement would give the sector the certainty it needs to build new homes alongside providing good services for existing residents. 

The report said that where rents are lower than the government-set formula for historic reasons, the government should introduce rent convergence – a mechanism for landlords to increase rents gradually over time.

The G15 recommended that the government ends the “short-termism that has dominated housing policy” by creating an expert body, the Affordable Housing Commission. This commission should scrutinise housebuilding targets and hold the government accountable to delivering them, the G15’s report said.

The group added that, to allow housing associations to continue building affordable homes and investing in sustainable communities, this should be followed up by “a clear, long-term, national housing plan that provides the sector with both funding and policy certainty”.

“We have the capacity to unlock billions in private finance, but we need the government to act now,” said Fiona Fletcher-Smith, chair of the G15 and group chief executive of L&Q.

“With the right support, we can play a key role in meeting Labour’s housing goals and ensure that London’s future is more affordable and secure for all its residents.”

Support for development is needed more now, after years of policy uncertainty, rising costs and the need to upgrade existing homes have forced housing associations to scale back new homes, according to the report.   

As a result, G15 members have seen a 76 per cent drop in housing starts in London in 2023-24, compared to the previous year.

In addition, G15 landlords have cut their development pipelines – covering all tenures and including areas outside London – by 56 per cent, from 14,658 homes in 2023-24 to 6,387 in the current financial year.

“The need for new homes in London is clear, but it’s essential that the government doesn’t lose sight of the importance of social and affordable housing in this plan,” Ms Fletcher-Smith said. “We’ve seen a decline in the number of new social homes in recent years, and this trend must be reversed. Housing associations are ready to step up, but we need government support to unlock the private finance that will make Labour’s target a reality.”

The G15 said in its report: “We are ready to do more. For years, we’ve been constrained by inconsistent decision-making and a cycle of uncertainty. Aided by better policy decisions, like the recent announcement on rent stability and changes to the National Planning Policy Framework, we can continue to improve existing homes, and provide the new social and affordable homes London so badly needs, attracting private investment while ensuring that the benefits go directly back to the people.”

In June, research by the G15 found that the failure to address the housing crisis is “starving” the country of at least an additional £7.7bn in social value.