Affordable homes: Social landlords draw up plans to kick-start construction industry

Affordable homes: Social landlords draw up plans to kick-start construction industry

Plans to revive the depressed housebuilding sector by providing much needed affordable accommodation have been drawn up by some of the country's biggest housing associations in an attempt to rescue the government's flagging building programme.

Calling for radical measures, including new forms of renting to replace the drive for increased home ownership, they warn today in SocietyGuardian that with builders struggling to survive and lending drying up only the government can kick-start the market by taking a lead, "investing first" and bringing forward a multi-billion pound funding programme.In a report the so-called "G15 Group" of associations in London, by far the biggest housing developers in the capital with 400,000 properties under their wing and a building programme of 15,000 homes a year, say that with the housing market in "paralysis" and the government's housing policy in the "doldrums", fresh thinking is urgently needed. While the government has earmarked over £8bn for affordable housing over the next three years, only £3bn has so far been allocated. The G15 group claims that the remaining £5bn should be seen as "war chest" to break the current deadlock by investing quickly as an incentive for others to follow.

Their intervention comes as the not-for-profit associations, regarded by the government as a safe bet largely immune from the worst excesses of the credit crunch, are being forced to cut back development programmes for.....continued below

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rented homes – at a time when there is a growing demand for them with mortgages hard to come by. Some associations, reliant on house sales to fund social building, are clearly feeling the heat and urgently scaling down plans.

The country's 1,500 associations, with approaching 2.5 million social homes under their management nationally and a growing commercial portfolio, had been committed to matching the government's £8bn funding with £12bn from their own borrowings over three years.

But now many lenders they depend on for funds to finance new building are shutting up shop. Five of the seven main lenders, including the Nationwide Building Society – the biggest player – have withdrawn from the sector. A question mark hangs over the remaining two.

guardian.co.uk © Guardian Newspapers Limited 2008