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The National Housing Federation has praised housing associations for stepping into the breach in a challenging environment – after the Government confirmed that associations are to build the vast majority of the nation’s new affordable homes over the next four years.

Ministers have revealed that housing associations will build around 90% of the 170,000 affordable homes set to be constructed nationally up to March 2015.

Across the South and South West, over £241m worth of investment has been allocated to build 12,721 affordable homes over the same period. This represents almost 14% of the funding available nationally, reflecting the challenges of the housing market in the region and demonstrating the strength of bids made by providers here.

David Ashmore, GreenSquare's MD and Chair of the South West Regional Committee (which represents the region’s housing associations) said: " Despite concerns about higher rents for new homes and uncertainties about the effect of changes to welfare benefits, the planning system and other key areas of government policy, housing associations remain committed to providing an ongoing supply of high-quality new homes for those who need them. Moreover, investing in homes supports existing and new jobs at a time when the economy needs to grow. This programme is important but we really need to be investing much more if we are going to tackle the growing shortage of affordable homes in the long term."

Under the new model, affordable homes will be part-funded through the charging of near market rents instead of through substantial capital subsidy. As has traditionally been the case, associations will continue to pay the overwhelming majority of the cost of new homes, through the raising of private finance.

The Homes and Communities Agency (HCA) estimates that of the 80,000 homes built under the new funding model, of which associations will build around 85%, the average property will be let out at 72-73% of the full market rate.

Jenny Allen, South West Lead Manager for the National Housing Federation said: “The fact that housing associations are being tasked with building the lion’s share of new affordable homes over the next four years is a strong vote of confidence a sector which has clearly demonstrated innovation and an ability to manage risk in difficult situations.

“Housing associations across the region have repeatedly stepped up to the mark in recent years and delivered thousands of desperately needed affordable homes. The latest figures from the government show there are over 148,000 households on waiting lists across the South West but this latest news means they can continue to do all they can to help tackle the nation’s housing crisis in the face of an extremely challenging environment.”

[published online 21/7/11]