Latest regulator survey for June quarter finds build programmes hit by ‘supply chain issues’

The amount spent by registered providers on new development in the quarter to June was a third below that forecast and significantly below what they had contractually committed to, according to the latest survey by the regulator.

Housing associations registered with the Regulator of Social Housing (RSH) spent £2.9bn on development between April and June, which was 14% below the £3.3bn they had told the RSH they were contractually committed to invest and 33% below the total forecast expenditure.

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The RSH’s regular quarterly survey said registered providers (RPs) had reported “development works being affected by the continued supply chain issues impacting the availability of materials and labour”.

The RSH’s report also said that “Pressures in the contractor market across the construction sector has also led to contractor insolvencies, resulting in further development delays.”

The £2.9bn figure was, however, in line with the amount invested in the previous quarter, and with the quarterly level of investment seen since the covid pandemic. Development expenditure averaged £3.0 billion per quarter over the two years prior to the coronavirus pandemic, the RSH said.

The report found sector currently expects to spend £18.2bn on new build over the next 12 months.

However, the quarterly report comes after a wave of housing associations have reported development outputs not meeting targets in the last year due to problems with supply chains, cost increases and planning.

The RSH’s report also found that the number of unsold affordable home ownership (AHO) homes had risen to a recent high of 6,831, with 2,437 unsold for more than six months. One provider, it said, had more than 1,000 units of AHO homes sitting unsold.

Will Perry, director of strategy at RSH, said the social housing sector remained financially strong, but that “wider economic trends are starting to present challenges”.

He said: “This is seen most clearly in cost inflation and material and labour shortages, as well as higher interest payments and potential changes to the rent ceiling. Boards will need to monitor these trends closely and have a strong focus on contingency planning to ensure they can respond quickly to emerging risks.”