NHF warns slowing down release of funds under £39bn SAHP could lead to 17,000 fewer homes over three years

The National Housing Federation (NHF) has estimated 17,000 fewer affordable homes could be built over the next three years due to Homes England’s request for providers to reprofile their bids under the £39bn Social and Affordable Homes Programme (SAHP).

Homes England, which administers £27bn of SAHP grant outside London, last month wrote to providers asking them to push back some of their expected timelines for grant payments so less money is drawn down in the early years. This is due to the Treasury limiting how much money can be spent each year in the early stages of the flagship programme.

NHF has today said its survey of 13 of the largest associations revealed 60% have reduced their development expectations through the SAHP in the early years as a result. Initially an estimated 70,000 homes were due to be started in the first three years, but this has now dropped by 24% to 53,000.

In a fresh letter to the chancellor Rachel Reeves, NHF chief executive Kate Henderson said building the homes initially planned would generate £3bn in economic growth and support 5,500 jobs.

Henderson, in the letter which is also signed by 21 chief executives of developing providers, said: “We urge you to bring forward more SAHP funding into the early years of the programme, so that the capacity created by your policy changes is unleashed and converted into starts on site

“There is a wider economic case for this approach. In housing market downturn, grant-funded social housebuilding will provide strong counter-cyclical support to the construction sector and wider economy, without crowding out private investment.”

Homes England has also now said grant will be paid when schemes start on site and not when land acquisition costs are first incurred as providers initially believed.

This means providers will have to borrow instead to fill the gap. One chief executive of a major housing association told Housing Today this would increase his organisation’s interest bill by more than £120m over the 10-year programme compared to estimates based on payment at land acqusition.

Amy Rees, chief executive of Homes England, last month speaking to Housing Today, said the Treasury releases the money for every government programme in tranches.

“The £27 billion that we’re managing […] doesn’t all get delivered in year one, so we’ve also got to make sure that people’s ambitions fit the profile that we can deliver, so that’s the work we’ve been doing, but I can certainly tell you people have stepped up and been ambitious,” she said.

The Greater London Authority, which administers £11.7bn of SAHP money in the capital, has written to bidders asking them to rethink their bids due to substantial “overbidding.” 

A spokesperson for Homes England said: “We are not slowing delivery - our focus is on accelerating it. The SAHP is designed to bring forward a strong pipeline of homes that meets the government’s ambitions and we continue to see bold and ambitious proposals from partners across the country.

“The overall funding envelope and its profile across the programme are set by government and we are working closely with partners to align delivery to that framework.”

An MHCLG spokesperson said: ”There have been no cuts to our £39 billion programme, which has attracted a strong response from providers and our delivery partners are carefully assessing bids so we can announce allocations as soon as possible.”

The Treasury has been approached for comment.