Savills: Investment in existing homes and helping the vulnerable now higher priority for social landlords

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Investment in existing homes and providing more affordable homes for vulnerable and homeless people have significantly increased in priority for social landlords since the COVID-19 pandemic.

The Savills Housing Sector Survey of housing associations and local authority landlords, launched today at the Virtual Housing Festival, also found that supportive government policy and grant funding will be crucial to hitting the 2050 net zero-carbon target.

Lucian Cook, head of residential research at Savills, said: “This survey is one of the first barometers of the affordable housing sector since the outbreak of COVID-19. It shows that the sector is adopting a people first approach, with a greater focus on building social and affordable rent homes for households experiencing hardship and for keyworkers.

“This is perhaps unsurprising, given the building safety and compliance focus for housing providers at present. The tensions around the future of Section 106 – which has been responsible for around half of all affordable housing delivery in recent years – are also playing a role in the altered approach being taken by the sector.”

Since the outbreak of COVID-19, the survey, run in partnership with Social Housing magazine, found an almost 50% increase in the priority given by respondents to delivering social rented housing.

There was marginally less appetite to buy stock from developers and more desire (26%) from respondents to develop homes themselves.

On the 2050 net zero-carbon target, more than 80% of social landlords said capital grant funding is the most important source of funding for the investment required in their existing homes.

Although more work is needed to fully understand decarbonisation costs, initial work by Savills estimates an additional £4.3bn could be needed each year on top of existing stock investment plans to hit the 2050 target across the sector’s 4.34 million council and housing association homes.

Cook added: “We are working with landlords to explore a range of approaches to tackling the 2050 zero-carbon target to help better understand the likely costs and optimum technical solutions.

“There is a key role for the government here as well with respondents highlighting the need for supportive policy, and more than two-thirds of housing providers saying the availability of grant funding is the main challenge they face.”