Special report: starts and completions funded by government fall 9% in devolved nations

The RSLs that completed more homes include Link Group (637), Castle Rock Edinvar (522) (which trades as Places for People Scotland), Home in Scotland (439), Kingdom (314) and Wheatley Homes (302). This is perhaps unsurprising, considering that these are some of Scotland’s largest housing associations.

Similarly, Scotland’s larger housing associations were also those that recorded high levels of starts, although these were at lower levels compared with completions. Wheatley Homes recorded the most starts with 397, followed by Sanctuary Scotland (280), Kingdom Housing Association (268) and Castle Rock Edinvar (189).

The data comes at a challenging time for housing delivery in Scotland. As part of its Housing to 2040 flagship policy, the Scottish government has committed to delivering 110,000 affordable homes over the decade to 2032, with at least 70 per cent being for social rent.

A central plank to this policy was the Affordable Housing Supply Programme (AHSP), through which housing associations receive grant funding, however this has been subject to successive cuts, which is hampering development.

Overall, Scotland’s draft Budget in December 2023 reduced the AHSP from £751.9m to £555.8m. This represented a 26 per cent reduction in nominal terms and a real-terms cut of £205m.

The main elements of the cuts were a reduction in capital grants for new social housing supply of £75m (down 14 per cent in real terms) and a £121m reduction in financial transactions capital for affordable homeownership (open market shared equity), charitable bonds and mid-market rent (down 72 per cent in real terms).

Susie Fitton, policy manager at the Scottish Federation of Housing Associations, describes Scotland as being in “the grip of a housing emergency”, with record levels of homelessness and children living in temporary accommodation, and 250,000 people on a social housing waiting list.

“Getting more social homes built is fundamental to addressing this emergency, yet the latest statistics show that the pipeline of new social homes in Scotland is slowing to worrying levels not seen since the 1980s,” she says. Uncertainty around future availability of grant funding, cost inflation and the huge challenge of responding to net zero are all contributing to this slowdown. Political choices must be made that support the development of affordable homes if this situation is going to improve.”

Ms Fitton adds that the sector is facing challenges and competing priorities. “Concerns about future funding, maintaining affordable rents during a cost of living crisis for tenants, tackling fuel poverty and responding to net zero in ways that don’t pass costs on to tenants are coupled with ever-increasing regulation and uncertainty about costs incurred through compliance.

“Housing associations have proved themselves time and time again to be adaptive, innovative and resilient and will again, but if the Scottish government is serious about eradicating child poverty, growing the economy and tackling the climate emergency, they must take decisions that actually help the sector to provide what we all need – a safe, warm, accessible and affordable home.”

Similar rhetoric can be heard from individual housing associations. In its accounts for the 12 months to 31 March 2024, Link Group, for example, flags the impact that cuts are having on its development capability.

“The reduction in the grant made available through the Affordable Housing Supply Programme by the Scottish government in 2023 for the 2024-25 period and the challenges faced by local authority financing are leading to reduced development forecasts for future years in Link’s non-contractually committed development programme,” it says.

Steven Henderson, chief executive of Wheatley, wrote in the organisation’s 2024 accounts that while it is on track to deliver its revised target of building up to 3,400 new homes by March 2026, Wheatley’s social landlords face “a difficult economic environment”.

“Our pipeline depends on the availability of government grant for new build projects and we are working with our local authority partners and the Scottish government to consider options to grow the supply of much-needed affordable housing,” he said.

Elsewhere, Social Housing looked at the number of social and affordable completions supported by the AHSP, which showed that affordable housing completions were up 12 per cent to 2,679 in 2023-24 from 2,385 the previous year. Social housing completions, meanwhile, were down 15 per cent to 6,835 from 8,081.

Wales

In Wales, homebuilding completions were down for housing associations and local authorities. Housing associations completed 970 homes in 2023-24, compared with 1,010 the year before. This represented a four per cent drop.

Local authorities, meanwhile, saw a 66 per cent drop in their completions to 65 for the period, compared with 193 the year before. The bulk of these homes were delivered in Flintshire (34), with the remaining homes built in Pembrokeshire (16) and Cardiff (11).

For housing associations, 217 of the total completions were delivered in Newport, as well as 115 in Caerphilly and 100 in Cardiff.

The UK Housing Review 2024 explained how Wales’ Programme for Government 2021 to 2026 had a strong emphasis on housing, with an aim to deliver 20,000 new low-carbon homes for rent in the social housing sector over five years.

In a chapter on housing expenditure authored by John Perry, policy advisor at the Chartered Institute of Housing, he highlighted how housing associations in Wales delivered 70 per cent of affordable housing supply, with local authorities delivering 20 per cent and other providers delivering the remaining 10 per cent.

Of the homes delivered by housing associations, 82 per cent were for social rent, while 72 per cent of the total affordable housing supply was grant funded. Of the total supply, 30 per cent was delivered via planning obligations such as Section 106.

In the review, Mr Perry said: “The allocation of social housing grant in the Welsh government Budget was £250m in the first year of the new programme (2021-22), then rose to £310m in 2022-23 and stood at £370m for 2023-24.

“These levels of grant funding reflect the shift towards more social rented provision, although this funding will still cover intermediate rent and shared ownership. An indicative amount of £365m has been confirmed for 2024-25, meaning that social housing investment in Wales has not suffered similar cuts to those in Scotland.”

The £365m figure was later increased by £5m in the final budget.

Still, similar pressures around build cost escalation and homelessness/temporary accommodation are being felt across Wales. As of 31 March 2024, government statistics showed there were 6,447 households placed in temporary accommodation across Wales. This represented an increase of 18 per cent on the 5,481 households in temporary accommodation at the end of March 2023. This was the highest figure recorded since Wales introduced new homelessness legislation in April 2015.

The UK Housing Review also highlighted additional pressures around rents, with Wales implementing tighter limits on rent increases replacing the previous policy of allowing rents to rise by Consumer Price Index plus one per cent. The Welsh government capped increases for 2023-24 at 6.5 per cent and has announced a cap of 6.7 per cent for 2024-25.

Northern Ireland

Completions and starts were both down in Northern Ireland. Completions fell three per cent to 1,403 (from 1,449) and starts dropped 23 per cent to 1,508 (from 1,956).

Our statistics here break down the totals by type, with new builds accounting for the bulk of the figure (as opposed to ‘off-the-shelf’ properties bought new from the open market or ‘existing satisfactory purchases’ of older homes). There were 1,385 new build starts and 1,241 new build completions.

Unlike the other nations, since the late 1990s in Northern Ireland, housing associations have been the only organisations that build social homes. Government support comes through Northern Ireland’s Social Housing Development Programme (SHDP), which is administered by the Housing Executive. Under the SHDP, housing associations acquire land and bring forward proposals that are then included in the programme.

The SHDP is funded through Department for Communities (DfC) capital grant. Grant levels are determined by total cost indicators, which are benchmark costs for all development stages (land acquisition through to construction). On average, these are currently set as 50 per cent public grant and 50 per cent private finance for each development proposal.

Commenting on the statistics, Seamus Leheny, chief executive of the Northern Ireland Federation of Housing Associations, says that while COVID-19 and the cost of construction had hampered the levels of completions, these figures surpassed targets set by the DfC.

However, he adds: “This year, the initial Social Housing Development Programme budget would allow for just 400 homes. Some additional in-year allocation may raise that to 500 homes. That’s just a fraction of where we need to be to start to make a dent in the waiting list.

“A major concern is that this level becomes the normal housing budget – when in fact it should be going the other way, with increased investment and targets moving towards 2,500 new homes per year.”

Justin Cartwright, Northern Ireland national director at the Chartered Institute of Housing, says that the figures reveal a “worrying trend” across the country.

“With around 48,000 households waiting for social housing, delays in development mean that more people will be stuck in temporary accommodation, including hotels and B&Bs – an expensive and unsuitable alternative to stable homes. Beyond the social impact, it’s economically short-sighted. Investing in building social homes is far more cost-effective than the rising expense of temporary solutions.

“Across all tenures, housing starts are at historic lows. This supply shortage is placing upward pressure on house prices and creating additional affordability barriers for those looking to buy. It’s crucial to recognise the long-term damage this housing drought can cause. One of the most pressing issues exacerbating the problem is the reduction in capital funding for new social housing. Reversing this trend must be a priority for the 2025-26 budget to ensure sustainable investment.”

Mr Leheny and Mr Cartwright both highlight a lack of investment in Northern Ireland’s water infrastructure, which they said is having a major impact on development capacity.

In Northern Ireland, public company Northern Ireland Water is the sole provider for water and sewerage services in the country. So rather than having water charging in place, Northern Ireland’s Department for Infrastructure allocates capital requirements, which Mr Cartwright says has led to underfunding over the years.

That in turn has resulted in more than 100 catchment areas in Northern Ireland that cannot take a connection to the wastewater and sewerage system, meaning social and private development has stalled because of a lack of water infrastructure capacity.

Mr Leheny adds: “Right across Northern Ireland, we are seeing housing projects stall because the wastewater infrastructure needs to be upgraded. This is not isolated, and it is becoming a rallying challenge to housing providers – both social and private.

“Northern Ireland Water has been calling for more investment to upgrade, but the level of funding required is significant at a time where public services are stretched. Where social housing providers are facing these issues, it can lead to increased development costs to find a solution, which is when the issue of viability of the project has to be considered. Delays in this, coupled with the length of time it takes to go through the planning process, can mean it takes an ongoing time to get work started on new homes.”

Click on the button below to download the data tables for ‘Starts and completions in Wales, Scotland and Northern Ireland 2024’*.

*This feature is only available to Social Housing subscribers

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