Government cuts hit social housing targets and main building contractors

The recent cuts announced to the budget for social housing will not only affect tenants but will also have a negative effect on the UK’s construction industry. At a time when there is an increased demand on social landlords and a woefully small number of new homes being constructed in the UK this has come as a considerable blow. This will undoubtedly lead to a short fall of over a million homes in the UK at a time when there are five million people languishing on council waiting lists for homes. With the continued mortgage drought as banks continue to rely on tighter lending criteria to hold down gross mortgage lending. Social landlords have taken advantage of depressed site values and have been either acting as developers or extending their land banks. With the last few years the development and house building sector has been in hibernation and cash has been king so social landlords have acquired some good sites. Sites that perilously would have been difficult for social landlords to secure due to competition from developers. They have been able to purchase village and market town sites that in better times would have been snapped up by developers who could out bid them. This has been because commercial developers have the advantage of increasing specification that is not suitable or would not uplift the gross development value of social housing. Where a social housing developer will focus on value engineering a house builder or private developer will spend more if they can justify an additional return on the additional investment.