Commuted payments and the PRS sector have failed to make up the shortfall in social housing starts in London since 2011, according to EG’s London Residential Market Analysis (LOREMA) report.
Key stats
36% – affordable starts compared to private from 2012-16
44,000 shortfall in social starts compared to 74% average between 2004-11
£1,058,745,588 generated in S106 contributions 2012-16
14,600: the average number of affordable homes that could be built from this
£3,193,117,500: the amount needed to build 44,000 homes
£2.1bn: the shortfall in S106 payments
16,894: the shortfall in social home provision 2012-16 including inferred S106 spend and PRS provision.
All starts
Private v social starts shortfall
Since 2011, social starts have massively failed to keep up with private starts, leading to a shortfall of 44,000 homes in total.
Payments in lieu
Between 2012 and 2016, £1,058,745,558 has been generated in affordable housing payments, but this would still only be sufficient to generate about 14,600 starts, well short of the 44,000 shortfall.
Adding inferred commuted payment starts to actual social starts still leaves a large gap between the “expected” levels of affordable housing of 74%. However, the four-year shortfall still stands at 30,173.
Starts and commuted payments
Adding all the PRS starts to this helps bring it closer – and reduces the four-year shortfall to 16,894 homes – but still fails to meet previous levels.
Furthermore, since 2015, the number of PRS homes started in London has slowed, a results of fewer PDR conversions and higher pricing stalling investment.
How the PRS stacks up
Nigel Evans, head of EG residential research, said: “PRS starts spiked in 2015 due to the influence of permitted development, which peaked due the looming 2016 deadline for ending the scheme that subsequently never arrived.
“We could be on the cusp of another surge in PRS homes, with permitted development recently extended to include the change of use of light industrial buildings with a maximum space of 5,381 sq ft.
“But conversions are unlikely to match numbers previously seen, and land values remain high. As a result, it will be up to the mayor’s affordable housing policy to increase alternative starts.”
Commuted payments and the PRS sector have failed to make up the shortfall in social housing starts in London since 2011, according to EG’s London Residential Market Analysis (LOREMA) report.
Key stats
36% – affordable starts compared to private from 2012-16
44,000 shortfall in social starts compared to 74% average between 2004-11
£1,058,745,588 generated in S106 contributions 2012-16
14,600: the average number of affordable homes that could be built from this
£3,193,117,500: the amount needed to build 44,000 homes
£2.1bn: the shortfall in S106 payments
16,894: the shortfall in social home provision 2012-16 including inferred S106 spend and PRS provision.
All starts
Between 2004 and 2011 in London, social housing starts were on average 74% of private housing starts. Since then, they have accounted for just 36%.
EG’s research looks into whether the social shortfall can be made up by commuted payments and the rise of the PRS (though it does not assume the PRS to be affordable).
Private v social starts shortfall
Since 2011, social starts have massively failed to keep up with private starts, leading to a shortfall of 44,000 homes in total.
Payments in lieu
Between 2012 and 2016, £1,058,745,558 has been generated in affordable housing payments, but this would still only be sufficient to generate about 14,600 starts, well short of the 44,000 shortfall.
Adding inferred commuted payment starts to actual social starts still leaves a large gap between the “expected” levels of affordable housing of 74%. However, the four-year shortfall still stands at 30,173.
Starts and commuted payments
Adding all the PRS starts to this helps bring it closer – and reduces the four-year shortfall to 16,894 homes – but still fails to meet previous levels.
Furthermore, since 2015, the number of PRS homes started in London has slowed, a results of fewer PDR conversions and higher pricing stalling investment.
How the PRS stacks up
Nigel Evans, head of EG residential research, said: “PRS starts spiked in 2015 due to the influence of permitted development, which peaked due the looming 2016 deadline for ending the scheme that subsequently never arrived.
“We could be on the cusp of another surge in PRS homes, with permitted development recently extended to include the change of use of light industrial buildings with a maximum space of 5,381 sq ft.
“But conversions are unlikely to match numbers previously seen, and land values remain high. As a result, it will be up to the mayor’s affordable housing policy to increase alternative starts.”
To send feedback, e-mail alex.peace@egi.co.uk or tweet @egalexpeace or @estatesgazette
