Affordable housing – a solution for private developers?

by Josh Clark

17 April 2023

The question that is often asked by private developers in relation to affordable housing is “how can we reduce the amount of affordable housing on this site?”, but this has changed in recent months as developers look to sell more houses to housing associations.

It is no secret that the housing market has slowed, with Bellway recently reporting a 32% decrease in reservations compared to this time last year and Barratts reporting the same in the last quarter of 2022. Developers have seemingly identified housing associations as being able to offer them a solution by selling these unsold houses for use as affordable housing.

We have seen our housing associations clients receiving offers from developers of the remaining private dwellings on a development, where they have not been able to sell them or they need to meet sale targets ahead of their year-end, and likewise seen our developer clients offering housing associations the opportunity to purchase entire developments, particularly where these are situated in high rise buildings. This has benefits for both sides:

The developer benefits from a much quicker sale process, contracting with only one party and in the knowledge that they have agreed a sale price in an uncertain climate amidst rising costs. This immediate injection of cash allows them to build more houses elsewhere and continue with their build programme, as well as having a potential to reduce the amount of some payments that may be due under the section 106 agreement as they increase the amount of affordable housing on the site.

The housing association in turn receives an intake of houses that can be used for affordable housing, helping them to meet their targets and, particularly where the dwellings are on a site where they already own properties, allows them an easy expansion of their portfolio with reduced management and legal costs, when compared to acquiring houses on a new site.

It is difficult to say whether this will become a growing trend, or whether it is a short term solution to a short term problem as we approach the end of the financial year, but at EMW we are able to keep track of this as our large development team has expertise across the spectrum of private development, affordable housing, planning and construction and we will update you as we see more.

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