Government changes to rent caps could have contributed to a fall in new housing registrations according to the National House-Building Council (NHBC).
New figures for August show registrations fell by 6% compared to 2014’s figures, down to 10,362 from the 11,037 measured a year previously. This is the first time since January that figures fell below last year’s respective monthly totals.
For the month, the private sector was marginally down by 1% (8,401 in 2015, 8,476 August 2014), while the public sector fell by a considerable 23% (1,961 versus 2,561 last August); this decrease follows six consecutive months of growth when compared to last year for the public sector.
Mike Quinton, chief executive of the NHBC, said: “We are now seeing registration volumes fall in the public and affordable sector after a good start to the year. This may be due to many housing associations holding back on developments in light of welfare reforms and the cap on rental increases. We will closely monitor this over the coming months, along with the private sector, as the house-building industry strives to build more new, quality homes that the UK needs.”
Chancellor George Osborne announced in July that the Government would impose 1% annual rent reductions in the social rented sector for four years from April 2016. At the time, the Office of Budget Responsibility (OBR) warned that the measure would “directly reduce social landlords’ rental income, and therefore their financing for, and returns to, investing in new house-building.”
Housing associations finance the construction of new homes by borrowing against their future rents, suggesting that a 1% reduction of rents will make it more difficult for them to build.
According to a recent survey from the District Council’s Network survey, the decision has also left district councils facing a £719m revenue gap. In an attempt to plug this hole, they have begun to cancel house-building plans, with over 5,000 homes already shelved.
Despite the fall in public sector house-building in August, the NHBC’s figures show an increase of 11% for the rolling quarter June – August, compared to the same period last year. A total of 40,101 new homes were registered in the UK during this period, up on the 36,149 new homes registered in the previous year.
