The ‘Closing the gap: Unlocking investment to address the UK's affordable housing challenge’ report, which comprises six months’ worth of research and exclusive interviews with social housing providers, was created to shine a light on the state of the affordable housing market now and in the near future.

Of the current market challenges affecting the market, the report identified three top ones hindering the delivery of affordable housing: construction costs, higher interest rates/cost of debt, and developers’ choice to refocus on managing, repairing and maintaining existing homes as opposed to delivering new properties.

According to the report, over a third of housing associations have reported an average funding deficit of 11-25% on individual schemes due to increased build and finance costs.

Moreover, housing associations have mostly chosen to focus on improving their current housing stock at the expense of uncommitted projects — overall spend on repairs and maintenance has jumped from £5bn in 2018 to £6.5bn in 2022.

•   Hilltop launches real estate funding and management platform
•   Paragon Bank lends £11.9m to Elevate Property Group for Derby residential scheme
•   Barberry acquires site for Worcestershire business park

This is expected to increase further because of the government’s review into the Decent Homes Standard, alongside increased scrutiny on disrepair in the social housing sector.

Professor Alex Lord, lever chair of town and regional planning at the University of Liverpool, commented: “It is registered providers that will be essential to delivering the new affordable dwellings that the country so urgently requires.

“Yet the findings of this research suggest that these providers are unable to fulfil their purpose; those surveyed expect a significant reduction in their development pipelines over the short-medium terms. 

“There is a considerable gap between aspirations and what registered providers expect to materialise over the coming years.”

Ed Clough, managing director at Octopus, concluded: “Registered providers have the skills, experience, and track record to deliver vast numbers of affordable homes, but are under significant pressure to invest in their existing homes.

“This is set against a backdrop of rising costs, a rent cap, and a freeze on the local housing allowance, which is squeezing registered providers’ surpluses and reducing the capacity to utilise surpluses to service the debt needed to build new affordable homes.”