Housing associations fear low sales could seriously impair ability to build homes for affordable rent

Housing associations are still completing more than 1,000 shared-ownership homes every month, even though at least £1bn of them are lying empty or unsold.

The government’s social housing agency last week said 9,655 homes were unsold, with 3,677, worth £640m, vacant for more than six months. This equates to almost half of last year’s production of 21,538 low-cost home ownership (LCHO) homes.

The Housing Corporation also said 1,000 homes were still being built, and confirmed Building’s report last month that £1bn-worth were unsold. Many registered social landlords use the receipts from LCHO schemes to subsidise the building of houses for affordable rent. They claim the backlog could impair their ability to build more.

Sir Bob Kerslake, chief executive designate of the Homes and Communities Agency (HCA), due to launch formally on 1 December, promised help for distressed social landlords, with a “tailored approach” to each situation. “It might be possible to convert some homes to intermediate rental properties,” he said.

Kerslake also confirmed that the HCA would encourage the development of housing schemes that mixed affordable rented housing with homes at intermediate rents, in a bid to get housebuilding moving without having to rely on house sales.

The news came as the National House Building Council predicted that housing starts next year would fall to their lowest level on record. Figures for October (in full overleaf) show starts for private homes, at 3,454, are 77% below the same time in 2007.

However, the government is not expected to allocate any new funding to the housing sector in Monday’s pre-Budget statement, although it may allow more of the Housing Corporation’s three-year £8.4bn budget to be brought forward and spent this year.