Builders asking to tear up agreed contracts with others walking away from schemes completely

Homes England has missed its delivery targets for the second consecutive year, citing last year’s “deteriorating” economic conditions as the agency said housing associations were having to deal with more and more contractors walking away from jobs because of escalating prices.

The agency, in its annual accounts for the 2022/23 financial year, funded or supported the development of 33,713 homes completed in the 2022/23 financial year.

This meant the agency, which administers programmes including the £11.5bn affordable homes programme, delivered 86% of its main target for completions of 39,008 homes. This year’s figure was also down on the 37,632 number recorded the previous year.

house building

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Contractors are trying to renegotiate fixed-price jobs, Homes England said, with others walking away from schemes completely

It missed its target for homes started by 30%, with work beginning on 37,175 homes against a target of 52,967.

But it said associations were reporting more fraught relations with contractors “with firms requesting fluctuation clauses, re-negotiation of fixed price contracts and in some instances withdrawing from negotiations totally”.

It added affordable housing providers were facing a “perfect storm” of issues which “engulfed” development plans. “Build cost inflation, rising labour costs, material availability, building remediation issues and the duty to support tenants through a cost-of-living crisis hindered investment in new homes.”

The government is calling on housebuilders, housing associations and councils to contribute evidence as part of a routine review of whether Homes England is “delivering for the taxpayer”.

In May, Homes England published its new five-year strategic plan, under which it will shift away from a “purist” focus on housing supply towards regeneration, with performance judged by a much wider range of metrics including social value per pound of investment.