Warning over threat to affordable housing

NEWCASTLE and Northumberland could be at risk of an affordable housing crisis due to escalating building costs, a think tank has warned.

Analysis from the New Economics Foundation (NEF) claims both areas’ supply of social and affordable homes could suffer massively as a result of labour and materials shortages, Covid-19, and Brexit.

When new housing developments are approved, local councils can require developers to make a percentage of new-builds available at affordable prices or pay towards building some elsewhere.

But the NEF says rising building costs are set to make it financially unviable for companies to do so without construction becoming unprofitable, while calling for the government to reform the planning system to address the issue.

The think tank predicts that both Newcastle and Northumberland would see social and affordable housing supply secured through the planning system, via the use of Section 106 legal agreements, completely eliminated as a result.

By contrast, areas such as Bath, Cambridge, and Kensington and Chelsea are at no risk at all according to NEF’s study.

However, councils in both North East areas studied hit back at the warning – with civic centre officials in Newcastle insisting there was “no evidence” to support it.

Northumberland County Council said that it believed that rising build costs were “temporary”.

A spokesperson added: “The council is optimistic that affordable housing will continue to be delivered by the development industry on schemes already committed, and on new schemes.

“Indeed, during the current financial year 2021/22, around 70 affordable homes have been completed in Northumberland, while construction has started on a significant number of others.”

Rose Grayston, senior programme manager at NEF, said: “Communities in the North and Midlands could be left without the same tools as southern councils to prevent homelessness and sustain construction jobs, making it harder for these places to bounce back from the ravages of the pandemic. It’s critical that the government acts to reform the planning system in England to deliver the homes communities want and need by diversifying the housing supply.”