Patrick FeeBBC News NI business correspondent
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Stormont has not met its targets on social housing
Funding for housing associations to build new social housing is to be cut, Communities Minister Gordon Lyons has announced.
Just under 1,000 homes are currently under construction which falls short of the 5,800 target set by Stormont.
Lyons said the changes “will achieve better value and more social homes for those who need them”.
But the shift will mean higher construction costs for developers, with some social housing projects likely to be abandoned or delayed, according to the Northern Ireland Federation for Housing Associations.
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The communities minister argues that the changes will achieve better value
With almost 50,000 people on a waiting list for social housing, there is broad political agreement that more homes need to be built.
On Monday, Lyons announced that less public money will be made available to the companies who build those homes.
Social housing is typically funded by a combination of grants from public money and loans from private finance. Grants are offered on better terms than commercial loans, reducing costs for housing associations.
Monday’s announcement will see the grant provided to housing associations to finance the building of a new social home fall on average from 54% of the total cost, to 46% from 1 December.
In some areas already struggling with housing shortages, including parts of Belfast, the grant will now make up just 42% of the cost.
The communities minister said that the “challenging financial context” required innovative thinking and that the changes “will achieve better value and more social homes for those who need them”.
He also pointed to the possibility of building on government land to reduce social housing costs, and another means of accessing finance as possible routes to increased house building, in spite of the funding cut.
Speaking to BBC News NI’s Evening Extra programme, Agnes Crawford, chief executive of Grove Community Housing, said it is “challenging news”.
“It means that we’re heavily leaning on private finance and the rents will go up as a result of that, which is not what you want in an area of social deprivation,” she said.
The chief executive of the NI Federation of Housing Association Seamus Leheney said the announcement is “concerning”.
“Certainly, for places like Belfast, Lisburn-Castlereagh where the rates have gone down to 42%, I think there’s a real serious need for housing associations to do the sums on that,” Leheney said, warning that “there could be a lot of schemes in these areas that would be at risk of not proceeding based on the current rates”.
He said there could be homes that just won’t end up being built due to the announcement.
Mark H Durkan, the opposition’s communities spokesperson said the announcement would see fewer homes being built and a deterioration of existing social homes.
“It’s hard to see how cutting their funding will achieve anything other than fewer homes being built,” he said.
“This cut will also impact the ability of Housing Associations to maintain existing properties and could lead to a situation where homes become inhabitable due to a lack of investment.
“This is the last thing we want to see with our social housing stock under such pressure.”
Borrowing
The announcement comes following Lyons’s appearance at a Northern Ireland Assembly scrutiny committee in which he said he had hit “a brick wall” in his discussions with the Treasury aimed at securing borrowing powers for the Housing Executive.
A UK government spokesperson said the latest spending review saw the executive provided with a record settlement of about £19.3bn per year.
As part of the review, the Treasury committed to begin immediate negotiations on a full fiscal framework for Northern Ireland, including consideration of the Housing Executive’s borrowing.
Lyons said he felt discussions with the Treasury were “going round in circles” and that it was one of his “biggest frustrations so far in my time in office”.
