Robert Grundy, head of housing at Savills, comments:

The chancellor's £7 billion boost for house building is welcome, but how does the focus on home ownership and the housing benefit cap affect social landlords and their tenants?

Housing association executive teams had been expecting to be picking through the pieces of their tattered business plans in the wake of the chancellor's Spending Review and Autumn Statement. Instead they are scratching their heads and wondering if they have missed something.

The housing sector had been softened up for the 1% rent cut announced in the July Budget to be increased to a 2% cut for four years. Had this latter cut been implemented by George Osborne, anecdotal reports suggest this would have been disastrous for large numbers of large and small housing associations which would have been unable to avoid breaching loan covenants.

This would have devastated the contribution housing associations make to building new homes and would have rendered meaningless the prime minister's target of building 1 million homes by 2020. (Although I note the point made by Jules Birch on Inside Housing that the Office for Budget Responsibility calculates housing associations will build 34,000 fewer homes by 2020 than the 220,000 that would have been the case prior to the Autumn Statement and July Budget.)

Instead the housing benefit for new social tenants after 1 April 2016 will be capped at the prevailing rate of Local Housing Allowance - and even then only implemented from 1 April 2018. While this will save just over £500 million in housing benefit by 2020/21 and cause hardship for many households, it is not time for housing associations to be calling in the administrators.

The main reason for this is that most housing associations have already capped their affordable rents at LHA, so there is already little difference in the rent costs for a tenant in the private sector and their counterpart in the social sector. If the chancellor's idea is to 'better align the rules in the private and social rented sectors' then the best solution would be to de-regulate social rents. Social landlords would then be able to set rents that tenants can afford, either with the assistance of housing benefit or from their incomes.

Before social landlords breathe too large a sigh of relief, however, the focus very clearly now turns to housebuilding. The chancellor plans to spend £7 billion building 400,000 affordable homes - mainly for home ownership - by 2020 and housing associations must step up to the plate and help deliver this target.

There is plenty of incentive to do so. Analysis by the OBR suggests housing associations should expect to receive around 90% of the available funding for shared ownership. In total, the OBR expects housing associations in England will receive around £1.7 billion a year in capital grants from the government by 2020/21 - £1.5 billion of which will be for shared ownership. This compares with the £960 million associations would otherwise have received.

The recognition of the important role shared ownership can play in helping address the housing crisis in many parts of the country is welcome and echoes calls made by the Chartered Institute of Housing, the National Housing Federation, Orbit and Savills. The 135,000 shared ownership homes and modernisation of the tenure and the de-regulation of sales and re-sales will help and will make a contribution to help the 70,000 households that Savills research has calculated are excluded from market housing each year.

The impact of the plan for 200,000 starter homes by 2020 is less clear and will depend on the interpretation of new planning regulations by local authorities. However, the emphasis on homeownership products should assist the viability of schemes as such products generally have a higher value than affordable rented units. On the other hand homes for sale have a slower absorption rate than rental products. There is also a risk that government-backed starter homes simply cannibalise lower-priced homes aimed at first-time buyers that developers had already planned.

In addition, the focus on homeownership will not help the poorest households who will rely on a dwindling pool of social rented housing that will further be depleted by the extended right to buy - despite its introduction being slowed. The government still plans to fund the delivery of 50,000 affordable rented homes in this parliament and this will be boosted by 8,000 specialist homes for older people and people with disabilities. Yet, it seems unlikely this will be enough to meet housing need for those on very low incomes.

Further detail will emerge over the coming days and weeks that will alter elements of this initial analysis. The rumoured rent cut may yet emerge through the Department for Communities and Local Government, for instance. Also, there was no evidence of anything more on the hoped-for clarity on further de-regulatory measures for housing associations to expedite their reclassification as private sector bodies.

However, for the time being, the fundamental point seems unlikely to change: social landlords have been handed the opportunity to show they matter to a government determined to build more homes available to buy. Housing associations should not let this chance slip.

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