A figure exceeding £10 billion has been revealed by the National Housing Federation’s (NHF) chief executive, Kate Henderson, as the estimated cost for housing associations to fix the fire safety hazards brought to light by the Grenfell Disaster and bring property portfolios within new safety brackets.

The works will include recommendations from the Hackett Review and the first phase of the Grenfell Tower Inquiry, which will have an impact on properties housing nearly six million residents in total.

The figure released is 25 times greater than the £400 million initially budgeted by the government for the removal of cladding. The shortfall between the budget and the estimated cost is set to leave a giant hole in the pockets of housing associations, with the government also being subject to increasing pressure around the bailout of private leaseholders which could cost over £2 billion.

The impact

The increased costs could mean a drastic drop in the development of new affordable housing, as well as halting the upgrades of current developments (including the services to leaseholders) as a result of housing associations having to divert funds.

“…there is likely to be detrimental impact on housing associations’ ability to build much-needed new affordable homes and provide services to their residents and their local community.” - Kate Henderson, Chief Executive, National Housing Federation

Until there is any kind of certainty as to how the government will assist, some major housing associations are halting new developments altogether—the costs of the essential works is predicted to raise of a bill of £4.3 billion for the 15 largest housing associations in London alone.

What next?

Next week’s budget announcement will hopefully provide some welcome relief for housing associations. The NHF and local campaign groups are calling for urgent assistance to set-up a ‘building safety fund’ to assist in covering the upfront costs of essential works, so housing associations can continue to carry them out as safely, and as quickly, as possible.

The government has previously ignored calls for an emergency fund to be set up; this year’s budget announcement will be more crucial than ever for the social housing sector. Any funding relief for the removal of cladding, or other dangerous materials, could help prevent the delay of much needed affordable housing.

Watch out for our live budget updates on Twitter (@CapsticksSH) and our upcoming insights where we will explore how this year’s budget will shape the next 12 months for the housing sector.