Communities Minister announces changes to funding for new social homes
Date published:
Communities Minister Gordon Lyons today announced a number of changes to increase the delivery of new social homes across Northern Ireland.
Communities Minister Gordon Lyons today announced a number of changes to increase the delivery of new social homes across Northern Ireland.
Following a meeting with the Northern Ireland Federation of Housing Associations (NIFHA) and representatives of its members, Minister Lyons has announced an update to the amount housing associations will receive to construct new homes.
The Minister confirmed that, in the interest of securing the maximum possible number of new social homes from the Department’s budget, the proportion of grant paid by the Department for Communities for new social housing starts will decrease. For the same purpose the Minister has also announced reviews of this grant and the design standards to which new social homes are built.
Minister Lyons said:
“Given the challenging financial context, I have made it clear that we must take an innovative approach to the funding of social homes. I remain committed to bringing forward proposals on how we can build more homes with the budget available.
“These changes will achieve better value and more social homes for those who need them from the budget that my Department provides towards new social housing, a budget of over £177.5 million in this financial year.”
The changes will update costs and the proportion of grant paid since the rate was last changed in 2023. To provide certainty and stability to Housing Associations, the changes will govern the Department’s support for social housing new build from 1 December, 2025 until the end of the 2026/27 financial year. The changes take account of construction costs, inflation, rent levels and interest rates. As a result of the changes announced, the grant provided to Housing Association to enable it to start building a new social home will on average reduce from 54% of the total cost to 46%.
The Minister also highlighted how the use of Financial Transaction Capital (FTC) mechanisms could enable housing associations to access finance at lower cost. Proposals for the use of government land for building are under consideration, and would reduce the cost of new social homes.
Minister Lyons continued:
“Achieving the Programme for Government target of 5,850 social housing starts within this mandate will be extremely challenging given the constrained budget. Changes must be made; we must achieve more, for less.
“I am grateful to the Housing Associations for working in partnership with my Department and the Housing Executive to deliver the new build programme. I am confident that housing associations will continue to meet these challenging targets and to deliver for those most in need.”
Notes to editors:
- The Total Cost Indicators (TCI) system is used to determine the cost to deliver social housing: a benchmark is established of total average costs for acquiring and constructing social homes across the 11 Council areas. From the TCI, the level of government subsidy that should apply – the Housing Association Grant (HAG) rate – is then calculated. This is expressed as the percentage of TCI supported by HAG. Therefore, the grant paid to support social housing development is determined by two complex calculations: the TCI; and the HAG rate.
- The benchmark costs will increase by 13.7 percentage points on average to take account of changes to construction costs, inflation, rent levels and interest rates. However, the grant associated with the development of new social housing will reduce by 7.7 percentage points on average.
- What this means is that the calculation has taken account of relevant recent changes to costs and concluded that against these higher costs, and anticipated higher income from rent, the grant can reduce slightly.
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