London landlords spending nearly 50% above national average on existing homes
Housing associations in London are spending nearly 50% more than the national average on each existing home, partly due to post-Grenfell remediation work, official figures have revealed.
The landlords’ average capital reinvestment per home rose by 13% to £1,680 in the year to the end of March 2024, the Regulator of Social Housing (RSH) reported.
By contrast, the average capital spend per home in the North West was £1,010. The average in England was £1,160.
The amount of high-rise blocks in London is part of the reason for the higher average spend.
Twelve landlords in England have at least 10% of their homes in buildings that are taller than seven storeys. Of these, eight are in London.
“Many of these homes have been subject to a higher volume of remediation work in recent years,” the RSH said in its annual Value for Money (VfM) report.
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“This high level of spend on the existing stock means that many London providers have had to make off-setting savings,” the English regulator added.
In the capital, the average spending per home on new development fell by 8% to £4,650.
Many of London’s large landlords have been cutting their development plans due to higher spending on existing stock, including repairs and tackling damp and mould.
However, their investment on new development was only beaten by the South East, which had the highest spend, and the East of England.
Fiona Fletcher-Smith, chair of the G15 group of London’s largest landlords and chief executive of L&Q, said the figures underlined the “unique cost pressures in maintaining affordable and social housing” in the capital.
She added: “That’s why we urge the government in the upcoming Spending Review to commit to a 10-year rent settlement and rent convergence, provide equal access to the Building Safety Fund, and announce a substantial successor to the Affordable Homes Programme, as well as funding for warm and decent homes.”
Despite the tough environment, 49,287 new social homes were delivered by housing associations in England, which is the highest level since 2021.
Elsewhere, the regulator’s report found that that the average headline cost to operate a social property rose by 12% to a record £5,136.
However, the sector is forecasting that cost increases will fall below the rate of inflation over the next five years, the RSH said.
The combined figure for investment in existing stock and new development rose to £14.6bn, up from £12.5bn, which was also the highest level since the value for money metrics were introduced in 2018.
Will Perry, director of strategy at the RSH, said: “The sector as a whole is proving resilient at grappling with competing demands on their resources, investing record amounts on new and existing homes, though inflation and high levels of repairs works are driving up unit costs.”
But he added: “It is crucial that landlords challenge themselves on their efficiency so they can continue to build more homes and deliver better services for people who need them.”
The RSH’s VfM report is an annex to its global accounts, which this year showed that housing associations spent a record £8.8bn on repairs and maintenance.
The VfM report included figures from 193 of the largest housing associations in England; it did not include for-profit providers or councils.
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