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Social housing construction

Work on social housing construction projects is expected to rise over this year and into 2020.

Increased support for shared ownership developments that were announced in the last Budget are expected to provide a stimulus. Projects disrupted by the 2017 Grenfell tragedy are also expected to begin moving onto site.

In the three months to July 2091, the underlying value of social housing projects starting on site surged 40% according to Glenigan’s construction market analysis.

Glenigan’s economics director Allan Wilén says: “A brighter outlook for project starts is forecast for 2019.”

After an 11% fall in the underlying value of social housing starts in 2018, a rise of 2% is expected this year according to Glenigan’s construction market research. A further rise of 3% is anticipated in 2020.

Top spenders

Registered social landlords (RSL) are gearing up for a rise in starts with a swathe of projects out to tender according to Glenigan’s data.

These range from a £22 million proposal for more than 200 homes in Plymouth by Clarion (Glenigan Project ID: 17297003) to a £7 million scheme in north London for 32 flats by Christian Action Housing Association (Glenigan Project ID: 16447272).

Glenigan’s construction analysis shows that Clarion is the biggest spending RSL in the 12 months to July 2019.

The group, which was created in 2016 through a merger of Affinity Sutton and Circle, had awarded work worth £301 million in the past year.

This spending placed Clarion in 14th place in Glenigan’s ranking of the overall construction industry’s biggest clients. Another three RSLs – Southern Housing, Notting Hill and Places for People – also feature amongst the construction industry’s 50 biggest clients.

Big RSLs build more

The major RSLs are all building and planning more work according to the latest edition of the Top 50 Biggest Builders survey by Inside Housing magazine.

The top 50 biggest RSLs built 38,000 homes last year – up 8% on 2017 – and are predicted to build 42,278 social housing units this year according to the Inside Housing survey.

Those same associations also anticipate a total of 146,000 completions between 2019-2022, which is an average of 48,667 units per annum.

In the pipeline

Glenigan’s data suggests that much of this workload may come from schemes already with planning permission.

The underlying value of social work gaining approval sagged in the quarter to July 2019, but this reflects RSLs reviewing and changing priorities and should not stop work rising.

Mr Wilén adds: “Progress of planned developments has been disrupted over the last two years as housing associations have reviewed the implications of the Grenfell fire for refurbishment and new build schemes.

“This is evident in an 11% decline in the value of apartment projects that secured planning approval during 2018. In contrast, the value of housing projects increased 5%.

“Overall, the value of detailed planning approvals for affordable housing projects stabilised last year. This is expected to support a modest improvement in affordable housing project starts during 2019 as projects reviewed in the wake of the Grenfell tragedy start on site.”

With a strong pipeline of approvals in place and RSLs planning to build more homes, opportunities should continue to emerge in the social housing sector over the next couple of years.

Further reading:

Glenigan Construction Forecast 2019-2020