Bright prospects for social housing construction

New social housing construction for housing associations and councils is helping to keep contractors busy during the current slowdown in the private housing market.

The bright opportunities in the sector are reflected in the September Glenigan Construction Review. It notes that social sector housing project starts in the three months to August climbed by 63% to a total value of £2,569 million and accounted for almost a fifth of all housing starts.

Of these, social sector apartments worth £1,412 million were up 12% on a year ago.

Spotting opportunities

The major housebuilders have been quick to spot the opportunities offered by the social homes and mixed tenure sectors as rising interest rates have hit demand for new private homes.

Last month Bovis Homes’ parent company Vistry Group unveiled a shift in its strategy towards the social housing sector and to working in partnerships with housing associations and local councils. Having integrated its recent £1.3 billion Countryside Properties acquisition, the company now sees itself as the leading provider of affordable mixed-tenure housing. Chief executive Greg Fitzgerald said: “The group delivered a robust half-year performance despite the challenging macro-economic conditions with partnerships continuing to see good demand demonstrating its market resilience.”

One of the largest businesses in the sector, Morgan Sindall, saw a 31% rise in revenues at its partnership housing arm to £373 million in the first half of this year, driven by an increase in contracting work. The company – which trades in the sector as Lovell Partnerships and focuses on working with local housing and housing associations – saw significant ongoing activity in partnership housing and is increasing the amount it invests in the business.

With an order book in the sector up 27% on a year ago and worth some £2 billion, the group says its partnership housing clients are increasingly looking to award work either through frameworks or through direct negotiation.

Scope for new contracts

Glenigan data highlights numerous examples of significant social and mixed tenure partnership housing projects of varying sizes in the pipeline which offers scope for new contracts.

In Great Yarmouth for example, detailed plans have been submitted for a £25.25 million social housing scheme at Repps Road (pictured) involving 146 houses, 20 flats, and 10 bungalows involving a mix of affordable and private market homes for Broadland Housing Association. Work is due to start in autumn next year and run for 20 months (Project ID 23296613).

Refurbishment specialists can also find work in the social homes sector. In Rochdale, a project manager has been appointed and work is due to start later this year on the £58 million Seven Sisters Flats Refurbishment involving various blocks of social housing flats for Rochdale Boroughwide Housing. The scheme is at the pre-tender stage and due to run for 12 months (Project ID: 23258420).

The social housing sector offers significant scope for contractors to win work on frameworks. In Sheffield, applications to tender have recently been extended to mid-October for the £700 million EN: Procure – Framework for New Build Housing (2023-2027) which involves hiring multiple contractors for residential and commercial buildings. The framework is set to run for four years from next autumn (Project ID: 23182600).

The sector is also creating new work for contractors focused on smaller projects. In Hertfordshire, applications to tender are currently being invited for a £5 million scheme of 14 social housing units for St Albans City & District Council where work is due to start later this autumn and run for 15 months (Project ID: 23232751).