Answering The Affordable Housing Challenge

The  affordable sector has had to weather the same challenges which have faced the housebuilding industry over the past 16 years, from the global financial crisis in 2007-2008,  Brexit and years of political instability, a revolving door of housing ministers,  to the pandemic, followed by the war in Ukraine.

At the end of 2024, there were 1.33 million households on local authority waiting lists across England, of which 336,366 of these were in London. This is the highest figure for more than a decade. This means at least one in 50 residents of the capital are currently homeless and living in temporary accommodation. Often, these are families in cramped and totally unsuitable housing or even in hotels.

London Councils estimates that boroughs collectively spend £4m every day on temporary accommodation – and this spending has increased 68% over the past year. That sum would help build a significant number of homes if it weren’t needed to provide emergency help. 

Funding new homes

There has been a fundamental shift in the funding landscape. There are different models of delivery for new entrants into the market, which are making it easier for institutional investors to commit capital. This has to be a good move, as all funding models (debt, equity, partnerships, JVs, or combination of all), need to be deployed to try and reduce ever-increasing housing need. 

This opportunity was identified by our parent company,  London Square, which has an outstanding record for delivering high quality homes of all tenures,  London Square recognised that a new funding model working with institutional investors and the GLA could hold the key to increasing housing delivery.  As a result, Square Roots was established.  We remain independent,  with a separate board and governance in place. 

Square Roots was established in 2021 and became a Registered Provider in 2022 - our first schemes in Kingston and Lewisham have won major awards. Recently, the London Borough of Southwark became the first London borough to make Square Roots an approved provider of affordable homes.  Since our registration in June 2022, we have 437 homes under management and 1,090 homes under construction across six local authority areas in London.  Of our committed 1,527 homes, 60% are rented and 40% are shared ownership. 

We have either deployed or committed over £577m of capital to date , including £140m of grant funding from the Mayor of London’s Affordable Housing Programme. Our parent company London Square continues to explore new opportunities for  Square Roots to make an even greater contribution to alleviating the affordable housing shortfall in Greater London. 

Our board has committed to 10,000 new affordable homes over the next 10 years across the capital. Square Roots generated more starts on site in London in 2024 than any other for-profit providers.  Square Roots has  committed to projects with a mix of  shared ownership, affordable rent and social rent, in the London Boroughs of Bexley, Lewisham, Kingston, Southwark, Waltham Forest and Barnet, with an active planning pipeline across Greater London. 

The  balance between financial and social objectives is challenging for all registered providers. At Square Roots, we are focused on providing high quality, well designed homes for our customers, to suit their housing needs and the communities in which they live.  We have a Customer Charter, which we established and developed with our customers. For each new project we build, we establish  a Customer Community Committee, led by our customers, for our customers, and serviced by our customer services team.  They meet quarterly to discuss all aspects of their homes, and services that they are receiving from us.  We are passionate as a team to provide an excellent customer experience.  We are fortunate financially that we have all new assets, which makes it much easier to deploy funds across homes that have been built to environmentally sustainable standards. We cover all affordable tenures and work hard with local authorities to make sure we are providing the types and tenure of homes that are in the greatest need. 

Key challenges

The sector as a whole continues to face challenges. I consider the top four to be :

- The cost of funding is now much higher and that needs to be factored into the viability of every development. 

- Balancing the higher build costs against grant funding. Construction costs in London are much higher than elsewhere. We need to build high rise apartment blocks while ensuring that the highest quality design and sustainability standards are achieved, alongside creating safe communities. 

- Building Safety Regulations in relation to buildings more than 18m high are adding to costs and delays in delivery. 

- Rent settlement: five-year plans can make it difficult to manage both investors’ expectations and our own business plan modelling. All the homes that are built out for Square Roots and its investors, meet the rent setting standards and requirements set out by our regulator.  

However, these challenges are insignificant when compared to the urgent need  to deliver more  affordable homes - vital to people’s welfare and stability. My personal passion every day is to find ways in which to overcome these challenges. Everyone deserves to live in a safe, secure, good quality home.