Housing associations in the United Kingdom anticipate a 22 percent reduction in the number of new affordable homes built over the short term due to increasing costs.

A new study conducted by Octopus Real Estate has found that increased build and finance costs have led to a third of housing associations reporting a deficit of 11 percent to 25 percent on individual affordable housing development schemes. This is making it harder to launch affordable housing development projects that are financially viable.

In a report outlining the research called Closing the gap: Unlocking investment to address the UK’s affordable housing challenge, the manager states that much of the increasing costs problem is down to inflation, decarbonisation work, the cost of debt and regulation.

Debt facilities were particularly popular in the past decade in the United Kingdom as social housing providers sought to make the most of a low-interest rate environment. The new higher interest r