Covid, Brexit and inflation sees Greenwich council’s homebuilding costs soar by £38m

A town hall will need to stump up an extra £38m for its new wave of council homes due to soaring costs.

Greenwich council is building hundreds of new council homes in a bid to slash waiting lists.

The homes, some family-sized, will boast low rents and eco-features to keep bills down.

But a cabinet meeting on Wednesday heard claims that Covid, Brexit and record inflation had added millions more to the cost of the project.

Council bosses have now agreed to plug the shortfall by using a mix of borrowing, cash from Right to Buy and a grant from the Greater London Authority.

The council planned a first wave of about 750 new homes, earmarked for completion this year – with a second phase of 1,000 homes to follow.

So far 42 homes have been built and 344 are under construction.

An initial £240m was set aside for the homes four years ago, which increased to £314.2m in December 2021.

And the total projected costs have risen yet again, now standing £352.3m, leaving a £37.7m shortfall.

A report by senior officers said external factors such as Brexit and the Covid-19 pandemic had affected the availability of workers and material, causing ‘extraordinary inflation’ and making it difficult to obtain fixed price tenders.

The decision to approve the further funding for council homes was voted for unanimously by the cabinet.

Labour councillor Aidan Smith, cabinet member for regeneration, said: “The council is committed to delivering the most council homes in a generation through Greenwich Builds – 750 zero or low carbon homes in phase 1 and a further 1,000 in phase 2.

“These homes are exclusively for people on the council’s waiting list with social rents well below market rents. Many are family-sized and wheelchair friendly.”

Cllr Smith said that funding for the project was sourced mainly by the Labour-held council, with the GLA also investing £42m to date.

Despite the extra cost, he said that affordable housing and helping people avoid fuel poverty remained a priority.

He added: “This long-term programme is a commitment by the council to the housing crisis that affects many of our residents. However, just like everyone else we are also facing rising costs – due to inflation, a shortage of labour and the war in Ukraine.

“Other councils and housebuilders are stopping development. This will worsen the housing crisis which is already having a devastating impact on people’s lives. In Royal Greenwich, we believe this is wrong and are not prepared to leave those in the most need continuing to be the ones that suffer.”

Pictured top: The decision to increase funding for Greenwich council’s project to deliver council homes was discussed at a cabinet meeting on Wednesday (Picture: Joe Coughlan)