Clarion Housing Group, the UK’s largest provider of affordable housing, told The Guardian it is set to build 1,800 fewer affordable properties over the next five years as a result of the crisis.

Another large provider, which asked to remain anonymous said it would build 2,000, or 15%, fewer homes in the next decade because of the crisis.

The largest providers of cheaper housing in London have also estimated they will need to spend £3.6bn on post-Grenfell repairs in the next 14 years, an amount that could provide more than 70,000 new homes.

The impact of the cost of replacing combustible cladding and other fire safety defects discovered on thousands of homes in recent years is being raised with Michael Gove, the secretary of state for levelling up, housing and communities.

Chancellor Rishi Sunak is also being urged to extend the £5bn building safety fund in the spending review on 27 October.

Rob Lane, chief property officer at Clarion, said: “Housing associations across the country are redirecting spending towards fire remedial works and away from building new affordable housing. We estimate we will build 1,800 fewer affordable homes over the next five years as a result of remediation costs.”

Simultaneously, private leaseholders are facing larger bills from developers and freeholders to amend fire safety defects in flats not covered by the government fund, which applies to buildings over 18 metres in height with combustible cladding.

Several building owners and developers are rejecting calls from ministers to fund works that run into millions of pounds per building.
Labour and a coalition of Conservative backbench MPs intend to submit amendments to the building safety bill, which is due to pass through the Commons in the coming session. They want ministers to protect leaseholders against building safety costs that are not their fault.

The warnings about the impact on affordable housebuilding come amid a chronic shortage of cheaper homes. In the first half of this year, only 16,000 homes were built by housing associations and councils, while 72,000 were built by private firms.

Kate Henderson, chief executive of the National Housing Federation, said thousands “of new affordable and social homes for those most in need could no longer be built because of the crisis.

She added: “We urge the government to fund the full upfront costs of making building safe and claim this money back from those responsible once work is complete.”

The government insists building owners should not pass on costs of defects, but rather pay or recover them from the developers or builders responsible. It says this has happened in half of cases where private highrise blocks were found with similar aluminium composite cladding to that on Grenfell Tower.

The Department for Levelling Up, Housing and Communities said: “We have committed over £5bn to remove unsafe cladding and we are focused on completing this work … We are also helping more people get on the housing ladder in an affordable way. Last year, we delivered 243,000 new homes and we are investing £12bn to help councils and housing associations provide affordable housing.”