The implementation of new international accountancy standards could reduce the book value of England's housing associations by over £1 billion and cost £150m in red tape – prompting fears that plans for thousands of new affordable homes will now be axed to cover the costs of the new system, the National Housing Federation has warned.

Housing associations could have little choice but to slash the number of new homes they were planning to build in order to pay a £150 million bill to bring their accounting in line with proposed new international standards.

The Accounting Standards Board announced last year that associations must file accounts according to International Financial Reporting Standards (IFRS) by 2015.

But the change will cost housing associations managing 30,000 homes £530,000 in order to bring their book keeping in line with the new rules.

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For associations with 3,000 units, the bill could come to £121,750. The total cost to the sector could be an eye watering £150 million, according to the National Housing Federation.

Huge extra expense will be incurred by changing or replacing accounting systems, IT systems, significant training costs and greater analysis and explanation to funders.

IFRS will also see the reported value of housing associations assets revised downwards by more than £1bn as they are forced to cut costs they incurred in developing houses from balance sheet totals and write off similar amounts from their reserves.

Other required changes will result in wild fluctuations in housing associations' income statement.

The Federation warned the financial impact of the new standards could result in plans to build around 4,500 homes being scrapped.

The UK Accounting Standards Board (ASB) has claimed that although the transition will cost £78.9m, it will have many significant benefits and any expenditure will be more than made up for in savings on finance costs.

Although the new rules will not come into force until 31 March 2015, the consultation period on the proposals ends on April 30 this year.

Federation Chief Executive David Orr said: "The proposed new accountancy standards could have a massive financial impact on housing associations. They could wipe £1bn off their reported assets, increase borrowing costs and result in plans to build thousands of affordable homes being axed.

"These new standards will contribute very little apart from added bureaucracy and will inevitably divert money away from funding desperately needed affordable homes."

(CD/GK)