New figures out this week confirm that housing associations have emerged from the worst of the downturn but they beg the very real question of what happens next.
As Inside Housing reports today, the Homes and Communities Agency has confirmed that a third of the way into 2009/10 it has already earmarked 85% of its £3.29bn budget. Large sums went on helping associations convert unsold shared ownership properties to rent but the days of large cash handouts are coming to an end.
According to Sir Bob Kerslake it now expects fewer requests for help. ‘In some ways we have taken the impact of unsold stock through the system.’
That tallies with the findings from the latest quarterly survey of associations published by the Tenant Services Authority earlier this week that the number of unsold low cost home ownership homes continues to fall and that a third of the 8,173 homes still unsold are reserved for sale. However, the survey also showed that the amount of conversions to rent has fallen significantly in the last three months. Despite impairment charges of £174m and an increase in the number of associations making them, none of the associations affected are in breach of covenants or loan conditions. There seems little room for complacency when that impairment total is up 38% on the previous quarter. But, thanks to the HCA bail-out and the recovery in the housing market, the worst seems to be over. Now for the next set of problems.
TSA they feared lenders’ increased deposit requirements would dampen sales. The time taken to sell shared ownership homes actually increased between the second and third quarters. And the report adds: ‘Another common concern was that funders models still treat shared ownership as “sub prime” and this in turn excludes some potential purchasers.’
Second, funding is about to get much scarcer with so much of this spending review settlement already committed. The HCA is under pressure to cut the cost of delivering affordable homes and has to deliver efficiency savings as part of the £1.5bn Building Britain’s Future programme ‘There is quite rightly a push from government to achieve value for money but no general diktat on grant rates,’ says Sir Bob.
Third, the next spending review period looks certain to see big cuts in the housing budget. The HCA is already preparing for that by using the money it’s got left to get a return on its investment while also seeking new sources of institutional investment. But the ability of associations to continue to deliver affordable homes with little or no grant will be the big test of the financial viability so fiercely protected over the last few months.
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