Audit Commission reports lay out areas for improvement
40 per cent of pathfinders ‘failing to engage’ with lenders
Forty per cent of the partnerships set up to tackle low demand for housing have failed to engage effectively with lenders during the recession, the Audit Commission has revealed.
The news emerged in a series of public funding reports, published last week by the commission, into how the 10 market renewal pathfinders have responded to the changing market in the recession.
Between 2002 and 2008, pathfinders received £1.2 billion. The Homes and Communities Agency - which has administered the programme since last December - has pledged £1 billion from 2008 to 2011.
The reports recommend that four pathfinders improve their relationship with lenders and other partners to ensure their work to turn around failing housing markets are successful.
It said some pathfinders’ attempts to gather market intelligence on their areas were inadequate, and that residents of housing market renewal areas are not receiving explanations for stalled development sites.
The commission described Renew North Staffordshire, Gateway Hull and East Riding, and Partners in Action Oldham and Rochdale as exhibiting limited contact with lenders. It said Elevate East Lancashire needed to follow up the work it had done with lenders so it could test its products prior to launch.
The review for Gateway Hull and East Riding said: ‘Gateway should undertake further, in-depth engagement with this group [lenders] in order to understand the current positions as regards to mortgage lending criteria and test the attractiveness of products to lenders.’
Pauline Davis, strategic director of Gateway Hull and East Riding, said: ‘We have been focused on our programme of delivering new build and refurbishments and making sure that we can keep that going.
‘Now we have got these proposals in place and the new build is starting to come out of the ground, we can talk to lenders about developing their confidence to use their products in our neighbourhoods.’
Hardial Bhogal, chief executive of Renew North Staffordshire, said: ‘I am quite prepared to say that we can always do more. The problem in the economy is liquidity, and I am pleased to say that we have got willing local lenders who we work with. But we are not keen to force products on people who don’t want them, as that would completely counterproductive.’
According to the report, Partners in Action Oldham & Rochdale had ‘worked well to develop its market intelligence and, with its partners, to develop a strategic approach in response to the market recession’. However, the commission also said work with lenders was ‘not fully developed at the moment’.
Alistair Graham, director of Oldham and Rochdale, said: ‘We already regularly consult with lenders and the independent financial advisers used by our Home Plus Plan scheme, which supports people being re-housed.
Four pathfinders - Oldham and Rochdale, Manchester Salford Partnership, Tees Valley Living and Transform South Yorkshire - needed to develop better ways of explaining delayed programmes to residents. The commission suggested the partnerships update their websites more regularly as part of this.
Max Steinberg, chief executive of Elevate East Lancashire, said: ‘Any recommendations that say we need to continue to do something are positive. We have been told we need to continue working with lenders and continue what we are already doing.
However, Mike Gahagan, chair of Transform South Yorkshire, which was not criticised for a poor relationship with lenders, said they were not in regular contact.
‘We are very cautious about pushing people into products that they can’t afford,’ he said. ‘So we really contact lenders when we are gathering market conditions about our area.’
Pathfinder funding
| Pathfinder | HMR funding | Growth point funding | Total funding |
|---|---|---|---|
| Birmingham & Sandwell | £17.5m | £6.9m | £24.4m |
| East Lancashire | £45m | N/A | £45m |
| Hull & East Riding | £26m | N/A | £26m |
| Manchester Salford | £41m | £4.8m | £45.8m |
| Merseyside | £46m | £2.5m | £48.5m |
| Newcastle Gateshead | £29m | £1.8m | £30.8m |
| North Staffordshire | £34m | N/A | £34m |
| Oldham & Rochdale | £27m | N/A | £27m |
| South Yorkshire | £33.7m | £3.8m | £37.5m |
| Tees Valley | £9.8m | £2.4m | £12.2m |
| West Cumbria | £1.8m | N/A | £1.8m |
In figures
Pathfinders’ total spend in 2008/09
Oldham & Rochdale
£31,960,000
Birmingham & Sandwell
£22,460,000
Newcastle Gateshead
£33,960,000
Manchester Salford
£51,960,000
Hull & East Riding
£38,800,000
South Yorkshire
£47,260,000
Merseyside
£148,800,000
North Staffordshire
£169, 935,000
Tees Valley
£63,000,000
East Lancashire
£51,960,000
Opinion: Roy Irwin
The Audit Commission has just published its findings outlining how each of the market renewal pathfinders are responding to the changing market conditions resulting from the current economic downturn.
We found that all pathfinders have managed to maintain momentum during difficult times; many focusing on refurbishment, acquisition and de-risking sites ready for the eventual upturn. Most have managed to continue some new build activity, although at lower levels than anticipated and with a higher proportion of homes built for rent rather than outright sale.
Generally, market intelligence gathered by pathfinders is helping to develop a wider understanding of the impact of the recession on the housing market in their regions, and to inform discussions at a local level on the appropriate responses within each project.
Some pathfinder neighbourhoods continue to be among those viewed as high risk by lenders and developers, and it is important for partners to engage at a local level to understand the current local lending criteria and test, preferably in advance, the attractiveness of products to lenders.
Some are doing this already, and are working to formulate new products for potential home buyers. A number of these are intended to complement government initiatives such as the deposit match scheme, meaning purchasers need only raise a 5 per cent deposit up front.
However, new products that actually run will also need a post implementation evaluation to assess the likely impact of the approaches chosen on a broader scale.
Overall, more work is required to promote awareness of the range of options available to potential buyers.
Roy Irwin is chief inspector of housing at the Audit Commission
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