Associations must win council approval of altered rates to secure grant
Battle looms over affordable rents
Rows between housing associations and town halls over rent levels are threatening proposed developments under the government’s £1.8 billion affordable homes programme.
Housing associations received development funding allocations last month under the programme, which allows them to charge rents at up to 80 per cent of market rates on new properties and some re-lets.
In parts of the country, including London, the new ‘affordable rents’ will be much higher than traditional social rents.
However, before their funding is signed off by the Homes and Communities Agency, associations must demonstrate that they have the support of the relevant local authority.
While associations agreed outline bids with councils earlier in the year, certain details - including rent levels - have altered following negotiations with the HCA, which wants landlords to charge the highest possible rents to keep public subsidy to a minimum.
Objections from councils to the changes have prompted heated discussions between some housing associations and councils over the past few weeks.
Keith Exford, chief executive of 56,000-home Affinity Sutton and chair of the G15 group of London’s largest housing associations, admitted there were problems.
‘There is a lack of understanding in some local authorities about what the arrangements have been for the bids,’ he said. ‘If you bid for a scheme on a given set of assumptions you enter into a contract with the HCA. It is not possible to deliver that scheme on any other basis.’
Ian Wingfield, cabinet member for housing management at Southwark Council, admitted that its officers would have ‘a robust discussion’ with housing associations in the area if they had raised rent levels after talking to the HCA.
‘I believe some housing associations have revised their initial position,’ he said.
Steve Douglas, partner at consultancy Altair, said at least three London councils had objected to rent levels proposed by housing associations.
Jamie Ratcliff, head of intermediate markets at the HCA, said the agency had kept councils informed of rent discussions but admitted they would not have been told of ‘every little change’. He added: ‘We will not be taking forward schemes that do not have local authority support.’