Thursday, 17 April 2014

Landlord reveals it may not be able to build all 3,000 grant-funded homes

Delivery concerns at Affinity Sutton

One of England’s largest developing landlords has said it is unlikely to be able to deliver all 3,000 homes it is contracted to build by April 2015 under the government’s £1.8 billion affordable homes programme.

Affinity Sutton revealed it will build ‘hundreds’ fewer homes than it agreed two years ago in its partnership deals with the Homes and Communities Agency and the Greater London Authority, due to problems getting some councils to agree to it charging affordable rents.

Under the AHP, landlords are expected to charge up to 80 per cent of market rents in return for a reduced grant level. Affinity Sutton won the second largest allocation of grant funding - £65 million - but its 3,000-home development plans have been reliant on being able to convert a high number of re-lets to affordable rents, as well as charging affordable rent in the new build homes.

Since associations made their funding bids in 2011, several councils have resisted allowing the higher rents to be charged, leaving a funding gap.

In its annual report, Affinity Sutton said: ‘We must balance delivery of the programme with both the management of local priorities and the group’s long-term interests and consequently will not build units at any cost.’

Mark Washer, finance director at the 57,000-home association, said: ‘We understand where local authorities are coming from, but that has meant there is not the level of subsidy needed to deliver the homes.’

He added there was also a lower level of turnover of tenancies than had originally been anticipated.

The association is in talks with the HCA and GLA about whether it will return grant funding. Neither body is likely to impose any penalty on the landlord.

Steve White, chief executive of Hyde Group, said his organisation had experienced similar problems. ‘It has been difficult to get the level of rent convergence we were expecting and we have also struggled to charge the rents we expected - and this has diminished our appetite for another round of affordable rent,’ he said.

He added this will cost Hyde ‘a lot’, but it will still deliver its contracted 1,030 homes using £25 million.

The LGA declined to comment.

A spokesperson for the HCA said: ‘In the event a provider confirms [it is] not confident it is able to deliver its full allocation, and wishes to hand back funding, it should do so to allow us to re-allocate to providers with pipeline schemes that are able to deliver.’

Readers' comments (3)

  • See...there is money for affordable housing and a desire to build. But it is local councils that are causing problems in not accepting affordable rents and taking a political stance that delays house building and extends waiting lists.

    Affordable rent is the best option available to expand the housing stock, it is not perfect but it is better. I know there are many who will say let councils borrow more money to build social housing. But this is a misnomer, how much is this country already in debt by? Do we really need to add to the national debt? I am not confident in local council's ability to manage and deliver. Most local governments have a poor track record in managing large scale capital projects so please lets not allow them to do this.

    Unsuitable or offensive? Report this comment

  • So Clifford wants us to build at any cost; that cost being either to those on low incomes or through increased housing benefit bills. Affinity Sutton are unlikely to be the only ones who come up against this issue in London and the South East where even households on median incomes will struggle to meet the rents implied by the affordable rent regime. There is clearly a need for some rent at sub market (70-80%) rents but it is folly to pursue a develop at all costs attitude when these rents become unaffordable for those on low incomes.

    Of course local authorities oversaw the huge inter war and post war building programmes that the private sector has never been able to match but let's not take a politcal stance on this. Yes, there is money available for affordable housing and, yes, there is a desire to build but not at any cost. So, let's use our money wisely; provide truly affordable housing and use whatever is the best vehicle to achieve that.

    Unsuitable or offensive? Report this comment

  • ManWithAbacus

    In summary...

    Affordable Rents are not affordable and do not house those in need...

    Local Authorities do not want them...

    Affordable Rents do not support additional valuations and increased funding as originally envisaged...

    To cap it off Affordable Rent drives up the benefit bill...

    Why exactly are the HCA, CLG and government still flogging this "dead horse"?

    (Could it be to save face given the Conservative Party Chairman, a few "great and good" HA CEOs and senior CLG officials came up with this nonsense...)

    Unsuitable or offensive? Report this comment

Have your say

You must sign in to make a comment

sign in register

Newsletter Sign-up

More Newsletters

Related

Articles

  • Missing the target

    19/07/2013

    Government plans to scrap rent convergence have sent shockwaves through landlords already facing income falls. Nick Duxbury asks what the likely impact will be and if the sector is to blame for not converging rents sooner

  • Housing association surpluses soar by 60 per cent to nearly £1 billion

    22/11/2013

    The combined surpluses of Britain’s 30 biggest housing associations by number of homes owned soared to almost £1 billion in 2012/13, according to research by Inside Housing.

  • New rent settlement ‘good news’ for landlords

    28/06/2013

    Senior housing figures have cautiously welcomed the new 10-year rent settlement for social landlords.

  • The race is on

    06/09/2013

    The clock is ticking for housing associations developing under the affordable homes programme. Michael Haddon reports on why, with just 19 months to go, some landlords fear this is a deadline they cannot meet.

  • Sector faces £4.5 billion accounting hit

    21/02/2014

    Rule change could push associations close to deficit

Resources

  • Luxury Lets

    19/04/2013

    A south west-based housing association is taking the unusual step of converting some of its properties into holiday homes. Alex Turner visits Bath to find out more

  • Precision thinking

    15 January 2014

    Analysis of its lets, voids and tenancy lengths has allowed Adactus Housing Group to cut its planned maintenance bill by millions of pounds a year and plough the savings into developing new homes. Kate Youde finds out how

  • The Matchmakers

    21/06/2013

    Do you have tenants who can’t pay their rent because of welfare reform? Well, speed dating might provide an unlikely solution to your problems, as Alex Turner reports

  • The return of PFI

    24/05/2013

    New-look private finance initiatives could help ease the housing crisis, says Penny Rinta-Suksi, housing and regeneration partner at Bevan Brittan

  • Make yourself at home

    28/06/2013

    A midlands-based landlord is offering tenants a chance to get a foot on the housing ladder and acquire work skills by building their own homes, as Helen Clifton finds out