Thursday, 05 March 2015

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.

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  • 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.

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  • Man Withabacus

    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...)

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