Saturday, 25 October 2014

Concern over affordable rent programme leads associations to slim down development plans

Housing associations cut development by half

England’s largest housing associations have slashed development programmes by up to 50 per cent, bids submitted to the Homes and Communities Agency this week reveal.

An Inside Housing survey of 20 associations show eight expect development levels to drop. Just two expect to build more homes. The news follows Tuesday’s bid deadline for a share of the £1.8 billion available under the affordable rent programme, which the government hopes will provide 56,000 low-cost homes over four years towards a target of 150,000 by 2015.

Bidders are expected to use extra income from charging rents at up to 80 per cent of market levels on new builds and re-lets, to leverage bank loans to help finance developments. But our poll reveals associations are bidding cautiously amid concerns about the extra level of borrowing risk.
Three housing providers - 38,000-home Metropolitan Housing Trust, 38,000-home Symphony Housing Group and 15,000-home Plus Dane - expect their development to drop by half. Others, including Affinity Sutton and Bedfordshire Pilgrims Housing Association, expect drops of between a quarter and a third.

People are bidding very cautiously because it is a step in the dark

James Tickell, director of consultancy Campbell Tickell

Keith Exford, chief executive of Affinity Sutton, said: ‘Associations might have been prepared to take more risk if there were not so many uncertainties.’

Bill Payne, chief executive of Metropolitan Housing Trust, said he was concerned about leaving tenants in a benefit trap by moving properties to affordable rent.

One senior housing figure, who did not wish to be named, said he would not be surprised if landlords’ caution left the programme undersubscribed.

James Tickell, director of consultancy Campbell Tickell, said: ‘My guess is there will be enough bids to fill the programme, but I don’t think it will be massively oversubscribed. People are bidding very cautiously because it is a step in the dark.’

Plus Dane Group expects to develop 1,000 homes under the affordable rent programme, half the amount it built over the past four years. But its chief executive Ken Perry hopes to fund additional homes through other mechanisms, including a group bond issue.

Bromford Housing Group is one of two landlords which expect to deliver more homes under the new regime. Bidding as part of a consortium with seven other associations, it has submitted a £100 million bid to build 5,000 homes over four years in the midlands and west England.

Mick Kent, chief executive of BHG, said landlords in the midlands were more able to develop under affordable rent than those in London because rents are lower, making them more affordable.

Two councils have also confirmed they have bid, Barking & Dagenham Council hopes to secure £25 million to build 850 homes, while Birmingham has also bid but not revealed details.

Additional research by Inside Housing reporters

Readers' comments (25)

  • I'm old (well, I was in the record stores when 'Rumours' was released...actually, I remember seeing a news clip of the Beatles on top of the Apple building - made its mark on me that did) but as I have gotten older so I have come to believe ever more in the sheer injustice of capitalism and the need to develop a socially just alternative.

    I have experience of both capitalist and socialist countries. If the measure of success is what people can consume, for having a cornucopia of trinkets to play with and cheap, easy entertainment, then capitalism is the better (as long as you have the money to join in) If however the measure of success is how relaxed and happy people are, if they have time to enjoy life and things they have, then socialism wins out every time.

    I would rather have a little less but be able to relax and enjoy it. As friend once said to me; "Sure I've got a nice shiny Renault now but I never have time or spare cash to go anywhere. Back when I had a Skoda, we all went up to the mountains or down to the lake every weekend. I think I'd sooner have my old Skoda back".

    So, maybe we should be developing with a view to more people having safe secure affordable homes and a few, a minority, perhaps having a little less - no second homes, buy-to-lets, money to squander on overseas 'investment properties'. And that means housing associations remembering their roots and not developing at any cost (that awful phrase: 'growing the business') but sending a clear signal to government that they will only develop for the majority (that wonderful phrase: 'providing a service').

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  • I think I'm a bit younger than you Gresley, but I do look at my friends killing themselves to get the newest TV, the newest car, get a bigger house and I think "isn't there more to life than this?"

    I mean really all we need is shelter, food, the company of others. Maybe I'm a hippy born a couple of generations too late... But I would rather live in a world where everyone had enough to go round, in a society that was happy and fulfilled.

    Maybe I'm just lazy and want to work a few less hours a week so I can spend more time with my friends and family?

    Whatever... I certainly didn't think life would turn out like it has.

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  • Apoica

    Are those socialist countries you refer to Gresley the ones that are more accurately described now as the former socialist countries or, more accurately still, as those that were formally "behind the Iron Curtain"? Notwithstanding elements of State oppression like the Stasi in it's many forms - and the detention of hundreds of thousands of dissidents who perhaps whispered the wrong thing to the wrong person - the Soviet Bloc collapsed under the weight of an unsustainable central planned system that did not and could not reflect social, political and economic reality. The Soviet Union had a ministry called Gosplan which set the price of 25 million separate items from one end of the empire to the other; irrespective of the actual costs of production or delivery. It's fair enough to argue for a way of life more in keeping with the French. But please, seriously, if this an attempt to portray the Soviet Bloc as some sort of workers paradise, forget about it. It wasn't and the people who actually lived under that system do not want it back.

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  • Are there people on extremely low wages?
    Well it has been revealed that the Queen herself pays her cleaners less than the basic London wage.
    Many people work and work hard for very little.

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  • My experiences from living with and talking to people in the former Soviet Bloc is that they indeed didn't like the oppressive nature of some aspects of the system. However, it wasn't as oppressive (outside of the USSR) as perhaps we were led to believe. My friends included a doctor who worked in London during the eighties and an engineer who worked in Libya, Greece and America. All the time keeping their homes back in the Eastern Bloc.

    Their view is that while they would not want all the aspects of the socialist system back (and certainly not the sometime heavy handed policing and apporach ot the media), they would like to see the greater social equality and the greater emphasis on community and family. The sense that everyone had a role to play and that people were genuinely pretty much all in it together.

    They dont like hearing drug dealers interviewed openly on the radio, complaining about their competitors and wanting the police to protect their businesses. They don't like seeing the sad groups of young girls, prostituing themsleves on the main trucking routes. They find the general grime in what were once decent hospitals and schoools unsettling. THey don't like seeing older people cast adrift without their pensions. They despair at once viable, solid businesses asset stripped and sold off my speculators.

    No, life wasn't perfect then but neither is it today. And for many, the balance has over the years shifted more towards rejecting the false promise of freedom and capitalism when it really translatesi nto freedom for the top ten per cent to have everything and the rest to fight and scrabble in an increasingly anarchic society to scratch some kind of living.

    Nothing is all peaches and cream and that is true of the communist system as it was then. That does not though mean that we can't learn from that time and take the good, avoid the bad and create something far better than the devil-take-the-hindmost, short termist, oppressive system we now have in which we are now expected to live solely to work and consume and not one in which we work to live and enjoy life, friends, family and just being here. What is clear is that the laissezfaire system we have had since 1979 has made us poorer, weaker as a nation and nastier as a people.

    We in undeveloping Britain have been living on past glories, old infrastrucutre and a mountain of largely private sector debt incurred to compensate for the lack of meaning in our lives with endless toys and trinkets. This is not the way forward.

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