Tuesday, 29 July 2014

Big four ask Treasury for £43bn write-off

Four of the country’s largest housing associations have called on the government to release £43 billion of historic grant to allow them to fund new homes.

The money was given to housing associations as social housing grant to fund the building of social homes at below market rents and is held on their balance sheets.

Under current rules, landlords cannot borrow against the grant because the Treasury could ask for it to be returned if the homes are no longer used to meet social housing need.

But landlords have said writing off the debt will allow them to borrow more money for new homes.

David Cowans, chief executive of 62,000-home Places for People, said the social housing grant has served its purpose: ‘It has been paid, the property has been procured and a person is living in it, what is the purpose of it? It was a payment to produce a low rent and that’s been done.’

Ken Youngman, finance director at Family Mosaic, said it was exploring a shared equity programme to fund new homes without losing stock, and would welcome extra borrowing powers.

‘The affordable homes programme will test our capability [to borrow] so there’s debate about whether we go for equity models,’ he said.

The plan was put to housing minister Grant Shapps at the Conservative party conference this week by Family Mosaic, Hyde, Places for People and Home Group, which between them own 131,000 homes.

Mark Henderson, chief executive of Home Group, said: ‘Could we convert the former grant in a housing association property into a deposit for tenants to buy their housing association home? We could then use the proceeds to build a replacement home.’

Mr Shapps responded cautiously. He said: ‘Let me not rule anything out but the treasury will have a very strong view on this, so will the national audit office and all the international accounting rules and we are in the process of trying to reduce [government] debt.’

 

Readers' comments (6)

  • F451

    In an age of supposed austerity what is the point in the argument to remove a process which allows taxpayers money to be reused endlessly with one that would see taxpayers money used just once. Surely the attraction of the recycling mechanism for housing grant is that it is one unit of money able to be used as many units of funding, and should it cease to be used in that way it is returned to the taxpayer through the payback mechanism.

    Recyling is a good thing, especially when it offers both value for money and assists to make housing affordable.

    If Shapps is suggesting that housing should no longer be affordable and that use of government grant should no longer encourage value for money, then the idea would at least be set in an honest context.

    If the RSL wants to be 'freed' of the effect of RCGF then it should either pay it back so the taxpayer can enjoy the benefit of the investment, or even better recycle it as intended to provide even more affordable housing. They are housing associations after all, with a primary objective to build the housing needed for the communities within which they operate - or is that now just a piece of quaint history.

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  • So on top of the RSLs getting free taxpayer owned properties and free taxpayer land and free grants from the housing corporation to build inferior quality properties and cover their own very wasteful costs and inefficiencies to their own staff and in their complacent placing of work with contractors they now want the chance to write off what small hold the taxpayer may have on what they do with the resultant assets .... so they can do it all again!

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  • Rick Campbell

    Free tax payer owned properties?
    Me not understand.

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  • Terra

    Rick - LOL.

    David Cowans says "It has been paid, the property has been procured and a person is living in it, what is the purpose of it? It was a payment to produce a low rent and that’s been done."

    I think David has forgotten that to build the low rent home, someone had to put the money in. The point of it is to protect the money that was put in - as F451 points out, and to make sure the money is spent appropriately.

    Isn't this proposal a bit like printing money?

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  • To whom it may concern

    Not so much like printing money, more like doing a Ronnie Biggs, but on a grander scale, and having the Minister approve it into the bargain.

    If the money is there and Shapps can make it available, then rather than writting it off of a balance sheet where the RSL may or may not use it to build the odd house, let developers have the funds direct to build truly affordable homes at social rents. £40Billion odd will go a long way to addressing the current needs I'd have thought.

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  • Why then ask councils to repay the HRA supposed national housing debt, let's write that off. LAs like their cash flow don't they as opposed to social house building flow.

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