Tuesday, 26 May 2015

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.’

 

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