Empty low-cost ownership homes a symptom of sector’s ill health
Long-term unsold homes up by 20 per cent
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The number of long-term unsold homes on housing association books surged by 20 per cent at the end of 2008 despite urgent moves to turn the tide.
The sector’s sickly state was revealed this week in a new report from the Tenant Services Authority.
By December 4,560 low-cost ownership homes had been standing empty for more than six months, up from 3,814 in the previous quarter.
The total number of unsold housing association properties broke the five-figure mark for the first time, hitting 10,060.
The regulator’s report also showed for the first time the full extent of the ‘swaps crisis’, which battered associations in December. In total 32 associations were hit with cash calls totalling £396 million, to provide short-notice security for financial products known as stand-alone swaps, which they purchased to ‘fix’ interest rates on their loans. But the ugly housing market and problems accessing finance are still the ‘key risks’ facing associations, the TSA said.
An influential committee of MPs this week called for the government to cut its target of 25,000 new low-cost ownership homes a year, saying there was a ‘substantial backlog’ of unsold stock (see page 6).
The unsold homes crisis would have been worse in December if the new Homes and Communities Agency had not poured in cash to help convert 3,996 ‘shared ownership’ properties to rental homes. Of these 2,236 were switched to ‘intermediate rent’, aimed at people on lower incomes who are ineligible for social housing.
But Graeme Moran, managing director of Metropolitan Home Ownership, said that the associations converting a ‘huge volume of homes to other tenures’ might not be reducing risk. ‘Have you got a market for market rent?’ he asked. ‘Do you think rents will hold up next year? I’m not convinced.’
James Tickell, of consultancy Campbell Tickell, said associations had time to adapt before housing market problems became terminal.
Some would be looking to lay off up to 10 per cent of their staff, he suggested.
‘Restructuring is beginning, and they are making efficiency savings this time for real - not just to keep the regulator happy.’
The diagnosis
What the TSA found out
3,996
Number of homes converted from shared ownership to rent in the last quarter
3,868
Number of homes sold by housing associations in the last quarter
£272 million
Amount raised by sale of housing association homes
22 weeks
Length of time associations claim it takes to sell a shared ownership home
37 weeks
Length of time associations in London and the south east reported it could take them to sell shared ownership homes
£1.3 billion
Amount associations want to raise from house sales over next 12 months
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