Landlord warns welfare reform risks development
One of the UK’s largest housing providers has warned that the Welfare Reform Act could affect its ability to build new homes.
In its annual report, Home Group highlighted a range of challenges facing the sector amid the ‘systemic change in the way that housing is delivered and managed’. It added that the changes were ‘on scale similar to that last seen in the 1970s’.
The 53,000-home housing association said that the introduction of direct payment of housing benefit to tenants instead of landlords being introduced through welfare reform would put increasing pressure on rental income ‘and consequently on providers’ credit ratings and Home’s ability to build new homes’.
It added that there was a likelihood of a continuing squeeze on public spending.
‘On the housing side, we need to be preparing ourselves for reduction in and potential for no grant to support development beyond 2015,’ the report says.
The group reported a turnover for 2011/12 of £313 million – an £8 million increase on 2010/11 – while its surplus ballooned from £11 million to £25.6 million, mainly on the back of an increase on money generated from property sales.
But the group’s Supporting People arm posted a £5 million dip in turnover and a £400,000 drop in surplus. In its review of the year, Home said that the reduction in local authority spend on care and support was likely to result in more and more encroachment from the private sector.
The report said: ‘Within both of the sectors in which Home operates, but particularly supported housing, we are likely to see the increased penetration of private sector providers, especially in areas where they can operate at scale through national or regional level contracts.’