But the days when the HCA pot had landlords swarming round, allowing the agency to name its terms are over.
As our survey this week of the top developing housing associations shows, landlords are cautious and plan to shrink their development programmes by up to 50 per cent. This highlights that the new affordable rents regime has caused providers to treat their submissions very seriously.
For the past few months, association boards have been locked in discussions about the purpose of their organisations and whether or not this includes letting new and some existing homes at up to 80 per cent of market rents. For some the answer has been ‘no’ - they prioritise their role in helping society’s most vulnerable. But the bulk of developing social landlords have answered ‘yes’. The question now is what price associations will be willing to pay in exchange for receiving dramatically increased rental income.
The short answer has been apparent for a while: greater risk. But what does this mean? The HCA’s definition is landlords signing up to build a set number of homes over four years and digging into their resources to deliver them. To associations, it means building as many homes as they can, without imperilling their financial viability, while treading a careful line between tenants, lenders and local authorities.
With less cash available from the HCA this inevitably means fewer homes. The issue of re-lets or ‘conversions’ to the new affordable rent is perhaps most contentious here. The more homes you convert to affordable rent, the greater your borrowing capacity and the more you can afford to build. But councils - particularly in London where the gains through affordable rents will be highest - want guarantees that revenue raised in their areas will be used to build homes there. Associations can’t promise this and so the balancing act begins. The HCA aims to strike deals with landlords by July, but whether it can deliver the homes needed to hit the government’s 150,000 target by 2015 is by no means certain.