Value for money

Fri, 12 Sep 2008 | By Jules Birch

Today in Inside Housing its biggest members admit that the model of using private sales to subsidise social housing development is ‘broken’ and needs a fundamental rethink.

It is of course yet another illustration of how the world has changed as a result of the credit crunch. The tsunami that has swept over estate agents and house builders is also hurting housing associations because of the way the existing model relies on the housing market. Far from building more homes for sale, David Montague of L&Q says that it will be building none at all for the next 18 months.

What’s encouraging is that some associations are recognising the scale of the problem and are prepared to think about what to do next. What’s more worrying though is that, according to a survey by Baker Tilly, most associations expect their counterparts to be hit by financial problems in the next year but a third of them have done nothing to prepare for the risks themselves.

Whether the government will be able - or willing - to bring forward the entire unspent affordable housing budget for the next few years remains to be seen. 

So far it seems wedded to the old model of leaving it to the market and encouraging more people to buy at a time when prices are falling. If so, it should think again.

Bringing forward investment would help keep the shattered building industry in work as well as protect the supply of affordable homes. It would allow associations to drive some hard bargains with developers for land and partially completed homes. And it might even make some of those developers’ sites more viable, boosting the overall supply of housing as well as that of affordable homes.

That has got to be better value for money than spending taxpayers’ money on bailing out the banks - as some are urging the government to do when it publishes the Crosby review next week.