You are viewing 1 of your 1 free articles
For-profits registering associations: where will it end up?
As we reveal that several house builders are registering association arms to keep Section 106 homes, Martin Hilditch questions whether this will deliver more secure and stable housing
This week’s coverage in Inside Housing is all about change.
We lead today with news that a flurry of private house builders are registering their own housing association arms to keep the affordable homes built in their development.
Their motivations for doing so vary, but one suggestion that it is because housing associations often offer “less than build cost” suggests some interesting negotiations about pricing may emerge as a result.
It may also be a sign of some precautionary moves against any forthcoming housing market changes.
This of course feeds into a much bigger debate about the future of Section 106 planning commitments and bigger players moving into the space occupied by traditional housing associations.
READ MORE
These include Sage, majority-owned by real estate giant Blackstone, which last year announced it is looking to buy affordable housing allocations from private developers.
Other players such as Legal & General, Grainger and British Land form part of the trend.
As a reminder – this has the potential to be one of the most significant shifts in the provision of affordable housing in a generation.
According to the latest statistics from the National Housing Federation (NHF), 50% of affordable starts in the second quarter of 2018/19 were delivered through Section 106 agreements.
“This has the potential to be one of the most significant shifts in the provision of affordable housing in a generation”
The NHF’s insistence that the new players should not be able to call themselves “housing associations” – which it said should be reserved for not-for-profit companies – demonstrated how seriously housing associations are taking these changes.
This is a change that the government has encouraged – with prime minister Theresa May indicating that she wants the sector to increase delivery and move away from a reliance on Section 106 homes.
Moves to a land-led development model brings its own risks.
And with Brexit lurking on the immediate horizon there are more immediate challenges to cope with.
Last week’s news that L&Q is predicting that its surplus will be less than half its projections for the year amid a “downturn”, with income from open market sales £50m below projections, was a worrying signal – particularly if this means a reduction in the delivery of affordable homes.
Ultimately, it is this last point that is important.
Will these shifting sands have any positive impact at all on the delivery of genuinely affordable, stable housing?
The stories in recent weeks raise worrying questions about where we are going to end up.
Martin Hilditch, managing editor, Inside Housing
Theresa May on housing associations’ reliance on Section 106
“Rather than simply acquiring a proportion of the properties commercial developers build, I want to see housing associations taking on and leading major developments themselves.
“Because creating the kind of large-scale, high-quality developments this country needs requires a special kind of leadership.”
Taken from Theresa May’s speech to the National Housing Federation annual conference on 19 September
