Four housing associations could increase their combined borrowing capacity by £96.4 million over five years by selling off stock or switching empty properties to different tenures.
This is according to a study published this week by the Chartered Institute of Housing and property services consultancy Savills.
The report, Appreciating assets, looks at the potential financial and social impact of associations having freedom to manage their assets on their own terms, including the ability to set different rent levels and transfer or dispose of stock.
It uses information from housing associations London & Quadrant, Bromford, Waterloo and Circle Anglia about what they could achieve by selling stock or converting to different tenures.
It calculates, assuming rents of 80 per cent of market value, this could significantly increase net borrowing capacity (see table).
The report said asset management freedom would allow associations to act like private sector property companies, looking at a portfolio property by property, balancing income streams with the need for refinancing and disposals.
It added: ‘A new approach to asset management could provide real incentives for focusing on where rationalising stock would have business advantages. This is likely to be a spur to significant rationalisation as housing associations seek to concentrate on smaller markets.’
Abigail Davies, head of policy at the CIH, said: ‘If you are trying to manage your properties closely, it can be difficult having stock scattered across different areas. Associations would need to make smart decisions and understand the local market area.’
The call for greater freedom for associations was echoed in a separate report published last week by the National Housing Federation. The report Radical reform: real flexibility said: ‘Despite the government’s rhetoric of flexibility there is considerable risk that the new framework will re-place one rule-bound and constrained investment model for another.’
|The landlords’ potential extra borrowing capacity|
|Units sold/transferred Net new homes Extra capacity|
|South east 786 297 £19.1 million|
|South west 257 343 £19.9 million|
|West midlands 309 477 £26.7 million|
|South midlands 54 49 £2.3 million|
|East midlands 697 338 £27.2 million|
|East Anglia 75 31 £1.2 million|
|Total 2,178 1,535 £96.4 million|
Source : CIH