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Jenrick: ‘Housing associations must be responsible for how indebted they’ve become’
Housing associations must act like “responsible players” and be answerable for how indebted they have become, housing secretary Robert Jenrick has said.
In an exclusive interview with Inside Housing, Mr Jenrick stressed that housing associations were independent organisations and have to make their own choices on future investment.
Responding to a question on what support London associations would get so they could continue to build homes, Mr Jenrick said: “They are independent organisations, and they will need to make their own financial decisions and be responsible for how indebted they’ve become.
“They need to be responsible players and as organisations have to make their own choices on the homes that they build. Government can’t tell them how many homes.”
The comments could prove controversial because organisations were pushed to take on more debt to compensate for the government’s cuts to grant in 2010.
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In 2010, then-housing secretary Grant Shapps announced the coalition government’s Affordable Homes Programme, which saw capital housing grant cut by 60%.
Grant rates fell from about 50% of the cost of each home to around 15%, with the coalition government encouraging housing associations to borrow from the private sector to cover the shortfall.
Mr Jenrick’s comments come as many housing associations have changed their development plans in recent months because of a stagnant London housing market and growing fire safety costs.
Two weeks ago, L&Q, London’s largest association, announced that it would be “pausing all new developments” as a result of the serious downturn in the London housing market.
On Monday, Fiona Fletcher Smith, L&Q’s development director said the cross-subsidy model, where associations raise money for building affordable homes through selling private homes, was "absolutely bust" and the only model for delivering affordable homes was through government grant.
Mr Jenrick said that this department’s plans would unlock land for housing and accelerate the planning system and provide improved conditions for associations to build new homes.
The housing secretary added that he was in discussions with the chancellor Sajid Javid regarding the successor to the current Affordable Homes programme, and said he was lobbying for a “ambitious plan” which would likely to come out in next year’s Comprehensive Spending Review.
Inside Housing also asked Mr Jenrick’s department about the status of the Social Housing Green Paper.
In June, in one of her final speeches as prime minister Theresa May said the government would be publishing a clear timeline for the paper in September.
When asked when it should be expected, a MHCLG spokesperson said: “We received around 1,000 responses to the green paper and ministers met around 500 residents.
“We are currently considering the responses to the consultation and will publish our action plan for implementing social housing reform and review of social housing regulation in due course.”
