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Industry calls for reinstatement of Affordable Housing Guarantee scheme
The housing industry has called on the government to reinstate the Affordable Housing Guarantee scheme in today?s Autumn Statement, after it was scrapped by former chancellor George Osborne last November.
Both the National Housing Federation and the Chartered Institute for Housing have made submissions to the Treasury arguing that the three-year scheme, which funded 27,000 homes with a guarantee commitment of ?2.5bn, should be reintroduced by the new administration.
From a total of ?10bn of guarantee capacity committed to by the coalition government, it is understood that there is a remaining ?4bn of unused guarantee capacity that could be allocated to support additional affordable housebuilding. The scrapped scheme was being run by The Housing Finance Corporation through its subsidiary company Affordable Housing Finance, with the debt guaranteed by government.?
It is understood civil servants have heard submissions from the sector about the benefits of the scheme, and have actively sought advice on how useful it was for associations as they developed policies for the Autumn Statement and the forthcoming Housing White Paper
In addition to homes directly funded under the guarantee scheme, by virtue of its lower cost of finance, the programme has produced an estimated interest saving capable of financing a further 6,000?6,500 homes, according to the National Housing Federation.
Under the programme housing associations accessed?the bond market at extremely low rates, or borrowed from the European Investment Bank (EIB) at even lower costs.?The scheme stopped giving credit clearance in March this year, but are still in the process of drawing down funds following successful applications.
Paul Phillips, financial director of Notting Hill Housing Group, which borrowed ?50m at a variable rate form the EIB, said: ?We would like to see it reinstated, as it reduces the cost of funds, particularly for smaller associations. It would be good to have it back.?
James Prestwich, head of policy at the National Housing Federation said: ?Reinstating the Affordable Homes Guarantee scheme would be a real boost to the nation?s housing supply.
?By lowering the cost of money and easing access to private finance, housing associations would be able to build many more affordable homes; the current scheme helped deliver 27,000 homes. What?s more, the sector?s no default record means it wouldn?t cost the taxpayer a penny - ?this could be an easy win for government.?
An NHF submission stated: ?The sector?s no default record means it came at no cost to the taxpayer, so there is a strong case for it continuing.?
