04 April 2008
Housing associations are continuing to raise millions of pounds from the sale of properties to tenants and other first-time buyers, figures reveal.
Many registered social landlords rely on sales to record pre-tax surpluses, according to the latest global accounts published by the Housing Corporation. But although sales grew by 9% in 2006/07 to £542m, the rate of growth is slowing down.
Last year's expansion compares with an increase of 19% in 2005/06. The corporation says the slower growth is mainly because fewer tenants are buying homes through the right to buy scheme after their homes are transferred from councils to an RSL.
The global accounts, which precede the recent slowdown in the housing market, show that traditional – non-transfer – associations raise the majority of sales income from selling homes through shared or low-cost ownership schemes.
In 2006/07, shared ownership sales accounted for 17,000 of the 36,000 homes sold by all RSLs. A further 6,000 were sold through the right to buy or right to acquire, while a similar number were open market sales. There were also 7,000 sales to other landlords.
Peter Marsh, the corporation's deputy chief executive, said RSLs were aware that sales might not continue at present levels because of tightening financial markets and mortgage problems. 'After a period of time it is bound to have an impact on business models,' he said.
The accounts, published to coincide with last week's National Housing Federation finance conference, show the sector's turnover rose by 9.4% to £9.1bn in 2006/07, while the pre-tax surpluses increased by 8.4% to £270m.
But there is concern that, while rents and service charges rose by 2.3%, management costs increased by 6.7%. The new regulator for social landlords, Oftenant, would be taking a close look at the management performance of RSLs from next year, warned Marsh.
Meanwhile, Kate Barker, chair of Oftenant's transition board, has confirmed that initially the new body will adopt the Housing Corporation's regulatory framework.
In a letter published on the corporation's website on March 31, she said it did not wish to rush the introduction of new powers, but would use a 'tenant-centred' approach to regulation from the outset.