PFI deal blazes trail for social housing funding

3 Sep 98
North East Derbyshire district council has signed the first social housing Private Finance Initiative deal.

04 September 1998

In partnership with South Yorkshire Housing Association, the council will receive 51 new homes in the 30-year deal. Land will be transferred to the association who will then design and build residential housing, and provide housing and tenancy management and maintenance services for the properties.

The rents will be pitched halfway between local authority rents and rents normally set by housing associations. According to the council, this will save up to £2.2m over the next 30 years.

Housing manager Bill Best said the council had silenced the doubters who believed that the PFI could not be used to build new housing. He said: 'They raised their eyebrows at the thought that a small district council and a local community based-housing association could come up with such an innovative formula.'

Hailed as a pioneering deal by PFI commentators, the government will provide the capital equivalent sum of £361,000, while the council will contribute £64,000.

The council-sponsored PFI body, the Public-Private Partnership Programme, welcomed the deal as evidence that the PFI is working in local government. Chief executive Peter Fanning said the deal gave new hope to smaller authorities.

Mr Fanning said: 'The deal must give heart to all those working at PFI in local government. The council has delivered the first housing PFI, despite early uncertainty over policy, regulations and funding.'

South Yorkshire Housing Association's Aileen Evans said the deal had no catch. She added: 'We have had accountants crawling all over the formula trying to pick holes in it. But it's a stunningly simple and effective way to deliver low rents alongside a quantifiable level of services.'

Housing chiefs said the deal – worth £1.7m in total – was unique in terms of new build schemes. But Chartered Institute of Housing director of policy John Perry said it would be hard to extend it to other housing areas.

He said: 'This deal might be hard to replicate in other local authorities. It is hard to say if the PFI has a future in stock renovation, where we need a lot more cash. It needs its own pathfinders to help it develop further.'


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