01 November 2002
Naïve housing associations are rushing into risky deals over key worker accommodation, a leading lender said this week.
Malcolm Kitchener, a general manager at Nationwide Building Society, said one registered social landlord had locked itself into an agreement without any guarantee that it would maximise rent income by filling the accommodation.
'Any organisation that has entered into that sort of agreement could end up with empty spaces,' he told the Henry Stewart annual briefing on social housing on October 29. 'It's that sort of weak deal which demonstrates a lack of professionalism.'
Ian Perry, chief executive of Harvest Housing Group and chair of the conference, said the problem was not isolated. Harvest was being forced to rescue an RSL that had set up a key worker scheme without considering future fluctuations in rent income.
'RSLs have entered into some very odd deals which look good at day one but not so good in the long term,' he said.
Earlier Kitchener had accused RSLs of failing to appreciate the risks of diversifying into key worker and other schemes when they apply for loans. Some were creating subsidiaries rather than shouldering risk themselves but expected lenders to advance them the money they wanted.
'Some RSLs have not looked at the implications of diversification,' he said. 'They express concern when we say that they might be taking too much of a risk.'
PFnov2002
