02 May 2003
Social landlords should compete for the right to manage houses transferred from local authorities, a leading lender said this week.
Competition might raise the quality of post-transfer management and provide investors with better value for money, Gabrielle Berring, a director in Bank of Scotland's housing finance team, told the Council of Mortgage Lenders' stock transfer conference.
Management is the only element of a large-scale voluntary transfer that is not open to competition, she said. Instead, most LSVTs lead to what is effectively a management buy-out by the local authority.
'It would be interesting to see an element of competition between existing registered social landlords and managers within the housing department,' Berring told the conference in Birmingham on April 29.
With the best-performing housing departments expected to become arm's-length management organisations during the next few years, ministers have told the council they are keen that LSVTs in other areas do not automatically result in ex-council managers continuing to manage properties.
Berring, who warned that future LSVTs are likely to be more complex, especially in urban areas, said RSLs with experience of managing former council homes elsewhere would provide more support for lenders.
It was also vital that lenders were involved in the transfer process at an earlier stage. 'We don't like to be rushed but this is not a luxury that's always offered to us,' she added.
Mark Hedges, from Nationwide Building Society, warned that councils should not rely on the big three lenders to continue to fund LSVTs. At present, about 75% of transfers involve Nationwide, Halifax/Bank of Scotland or Royal Bank of Scotland.
The three lenders were keen to back LSVTs because social housing is seen as a low-risk and highly regulated market. But mounting pressure on financial institutions to generate higher returns for shareholders could lead to lenders switching their money to other activities.
PFmay2003
