19 September 2003
New housing associations set up following stock transfers are struggling to meet promises made to former council tenants because they are losing so many homes, says a new survey.
Rapid stock depreciation and the subsequent drop in rental income means transfer landlords are sometimes forced to rewrite business plans, which then leads to tension with the council that once owned the homes, says the study by the Joseph Rowntree Foundation.
In spite of building new properties, more than two-thirds of transfer landlords have experienced a net loss of homes since they were set up. This is due to tenants exercising the right to buy and the demolition of poor-quality housing.
In 2001/02, transfer associations sold about 7,000 homes through right to buy and demolished nearly 2,000, while building just 6,000 new properties, says the report Maturing assets: the evolution of stock transfer housing associations, published on September 16.
Although business planning has become more sophisticated since the first transfer landlords were created in the early 1990s, some associations recognise that it will take longer than expected to pay off loans.
'Because transfer promises, for example, on rents and catch-up repairs, are seen as sacrosanct, the newly created landlord usually has very limited room for manoeuvre,' says the report, based on research by Heriot-Watt University.
Attempts to overcome budgetary problems by centralising services or mergers with other associations may attract criticism from the founder local authority.
However, only a third of transfer landlords believed their relationship with the council had become more distant following the immediate post-transfer period.
PFsep2003
