Bid for grants, private builders are urged

12 Apr 07
More private developers are being urged to bid for grants to fund social housing and low-cost ownership schemes.

13 April 2007

More private developers are being urged to bid for grants to fund social housing and low-cost ownership schemes.

Just 1,500 out of 84,000 homes planned under the Housing Corporation's current two-year National Affordable Housing Programme for England are being built by private firms. But Steve Douglas, its deputy chief executive, said developers would need to play a greater role over the next three years as government targets increase.

Speaking on April 10 as the corporation launched the pre-qualification stage of its 2008/11 programme, Douglas said some developers who had decided to 'wait and see' last time were showing more interest. 'We're really pleased that a number of them are coming back to us and saying that they want to do business.'

Bidding for the first three-year programme will start in September, with most grants to be handed out next March. Ministers will reveal how many homes they will fund in this autumn's Comprehensive Spending Review, but the corporation has already called for the number of homes for rent to almost double, from 23,000 to 40,000 per year.

Private builders are promised an easier online bidding system and simpler grant agreements if they transfer homes to a registered social landlord as soon as they are built. They will be paid 50% of grant up front, in the same way as RSLs, instead of having to wait until homes are occupied.

But Terry Fuller, chair of the House Builders Federation's affordable housing group, said many builders were still likely to be put off by the 'onerous nature' of contracts and the need to disclose profits made on open market sales, as they are grant-aided homes. 'The disincentives are still there,' he said.

The corporation is also keen for arm's-length management organisations to bid for grants. While Almos cannot borrow privately in the same way as RSLs, Douglas said they might be able to use their assets to 'lever in' extra finance, while councils had a vital role in providing land for regeneration programmes.

For the first time, some money will be held back so that further grant bids can be made on a quarterly basis from October 2008.


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