Leave our surpluses alone, warn RSLs

14 Jun 07
Large housing associations have stepped into the debate over how much landlords can afford to borrow by warning the government to keep its hands off their surpluses.

15 June 2007

Large housing associations have stepped into the debate over how much landlords can afford to borrow by warning the government to keep its hands off their surpluses.

According to the G15 group of housing associations, which own nearly 360,000 homes in London and Southeast England, most landlords already have a strong record of ploughing money back into local communities and cannot afford to pay more towards the cost of new affordable housing.

Earlier this year, the Housing Corporation claimed that registered social landlords could increase borrowing by £6.8bn — allowing development grants to fund 34% of new homes instead of 44%.

But David Montague, group finance director at London & Quadrant Group and chair of the G15 finance directors, said RSLs could not throw away money raised from asset sales and other activities on a 'two-year spending spree' solely to ease pressure on the Treasury.

'Our concern is that analysts in government departments look at balance sheets and see reserves and assume that they're gathering dust,' he told Public Finance, when they 'are already being put to good work'.

The G15's report, Capital Finance, published on June 8, claims that associations require strong balance sheets to take commercial risks.

The group is also backing calls by the National Housing Federation for more flexibility to raise rents. A rise of just 0.5% above inflation would enable RSLs to build twice as many homes per year.

An NHF report, due later this month, will agree that RSLs can afford to borrow more but will also call for them to build more homes for sale and keep most surpluses from asset sales. 'We are looking for more sustainable solutions,' said NHF research leader Neil Griffith.

PFjun2007

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