09 May 2008
The traditional system for funding new social housing through government grants could be dismantled by the nascent Homes and Communities Agency.
Sir Bob Kerslake, chief executive designate of the HCA, is exploring alternative ideas with registered social landlords. One possible model involves the agency taking an equity stake in housing and sharing the profits made when the homes are sold on.
At present, RSLs fund homes for social rent and low-cost sale through a mixture of Housing Corporation grants and private borrowing, and retain any profit when a home is sold.
Kerslake said it was possible that homes might be funded through a combination of grants and equity shares. 'We want to look at different ways of achieving outcomes and part of that would be that funding was part of an investment rather than a grant,' he told Public Finance.
An equity-based model would mean the HCA shared the risk of property prices falling, said Kerslake, who wants the agency to take over from the corporation later this year, rather than wait for its planned starting date of April 2009.
'It's part of a conversation that I'm having with associations about different approaches,' he added. 'It's something that can be moved forward only when we have the new agency.'
The National Housing Federation pointed out that the corporation had floated an equity investment model four years ago but said it was happy to explore the idea again.
'The current business model assumes that housing associations get 100% of the benefit,' said Neil Griffiths, the NHF's research leader. 'If they are required to split it with the HCA, they will require more upfront investment.'
PFmay2008
