10 October 2008
Grants for affordable housing must continue to increase in response to the credit crisis facing social landlords and other developers, the head of a new multi-billion pound government agency said this week.
Schemes put forward as part of the National Affordable Housing Programme should not be rejected because they fail to hit earlier targets for increasing private borrowing, said Sir Bob Kerslake, chief executive of the Homes and Communities Agency.
Promising to 'keep the show on the road' in the face of mounting problems in the financial markets, Kerslake told a Housing Corporation conference on rural housing that the HCA would use its limited powers to sustain house building and other major projects.
While capital receipts that were expected to fund some regeneration schemes had almost dried up, grants that will be distributed by the agency from December would be sources of cash 'in a world where cash is hard to come by', he told the conference in London on October 8. 'We're probably one of the few players that have liquidity at this moment.'
Prior to this year, about half the cost of homes built by housing associations was funded through government grants. While associations pledged to increase borrowing for the 2008/11 NAHP, their plans have been thwarted by the credit crisis.
By bringing forward money from the final year of the 2008/11 NAHP, ministers effectively increased grant rates from last month. But each scheme is assessed on its merits.
Kerslake said it was impossible to set a new fixed rate for the percentage of each scheme that would be funded through grant. 'We are moving into territory where it's about negotiation and discussion,' he said.
Earlier, junior housing minister Iain Wright told councils not to wait for legislation before tackling the problems facing rural communities. Local authorities can already take steps, such as interpreting planning rules more flexibly and reducing council tax discounts, he said.
Wright welcomed this summer's review of rural communities by Liberal Democrat MP Matthew Taylor, which pointed out the problems people have in setting up small businesses.
PFoct2008
