07 November 2008
By Neil Merrick
Private developers are joining social landlords in using government grants to buy up unwanted homes, it has emerged.
A total of £4m has been allocated to three developers by the Housing Corporation since July, at the same time as £66m went to housing associations. The money is used to buy empty homes that were built by private firms before the mortgage crisis.
To qualify for grants, developers must be recognised 'investment partners' and also eligible to receive house building grants. A corporation spokesman said it was possible that the homes would be sold on to registered social landlords to manage.
On October 28, the Financial Services Authority revealed that mortgage lenders repossessed 11,054 homes during the second quarter of 2008 – up 71% on the same period last year.
The dramatic increase in repossessions is leading to longer housing waiting lists as councils and registered social landlords struggle to find homes for needy families.
The government initially set aside £200m for RSLs and others to buy up unwanted properties, although the sum is not capped. The corporation revealed last week that 46 associations had bought homes, with each purchasing an average of 35.
Sir Bob Kerslake, chief executive of the Homes and Communities Agency, questioned whether buying unwanted homes represented better value for money than building new ones.
He told Public Finance: 'It's not simply about price but about the right property in the right place. We know some of the hardest to shift stock isn't going to be terribly usable for people looking for social rented accommodation.'
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