19 December 2008
By Neil Merrick
Housing associations struggling to sell homes to first-time buyers are being offered grants to turn them into rented accommodation.
The Homes and Communities Agency says it will compensate associations for lost income if they temporarily rent homes to people on housing waiting lists – providing the agency receives part of the proceeds when they are eventually sold.
The downturn in the housing market has decimated the low-cost home ownership programme, which associations partly rely on to fund new social housing. A Housing Corporation survey published just before it was wound up last month showed that 9,955 homes remained unsold at the end of October.
Sir Bob Kerslake, chief executive of the HCA, said it recognised that the loss or postponement of sales receipts had a serious impact on the ability of registered social landlords to subsidise development schemes.
The agency would share the risk of converting homes to social rented housing, providing that it benefited from any subsequent growth in value ahead of their sale.
He added: 'This is a “something for something” strategy that should start to unblock the housing stalemate by increasing levels of rental homes and kick- starting stalled schemes.'
An HCA spokesman said bids for grants must meet the same value-for-money criteria as those for new housing. Properties converted to social renting with HCA support would remain in the ownership of RSLs.
The HCA is also helping RSLs and other developers buy and develop land. New grant rates will reflect the higher costs of borrowing during the recession and the partial collapse of Section 106 'planning gain' schemes.
The government announced on December 15 that 130 developers had signed up to its Homebuy Direct scheme. The new scheme offers free equity loans to first-time buyers, jointly funded by the government and the developer, for up to 30% of the purchase price.
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