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Asset management or mixed communities? Matthew Warburton - 31/01/2014

affordable_300This week the Homes and Communities Agency (HCA) published its prospectus for the 2015-18 Affordable Housing Programme, giving details of bidding arrangements for £1.7 billion in grant funding for new social housing outside London. Details of the London arrangements are included in The Mayor's Housing Covenant: Funding Prospectus 2015-2018. Comparison of the two documents makes interesting reading.


In his Ministerial foreword to the HCA prospectus, Kris Hopkins makes it clear that successful bidders will need to minimise the grant needed to fund each new home by selling vacant properties or converting them to affordable or rent. Councils are exhorted to make local authority land available for new developments to further reduce costs.


The prospectus itself states: "we will expect bidders to explain how many properties they are planning to sell to fund the programme and why they have chosen not to dispose of more ... Providers should include evidence of how they identify properties with high market values, or which are costly to maintain, and their approach to deciding whether to hold, sell or convert these properties to another tenure".


What is conspicuously absent from this passage is any acknowledgement of the main reason why social landlords may be reluctant to dispose of "high value" properties. Location, location, location is of course the main determinant of property value, and social homes of higher value are nearly all to be found in the more expensive areas.


To look at the question of disposals solely in terms of asset management and maximising housing supply ignores any priority that may be given locally to creating or sustaining mixed communities. The social costs of further intensifying social segregation are completely ignored in the HCA prospectus.


The Mayor's approach is somewhat different. His proposal is that all new Affordable Rented homes should be cross-subsidised from the provision of market housing for rent or sale to reduce the call on government grant. "All providers," his prospectus states," will be expected to provide market housing for rent and/or sale alongside of their Affordable Housing offer, where it if financially sustainable for them to do so."


Forty per cent of the £1.25 billion available for London in 2015-18 is earmarked for low cost home ownership programmes - shared ownership, "rent to save" and equity loans. Half the remainder will be used to fund standard Affordable Rent housing at up to market rents, and the remainder allocated for capped rent properties "for households in the greatest need".


On the question of disposals, his prospectus is less directive than the HCA's: bidders are encouraged only to "give consideration to targeting disposals, or letting at market rents, of selective high-value or non-standard stock, where appropriate". Conversions of existing stock are particularly encouraged "as a way of introducing a range of incomes into mono-tenure estates". 


Some may wish to challenge the Mayor's priorities and the distribution of resources between households on the lowest and rather higher incomes. However, his approach does at least signal that the impact of "asset management" decisions on the social mix of new and existing housing developments deserves serious consideration.


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