Supplementary memorandum by the National
Housing Federation (DEC 21(b))
Following our evidence to the Select Committee
on 28 January, we promised to send further information on the
VAT shelter issue (which was sent on 30 January) and on our estimates
of Major Repairs Grant funding requirements. A note on the latter
is attached.
There is one further clarification we would
like to make. In the Minister's oral evidence that followed our's
on 28 January, he made reference to nearly 10% of RSL stock potentially
not achieving the Housing Health and Safety Rating System standards
(Q500). We do not recognise this figure, and our sources indicate
that only a minimal number of RSL homes are not on course for
this standard. We have queried the figures with officials, and
we understand that it will be withdrawn from evidence. However,
we felt it appropriate to relay our concerns directly to yourself
as Chair.
Danny Friedman
Director of Policy
Estimate of Potential Grant Requirement
to Assist Housing Associations to Achieve the Decent Homes Standard
The number of homes currently not reaching the
Standard as reported by associations at March 2003 was 357,575.
Of these 218,000 were owned by transfer associations and it as
assumed that these will be brought up to the Standard or higher
from their current business plans or, where they are older transfer
associations, by additional borrowing.
This leaves stock owned by "traditional"
housing associations amounting to 139,575 currently not meeting
the Standard. This may be a minor underestimate as some associations
did not supply data as they owned less than 250 homes and were
not required to do so as at March 2003. It is expected that the
information will be improved as all associations will be required
to provide the information from 2004 and those without data will
be taking steps to collect it.
The actual total is less important than the
number of homes where associations will not be able to fund improvements,
either to reach the Standard or to carry out other improvement
works needed over and above the Standard to ensure homes continue
to be lettable. The majority of works required to reach the Standard
is of low cost (the English House Condition Survey suggested over
half required less than £832 to achieve the Standard).
However, bids for grant aid to the Housing Corporation
for full improvement packages for 2003/4/5 included some 3,000
homes at an average of about £35,000 each in grant. As has
been noted in evidence to the Committee, it is sometimes more
sensible to go in once and carry out a full package of re-modelling
and improvement works to particularly 19th century stock, than
to carry out DHS works, and then have to go in again and modernise
(and in the process, possibly having to dismantle the previous
DHS works). These will be applications from non-transfer associations.
There were also bids for miscellaneous works (which include Aids
and Adaptations) for another 18,200 homes at an average of just
under £4,000 each.
If the level of application represents the average
cost of the full improvement packages, it would be these high
cost improvements to homes not currently reaching the Standard
which will continue to need grant funding. Without this, associations
will not be in a position to carry out the works to ensure their
homes are appropriate to meet changing housing needs, and will
perhaps have to look to alternatives such as disposal.
Assuming that there are 140,000 units owned
by "traditional" associations currently not to the Standard,
if just 5% of these are in the category noted above of needing
substantial additional works (eg re-modelling or the provision
of lifts) as well as works to reach the Standard at a cost of
£35,000 each this would reflect a need for £40 million
grant per annum over the next six years to ensure they are all
brought up to Standard.
This is the estimate total of the budget for
all works to existing stock for 2004-05 which currently include
a substantial amount for works such Aids and Adaptations. So,
if we want to continue to provide Aids and Adaptations, for which
there is likely to be even greater demand from an ageing population,
through the grant route, as well as meeting the needs of the Victorian
stock, a total provision for major works in the region of £60
million per annum over the next six years is therefore suggested.
These figures will have to be refined as better
information is forthcoming and to take into account the effect
the Housing Market Renewal pathfinders may have in dealing with
some of the high cost improvements required.
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