Memorandum from the National Housing Federation
(WM 14)
1. The National Housing Federation welcomes
the opportunity to submit evidence on the current financial and
economic situation and its impact on businesses in the West Midlands.
This submission outlines:
— The current challenges facing housing
associations attempting to provide new affordable housing
— The details of the fiscal stimulus that
the Federation, as part of the 2020 Group, is asking of Government.
2. The Federation represents 175 housing
associations in the West Midlands who own nearly 250,000 homes
on behalf of over 450,000 people. Housing associations are
independent, social businesses. In 2007 associations in the
region employed over 11,000 people directly and had a combined
turnover of close to £950 million. A recent study has
calculated that direct employment by associations in the West
Midlands contributes £280 million to the regional economy
per annum.
3. The housing association sector is keen
to engage and provide positive solutions during this period of
economic uncertainty. However, housing associations as social
businesses are facing the same credit pressures as other businesses
and need to de-risk where possible.
4. Many associations are at the forefront
of supporting local communities during the credit crunch, particularly
through financial inclusion work and skills/training projects
to obtain work. Housing associations also house some of the poorest
and most deprived households and therefore are a good conduit
for accessing these groups by bringing unemployed people into
the workforce and so ultimately driving up the GVA of the region.
5. Associations are experienced in working
in regeneration and have a positive history of engaging and supporting
local communities in accessing employment and training initiatives.
Many associations support residents in dealing with complex money
management issues, providing advice or funding advice workers
and giving access to saving schemes. A large number of training
opportunities, social enterprise and employment opportunities
are given through housing associations. Many examples of this
work could be provided but one example is the Walsall Housing
Group Skills Centre which provides training and employment experience
in construction and property maintenance trades. Six housing associations
are currently involved in the LSC pilot on adult advancement and
careers service prototypes which supports the long-term unemployed
and also to enhance the skills of existing employees.
6. The most significant challenge to the
sector is how to deliver the current affordable housing development
programme. Our members who are developing are facing considerable
difficulties. This submission will summarise the key challenges
facing members.
CHALLENGES FOR
THE SECTOR
7. Our members are facing a reduced flow
of finance from lenders. In some cases, lenders are demanding
the review of the entire loan book when negotiating new finance
deals. The rationing of finance has led to some schemes being
abandoned or delayed.
8. The slowdown in the sale of shared ownership
properties caused largely by the lack of mortgages available for
shared ownership have led to a decline in the development of new
shared ownership schemes. Therefore, funds from shared ownership
sales used to cross-subsidise development no longer exist.
9. The lack of private development has resulted
in drying up of section 106 agreements, which is reducing
the development of affordable housing.
WHAT WE
ARE ASKING
FOR
10. The Federation has urged ministers to
use nationalised bank Northern Rock to boost the supply of mortgages
for low cost home ownership. We believe that Government should
take action to require lenders that have benefited from the bank
bail out to offer mortgages for shared ownership.
11. The Federation is calling for the Homes
and Communities Agency to increase grant rates and therefore increase
the capacity of the social housing sector to deliver more homes.
The Federation has carried out some modelling work to calculate
the cost of delivering an additional 20,000 homes nationally
at a 75% subsidy rate. Increasing the grant rate for Social Housing
Grant would act as a short term stimulus to supply homes and create
jobs. It would enable associations to forward finance new schemes
and to ensure that new schemes break even without the cross-subsidy
from shared ownership. This would provide a positive solution
through difficult market conditions and enable associations to
offer a new range of home options to customers.
12. The National Housing Federation is calling
for an additional £6.35 billion over the next two years,
which would build 100,000 new homes; 20,000 on top of
the original target. This would consist of £3 billion
for 20,000 new homes above the CSR target, £2.6 billion
to ensure we continue to deliver existing CSR targets and a £0.75 billion
infrastructure fund to pump-prime new developments that would
not otherwise be started in the short-term.
13. The Government should also consider
whether public loans could be made available to housing associations
as an alternative to private finance to enable the social housing
development programme to flourish. This would be of an extra cost
to Government but would result in a new income stream in the form
of loan repayments. Members would welcome the use of equity stakes
in schemes. At the same time, the Federation and its members are
looking to develop other funding models including equity release
to support sustainable long term funding plans. The Federation
acknowledges the pressure on public spending and is seeking to
find innovative new models of funding to ensure the continued
supply of social housing through most efficient means.
14. As well as a fiscal stimulus to support
the growth of new social homes, we would be looking to the HCA
to consider how public sector land might be more easily released
for development.
15. The economic benefits of such a package
are as follows:
— Reducing job losses. An additional
20,000 social rented homes over a two year period would directly
preserve 30,000 jobs.
— Sustaining business activity. Would
improve cash flow and reduce risk for private and social developers
and suppliers.
— Retaining skills and driving innovation.
Public sector to take lead in innovation in house building.
— Increasing labour market mobility.
Social housing will provide some of the housing required to
enable people to move to where the jobs are.
— Promoting long-term macroeconomic
stability. By supporting the house building industry through
the downturn it should reduce some of the economic volatility
which leads to such big economic cycles.
| 
