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The new investment framework and supported housing
Jake Eliot, Policy OfficerSHiP Conference 2011
Friday 4 February
Summary
• The Spending Review and context• Quick look at the new framework• Issues for supported housing• Localism Bill and tenure reform• Discussion
A brave new world?
• Financial context:- cut the deficit - the new investment framework
• Ideological position: - social housing seen as stagnant- culture of dependency- Local leadership- tenancy and allocation reform - regulatory reform
• Housing: NAHP 60% cash cut:- £4.5 billion (including existing commitments,
mortgage rescue, empty homes, places of change and G&TSs) over next 4 years
- ‘flexibility’ to fill the capital hole- new ‘Affordable Rent’ tenure at up to 80% of
market rent (on a proportion of re-lets and new build) in return for an agreement on new supply.
CSR: The headlines
• 19% cut across departmental and capital budgets• CLG: largest cut – departmental budget by 51%, capital
spending by 74%
The new funding model
• Government argue a limited capital pot can provide 150,000 new affordable homes
• But... future supply is extremely sensitive,
o proportion of re-lets at new tenure o market rent levels – LHA and housing benefit caps
....New model will not generate capacity everywhere
Quick look at affordability in SE
£0
£50
£100
£150
£200
£250
£300
Brig
hton
Mole
Valle
y
Guild
ford
Tan
drid
ge
T'b
ridge
& M
alling
Sev
enoa
ks
Mid
Sus
sex
Tun
brid
ge W
ells
Hors
ham
Adu
r
Cra
wle
y
Wor
thin
g
Chic
hest
er
Dart
ford
Gra
vesh
am
Sw
ale
Cant
erbur
y
Maid
stone
Wea
lden
Roth
er
She
pway
Ash
ford
Tha
net
Medw
ay
Hast
ings
Dove
r
£'s
per
wee
k -
2 b
ed p
rope
rty
Weekly cost of renting from an RSL
Private rent
Weekly cost of buying a lower quartile priced flat
Old model vs new model
Social Rent Affordable Rent
Rents at c. 50% of market rent Rents at up to 80% of market rent
Grant at c. £80k unit (nationally) Grant as part of the wider offer
Limited use of existing assets – disposals and conversions
More active asset management strategies involving conversions of voids and disposals
Lifetime tenancies Fixed term tenancies – with opportunity to extend
• Level of flexibility? What about service charges?• Where does the model work? • What’s the ‘market rate’ for supported housing?• In local relationships, who’s making the case for
supported and specialist? • Interaction with welfare reform? • Will near market rents be affordable or create
work disincentives?
Some big questions about supported housing
• How to deliver range of solutions and value for money for grant
• High risk of revenue model
• Challenge of timescales
Key issues for development
The major stumbling block:rents and benefits
Family size Housing need Benefits left for housing costs within £500 cap
Couple with 4 children 3b6p £129.95
Couple with 5 children 4b7p £65.97
• Rent risks – need confirmation of high level principle between CLG/DWP that is covered and not subject to further review after sign-off
• £500 p.w. (£26k p.a.) benefits cap for larger families as proposed by the Universal Credit
• If this cap remains it will limit the supply of larger homes, particularly in high value areas. HCA/CLG in discussion with DWP.
• Certainty on benefits • Enabling rents and
service charges• Sensible partner
engagement• Product flexibility • Operational control for
housing associations
Radical reform needs real flexibility
Other potential solutions
• Non-grant development models
• Equity release through asset management
• Better or different investment partnerships?o Health or social serviceso Consortia with developing associations
Where do we go from here?
• End of Jan/early Feb - HCA publish prospectus • Feb to end of March – bids invited from providers • April to May – assessment of bids • Early to mid June – ‘National mediation’• Mid June – HCA Board/Ministerial sign-off• Late June – contracts signed.
Agreeing investment packages
• Need tight proposals for first eighteen months of programme
• Critical to have local authorities on board – particularly to deliver supported and specialist
• Know the risks of engaging….• ….and the risks of not engaging
Flexible Tenancies and tenancy strategies
• Flexible tenancies of at least 2 years
• Limited succession rights
• Local Authorities not obliged to have open waiting lists
• Local authorities will have a strategic tenancy policies
• More tenant transfers outside allocation system to improve mobility
Jake Eliot
Policy Officer
020 7067 [email protected]
www.housing.org.uk/careandsupport
Keep in touch