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April 6, 2011

New scheme a disaster for housing associations

The Government is committed to building more affordable housing for those on the lowest incomes and has consistently praised the key role that local housing associations have played over the past 30 years in building social housing and regenerating local communities. But there are signs that this may be coming to an end.  Many believe the new funding arrangements are designed to exclude the smaller housing associations and housing coops

Extract of a response by Glasgow and West of Scotland Forum of Housing Associations. For full paper click here.

The new funding arrangements apply to every housing association seeking approval to build new houses in 2011/12. They set aside existing Housing Association Grant procedures, by introducing a new competitive bidding process and greatly reduced levels of Scottish Government subsidy.

GWSF is strongly opposed to the new arrangements because:

  1. They are a short-term, unsustainable way of investing in new housing
  2. They will exclude local housing associations and co-operatives from being able to build new housing, as they have done so successfully since the 1980s
  3. We need a different plan for making housing investment sustainable. Housing investment has been cut disproportionately in 2011/12, despite the powerful case for making it a bigger national priority.
  4. The sums don’t add up. The grant benchmark level (£40,000 per house) is completely unrealistic.
  5. The role of local housing associations in building new housing and regenerating communities is under serious threat – again. Housing associations and co-operatives have been the main builders of social housing in Scotland for the last 30 years. This policy has lasted because it works, bringing lasting and effective solutions in countless
  6. The policy will not deliver the right houses in the right place. The guidance on bidding says that funding may still be available for types of housing that cost more to produce. For example, housing in regeneration areas: rehabilitation projects: projects in rural areas: and housing for people with particular needs. Our question is how can this be achieved?
  7. More municipal housebuilding is not a long-term solution. 40% of the Innovation and Investment Fund (£20 million) will be directed specifically to new council housebuilding. In theory, any local authority can apply for a share of this funding. In practice, council housebuilding is not taking place in all parts of Scotland. This includes Glasgow and many other parts of the west of Scotland. Elsewhere, current policy is headed very much in the direction of higher levels of council housebuilding.
  8. The Innovation and Investment Fund may squeeze out a few more houses in the very short term – but it is not financially sustainable. Housing associations already contribute directly to the costs of building new housing:  Development schemes typically generate private finance of around 40% of the capital costs. Housing associations have used their assets to “front fund” housing investment programmes to the tune of £249 million in recent years.