Home news Social housing: Ministers move debt to boost building

Social housing: Ministers move debt to boost building


Plans to encourage housing associations to borrow money to invest in new homes are being announced as part of a fresh government house-building drive.The government is to take about £70bn of housing associations’ debt from its balance sheet, allowing them to borrow without affecting overall debt figures.Housing providers said changing their financial status would help them secure the “long-term finance” needed.But Labour said there was no coherent plan to address the “housing crisis”.Thursday’s announcement will see housing associations reclassified as private rather than public bodies which ministers hope will provide greater certainty and allow them to raise money more cheaply. It comes a week before Chancellor Philip Hammond’s autumn Budget, in which support for housing is expected to figure prominently.Prime Minister Theresa May has pledged to take “personal charge” of the government’s strategy to address what is widely regarded as the chronic shortage of new affordable homes being built, particularly for rent.In her much-maligned leader’s speech to the Conservative conference last month, she promised to kick start a new generation of council house building – by making available an additional £2bn for social housing, while leveraging an extra £5bn in resources for councils and housing associations.The state, she said, must get “back in the business” of building subsidised homes for those not able to buy. And it must do more to increase the supply of land for development and overcome other obstacles.But critics said the sums being allocated were modest. And there have been reports of tensions within the cabinet about whether the government should be borrowing tens of billions to directly fund more schemes.’Rootless generation’In a speech in Bristol on Thursday, Mr Javid will say the decision to remove housing association debt from the UK balance sheet will help create a more “stable investment environment” for the thousands of providers.In 2015, the Office for National Statistics reclassified housing associations as public bodies because of the way they were funded. That decision was greeted with dismay by the sector. It said the government’s focus on reining in overall debt levels could have a negative impact on house-building.At the time, ministers said they would consider the best way to let housing associations act as private sector bodies and to take advantage of low interest rates, to borrow, to invest.Mr Javid will say the rethink by the ONS, along with other initiatives, will help “lay the foundation” for thousands and thousands of new homes.But he will warn new thinking is required to stop “a rootless generation” of tenants drifting from one short-term tenancy to another.By BBC’s Home Editor Mark EastonIn 2015, the Office for National Statistics shocked the government by announcing that ministerial control of housing associations had become so intrusive they could no longer be seen as charities or private businesses. Overnight, all their borrowing was added to the public debt. Now, after the drafting of new regulations currently going through Parliament, the ONS has agreed the government has become hands-off enough again to take all that debt away. The announcement of the change, before the new regulations have come into law, appears to be part of a move to encourage Philip Hammond to offer more help to the housing sector. Whether such pressure will move the Treasury to loosen the purse strings remains to be seen. “There are many, many faults in our housing market, dating back many many years. If you only fix one you will make some progress but not enough. This is a big problem and we have to think big.”On a visit to a housing development in north London, Mrs May will say successive governments have failed to build enough homes and those that have been built have not been done quickly enough.”This will be a long journey and it will take time for us to fix the broken housing market,” she will say.More than 1.2 million families in England are currently on the waiting for council accommodation while in 2015-6 only 6,800 social rented homes were completed.The National Housing Federation, which represents housing associations, said there were encouraging signs – with 50,000 new social homes being started in 2016-17, a 13% increase on the year before.But the Local Government Association said councils should be given the same freedom to borrow to build.Labour, which pledged ahead of June’s general election to build more than 60,000 social homes for rent within two years, said the Tories record over the past seven years was one of failure.
Source: BBC