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

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£50

£100

£150

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£250

£300

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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

Wait, did someone say ‘Localism’?

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 1084Jake.eliot@housing.org.uk

www.housing.org.uk/careandsupport

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