Gloves come off in RSLs’ elite partner struggle

Housing associations desperate to win a place among the Housing Corporation’s development partners have been gazumping each other for prime sites, it has emerged.

The practice is understood to have spread across London and the South-east as associations pull out the stops to show they are ready to deliver the corporation’s tough housebuilding targets when the bidding round for 2006/7 and 2007/8 gets under way.

Bidding will take place in the summer, but a final date is subject to ministerial approval.

The corporation is expected to spend £3.3bn on more than 60,000 new homes by April 2008. Associations are so keen to win a share of the cash that, in one instance in London, a plot of land reportedly worth £1.5m was sold for £5m.

A source at one London association said: “We have been gazumped on a number of occasions. Recently in west London we had a deal with Hounslow council and one of the bigger associations came in and simply outbid us. The same happened in Harrow [north London] too.

“This is certainly not best value for taxpayers’ money and is not good for tenants when associations are investing so much money in buying land.”

The source said many associations that missed out when the corporation picked its 70 development partners in March 2004 were “preparing bids and buying up land with vast sums”.

He added: “This development is very worrying as not everyone is going to get on the list. Private developers are going to get a place as well and so, presuming the number will remain at between 70 and 80, people are going to have to miss out.”

A corporation spokeswoman said: “Gazumping shouldn’t be happening. If we’re given details by the associations concerned, it’s something we would look at as part of the regulatory process.”

In one instance in London, a plot of land reportedly worth £1.5m was sold for £5m

A spokesman for Places for People, which missed out on development partner status last year, said: “We’re still working on our plans to bid for partnership status. We have no experience of gazumping but it’s not surprising that it’s going on.”

A number of associations are also negotiating hard to set up development consortia for the upcoming bidding round.

This is despite the corporation having warned about “marriages of convenience” that fail to improve the quality of delivery (HT 25 June 2004, page 17).

Associations setting up consortia include East Midlands Housing Association; a venture led by Eastern Shires Group; and a third called Encompass, which includes Flagship and Aldwyck.

Chan Kataria, chief executive of East Midlands Housing Association, said: “We want to achieve efficiency in procurement and we’re more likely to achieve this by pooling resources.”

Sources close to the corporation have also said the regulator plans to cut “about 12” associations from the current 70 partners.

It is unclear which associations face the chop, but the corporation has made it clear it will “relegate and promote” from and to the elite list (HT 2 April 2004, page 17).

A development source said: “Some current partners are failing and the Corporation is losing confidence in their ability to deliver their programme. Some associations that are not currently partners have been told they will be.”