Including affordable homes as an afterthought is no longer an option, corporation says
The Housing Corporation is to insist that developers include housing associations in section 106 projects from the outset if they want funding assistance.

At present, associations are often involved at the end of the process to run the affordable housing that developers include in the projects in return for planning permission from the council under section 106 planning gain agreements. The corporation then gives the associations money to buy the homes – effectively subsidising the developers.

But Neil Hadden, the corporation's assistant chief executive for investment and regeneration, said: "We are reliant on those [developers] getting planning permission. We are also concerned that developers factor in getting corporation money when they are planning developments, and in negotiations with associations. This means that associations have got two hands tied behind their back when they go and negotiate the price."

To combat this, Hadden said the corporation would no longer fund section 106 schemes unless it was involved from the start. It also plans to scrap the total cost indicators and grant rate framework. "There are more schemes than we can fund in any one year, so we'll just have to be a bit pickier," he added.

Section 106 provides 12,000 homes every year. According to research body the Joseph Rowntree Foundation, 70% of these get corporation funding in some way.

Hadden also confirmed that funding rounds will now be every two years, not annual, and that the available cash – likely to be £1.4bn – would be split into two streams.

The new second stream will be available to developers and associations that become "development partners" of the corporation. These associations will be required to produce 30-year development plans.

Those that missed out on this stream would be encouraged to form their own partnerships, Hadden added. "The important message is that the approved development programme is not there to prop up organisations and give them money because they fancy doing a bit of development one year – this is about meeting regional housing priorities and getting the best product at the best price to the public purse."

The corporation was finalising its proposals this week ahead of publishing a full strategy document in "mid-October". They will then be subject to ministerial approvement.

Nick Townsend, group legal director at housebuilder Wilson Bowden, said: "This is very bad news for us. It makes a complicated process even more complicated."

Source

Housing Today