housing corporation plans to allow registered social landlords to borrow more money could encourage them to take unsuitable risks, housing professionals have warned.
The warning comes in response to the corporation’s consultation paper on diversification, released on 22 December. It proposed that:
  • RSLs should be allowed to use their social housing assets to borrow money to fund non-social housing work, such as homes for sale at market values, or nursing homes
  • for preference, they should borrow against non-social housing assets, but could use their social housing as collateral in exceptional circumstances
  • an association must prove that the borrowing does not put its social housing at risk.

Although some in the sector welcomed the proposals, others feared the extra borrowing opportunities could encourage RSLs to take on projects before they were properly thought through.

Inge Kettner, finance director at Whitefriars Housing Group, said: “It makes me nervous. Given our tight financial circumstances we cannot do subsidy, so people are forced to think about schemes that come forward. If you can do lots of subsidy, you can go into schemes sooner than you should do.”

But Raj Upadhyaya, group investment director of the Guinness Trust, said: “This idea is a good thing. It gives RSLs much greater flexibility in running their business.”

Responses to the consultation must be submitted by 17 February.

Source

Housing Today