Major developers are consulting lawyers about becoming affordable housing landlords. Experts expect it to mean tenants paying more
The news, from lawyers working with some of the country’s biggest developers on the plans, has alarmed tenants and housing experts who believe it will mean higher rents, “mediocre repairs” and corners being cut.
New affordable homes on Birch Meadow, Battenhall, Worcester, have been empty for more than two years because the developer has been unable to find a housing association to take them on “Allowing construction firms to set up social housing arms will only magnify the problems of poor service and normalise the profit motive we are already seeing in the social housing sector,” she said. “They are profit-driven builders… they won’t care about keeping rent levels or service charges at affordable levels.”
The NFB and HBF did not respond directly to the claims that their members running affordable housing would lead to higher rents. But they have said their members would be bound by the Section 106 planning agreements. Andrew Cowan, a consultant at law firm Devonshires, said housebuilders which had been talking about registering affordable housing arms for years are now “closer to pulling the trigger” to set up registered affordable housing arms and wanted them in place “as soon as possible”.
The Government’s Regulator of Social Housing said it required its registered affordable housing providers to consult any existing tenants and notify it of sales but had “no veto” to stop them. Mr Beiley said building firms were starting a “new wave” of affordable housing providers and they would expect to make a “modest” profit from them.
“Housebuilders have little or no experience of managing social housing and are driven by minimising financial risk to themselves and maximising short-term returns to shareholders,” he said. “They can also be quite ruthless in their pursuit of profit and may skimp on the repairs and maintenance of these homes.”
“Unfortunately, those responsibilities are not currently being met and so to enable desperately needed homes to come forward, builders are looking to find solutions, but in doing so are legally bound by the requirements of the Section 106 agreement.
“But this isn’t an overnight fix,” Mr Beiley added. “It can take over a year for their registration with the Regulator of Social Housing to come through.” Joanna Lee-Mills, head of social housing development at law firm Shakespeare Martineau, says managing social housing required “a different mind and skillset compared to private development.“Developers will need to carefully balance their commercial interests with the social objectives inherent in affordable housing provision.”
The HBF’s executive director David O’Leary said the lack of housing associations in the market to take on affordable housing was a “major and growing problem increasingly threatening affordable and overall housing supply”.
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