The Government announced how the £5.5 billion for housing investment available through Regional Housing Pots (RHPs) for the next two years - 2006/07 and 2007/08 - will be allocated.
£3.9 billion is to be made available to social rented housing and low cost homeownership schemes across the regions - an increase of around 20% over 2004/05 and 2005/06 - to reduce homelessness, and help low-income earners and first-time buyers onto the property ladder. The remaining £1.6 billion will mainly go toward improving existing housing, with around £700 million of this earmarked for helping local authorities meet the Government's target of bringing all council housing up to the Decent Homes Standard by 2010.
For the first time, the Housing Corporation's main bidding round will be open to developers and other non-registered bodies. Grants will go to those who are considered most able to deliver on the range of housing needed whilst offering value for money.
The final affordable housing allocations will depend on the outcome of the bidding round. The ODPM and the Housing Corporation will be in discussion with the Regional Housing Boards throughout the bidding process to ensure that the final allocations reflect the commitments made in Homes for All, the ODPM's Five Year Plan for affordable housing, including:
Allocations for individual local authorities will be announced alongside Regional Housing Pot allocations later in the year, so local authorities must wait to find out their share of the cake. That allocations reflect the funding advice from Regional Housing Boards may give some local authorities fuel for speculation.
The Government gave more details about its HomeBuy scheme, which aims to help around 100,000 households into homeownership by the year 2010 through simple, streamlined, and more affordable routes.
Under the proposals, there would be three HomeBuy products, all based around equity sharing:
Social HomeBuy, enabling social tenants to buy a share in their current home.
A minimum initial purchase of at least 25% of the cost of a home would apply, with the remainder of the equity being held by a housing provider. The provider would be able to levy a charge of up to 3% on their equity (a lower target average for the charge would be set at 2.75%).
Buyers under the scheme would also receive a discount on the total purchase price of their home. At least initially, there would be some flexibility in the precise terms of the scheme, to ensure a scheme that works well for both providers and buyers, and to trial different products.
Receipts generated by Social HomeBuy sales would generally be used to provide more social lettings, with a possible small proportion going toward other housing related projects.
New Build HomeBuy, enabling people to buy a share in a newly built property.
A minimum initial purchase of at least 25% of the cost of a new build home would apply, with the remainder of the equity being held by a housing provider. The provider would be able to levy a charge of up to 3% on their equity (a lower target average for the charge would be set at 2.75%). The scheme would be open to the same groups eligible for Open Market HomeBuy (see below).
Open Market HomeBuy, enabling people in London, South East, and Eastern regions to buy a property on the open market with the help of an equity loan. Purchasers would need to raise funds for an initial purchase of 75% of the cost of a home on the open market, with a housing provider providing a loan for the balance required. A small charge may be made on the equity share held by the provider.
The scheme would be available to eligible key public sector workers, social tenants, those on housing waiting lists, and other first time buyers identified as priorities by Regional Housing Boards. The definition of a key worker will be extended from the one in current use.
The Government will be keeping the Zone Agent model currently utilised under the Key Worker Living scheme. This will provide a one-stop-shop for all affordable housing options in a given area.
Note:
Home owners who have been assisted by the current HomeBuy scheme are now able to use a percentage of any increase in the value of their property to increase their borrowing, to finance repairs and improvements to their properties.
Derwent Living, which manages some 8,000 homes of which half are for social rent, launched the first ever UK property fund investing solely in student accommodation.
Student accommodation currently represents 40% of the Association's business - just 9% below the Housing Corporation's limit for an association's percentage of non-core business turnover. Without the move, Derwent Living were set to exceed the limit within 18 months.
The fund is being launched with an asset management business and will be a Jersey-based unit trust. It will start with a property portfolio of £23 million, with a target of raising this to £50 million within a few months. The Association hopes to attract investment to the fund of around £200 million.