The Homes and Communities Agency (HCA) published a Framework setting out the details of its new Affordable Homes Programme of investment, inviting Registered Providers to put forward proposals for £2.2 billion of funding (out of the overall £4.5 billion funding pot) for affordable housing during the 2011-15 Spending Review period.
The Framework, co-produced with the Department for Communities and Local Government (DCLG), is a step-by-step guide for providers who wish to apply, working alongside their local authority partners. It outlines the changes in affordable housing provision being introduced for 2011-15, and how this new approach will meet the Government's ambition to deliver up to 150,000 new homes over the next four years.
Key to this new programme is the Affordable Rent product, a more flexible form of social housing that will allow providers to charge up to 80% of market rent on properties, potentially increasing revenues and reducing the level of Government investment in affordable homes. (See also Allocations & Transfers).
As part of the new funding offer, providers will also have the flexibility to convert a proportion of their social rented homes to Affordable Rent as part of a package agreed by the HCA, with all of the additional capacity generated used to deliver new affordable homes.
The Framework will also enable the funding of other housing options including affordable home ownership.
The Framework makes clear that proposals must meet local priorities, with pro-active discussions between local authorities and providers key to success. The HCA - through its enabling role - will act as a bridge between local authorities and providers to help deliver homes in line with local needs.
Any provider, offering value-for-money, can submit proposals. Existing consortium arrangements are expected to be maintained or expanded and larger providers are particularly encouraged to work with smaller, rural, specialist (e.g. supported housing), or with community-based organisations, in order to better reflect local need.
Significantly, the way in which funding will now be allocated has changed. Unlike the previous funding model of continuous market engagement, providers are now invited to submit proposals for delivery of affordable housing to the HCA for the entire four year period - which will be managed through a flexible approach.
Additionally, the document outlines how the HCA will assess the bids, and how programme management will operate under the model. It explains the role of the social housing regulator, currently the TSA, and details arrangements for London, where the HCA's powers are proposed to transfer to the Mayor in April 2012. A timetable for the programme is included.
Registered Providers will have until May 3rd to submit their proposals to the HCA, after which point all offers will be assessed. Subject to Ministerial approval of the proposed programme, it is anticipated that initial contracts will be ready in July.
The framework is available to download from the HCA website - click here.
Housing Minister Grant Shapps published details of the new financial arrangements for council housing - a key measure of the Localism Bill currently before Parliament.
This includes a detailed description of how each council's opening financial position will be determined and the process for implementing these reforms in April 2012.
The Government believes that by providing councils with clarity on funding for the future - they can now begin detailed preparations on how they plan to better meet the housing needs of their communities over the long term.
This new approach will bring an end to the Housing Revenue Account subsidy system, where councils were required to pay council rents to Whitehall - which in turn decided how to redistribute it. Under that system, councils had no certainty about future income, no ability to plan long term and little incentive to be more efficient.
The new self-financing approach puts councils more in control with the tools and incentives they need to manage their housing stock over the long term rather than on a year by year basis.
This will be achieved by a one-off adjustment to each council's housing debt, after which they will retain all the rental income they collect. They will also be free to make decisions about their housing assets without first having to get permission from Ministers in Whitehall.
The Government argues that by introducing a direct link between rents councils charge, the money they spend and the services they deliver - tenants and local tax payers will be better able to hold their landlords to account.
Councils will be able to make information about how money is raised and spent publicly available in an easily accessible format. This will include how landlords are improving value for money to their tenants and local tax payers.
The new financial arrangements include an extra half a billion per year for councils to spend on their housing stock and extra £116 million funding for councils to pay for disabled adaptations to homes. In total, funding for management, maintenance, repairs and adaptations under the new approach will be 14% higher than under the current subsidy system.
The Localism Bill, which is at its Committee Stage in the House of Commons, includes measures to repeal the existing subsidy system and replace it with powers for the Secretary of State to introduce self-financing.