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Shared ownership Right to Buy plan forces landlords to rethink strategic partnership bids
Housing associations are being forced to reconsider their bids for the next phase of strategic partnership funding after the government unveiled plans to give their tenants the right to buy a portion of their home, Inside Housing can reveal.
Sources from those bidding for the next wave of strategic partnership funding from Homes England have told Inside Housing that the government’s proposal, which was announced at the Conservative Party conference in September, may force them to alter the number of and tenures of homes included in their current strategic partnership bids.
In August this year, existing strategic partners were invited by Homes England to submit bids for funding up until 2029, with the expectation that successful bidders would be announced this Autumn.
However, Inside Housing understands this announcement has been delayed until next year, partly as a result of the election, but also because Homes England and bidders need to consider what impact the shared ownership Right to Buy will have on bids.
It is understood that the funding handed out through the next phase of the programme will come with the condition that the new homes will be subject to the shared ownership Right to Buy.
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The new policy will see housing association tenants be given the right to buy a 10% share in their home, which could then be built up in 1% chunks.
Partners have raised concerns over their ability to borrow money from lenders to fund new homes without the guarantee that they will remain rented tenures.
Typically, housing associations are able to borrow money at low rates thanks to having a dependable stream of income through social housing rents. However, many now worry that the shared ownership Right to Buy will add a level of risk and increase borrowing costs.
Some lenders already place limits on the proportion of shared ownership units they will offer security against.
One source told Inside Housing that this may alter their organisation’s appetite for the amount of new homes they wish to build, while another source said they will now need to return to their board with an updated 10-year model, and may reconsider whether to bid through the programme altogether.
Homes England has currently entered into 23 strategic partnership with 27 housing associations, spending £1.8bn through the programme.
Partners bidding for the latest phase of funding are expected to have at least 4,000 additional grant-funded affordable homes started on site between March 2022 and March 2027, with an 8,000-home uplift expected on their development
programme up to 2029 overall.
A spokesperson from Homes England said: “Strategic partners who submitted bids have been advised that any significant funding decisions have now been put on hold due to election period restrictions.”
Homes England was unable to comment on the impact of the shared ownership Right to Buy due to purdah restrictions around the election.
A guide to strategic partnerships and the deals announced so far
Under strategic partnerships, housing associations agree to increase their development programmes by a specified number of homes in return for extra funding for the government.
Unlike some other government funding programmes, they can use the new funding flexibly across their development programme, determining the tenure of affordable homes closer to completion following negotiations with Homes England.
The following housing associations were confirmed as strategic partners on 30 January 2019:
| Housing association | Grant | No of additional starts to March 2022 |
|---|---|---|
| Bromford | £66.4m | 1,400 |
| Curo and Swan | £51.1m | 1,067 |
| Liverpool Mutual Homes and Torus | £66.4m | 1,757 |
| Longhurst and Nottingham Community Housing Association | £71.7m | 1,685 |
| Together Housing Group | £53m | 1,152 |
| WHG | £38.7m | 1,000 |
| Yorkshire Housing | £61.8m | 1,300 |
| Your Housing Group | £87.5m | 2,315 |
Homes England announced the following partnerships in October 2018:
| Housing association | Grant | No of additional starts to 31 March 2022 |
|---|---|---|
| Guinness/Stonewater | £224m | 4,500 |
| Optivo | £44.9m | 1,000 |
| Orbit | £128.8m | 2,762 |
| Platform Housing Group | £71.8m | 1,800 |
| Southern Housing Group | £55.1m | 1,005 |
| Thirteen | £40m | 1,000 |
| Vivid | £88.2m | 1,408 |
Table published by Homes England on 31 October 2018
Homes England also earlier this year confirmed the following partnerships:
| Housing association | Grant | No of additional affordable starts to 31 March 2022 |
|---|---|---|
| EMH Group | £30.5m | 748 |
| Great Places | £29.2m | 750 |
| Home Group | £85m | 2,300 |
| Hyde | £95.4m | 1,623 |
| L&Q | £85m | 1,724 |
| Matrix Partnership | £77m | 2,257 |
| Places for People | £74m | 2,603 |
| Sovereign/Liverty | £111.5m | 2,275 |
Table published by Homes England on 3 July 2018
