Is Building For Sale The Answer To The Rent Cuts?

Article

05 October, 2015

Following the announcement that rents would be cut by 1% for the next four years, many housing associations' development programmes have been halted whilst business plans are reconsidered.

One of the emerging themes is that development for sale may be on the increase to claw back lost income due to the rent cuts and meet targets.

Before the emergency budget was announced earlier this year, social landlords believed that they would continue to benefit from rents increasing each year with cpi plus an additional 1%. This is now all due to change from April next year as a result of the Welfare Reform and Work Bill. This shock u-turn has meant that housing associations have had to rethink their whole business plans to accommodate for the £3.9 billion loss of income it is predicted landlords will suffer as a result, over the next 4 years. The Government announced earlier this week that they would consider an exemption to these cuts however, this would be in limited situations where the housing association faces insolvency and has considered all mitigating steps including the possibility of a merger.

Although housebuilding has increased by 11% from last year, it is still below the 250,000 homes a year required to meet the demand, and the rent cuts are only putting more pressure on an already strained housing supply.

Forbes' Housing and Regeneration Team specialise in assisting registered providers with development of new build housing and has a dedicated plot sales team whether for open market sale or shared ownership.

For further information please contact any member of the Housing & Regeneration (Property) Team on 01772 220022.

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