20 July, 2016
Exit routes, exit routes, exit routes… In our day to day work in the office dealing with development work for housing associations and whenever we speak at seminars and conferences on development, we always find the same 2 words are on our lips - exit route. Those words will be even more important over the next few months and potentially years given the uncertainty over the property market following the Brexit decision.
Whether an RP is buying properties for shared ownership sale under a s106 Agreement or acquiring land for outright or shared ownership sale, housing associations should always ensure they have a viable exit route if those properties do not sell.
In the last week, the government has come under pressure from housing associations and the National Housing Federation for greater flexibility in its new shared ownership programme and to ensure that the housing associations have that exit route.
The Homes and Communities Agency (HCA) is making available £4.7 billion of capital grant for the 2016 to 2021 housing programme and housing associations want assurances from the HCA that if they cannot sell the shared ownership properties built with the grant then there are alternatives available and the freedom for housing associations to decide the appropriate tenure. The chief executive of the National Housing Federation David Orr is lobbying for this change and commented at the NHF Brexit Conference in London that if the government made available grant for building homes of any tenure then the housing sector would continue to build through economic uncertainty. Orr went on further to say "We will use the money you have already committed, we will make sure the money goes on new homes. What we need from the government is an agreement from the government that the money is used flexibly".
Having flexibility in place will assist housing associations to manage the risk and plan for a suitable exit route. At present these assurances are not available and housing association may want to look at other ways in which they can mitigate and manage risks.