Overview of Funding Streams in the Social Housing Market

The drive to achieve the Decent Homes Standard continues to be a major factor in public sector procurement and social housing refurbishment. 2010 still looms large, though there is an increasing acceptance that for many authorities this may not be achievable and that 2012 is a more realistic date in these situations. 

The newly titled Department for Communities and Local Government (formerly the ODPM) continues to support the Decent Homes Initiative, but is looking to make it more embracing and include wider community re-development within it. The department additionally continues to look for more efficient and cost effective methods of procurement.

Social Housing stock in England for both Local Authorities and Housing Associations is required to meet the government guidelines by the end of the financial year 2010/2011.

Additionally, similar considerations are being discussed for Scotland (Scottish Housing Quality Standard) for 2015, and Wales (Welsh Housing Quality Standard) for 2012.

Funding Options

There continues to be four main options available to Local Authorities and Housing Associations in terms of drawing down funds to complete the works.  Each of these are developing at different rates, with LSVTs slowing down from the original forecast of 200,000 homes per year with the advent of increased numbers of ALMO rounds (see stock transfer update on this site).  Bidders have submitted proposals for Round 5 funds, and there is talk of a final, Round 6 bidding process to be announced later in the year.

Options

The four main options are:-

Housing Investment Programme (PFI) and Major Repairs Allowance (MRA) for authorities who want to continue to own their stock, and do not wish to take up any of the transfer options, and who believe that the above funding streams will be sufficient to meet the Decent Homes target.

Arms Length Management Organisations (ALMO) where the stock is transferred into the management of a new company, but the stock continues to be owned by the local authority, and which enables funds to be drawn down from the government to carry out major repairs to achieve the Decent Homes target.

Large Scale Voluntary Transfer (LSVT) where partial or full transfer of stock is effected between a local authority and a new or existing Registered Social Landlord (RSL), and funding is raised against the value of the properties via financial institutions, and is used to carry out repairs and maintenance.

Private Finance Initiative (PFI) and Housing Revenue Account (HRA) which enables a Local Authority to fund immediate repairs and maintenance on estate based projects by forming a venture with private industry normally comprising a consortia of a building company, a financial institution, and a Registered Social Landlord.