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Housing provision: The new development framework Nick Taylor Head of Area, North West London Homes & Communities Agency Thriving communities, affordable homes Spending Review outcome Government investing over £6.5bn in housing, including over £2bn to make existing social homes decent and £4.5bn to fund new affordable homes, roughly half the 08-11 settlement £4.5bn includes provision for: – – – – Bringing empty homes back into use Mortgage Rescue Places of Change Gypsy and Traveller sites and the new Affordable Rent Model Thriving communities, affordable homes A single affordable housing budget Thriving communities, affordable homes What is “affordable rent” Affordable Rent will be set at ‘up to’ 80% of local market rents New tenancies will not be secure and will be reviewed after an agreed period of time, with decisions on future tenancy made depending on tenant’s circumstances. Tenants in homes where the new affordable rent is charged will be eligible to apply for housing benefit. Tenancies and rents of existing social tenants, will be unaffected PPS 3 compliant as affordable housing Will facilitate greater revenue for development partners - enabling delivery where there is far less grant, if required.. Thriving communities, affordable homes Old model vs new model Social Rent Affordable Rent Rents at c50% of market rent Rents at up to 80% market rent Life time tenancies Fixed term tenancies Grant at c80k per unit (national) Grant as part of the wider subsidy offer Limited use of existing assets Asset management strategies involving conversion of voids and sales Thriving communities, affordable homes Principles New affordable rent homes funded from a combination of: – Provider’s resources • Borrowing capacity from new affordable rent homes • Capacity generated from conversion (to affordable rent and in some cases, disposal or conversion to shared ownership) – HCA funding – Other resources (provider’s own resources, RCGF (DPF), public land, s106 contributions) Conversion of existing homes to affordable rent agreed on “something for something” basis – i.e. linked to delivery of new supply Providers make offers for delivery – i.e. as a package – both new supply and other sources for generating capacity Thriving communities, affordable homes Package.. Broad timing of delivery Indicative location (sub-regional geography) – new supply and conversions/disposals Outline of target mix Outline of tenure proposals (is LCHO proposed?) Standards proposed Offer on payment terms (payment by results) We anticipate firm(er) proposals in early years, indicative high level numbers in later years (flexibilities) Specific potential exemptions from 80% include supported housing, estate regeneration, very high rental areas, possibly larger homes Update on providers (boards) decisions to participate Thriving communities, affordable homes Working in the Local context.. Providers work closely with local authorities in putting forward packages and developing proposals HCA will seek information on discussions with LAs (pre and post submission of proposals) HCA will work closely with LAs in investing in new supply – HCA will work with LAs on on-going basis (building on existing work and relationships) to accommodate BIP priorities, – to act as enabler between LAs and providers receiving investment to allow LA priorities to be delivered Thriving communities, affordable homes Working in the Local context.. Local Authorities will continue to play a key role on nominations – seek local agreement on achieving mixed income communities Balance between supply, capacity, allocations and access to nominations, conversions, geographic capacity 3 way on-going dialogue and discussions – providers, local authorities, HCA as well as on-going discussions with house builders and developers to bring forward new supply Thriving communities, affordable homes London.. Close collaborative working with the GLA, HCA and DCLG on programme design London section of Affordable rent prospectus will set out Mayoral priorities Working closely with DCLG and GLA to agree when and how to apportion programme to London Single negotiations with providers including London and rest of England – details to be worked through HCA London Board will take a view on proposals including consideration of overall funding and receipts position Affordable rent budget will pass to GLA when Localism Bill becomes law – April 2012 Thriving communities, affordable homes Timing.. Need to move quickly to implement new approach and test capacity (and appetite) for delivery Capacity generated from conversion – needs to start early in programme period Profile of available resource and delivery assumptions – need providers to commit to starts at an early stage HCA consider offers for 2011-15 SR period across all providers wishing to participate in the new model at same time Thriving communities, affordable homes We need to start the new programme urgently London affordable starts and completions 18000 completions 16000 starts 14000 12000 10000 8000 6000 4000 2000 0 2008/09 2009/10 2010/11 Thriving communities, affordable homes 2011/12 2012/13 2013/14 2014/15 Key issues…? 1. New rent model has significant investment potential in London where market rents are close to double target rents 2. Need to overcome start on site challenges anticipated next year 3. Alignment with localism: need to define borough priorities 4. Interplay with welfare reform – particular pressures on larger homes and ‘benefit trap’ 5. Estate regeneration: viability and rent pressures 6. What role for LCHO? 7. We will need portfolio bids and forward allocations to deal with ‘back loaded’ programme 8. Viability of larger homes 9. New risk profile for RSLs (re-let income; gearing; covenants etc) 10. Planning: need to clarify S106 position Thriving communities, affordable homes homesandcommunities.co.uk Thriving communities, affordable homes