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Housing association plans market rent move

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Published by 24publishing for 24dash.com in Housing

Housing association plans market rent move Housing association plans market rent move

The board of Viridian housing association has, in principle, approved the landlord's move to invest in the market rental sector.

Viridian - which owns around 16,000 homes - came in for praise this month from housing minister Grant Shapps following its decision to publish all expenditure over £500 and senior staff pay on its website from 1 April.

Now, its CEO Matthew Fox has blogged about the association's planned move into the market rental sector and the risks it faces around the future of property prices.

He wrote: "...last week our board gave in-principle approval to investing in market rental. We devoted a whole evening to the pros and cons of the decision.

"We spent lots of time on questions such as:
is market rental really core business for a housing charity? Will market rental generate a high enough return to cover the cost of servicing the debt used to buy the properties? and, What will happen to property prices?"

He added that what is clear is that although there are pressures for the organisation to become more local, much of its future will depend on "factors that are international and way beyond our control", for example the future of the Eurozone and the US housing market.

He said: "However, we cannot stop providing new homes until the global picture has become clearer. On balance we have therefore concluded that we need to better understand market rental because, given the absence of Government funding for the foreseeable future, market rental looks to be the direction that social housing is moving towards. However, given the volatility of markets, we will approach this new market very cautiously and put a toe in the water at this stage until we feel more confident about the future and of our experience in this area."

Another finance director said recently that the move into market rents was almost inevitable for housing associations to attract institutional investment and to provide homes for those on low incomes that fall in between home ownership and social housing.

Yesterday, Birmingham City Council announced it was teaming up with housing association WM Housing to deliver 400 market rented homes, while Sovereign - which owns or manages more than 33,000 homes in the South and South West of England  - has bought up more than 80 homes in the West of England to let at market rents.

It was also confirmed this month that the London borough of Barking and Dagenham has secured private funding to build nearly 500 homes for people on its waiting list where homes will be let at rents between 50 - 80% of the market rent.

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