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Council furious as housing association moves to sell off land

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Council furious as housing association moves to sell off land

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Published by Max Salsbury for 24dash.com in Housing and also in Development, Local Government

Council furious as housing association moves to flog off land Council furious as housing association moves to flog off land

A housing association has angered a local authority after making moves to sell off land it was transferred – rather than building new affordable housing on it.

Magna Housing Group has announced that it plans to sell several plots it gained from West Dorset District Council after the 1993 land transfer.

Council leader Robert Gould has slammed Magna’s plans, claiming that it is the social landlord’s responsibility to build new affordable homes on the land and not to sell it off to private developers for profit.

However, Magna claims it only selling the nine land pockets and some garages in Sherborne because it doesn’t have the funds to develop its own new homes.

Leader cllr Gould said: “We are very disappointed to hear about Magna’s intention to possibly sell off some of its assets.

“When Magna took on the district council’s housing stock about 20 years ago it was given a remit to provide additional affordable housing and we believe it still has a duty to continue to provide this.”

A spokeswoman for Magna said that the group is “disappointed” at the criticism it has received, and believes it is doing “what is right for our current and future residents”.

Magna has also claimed that there is nothing in the original transfer agreement with the council that says the group has to build affordable housing on the land.

The spokeswoman said: “If we had simply continued to hold these pieces of land, as we have for several years, then it is highly unlikely that we would have attracted any criticism or indeed that anyone outside of Magna would have known about it.

“However, a possible programme of land disposals to others who are willing to build, which will almost certainly increase the numbers of affordable houses being built, both for sale and for rent, has attracted criticism."

Magna is currently marketing nine sites, some of which have planning permission for affordable housing. 

The group has said that as it is not currently planning to build any houses, it wants to give other organisations, including other housing associations, the opportunity to do so.

Magna has built over 810 affordable homes in West Dorset in the last 20 years. 

Some time ago, the social landlord’s board made a decision not to develop any new homes for the time being except in particular circumstances. 

Magna has said that it may build again in the future but currently conditions are not right for it to develop.

The group says that borrowing money over the required 30 years is a lot more difficult and expensive than previously.

Addition, its forecasts show that the current low levels of grant to help meet the cost of new build mean that most new build would be a permanent drain on its resources.  

Magna said: “Normally, we are willing to take a 30-year risk that a scheme will pay for itself over that time. We cannot take the significant risk that now exists that a scheme will never pay its way. If we were to build new houses at these grant levels, we would have to charge higher rents than we have in the past.  £150 per week rent for a three-bed property compared to the £100 per week we currently charge is not affordable for the vast majority of our tenants and would-be tenants without trapping them on benefits.  

“The truth of the matter is that the terms for building from scratch are currently very poor.”

Magna’s financial statements recorded a consolidated surplus of over £8m in 2013, a turnaround from the previous year when the group recorded a deficit of over £5m.

The group has also highlighted the pressures of the welfare budget and the imminent move to universal credit as stumbling blocks to development.

Magna said: “We expect this to put greater pressure on tenants’ household budgets and this is likely to reduce our income.  We do not know by how much, but we do not wish to take on significant additional debt when an equally significant threat to the income necessary to service that borrowing looms over us.“

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