The Council of Mortgage Lenders (CML) has called for a debate on the relationship between private finance and social housing to be opened. It believes that while private finance has proven to be a good method of stretching out public funding, and has brought market discipline to the sector, social housing policy and funding is now approaching a crossroads.
It has launched a briefing paper recommending transfer of houses from council ownership to non profit-making organisations like housing associations, but with reforms and improvements to the system. These include clarity on the powers and capacity of local authorities to borrow from the private sector for housing purposes, and the introduction of a private finance option for the organisations that would be set up to manage council homes.
Peter Williams, deputy director general of the CML, said: ‘Private finance will play a crucial role if local governments across the UK are to meet their challenging hous- ing objectives. Over the last 15 years, lenders have made a very significant contribution to housing policy, and its funding… but the current climate of uncertainty is unhelpful to lenders.’
He added: ‘Lenders want to help shape policy, rather than simply being the recipients of its outcome.’
The paper pointed out that private finance for social hous- ing has amounted to more than £27bn since 1988 and 24,000 homes have been built following the transfer of housing from council ownership with funding provided by mortgage lenders.
Deputy Prime Minister, John Prescott, is expected to put restrictions on the right to buy in certain areas and allow local authorities in property hotspots to cap discounts they make available to tenants to less than half the £38,000 maximum.
This announcement was to have been made in early January, but the date is now in doubt. ‘We do not have a set date for the announcement. We expect it to be in the next couple of weeks,’ said a spokesman from ODPM.