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Delivering the Affordable Housing Programme Brian Johnson Chief Executive, Moat

Delivering the Affordable Housing Programme Brian Johnson Chief Executive, Moat. Moat. South East focus Mixed tenure Service quality Innovation Local authority relationships (60 local authorities in 2008/9, 40 today) Local HomeBuy Agent for Essex, Kent and Sussex

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Delivering the Affordable Housing Programme Brian Johnson Chief Executive, Moat

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  1. Delivering the Affordable Housing Programme Brian JohnsonChief Executive, Moat

  2. Moat • South East focus • Mixed tenure • Service quality • Innovation • Local authority relationships (60 local authorities in 2008/9, 40 today) • Local HomeBuy Agent for Essex, Kent and Sussex • Develop 600 new homes each year • Number of properties: • Rented and other 13,333 Shared Ownership 4,478 Equity Loans 2,889 Total 20,700

  3. Social and affordable rent

  4. Or…

  5. Moat 168 conversions to affordable rent £36,000 extra ‘subsidy’ created per new home (£40,000 in HCA offer) 67% residents on benefits No impact on void turnaround Arrears no different to social rent But Not doing 4 bed properties Capping rents at £180pw Is affordable rent working?

  6. Trends – profitability, staircasing Good product for South East Needs tweaking to promote staircasing We believe delivers £50,000 per home of social value Shared ownership

  7. Shared Ownership

  8. Shared Ownership

  9. Bond funding remains buoyant S106 still in good supply Increased Moat programme size on back of rent increase This programme to 2015

  10. There are two issues on financing: Borrowing Most housing associations will hit one of the three borrowing constraints in the next ten years: Ability to meet interest costs (interest cover) Ratio of borrowing to assets (gearing) Ability to secure borrowing with assets The first is controllable by reducing costs The second and third might be relaxed to some extent by the government guarantees but this is by no means certain Subsidy Subsidised housing requires subsidy! This can be capital subsidy or revenue subsidy (housing benefit) The move towards revenue subsidy makes constraints 1 and 2 above more severe 2015 and beyond

  11. The only attraction to institutional investors of subsidised or low end private rented sector housing is inflation linked income We want more rented homes Let’s attract institutional investors It’s a “no brainer” that housing benefit should not increase with inflation CLG Treasury DWP and many government MPs Institutional investment?

  12. Institutional investment? • It will only happen if housing associations take on the risk of rent inflation • Should housing associations take on that risk given that it is unpredictable? • Might the loan guarantees begin to answer that? • Do the different government departments understand the inter-dependencies?

  13. Creating subsidy from existing homes Rent models Shared ownership staircasing Local authorities Local vehicles utilising Housing Associations and Local Authorities (HRA) surpluses', LA land, RTB receipts and HA access to funds Operational efficiencies Cross subsidy from other activities Private rented or open market sale Be very careful that risk is understood and really tested against what is appropriate Housing Associations run to very long business cases, developers to very short ones. Their respective funding structures reflect this. What are the opportunities

  14. So, what should we do?

  15. Current programme is going well for Moat Schemes available Affordable rent working Shared ownership good Funding fine Future more uncertain Some controllable elements Better performance and relationships essential Huge political uncertainty Conclusion

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