3.3bn up for grabs for private developers

Private developers could be able to bid for the whole of the Housing Corporation’s £3.3bn two-year investment programme if the trial payment of social housing grant to developers is judged a success, Housing Today can reveal.

There are also discussions taking place in Whitehall that would see the proposed £200m trial of paying grant to developers that is due to begin in February next year extended to possibly as much as £1bn across the three years to April 2008.

A Whitehall source said: “If the initial phase works, why wouldn’t you open up the whole programme? However, there is no reason why housing associations couldn’t compete in this world as some of them are now on a par in development terms.”

The source added: “The expectation that I hear from the Treasury is that the £200m – which is chickenfeed when you look at the overall picture – will grow substantially over the period of the spending review.

“As part of the ODPM settlement there are extra resources above the £200m that will take this pot much higher. The feeling is that you need to have serious sums of money to attract interest from serious players like Barratt.”

It also emerged this week that any private developers who bid for social housing grant when the pilot begins in four months’ time would not face the same European Union procurement rules as housing associations when forming development partnerships.

In addition to this, as part of a consultation paper on how the proposed pilot will work, due out at the start of November, the Housing Corporation also plans to set a threshold of £20m for the total size of a bid by an individual organisation to access the £200m pilot. This will be regardless of whether the bidder is a housing association or private developer.

This contrasts with the £10m threshold set for access to the Housing Corporation’s pool of 70 elite developing associations.

Jim Coulter, chief executive of the National Housing Federation, said: “If the roll-out of allowing non-RSLs access to the whole of the corporation’s development programme goes ahead it will have massive implications for the whole of the sector as well as causing fundamental changes at the corporation.

“The whole of the current regulatory system would disappear within five years and be replaced with the contractual system that would need to be used to regulate the relationship with private developers.”

Terry Fuller, chair of the affordable housing committee at the House Builders Federation, said: “To open up the whole corporation programme to housebuilders makes a lot of sense.

“There is one developer in the South who controls land for 15,000 units of affordable housing and he’ll be looking for £750m in social housing grant over the next five to eight years. This is the sort of scale we are looking at and obviously £200m would nowhere near cover that.”

A corporation spokesman said: “Our policy proposals are going to our board on 2 November and our policy document will be published in due course thereafter. We are proposing a £200m pilot programme to be launched in 2005-06 and we will take decisions on how to widen this following evaluation of the pilot.”