The move should strengthen the hand of housing associations that want to be exempted from European procurement rules for public bodies (HT 23 January, page 37).
RSLs had feared that, under the competition rule, the size of grants would have been limited to about £10m a year and been subject to strict conditions.
For example, RSLs would have had to calculate the market rent of a project and prove the Housing Corporation grant was exactly the right amount to bring rent down to the target level for social housing. Grants could have been challenged in court if an aggrieved party felt the RSLs had broken the EC conditions.
In addition, the turnover of an RSL would have been restricted to about £26m, which would have been a major restriction for many. Places for People, for example, had a turnover of more than £197m in 2003.
The EC decided associations should be exempt from the rules because they provide services of "general economic interest". The decision followed lobbying by CECODHAS, the Europe-wide body that represents RSLs.
The UK had a long-standing informal agreement that grants to RSLs should not be included in EC competition rules, but this came into question when the EC looked at how competition rules should apply to social housing across Europe.
The EC's decision could have the knock-on effect of ensuring that private developers will have to adhere to the same conditions as associations if they receive grant.
"If the Housing Corporation gives grant to private developers, then the processes need to be identical to those of RSLs receiving grant," said James Tickell, deputy chief executive of the National Housing Federation. "So the process the corporation has for allocating grant has to be open, fair and consistent … and if social housing grant goes to developers they have to be regulated in the same way."
This could mean private housebuilders have to register with a regulator before receiving grant, have to repay grant under certain conditions and cannot bid only for lucrative shared-ownership projects.
Source
Housing Today
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