What is clear, however, is that developers increasingly need to work with housing associations to get planning permission, and housing associations need to work with developers to deliver affordable housing.
It is this symbiotic relationship that has led some affordable housing providers to adopt a far more commercial approach when dealing with private housebuilders. The Apex Housing Group, for example, is now a major partner of many of the South-east's largest housebuilders, with a programme of 400 homes in the pipeline – all as a consequence of section 106 agreements.
Unfortunately, housing associations are often thought to be bureaucratic, regulation-led, uncommercial, inflexible, slow and penny-pinching. However, such an image is no longer fair or accurate – affordable housing providers are beginning to understand and meet the needs of the private housebuilder.
The preconception that housing associations have limited funding is not always the case. Although they are not-for-profit, they have powerful fundraising abilities. Apex, for example, has attracted private finance amounting to £130m at highly competitive rates to fund its current development programme. This funding enables us to meet the cost of affordable housing. Furthermore, we have assurance from our leading funders that, based on our assets and performance, this figure could be doubled.
Another criticism sometimes directed at housing associations is that they are inflexible. In fact, they are now negotiating far less onerous and more flexible development contracts in their dealings with housebuilders. At Apex we are less tied to the traditional JCT contracts as a form of procurement and are able to offer incentives to housebuilders for early completion of a scheme, something traditional contracts do not allow.
housing associations are negotiating far less onerous and more flexible contracts with housebuilders
Linked to this supposed inflexibility is the idea that affordable housing providers are regulation-led and bound by procedure. Obviously much of what we do, particularly with regard to social housing grant, is determined by Housing Corporation guidelines and procedures. On the other hand, we understand that developers want to minimise delay and so we try our best to make decisions as quickly as possible.
To speed up the process, housing associations can often act as a bridge between the housebuilder and the local authority who often seem at loggerheads. Indeed, the quantity, tenure and location of affordable housing is determined through sometimes lengthy and confrontational negotiations between housebuilder and local authority. But involving housing associations early enough in negotiations leading up to section 106 agreements can speed up the entire process.
The increasingly businesslike attitude of housing associations is also reflected in their recruitment practices. In order to increase its knowledge of the private housing market, Apex has recruited both senior managers and board members from this sector. This approach has been extended to our choice of employer's agents, key players in the smooth running of section 106 projects. We have learnt that it is vital to work with employer's agents who thoroughly understand the importance of meeting timescales, agreeing terms and developing flexible development contracts with private housebuilders.
Housing associations are aware that private developers are worried that mixing affordable housing with housing for sale can sometimes make it harder to sell properties and even depress the price at which properties are sold. To mitigate against this, Apex works closely with developers on a design brief so that the affordable homes are externally indistinguishable from those for sale, and provides a first-class property management service to ensure that they remain so.
Alan Walker is chief executive of the Apex Housing Group.