The Housing Corporation is to bow to pressure from housing associations on how housing development is funded, with a fundamental, year-long review of the grant rate model
The quango and the National Housing Federation are to jointly study all aspects of the model which helps determine the level of public funding and rent levels in social housing. Work will begin in September.

The federation said the review could increase the proportion of public grant in housing development.

Corporation development director Neil Hadden said that the review would look at range of factors including management and maintenance costs and rate of interest assumptions.

He told Housing Today: "We will look at anything and everything. It's a fundamental review and fits in with our plans to reshape development funding towards regeneration and addressing the differents needs of the different regions."

The move follows moves away from using the housing needs index to work out how the quango's £650m development budget should be spent.

The grant rate model has long been a bone of contention between associations and the corporation, with associations complaining that grant rates and rent caps do not allow financially viable schemes to be developed even at "full" grant and rent.

NHF head of investment and resources Alistair Jackson welcomed the move although he said the federation had not been notified officially.

He said the federation would be pushing hard for a more long-term approach to be adopted, with more emphasis on affordable rents.

He added that reforms to the grant rate model could increase the grant rate on future rounds, but could not say by how much.

Guidance on this year's rate - expected to remain at a similar level to last year's 54 per cent - is due shortly.

Source

Housing Today