The government has gone to Europe to ask permission to set up a special fund to tempt private housebuilders into regeneration areas where development would otherwise be too risky, it has emerged.
The scheme will offer opportunities for social landlords, whose unregistered subsidiaries could get a cost subsidy of up to 60 per cent.

No budget has been set, but the scheme would be a clear candidate for the proposed housing market renewal fund.

The DTLR, with other departments, held a “very positive” meeting with the European Commission late last month to discuss possibilities, and to see whether the fund would breach Brussels’ complex competition rules.

A spokesperson said a scheme similar to Scotland’s ‘GRO grants’ was mooted, and the commission is to look at its viability ahead of a further meeting in July.

GRO grants are paid direct to developers by Communities Scotland at a rate of 40 per cent of scheme costs. The grants were temporarily halted last year because special EC permission is now needed for public funding to private organisations.

But the scheme resumed after being given the green light.

Associations originally opposed GRO grants, arguing that the money could have been better spent on affordable rented housing. But in recent years some have themselves obtained grants – through subsidiaries – to develop mixed tenure schemes.

Scottish Federation of Housing Associations deputy director David Alexander said the mood had changed from suspicion to pragmatic acceptance of GRO grants’ contribution.

The scheme also carries echoes of the Tories’ City Grant, which was paid to developers through councils. Calderdale council used the grant to facilitate the development of 75 private houses on its Abbey Park estate.

David Procter, now chief executive of Pennine Housing 2000, said the scheme was “a nightmare to administer”, not least because developers are unwilling to state the true costs.

He added: “It would not be my first option. The government should trust councils and RSLs to know what is needed, and just give them the resources to make it happen.”

Bolton council, however, was enthusiastic. Housing director George Caswell said: “Bolton would welcome any move by central government to reduce bureaucratic and Byzantine methods to secure regeneration funding. Any assistance in this area would be good news for us all.’’

The DTLR added: “We have no budget; we need to clear the principle first. This follows the government’s desire to get regeneration going, with measures such as cutting stamp duty in deprived areas. We are trying to entice developers to those areas.”

Source

Housing Today