Government decision not to fund stock transfers that need gap funding hits Woodberry Down £1bn regeneration project
The government has withdrawn £40m gap funding for the Woodberry Down estate regeneration in Hackney, plunging the troubled £1bn project into uncertainty.
Now, instead of being able to transfer the whole estate to social landlord, Genesis for redevelopment by Berkeley Homes, the council has been forced to fall back on redeveloping the estate incrementally using kickstart project funding.
Berkeley Homes, with which Genesis has a £750m contract, would develop the site in phases before transferring the units to Genesis upon completion.
The Homes and Communities Agency last week told councils across the country that it will not now fund stock transfers that require gap funding as it seeks to rein in its £180m gap funding budget over the next two years.
It is not clear how the change will affect the partners’ 20-year plans to build 4,400 units, two schools and a health and children’s centre on the 43 ha site.
Transferring the stock was vital to the council’s plan because social landlords can borrow from banks and building societies where councils are not able to borrow.
Gap funding is more traditionally used to make up the shortfall between the cost of repairs and maintenance to the estate and the rental income from social tenants when landlords want to make repairs under the Decent Homes initiative.
Hackney Homes was instead planning on putting the money towards the regeneration of the estate, but received a letter three weeks ago saying the cash would not be forthcoming as previously arranged.
Cllr Karen Alcock, deputy mayor of Hackney, said: “The council was prepared in case the government took this decision, which affects authorities across the country. We were already in discussions with the relevant government departments about ensuring funding for the next phases of the regeneration of Woodberry Down, to build on the progress we have already made.
“In the meantime, we are continuing with our repairs and essential works programme. Hackney Council remains committed to the regeneration of the borough’s housing, despite the current economic climate.”
The news is the latest twist in the long-running saga of the £1bn regeneration program. It began in 2002 and is one of the HCA’s mixed communities demonstration projects.
Meanwhile, work began in March on 117 affordable homes following a £16m kickstart grant from the HCA and are due for completion in 2011. It is understood that HCA is planning to provide £60m more funding to build a further 400 homes, although it is not clear of what type.