Proposed changes to Housing Corporation rules would remove need to set up subsidiary
Housing associations are set to go head to head with private housebuilders providing homes for private sale and rent without having to set up separate businesses, under Housing Corporation proposals.

It is hoped the change will encourage larger developing associations to build more homes for lower-income earners, who are currently missed out by most volume housebuilders but fail to qualify for affordable housing.

Presently, if registered social landlords want to provide houses for the private market the corporation requires them to do it through a separate legal entity.

Housing Corporation chief executive Norman Perry said he welcomed the trend of larger housing associations turning to the development of homes for private sale. He said: "The corporation will be looking at the existing regulations which specifically cover the speculative sale of houses [on the open market] by housing associations, as they can't be sure about being able to sell them."

Perry said the changes, which will be included in consultation published early next year, would allow the corporation to regulate the whole of housing associations' businesses, rather than just the social housing element.

Richard McCarthy, chief executive of the Peabody Trust and chair of the National Housing Federation, said that housing associations were perfectly placed to provide more homes for market sale, but that the sector was largely ignored: "It frustrates me to hear people say we need new special bodies [to meet housing demand], when RSLs have been mixing public and private sector funding for years," he said. "We are missing the partner that is standing right in our midst."

A number of housing associations have already diversified into homes for market rent, as they are allowed to channel profits back into other areas of their businesses.

Places for People, for instance, has a number of subsidiaries that build for the private market.

Chief executive David Cowans welcomed the corporation's review but warned: "Associations should have to demonstrate a track record and the right infrastructure before being allowed to do this. They must be able to show they have the right skills."