Sector fears auction price wars after developers get grant

The price of social housing could rocket as housing associations compete to buy properties built with social housing grant from private developers, the Housing Corporation was warned this week.

Roger De La Mare, the corporation’s director of regulation performance, confirmed he would examine the issue in detail after concerns over inflationary auctions emerged as a main concern at the bidders’ conference in Euston, London, on Monday.

He said: “We will give a bit more thought to the whole area of how price is determined if unregistered bodies are disposing of properties to housing associations.

“People were asking how that was going to work and how we will avoid unhelpful competition between housing associations that would put up prices.”

Although the prospectus for the pilot programme, published a fortnight ago, states that the corporation expects that “the majority of the homes provided by unregistered bodies will be passed to RSLs to own and/or manage”, details of the process remain sketchy.

Keith Searle, director of housing consultant Adams Integra, said: “The trouble is nobody knows what anyone is doing at the moment. [Competition between associations] is something on the horizon and could happen. Eventually [any price rise] could affect rents and deliverability.”

Wayne Morris, chief executive of Western Challenge Housing Group, said associations would probably be cautious about getting involved in any bidding competition.

He said: “I’m aware that disposal arrangements were a key point arising from the consultation paper but I think associations will be very keen to ensure they pay the right price. From my own point of view, we will want to ensure that any properties are sustainable financially in the long-term.”

Questionnaires from all parties interested in bidding for the £200m pilot scheme are due in by 8 April. A shortlist, and more detailed proposals, will be produced by May.

De La Mare also confirmed that although the corporation is not looking to alter its statement that unregistered bodies will be paid all the grant at the completion of any project, it will consider “bids that vary from that template”.