Top associations await corporation pilot verdict

Three of the biggest developing housing associations were this week waiting to find out if they are to be included in the Housing Corporation's reduced group of development partners.

On Tuesday the corporation published long-awaited details of the way it will try out a new method of funding developing associations.

It will still use the traditional approved development programme, but will also pilot a scheme in which a select group of larger registered social landlords will get longer-term contracts (HT 24 October, page 8).

The three – Notting Hill Housing Trust, New Islington & Hackney and Ujima – were between them responsible for building around 970 homes last year and received a total of £78m in grant for 2003/04 (see table).

But they may still have fallen foul of the strict criteria used by the corporation to decide which RSLs will join its development pilot programme.

Sources predict that just 60-70 RSLs will be included rather than the current 350 and those chosen for the two-year pilot are likely to get the lion's share of development funding in the future if the pilot is a success.

The key criteria are the size of development programmes in recent years – whether an RSL can manage an annual programme in excess of £10m – and whether or not the RSL got four "green lights" in its recent "traffic light" assessment by the corporation.

Based on the allocations made in the 2003/04 programme, 42 RSLs would meet the £10m criteria. Of these, according to the corporation, seven have yet to receive a "traffic light" assessment and a further six are part of larger group structures that have received an overall rating.

Neil Hadden, the corporation's assistant chief executive for investment and regeneration, said: "We will be looking at those RSLs that intend to receive bids totalling more than £10m.

"This is a pilot and there have to be some cut-off points. Outside London and the South-east we could well have a lower threshold.

"But there is a cost associated with setting up a partnering agreement and bigger schemes could obviously carry this better."

We are still waiting for the call, but are confident we shall be involved

Brendan Sarsfield, New Islington & Hackney Housing Association

New Islington & Hackney chief executive Brendan Sarsfield said: "We are still waiting for the call, but are confident we shall be involved."

Shepherd's Bush Housing Association – one of the 42 that would meet the £10m threshold – got a red light for its development performance, but has still been chosen as a development partner.

Dave Spinks, Shepherds Bush's head of development, said: "They just have a preferred list at the moment and we are definitely one of those. But the list could change."

He added that the association was contesting the red light it got for development. If Shepherd's Bush meets a set of building completion targets by November it may upgrade to a green light.

Housing associations that do not yet have £10m grant programmes are looking to expand their development or form consortia with other associations.

Havebury Housing Association in Suffolk is in talks about forming a development partnership with another association in the region.

There are no associations based in the South-west who got £10m or more in development grant last year. John Earley, chief executive of East Dorset Housing Association said: "There certainly are concerns that there will be an inadequate number of associations who will be able to apply for partner status.

"A £10m programme in the South-west can be very different in terms of the number of units than a £10m programme in London."

He added: "There is a risk that on the one hand the Housing Corporation is anxious to achieve greatest value for money for grant per unit but if you need an even larger programme the incentive to degree is ambiguous."