Welsh housing associations have urged the National Assembly to change the way their grants are calculated to take account of rising build and land costs.
At the moment, grants cover 58% of the cost of a development. However, rising costs mean the remaining 42%, funded by the associations, is becoming a larger and larger sum of money.

The first Welsh stock transfers are about to take place, so there will be more competition for grant. Greater demand for builders once transfer associations start their refurbishment programmes could also inflate building prices.

Tender prices for new building work in Wales in the last quarter of 2002 were 8% up on the previous quarter and 9% higher than the same period in 2001.

David Fry, finance director of Swansea Housing Association, said: "In particular areas, the build costs have been going up and up. We get more grant but, in real terms, we have to put in more private finance. Rents increases don't take into account increased build costs. Low interest rates have been helping us absorb this but we are now putting in as much private finance as we can. We need an increase in the grant rate because it's the only moveable thing."

We are putting in as much private finance as we can. We need a rise in the grant rate because it’s the only moveable thing

David Fry, finance director, Swansea Housing Association

Howard John, director of the Welsh Federation of Housing Associations, said the federation was asking for a review of how grants were calculated. He said some developments that had been approved for grant were becoming unviable because costs rose before the money arrived.

He said: "We are asking for a review of the whole financial basis. This is especially important as the new transfers have to put together a business plan using the same assumptions as other associations."

John Bader, housing director at the Welsh Assembly, said the assembly would commission work on grant distribution and hoped to consult on the results at the end of the year.

Source

Housing Today