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16 Nov, 2017/ by Homeward Legal /First Time Buyer

Housing associations are to be reclassified as private organisations in a bid to encourage them to build more affordable homes for sale and rent.

Two years ago, the Office for National Statistics (ONS) had said ministerial control of the finances of England's housing associations was so pervasive that they could no longer be identified as charities or private bodies. Overnight £70 billion of debt was added to the government's balance sheet.

However, Communities Secretary Sajid Javid has now announced these not-for-profit groups are now sufficiently arm's-length enough to be considered private organisations once more by the ONS, and the subsequent change in their financial status could open the way for them to secure the long-term finance to build more homes.

Focus on solving housing crisis

In 2016-17, around 170,000 properties were built for sale or rent in the UK. According to the National Housing Federation, the body that represents housing associations, around 50,000 new social homes were started in 2016-17 with housing associations expected to build around 65,000 homes in 2018.

However, the government's own projection is that the UK needs around 300,000 homes built every year to meet demand and end the housing crisis.

The announcement on housing associations is part of a projected focus on housing in Chancellor Philip Hammond's Budget to be delivered on November 22.

Prime Minister Theresa May has pledged that the government's strategy will address the serious shortage of affordable homes being built. She told October's Conservative Party conference that an additional £2bn will be available for social housing while councils and housing associations will be able to access an extra £5bn in funding.

Excellent value for taxpayer

David Orr, the chief executive at the National Housing Federation, welcomed the decision to reclassify housing associations as independent.

He said: "This is welcome recognition of their position as independent social businesses with a shared social purpose of building a quality home that everyone can afford. Housing associations already represent excellent value for the taxpayer - for every £1, Government puts in, housing associations put £6 of their own.

"In the last year, the sector started building almost 50,000 new homes - an increase of 13 percent on 2015/16. This change will allow them to build on their strong track record and secure the long-term finance needed to build even more affordable homes."

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