Repairing disused homes for social rent

Adam Branson, Regeneration & Renewal, 25 April 2008

Set up in March 2006 in partnership with the London Borough of Newham, Local Space provides temporary accommodation for homeless people. The social landlord buys disused properties in need of repair, brings them up to the Government's decent homes standard and then leases them to the council. Local Space chief executive Bob Young answers our panel's questions.

Q: Where do you get the money to buy the properties in the first place?

A: One of the consequences of the Government's policy of avoiding housing homeless people in bed and breakfasts was that councils started putting people into private properties. We realised that in 2004/05, £500 million in housing benefit was paid to private landlords in London alone. If that money was instead invested in social housing, it could make a massive difference. So, using as security the future income from renting out 1,000 homes, we were able to secure a loan of £200 million from the Royal Bank of Canada to buy the properties. In addition, social homes agency the Housing Corporation put in £25,000 per home - £25 million in all - because we're investing in future social housing. Once the loan has been repaid we will continue to lease the properties to the council at a much lower rate.

Q: Why did you choose to buy existing, run-down properties, rather than investing in new developments?

A: There's nothing wrong with new build social housing in principle. But in London a lot of new build developments incorporating affordable housing are a long distance from existing transport links, schools and shops. Living somewhere like that is fine if you're young or have a car, but if you're vulnerable and have a family then that sort of housing does not meet your social needs. So we invest in properties in places where tenants can access the facilities they need and, with any luck, the local community will be supportive.

Q: Couldn't you afford to buy a lot more homes in less well-connected areas?

A: Yes, but it's more urgent for the future social mix of central London communities that we invest in homes in well-connected areas now. If social landlords don't do so, and prices keep on rising, in 15 years' time it will be impossible to do so.

Q: If this is a financially sustainable business model, why aren't there more housing associations doing it?

A: The social housing sector is focused on new build, which is in line with what the Government is asking of them. We're pretty much going in the opposite direction to government policy. We spend a huge amount of time lobbying the Government to pay more attention to what we're doing. We recognise that new build is very important - in terms of housing numbers and building more environmentally sustainable stock, among other things - but we think there is plenty of room for our way of working to be expanded. The potential is huge, especially in London.

THE PANEL

Questions were compiled with help from Hugh Owen, divisional director at housing association Riverside Housing, and Andrew Delaney, head of regeneration at consultancy Lambert Smith Hampton.

CONTACT US: If you know of an innovative scheme that merits closer scrutiny, email Adam Branson at adam.branson@haymarket.com.