The proposal for ringfenced sales receipts was among 51 recommendations in the low-cost homeownership taskforce's report, published last week, on options for people who want to get onto the housing ladder.
The government has already adopted some of the taskforce's recommendations, including measures restricting the right to buy. It will put them in the Housing Bill, part of next week's Queen's Speech.
The report said: "The taskforce considers that both recycled grant and surpluses should only be used for further homeownership products."
The Housing Corporation is in discussions with the government about proceeding with this and other taskforce proposals.
The plan has the sector up in arms because associations use the money from home sales – including shared ownership and HomeBuy – to cross-subsidise other areas of business.
John Schofield, group director at Family Housing Association, said: "If they're saying we should ringfence surpluses, it's a non-starter. Cross-subsidy is how we survive. We need the freedom to spend according to our priorities."
The corporation gave £161m in grants – 13% of the total funding pot – to homeownership schemes in 2003/4. This is supplemented with housing association funds.
Presently, if these schemes run a surplus, associations can use it however they wish. Under the taskforce's proposal, all supluses from these co-funded schemes would be ploughed back into building more homes for low-cost homeownership.
John Barker, chief executive of Moat Housing Group, has prepared a four-point rejection of the plan, with which he intends to lobby government. He said the change would endanger the chances of meeting the decent homes target, as associations will be forced to divert money away from improving stock.
Other proposals in the report include greater transparency over rent levels in shared ownership and equality of access to these schemes across social housing tenures.
Source
Housing Today
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