Goal: Capital Receipts
‘To generate £33 million net capital receipts from the Government’s Voluntary Right to Buy Programme, asset management, and other fundraising by March 2020, to provide £30 million for reinvestment in new homes and £3 million for reinvestment in existing homes and services.’
In 2010 we recognised that Government funding for new homes was likely to reduce and possibly cease altogether from 2015, placing greater pressure upon housing associations to use their own resources to maintain a supply of affordable homes.
This goal responded to that pressure though the ‘vacant possession’ sale of some existing older homes to release capital resources for investment in new homes as well as additional reinvestment in existing homes, particularly thermal cladding and adaptations for older residents with disabilities.
A part of the 2015 Conservative Election Manifesto was a commitment to open up the Right To Buy to all Housing Association Tenants. Since forming the new Government it has been in dialog with the National Housing Federation in response to concerns within the sector. These discussions have culminated in an offer that has been accepted by Government to introduce a Voluntary Right to Buy scheme, avoiding legislation. This voluntary offer is underpinned by a commitment from Government to compensate Housing Associations for the discount given to VRTB applicants and in turn this compensation is to be used to replace or even deliver more homes than those sold. We recognise the role that VRTB will have in ensuring people have access to tenure choice and contribution this makes to sustainable communities not forgetting that there is an acute shortage of affordable housing. We estimate that over the next 20 years over 1,300 homes will be sold through RTB with receipts from sales and RTB discount compensation totalling £33 million. This generates significant capital for reinvestment and is likely to become the main source for funding new developments.
What we have done …
1: Re-invigorated right to buy (2012-14)
With the launch of the re-invigorated Right to Buy and a raising of the maximum discount available for residents to £75,000 our 1000 tenants who have the preserved Right to Buy have the opportunity to purchase their own home. Working with Wychavon District Council we have agreed that for every sale we will look to replace it with a new home using money released from the proceeds of sale.
2: Implement a fundraising initiative for one year and review the outcome (2011-14)
The group already raises substantial sums of ‘mainstream’ external funding each year as well as a number of smaller project based funding sources. Working with a specialist, this project sought to identify wider opportunities to apply for capital or revenue funding to support our activities. Results achieved included the following:-
- Carbon Emissions Reduction Target (CERT) funding received £80,000 to date
- Air source heat pumps funding received £42,000
- Funding in excess of £800,000 for Adelaide House agreed, subject to identification of revenue funding and board approval to go ahead with this scheme
Eco funding likely to be 60% of cost of external cladding on 700 properties circa £5 million.
3: Sales of other property assets (2011-15)
The Group had a number of properties that were surplus to our operational requirements or future development plans. These properties and land assets have now been sold to raise capital that supported both RHA (formerly EPHA) and RHL in delivering new homes and services.
What we are doing
4: Implement tenure change programme– incorporating void sales(2010-17)
A programme of targeted sales of vacant properties in the open market providing both outright and shared ownership opportunities. Currently this project is suspended awaiting a review of further sales of shared ownership properties.
5: Right to Buy 2 (RTB2) (2016-18)
The new voluntary agreement for RTB2 will potentially yield considerable funds over a large period of time which can be used to provide new homes. This project considers the process and resources required to efficiently implement this new initiative, and the extent to which this service could be made available to other providers.
6: Sheldon Avenue – open market sales
This development project has been included under the Capital Receipts goal because it will deliver properties for open market sales.