“First trial of arm’s-length building gets the go aheadThe first arm's-length management organisation set to build new homes has been given the green light to proceed with its pilot scheme. Hounslow Homes' pilot model to develop homes for rent and sale, worked up in conjunction with the Office of the Deputy Prime Minister, was given the go ahead by Hounslow councillors this week. Hounslow Council will kick start the scheme by giving the ALMO free land. Hounslow Homes will then be able to fund the overall development by building homes for private sale that provide cross subsidy for the construction of social rented homes. The ALMO estimates that for every home it keeps for rent it will need to build one of a similar size for sale. It has plans in the pipeline to build up to 1,000 homes in the next five years. Homes built will not be subject to the right to buy. Tenants will be given an assured rather than secure tenancy agreement. Official papers handed to Hounslow councillors also revealed the council was considering lobbying the ODPM for an extension to the ALMO's contract, to enable it to borrow private finance over the longer term. Hounslow Council will have 100 per cent nomination rights on the homes built for social rent. The ALMO expects to start work on the initial scheme of 49 homes in March. Neil Isaac, director of resources at Hounslow Homes, said the high house prices in the area would help the scheme get off the ground. The pilot would not be using any prudential borrowing as it would add extra complexity, he said, but the ALMO would consider it for subsequent schemes. Gwyneth Taylor, policy officer at the National Federation of ALMOs, said the news was a huge boost for the long-term future of ALMOs. The model could be adapted for use by ALMOs across the rest of the country, she said. But Anthony Lee, director of housing consulting at Atisreal, questioned whether ALMOs would have the expertise to develop homes. Councils would be lacking the experience to oversee developments, he said. 'They are arm's-length management organisations, not developers. The [development] expertise is always in the registered social landlord sector.' Martin Latham, head of housing finance at Britannia Building Society, said lenders saw the opening up of private finance to ALMOs as a likely progression of their role. The lenders would be very keen to do business with ALMOs, he said, because of the high inspection results many had achieved. But separating any private finance from the spending restraints placed on councils could be problematic, he warned.Published: 15 December 2005”
David Johnson ● 7095d