CML asks government for clarity on private finance

The CML is calling for the government to carve out a more definite role for private finance in the social housing sector.

More than five million families in the UK are social tenants. The CML says that the £27bn of private finance spent on social housing so far has improved the accommodation of 1.5 million people “in ways that would not have been possible had they been funded by taxation alone”.

A further 24,000 new homes have been built following the transfer of housing from council ownership with funding provided by mortgage lenders.

Although the CML claims private finance as an “efficient and effective” way of stretching limited public funding, it says more dialogue between government and lenders is urgently needed to remove uncertainties that could restrict the role of private funding.

Deputy Prime Minister John Prescott is expected to make a major announcement on housing policy later this month.

In a new briefing paper, the CML says lenders want to see a continuing commitment to the large-scale, voluntary transfer of houses from council ownership to non-profit-making organisations like housing associations, albeit with reforms and improvements to the system.

It calls for greater clarity on the powers and capacity of local authorities to borrow from the private sector for housing purposes, and asks for the introduction of a private finance option for the arms-length organisations that can now be set up to manage council homes.

Peter Williams, deputy director general of the CML, says: “Private finance will play a crucial role if governments across the UK are to meet their challenging housing objectives.

“Over the last 15 years, lenders have made a very significant contribution to housing policy and its funding. Without it, government would have faced the stark choice of putting a lot more public resources into the sector or dealing with the consequences of less well funded social housing.

“But the current climate of uncertainty is unhelpful to lenders. Fundamental shifts in policy emerge from within government, but the exclusion of lenders from full participation in policy-making is understandably seen by them as a threat. Lenders want to help shape policy, rather than simply being the recipients of its outcome.”

He adds: “A stronger partnership with government could allow lenders to contribute more and to build on the significant contribution they have already made to improving standards in social housing.”