New affordable housing funding will impact landowners and lenders

Philip Browne, Knight Frank Affordable Housing partner, says:

"Although broadly welcomed because of the increased flexibility the new Homes & Communities Agency funding framework gives to Registered Providers, it will also impact on developers, landowners, planning professionals and lenders.

"Signed Section 106 agreements not yet implemented that do not allow for the affordable rent tenure may now need time spent in renegotiation.

"Schemes in planning will need to take account of revised values for affordable housing arising from the new funding framework in determining the amount of Section 106 affordable housing supportable.

"The earliest date for agreement to new RP contracts is June 2011, leading to a short term delay in procurement of affordable housing.

"Planners will need to update planning policy, particularly in terms of the evidence base used to support affordable housing policies.

"RPs will rely more heavily on private finance, but lenders will be reassessing their lending criteria, considering the security of the rental stream, the potential for higher voids, bad debts and operational costs for the affordable rent tenure.

"The new funding framework gives RPs of affordable housing greater flexibility, but the increased complexity of funding arrangements, the introduction of the new tenure, and the uncertainty from now until June will have impacts that spread wider than Registered Providers - the industry as a whole will need to consider what these changes will mean."