New Housing LIN Factsheet seeks to map way through credit crunch for extra care development

This Factsheet No30, published by the Housing Learning and Improvement Network (Housing LIN), says there is some evidence that housing associations are wary of entering new commitments because of concerns about the availability and cost of new finance and possible breaches of covenants attached to existing loans.

However, the factsheet notes that extra care housing schemes are seen as a relatively secure proposition because the benefits which fund rents effectively deliver a Government guarantee. It also notes that private developers previously eager to minimise the amount of social rented housing on their estates under Section 106 agreements are now more enthusiastic. Some developers are also offering RSLs land at heavily-discounted prices, the factsheet notes.

Local authorities have also reported an increase in planning applications by private developers for what the developers term 'extra care' - but there is some doubt how many of the proposed schemes really match recognised definitions of extra care.

For RSLs, additional challenges on top of uncertainty around the cost and availability of funding include the impact of the bleak state of the housing market generally.

Shared ownership units are proving difficult to sell in some schemes because elderly people are finding it difficult to sell their own home.

The factsheet acknowledges that RSLs might choose to put off the development of new schemes 'until the climate improves'.

Jeremy Porteus, National Programme Lead for the Housing LIN, said: "It is understandable and right that in these unprecedented times RSLs and their partners are being cautious in planning new developments.

"This briefing shows however that while the current climate presents massive challenges, there are also opportunities for RSLs with the right financial base and ideas.

"With an ageing population, we cannot take the foot off the gas in the development of extra care and other housing options for older people. RSLs, local authorities, Government departments and partners such as the Homes and Communities Agency must work together to address the challenges."

Mr Porteus said the Department of Health's Extra Care Housing Fund provides a base for planning innovative developments.

The Factsheet No30 'Extra Care Housing and the Credit Crunch: Impact and opportunities' is available on the Housing LIN's website under the link below