Social landlord in talks to buy 200 unsold homes

Oct 7 2008 by Peter McCusker, The Journal

A SOCIAL landlord is hoping to help kick-start the North East housing market by buying up to 200 unsold homes and making them available for rent - with an option for residents to purchase in the future.

Derwentside Homes is already in talks with the region’s major housebuilding companies in a bid to buy properties which are proving hard to sell in the Consett and Stanley areas.

In one of the first initiatives of its kind in the country the social housing company – which has earmarked £18m for the scheme – will then offer residents the chance to buy their property after four years by sharing in any equity accrued. The scheme, set up under new subsidiary Prince Bishop Homes, follows a surge in applications to join the landlords’ housing waiting list as mortgages become harder to get for first time buyers.

Derwentside Homes’s director of finance and corporate services and Prince Bishop Homes’s new chief executive Keith Tallintire said: “This initiative has come about because of the serious state of the economy. We are already in negotiations with most of the region’s main housebuilders.”

Prince Bishops is looking at buying unsold two and three bedroom semi-detached and terraced homes in the £75,000 to £110,000 price range. The cash comes from Derwentside Homes’ £105m funding package from LloydsTSB.

The initiative has been welcomed by the Home Builders Federation which represents the country’s major house builders. A spokesman said: “This is the first scheme of its kind we have come across. The supply of social housing had dried up.

“It’s a very welcome step as it benefits not only house builders who may be finding homes hard to shift, but it also benefits the tenants.”

House builders have shunned social housing schemes in recent months with house prices falling 12% in the last year. However, the Government has made extra cash available to the Housing Corporation to support social housebuilding programmes.

The Derwentside scheme adds another string to the bow of social housing providers and may lead to follow-on schemes.

A similar scheme is already underway in the North East with Newcastle City Council announcing weeks ago it intended buying unsold homes.

The council wants to buy 10 to 15 properties on an estate previously earmarked for private sale. The plan aims to avoid the “nightmare” of unfinished developments and provide affordable rental homes pitched between social and commercial prices.

Funding is being finalised, with £200m available nationally from the Government to buy unsold new homes, although council chiefs say it is insufficient.

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FRUSTRATING TIMES FOR CONSTRUCTION

NEW build home numbers could drop below 100,000 next year, according to the Royal Institute of Chartered Surveyors.

Following significant declines over the past two quarters, private housing sector workloads plummeted yet again, with 60% more surveyors reporting a fall than a rise, according to RICS latest UK Construction Market Survey.

RICS says the Government needs to build more than 200,000 new homes each year in order to reach their target of two million homes by 2016 but to date only 66,220 new homes have been built in 2008.

RICS North East spokesman on the construction sector Michael Henning said: “A shortage of funds has halted the entire market and these are very frustrating times for everyone working in construction.”