Written evidence to be reported to the House
Housing and Regeneration Bill
12:00 pm
David Orr: The answer to your first question is I think, on balance, that there is too much rather than too little regulation of the way in which housing associations dispose of their assets. At present, before disposing of anything it is necessary to have the consent of the regulator. We do not argue that there should be no regulation of disposals, but we do think that there should be more opportunity for class decisions, if you like, so that if for example garages are being sold, that might happen without the specific consent of the regulator for every individual transaction.
I think that where housing associations dispose of assets it is in pursuit of their business plans. That is also part of the present regulatory environment. If assets are disposed of it is necessary to be able to demonstrate that the proceeds from that sale are being used for proper purposes, for investing in stock or for cross-subsidising against new social rented homes. If you or any of your parliamentary colleagues had evidence that sales were being made merely to bolster reserves, we would be disappointed. That is highly unusual and I do not think that that is how things happen at present.
You may not be aware that it is not at present possible to achieve the core objective of providing a new supply of high-quality rented housing without some cross-subsidy. Housing associations on average invest about £25,000 per unit of money that they raise, primarily from transfers of shared-ownership housing, towards the cost of rented and shared-ownership housing. That activity cannot be funded purely from present Government subsidy and private borrowing. There is that additional subsidy. You might say that that is a loss-making activity that under present arrangements can be managed only with that form of internal subsidy.