Newspaper article The Journal (Newcastle, England)

Hard Times Can Yield Better Results

Newspaper article The Journal (Newcastle, England)

Hard Times Can Yield Better Results

Article excerpt


IT'S nearly two months since the Comprehensive Spending Review and while some businesses in the North East are making positive noises, there has also been a further degree of uncertainty for the housing sector.

On the upside, well over 8,000 jobs have been highlighted as being created for the region since the start of September, a much overlooked fact amid less promising reports.

However news such as the administration of building company Rok, which carried out a lot of work in the affordable and social housing markets, shows we are far from out of the woods.

While this sad case was not simply a result of the downturn itself, calmer times might have allowed for a solution to be found.

When George Osborne said, as part of the review, that pounds 4.4bn was being made available to this sector, it may well have raised thoughts of "they have done well". But that would only be among those not up to speed with the sector's needs and what we had been promised. The last Government earmarked more than pounds 8bn for affordable housing over three years. Our funding was essentially halved for four years, yet the job at hand is as big as ever.

The normal way to make up the shortfall is to borrow more money. However, to cover the cost of this, we must raise rents, which is not always wise commercially, let alone when so many are struggling financially. Besides, that option is not available to us in many locations.

At Fabrick Housing Group, we manage properties from Tyneside to York, with a large portion of our stock in regeneration areas.

Rent prices in affordable and social housing must, by their very nature, be lower than market rents. So rises are very limited or impossible and subject to regulator scrutiny, meaning this option is not going to be viable in some areas.

We are certainly not alone in being faced with this problem. Community regeneration organisations across the whole country will suffer the same.

It's hard to see how housing regeneration will continue. Yet these are the areas that most need investment and undermine our economic future if not dealt with. …

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