1. Delivering the Affordable Housing Programme Brian Johnson Chief Executive, Moat

2. Moat South East focus Mixed tenure Service quality Innovation Local authority relationships (60 local authorities in 2008/9, 40 today) Local HomeBuy Agent for Essex, Kent and Sussex Develop 600 new homes each year Number of properties: Rented and other 13,333 Shared Ownership 4,478 Equity Loans 2,889 Total 20,700

3. Social and affordable rent

4. Or…

5. Is affordable rent working? Moat 168 conversions to affordable rent £36,000 extra ‘subsidy’ created per new home –(£40,000 in HCA offer) 67% residents on benefits No impact on void turnaround Arrears no different to social rent But Not doing 4 bed properties Capping rents at £180pw

6. Shared ownership Trends – profitability, staircasing Good product for South East Needs tweaking to promote staircasing We believe delivers £50,000 per home of social value

7. Shared Ownership

9. This programme to 2015 Bond funding remains buoyant S106 still in good supply Increased Moat programme size on back of rent increase

10. 2015 and beyond There are two issues on financing: Borrowing Most housing associations will hit one of the three borrowing constraints in the next ten years: 1. Ability to meet interest costs (interest cover) 2. Ratio of borrowing to assets (gearing) 3. Ability to secure borrowing with assets The first is controllable by reducing costs The second and third might be relaxed to some extent by the government guarantees but this is by no means certain Subsidy Subsidised housing requires subsidy! This can be capital subsidy or revenue subsidy (housing benefit) The move towards revenue subsidy makes constraints 1 and 2 above more severe

11. Institutional investment? The only attraction to institutional investors of subsidised or low end private rented sector housing is inflation linked income We want more rented homes CLG Let’s attract institutional investors Treasury It’s a “no brainer” that housing benefit should not increase with inflation DWP and many government MPs

12. Institutional investment? It will only happen if housing associations take on the risk of rent inflation Should housing associations take on that risk given that it is unpredictable? Might the loan guarantees begin to answer that? Do the different government departments understand the inter-dependencies?

13. What are the opportunities Creating subsidy from existing homes Rent models Shared ownership staircasing Local authorities Local vehicles utilising Housing Associations and Local Authorities (HRA) surpluses', LA land, RTB receipts and HA access to funds Operational efficiencies Cross subsidy from other activities Private rented or open market sale Be very careful that risk is understood and really tested against what is appropriate Housing Associations run to very long business cases, developers to very short ones. Their respective funding structures reflect this.

14. So, what should we do? DeliverInfluence Relentlessly reduce costsCoherent housing and housing benefit policies Sustain high credit ratings End the destruction of £75k of value in every RTB sale Develop and deliver better integrated products that can ‘pop out’ subsidy when not needed Work with the spirit of the welfare reforms but influence the implementation Push our understanding of all of the potential financing options Be very careful that we understand what risks are appropriate – avoid self-delusion Work much more closely with others – especially local authorities

15. Conclusion Current programme is going well for Moat Schemes available Affordable rent working Shared ownership good Funding fine Future more uncertain Some controllable elements Better performance and relationships essential Huge political uncertainty