Higher National Certificate in Housing

Year 2 - Housing Finance and Financial Skills

HFFS101: The Context of Housing Finance

This Block begins by introducing themes and issues in housing finance, which sets the context for the other Blocks of the module.

It begins with a discussion of the importance of resources, and constraints on resources for housing, both nationally and on a local and organisational level. We
consider the role of housing and the housing industry in the national economy; and the implications of national economic policy for housing resources.

Next, we examine some recent trends in housing expenditure and consider the ways in which patterns have been changing over recent years, and the policies which have influenced these.

We then provide an overview of current government economic policy and outline their approach to housing finance.

Finally, we review the roles of key government departments and agencies and other key players in the provision of housing finance.

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HFFS102: Concepts in Housing Finance

Elsewhere in this Unit we examine the financial arrangements which permit dwellings of all types to be built, repaired, improved, sold and managed. These
financial arrangements are largely specific to particular tenures, and depend also on whether it is the provider or the consumer who seeks the finance.

However, the basic terms which are used to describe and define financial arrangements are universally applicable to all different systems of housing finance. There are a number of key financial concepts, and these terms underpin any explanation of financing arrangements for all tenures. It is with these financial concepts that we will be concerned in this Block.

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HFFS103: Local Authority Finance

This Block examines the provision of finance for local authority housing.

It begins in Section A with capital finance, and the types of expenditure which this covers. It then examines the mechanisms for the control of local authorities’
borrowing for capital spending. Next, it looks at other sources of capital funding, including revenue sources and grants.

In Section B, the mechanics of how capital finance works are set in a larger context. This part of the Block looks at overall government policy - in particular Decent Homes, stock transfer, ALMOs and PFI - and local housing strategies.

Section C examines revenue finance for local authorities. It identifies the main features of the Housing Revenue Account, and the effect of the introduction of the new ‘resource accounting’ arrangements.

Finally, in Section D it identifies different rent setting systems, and explains the main features of the rent restructuring regime.

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HFFS104: Housing Finance For Registered Social Landlords

In this Block, we study the way housing associations and other Registered Social Landlords are financed. (The term Registered Social Landlord (RSL) was introduced by The Housing Act 1996 to cover both Housing Associations and Local Housing Companies registered with the Housing Corporation.) To reflect this expansion of The Corporation’s responsibilities, Housing Association Grant (HAG) was renamed Social Housing Grant (SHG). In this Block, we refer to Housing
Associations and HAG where we refer to the legislative provisions of 1988 and earlier, and RSLs and SHG for any provisions introduced with or since the 1996 Act.)

To understand the current regimes, and to evaluate their impact, it is necessary to take a historical perspective in particular looking at the immediate precursor of the
systems in use today.

While the text focuses principally on the regime that is in operation in England, it integrates commentary on the situations pertaining in Scotland and in Wales wherever possible.

We begin with a brief outline of the situation leading up to the Housing Act, 1988 and the Housing (Scotland) Act, 1988 - the legislation on which the main current
government funding regimes are based. This section sets out the framework for the first substantial public funding programme for housing associations, established under the Housing Act, 1974.

Next, we examine the regimes that were introduced in 1988. We look at the government’s intentions in introducing new regimes, and at the impact on both
capital funding for new projects and on the revenue position. We consider the interests of private lenders and how these affect housing associations. Changes in the regimes from their introduction in 1988 to the present time are also outlined.

In the next section, we consider how the development programme for each country is distributed from the relevant funding body (the Housing Corporation in England, Communities Scotland, and the Social Justice and Regeneration Department in Wales) to individual housing associations or other Registered Social Landlords. This involves looking at both the central mechanisms for allocation and at the way in which individual RSLs reach their own decisions about budgets and capital programmes. This involves us in looking at the process of scheme appraisal and at rent setting and rent restructuring.

We then look at other sources of funding, including funding for stock transfer, before moving on to the final section, where current key issues are considered: rents,
affordability and Housing Benefit; rate of growth, supply and demand; and the new partnering initiative.

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HFFS105: Mortgage Finance for the Owner Occuppied Sector

In this Block, we will look at resources for owner-occupiers. We begin by looking at sources of mortgage finance for owner-occupiers, including building societies, banks, insurance companies, foreign banks and local authorities.

We will then look at the way the societies fund home owners, through mortgage lending, and the different ways of repaying the loan and interest. We will also discuss the constraints within which the societies operate their lending and investment policies.

This is followed by a brief examination of the investment accounts offered by societies. We will look at them in terms of their attractiveness to different kinds of saver, and their place in a competitive market.

Lastly, we examine which sorts of housing customers are able to obtain a mortgage, and identify problems of affordability for some groups.

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HFFS106: Finance for Private Rented Housing

In this Block we will look at the ways in which private rented housing is financed. We begin by looking at some of the causes of the decline of the private renting sector,
in terms of the constraints on landlords; at the causes of low returns on investment in private rented property; and at the kinds of returns which would be needed to
induce more investment in what is seen as a high risk area.

We will then turn to the kinds of finance available to landlords, in terms of the different kinds of landlord -companies, institutions and individuals, and their share
of the market. We look at sources of finance to companies, including public finance through various government grants; at the operation of the Business
Expansion Scheme as a source of housing finance; at Housing Investment Trusts; at an experiment in helping homeless people without deposits into rented
accommodation; and at the ways in which loan finance can be raised by companies and individuals.

You will find that some housing statistics, and also some texts on housing, include housing association properties within the private rented sector. We have specifically
excluded them: you have already studied housing association finance in Block HFFS.104. For the most part, the financial arrangements for housing associations and for private landlords are very different.

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HFFS107: Help With Housing Costs

In this Block, we will examine the subsidies to housing costs available to tenants, in both public and private sectors, as well as help for owners of properties.
We look at Housing Benefit, which we have discussed in previous blocks as a subsidy to tenants of both privateand public sector housing, and housing associations.

We examine how Housing Benefit is paid, and the problems for local authorities. We then see who can claim the benefit, and the method of deciding claims
and calculating amounts of benefit. Some problems concerning Housing Benefit are then examined.

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HFFS108: Perspectives on Current Issues

You have already learned a great deal about current issues in housing finance from your study of the earlier Blocks in this Unit.

You will be aware that there are concerns that our system of housing finance is inadequate. There are still very many households living in poor conditions, or without homes at all.

Before you begin your study of this Block, therefore, we want you to review what you have already learned: what do you think are the main problems in housing finance at the moment?

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