NIFHA welcomes reclassification legislation announcement

Following the announcement that the NI Executive will bring forward reclassification legislation via accelerated passage, Ben Collins Chief Executive of NIFHA (Northern Ireland Federation of Housing Associations) commented:

“NIFHA welcomes this announcement on bringing forward legislation to reverse the reclassification of housing associations in Northern Ireland. This will provide certainty at a challenging time, as it will allow housing associations to continue to match government funding pound for pound with private finance. This means twice as many homes can be built, as would otherwise be possible. The risk of circa £1Bn of borrowings used to fund homes by housing associations, going onto the public accounts, will also be ended.

“It will also stop the erosion of our sector’s social housing stock through the ending of the House Sales Scheme. The need for new social and affordable housing is increasing and there is already a pathway to home ownership through schemes such as those operated by Co-Ownership.

“We will be able to explore new innovative uses for FTC (Financial Transactions Capital), which will now become available again. Housing associations can play a critical role, working with the NI Executive and others, to build the economic recovery as we continue to deal with the Covid-19 pandemic.”

ENDS

Notes to editors:

1. Over the last four years the number of homes sold by housing associations to tenants through the House Sales Scheme is as follows:

2. Housing associations receive approximately 54% funding through the Housing Association Grant to build homes as part of the Social Housing Development Programme. They borrow through private finance to cover the remaining cost and can therefore build twice as many homes as would be possible using government money alone.
3. The ONS (Office for National Statistics) designated housing associations in Northern Ireland as public sector bodies in Jan 2016. This meant that they were technically unable to borrow private finance and their ability to access FTC was stopped. A temporary derogation was agreed with HM Treasury which allowed housing associations to continue to borrow money. This temporary arrangement had recently been extended until March 2021. However housing associations in Northern Ireland are currently unable to access FTC, until the legislation to reverse the reclassification has been passed.
4. If the reclassification of housing associations in Northern Ireland by the ONS (Office for National Statistics) is not reversed by necessary legislation, the sector’s current borrowings of circa £1bn will move onto the public accounts and have a significant impact on the block grant which is received by the NI Executive.
5. The Department for Communities press release announcing this legislation can be accessed here.