The headlines indicated a roaring success. The Homes and Communities Agency's (HCA) affordable homes programme 2011-15 was over-subscribed for the £1.8bn funding available. The keenness of bidders resulted in the government announcing an over-performance of 20,000 new homes. More than 145 housing providers, including consortia, were successful bidders.
Yet uncertainty remains; contracts are still being signed between the HCA and the successful bidders, while the underpinning Localism and Welfare Reform bills have not yet received royal assent. And if that wasn't enough the costs of borrowing increasing and the appetite among lenders for development is waning, affecting housing providers' business models.
Despite the actual detail of each successful allocation remaining under wraps, it is apparent from quiet whispers that many programmes have been successful only in part, with some high profile bidders losing out well below their expectations despite solid performances in previous bid rounds.
We are in a new world, and those still perplexed by government decisions should consider just how new this world is.
For many years, we have seen the Housing Corporation and the HCA focus on reducing the number of partners it would prefer to deliver new affordable homes with. Instead the policy is to match resources with the right skills to deliver on time and to budget, obtain efficiency in procurement and reduce the cost of administration.
Should it really be any surprise that the way the old world model worked was not going to simply translate? Programmes of the past were delivered in frankly benign conditions compared to those we now face. The government is looking for the financial capacity locked within many registered providers, not just a few. It is no wonder that so many bidders were successful, as tactics of the past were cast aside to ensure a healthy risk profile across the 170,000 unit programme, supported by only minimal grant and the new affordable rent regime.
What this means, at least in theory, is that the government has capacity with the over-subscription of bids to seek out flexibility should contract negotiations prove tricky. What is perhaps less understood, is just how much credence was put by those successful bidders on delivering entire programmes instead of just part. We will see some difficulties in viability in what is left as a result; other landlords will be quite simply relieved they no longer have to put so much pressure on their uncertain finances.
But while the frantic search for public land continues in support of affordable housing supply (the NHS estate being the latest target), what is going to happen to the existing networks and relationships where plots and new housing have been earmarked or secured, but are not supported by grant? Some residential developers are already finding that the offers they had on the table for their section 106 affordable homes (not typically grant supported) have been withdrawn and others who simply can't get a straight answer in terms of when they can get into contract.
As predicted, the HCA has issued guidance to private registered providers wishing to deliver new affordable rent homes without grant. They will, however, be unable to apply the new rent regime to re-lets, unlike those whom have secured grant under the AHP's Framework Delivery Agreement. The new Short Form Agreement, to be used scheme by scheme, appears to be specifically designed to close the otherwise potential loophole created by the new PPS3 definition and developments seeking to use recycled capital grant and disposal proceeds funds. What is currently unknown is whether the homes delivered under these new agreements will provide a further over performance to the now 170,000 target by 2015 - my guess is they will.
I think we will see new strategies being developed over the coming weeks from landlords with and without grant and a new "sideshow" to the affordable homes programme emerging. A stroke of genius by government or lucky consequence? Much will depend on landlords' ability to commercialise their businesses, with the fate of their ambitions in the hands of their ability to inspire the appetite of those providing "new world" private finance solutions.
Rebecca Bennett Casserly is head of affordable housing at EC Harris
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