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The Treasury and housing minister Margaret Beckett are to warn banks that their lending practices are risking the viability of housing associations. They are preparing a dossier showing association lending rates are being pushed up by banks.
Peter Marsh, the chief executive of the Tenant Service Authority, the housing association regulator, also disclosed that six medium to large housing associations were now in serious financial difficulty. He declined to name them.
Beckett told the communities and local government select committee yesterday that a paper was being drawn up in the face of evidence that banks were using any opportunity, such as a restructuring, to rack up the cost of borrowing, often forcing housing associations to abandon plans to rationalise, make efficiency savings or build new homes. Sir Bob Kerslake, the chief executive of the Homes and Communities Agency, told the committee that developers were being hit by the lack of mortgage availability and difficulties getting finance.
The council of mortgage lenders and the Intermediary Lenders Association chief executive, Peter Williams, said government should act more swiftly to implement the Crosby review designed to provide new sources of government guaranteed credit. They said the housing market would continue to decline and could not wait for the budget next March. Beckett insisted an early response to Crosby was impossible and held out little hope that the government would provide extra money to help the market. She also disclosed that the government has commissioned a major study of housing need to determine whether people want to rent, buy or are interested in shared ownership.
The director general of the Council of Mortgage Lenders, Michael Coogan, suggested it might take as long as six years for the housing market to recover, judging by the previous crash.
The House Builders Federation chief executive, Roger Humber, said the credit crunch meant the government's plan to build 3 million new homes by 2020 would not be met.
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