WITH a planning application about to be submitted for a 58-place ‘extra care’ facility for frail elderly tenants in St Neots, social landlords are expecting to have to look for alternative sources of cash to build affordable homes.

WITH a planning application about to be submitted for a 58-place 'extra care' facility for frail elderly tenants in St Neots, social landlords are expecting to have to look for alternative sources of cash to build affordable homes.

When the new Government slashes funding for the Homes and Communities Agency, Bedford Pilgrims Housing Association, which is providing several hundred homes at the new Loves Farm development in St Neots, expects to need to try to attract institutional investors, such as pension funds and insurance companies, to make up for the 25 per cent (or more) reduction in central funding that is expected to be announced in October.

Chief executive John Cross told The Hunts Post: "We know there's going there's going to be more pressure on budgets and, in particular, the benefits system, which is clearly a big issue for those on benefits, but it's an opportunity for housing associations to do what they were set up for - to meet housing demand for less well-off families."

The company - which now styles itself bpha - was one of the country's first to be created from the transfer of council housing, when it took over North Bedfordshire Council's stock of 7,300 homes in June 1990 for £63million. Twenty years later it has doubled in size, with 300 employees looking after tenants in 16,000 homes across central and eastern England.

As Mr Cross points out, the buoyancy of the social housing sector is counter-cyclical. When the economy is tough, demand rises - though in the rapidly-growing Cambridge sub-region demand was outstripping supply even in boom years of more-or-less full employment.

The risk is that, if austerity measures push the UK back into recession, demand for affordable homes will accelerate.

"Rented accommodation is vastly needed in this area, and it needs subsidy. The Government can put it in through the Homes and Communities Agency and you can use the planning system to provide land, as happened here at Loves Farm."

By the end of next year, bpha will have finished and let (or part-sold through a number of shared-equity schemes) all the 400 affordable homes originally envisaged for the development - plus an additional 125 it will have provided on land it bought at market rates - at a total cost of £62million.

Mr Cross believes there could be even more opportunity for social housing in the encouragingly-cohesive development.

But if HCA cash were to be cut by 25 per cent, in spite of the £1.5billion a year of Whitehall cash still going into the sector, the task for housing association chief execs will be to find new funding streams.

Institutional investors seeking steady income streams are no strangers to the commercial property market. Mr Cross sees no reason why they should not find the index-linked rental stream from social housing equally blue-chip - if not better, because demand is insatiable and occupation levels more secure than in the commercial sector.

"We are a long-term business, so we don't need to make a short-term profit. But we still have to satisfy the lenders that we are going to pay them back, so we have to take in more than we spend," he said.

The association is well-placed to be the social landlord of choice when Loves Farm expands eastwards in the future and when a new proposed 'eco-quarter' is built to the south. It is also the chosen partner at the planned new town of Northstowe, as well as at two huge developments in Cambridge city, so bpha is becoming a major player in the county's housing sector.