HOMES built on condition they are for social rent could be sold off privately if the housing association responsible was to go bust.

A legal agreement, from 2018, required 11 homes at a development at Chepstow Road, Raglan to be affordable and they are to be let by housing association Pobl Homes.

Monmouthshire County Council, which put in place the planning condition, known as a Section 106 legal agreement, has approved the association’s request, made in November 2024, to amend the agreement.

The council, which had been waiting on advice from the Welsh Government before reaching its decision in January, agreed to add a clause that would allow a mortgage lender to sell the properties if they were to take possession should Pobl default on repayments. The condition means the lender wouldn’t be bound by the condition the homes have to be affordable.

However the council’s legal department has said it is unlikely a housing association would default.

The advice it issued to the planning department, before it agreed to the application, stated registered social landlords have faced difficulties in raising funds as mortgage lenders have been unwilling to lend to them as the restrictive conditions decrease the value of sites.

The legal department said it took advice from the Welsh Government which said there is “effective regulation” that assures registered social landlords (RSL) are “well governed, deliver high quality services and are financially viable”.

It also said in the “unlikely event of an RSL facing a potential insolvency” there is a provision, under the 1996 housing act, that triggers a moratorium to provide time for the issues to be addressed with the aim of protecting social housing assets and tenants.

Council solicitor Paige Moseley stated in her advice: “Therefore, the risk of default by a Welsh RSL is minimised through the regulatory system and the statutory insolvency provisions. In practice, the RSL sector in Wales has maintained a zero default record for financial reasons since 1974.”