Where do we go from here...

Posted by Chris Carr on
Chris Carr writing for the latest edition of 24dash. 
Housing, for the first time in quite a while, finds itself centre stage and is under the Government's spotlight, which is something of a double edged sword. 

The sector is finally getting the attention it so richly deserves, but is finding that this attention comes with unwanted scrutiny which often misses the point of what Housing Associations do.  Some commentators have focused solely on building records and missed that the overwhelming majority of Housing Associations also provide semi-public functions, social and extra care services and are responsible for creating some of the strongest communities in the country.

Government policy has become housing-centric recently which has, in turn, created a lot of uncertainty as reforms are announced but, often, with very little detail on how it will work and Housing Associations are expected to implement it.  Planning for the future has, understandably been hard.

The Comprehensive Spending Review (CSR) marks the beginning of the end of this period of uncertainty for the sector. Whilst we're not completely clear on many things, we do now know the Government's direction and the course it is plotting towards 2020.

Home ownership, both for first time buyers and social housing tenants, is the key policy that the sector will need to deal with in the next five years. Housing Associations will also be expected to increase efficiency, deliver more value for money and, increasingly, become more self-reliant.

Whilst the 1% rent cut remains, the Chancellor has reversed his decision to cut tax credits now, leaving it alone for a few years until they will are rolled into Universal Credits.  Nevertheless this provides Housing Associations time to help tenants on low incomes plan to deal with these cuts over a period of years rather than merely months.

In addition there is more money for shared ownership as well as Starter Homes, albeit no detail on whether this money is intended to partially fund discounts or for some other related purpose.  If the discounts are to be partially funded this way then house builders will still need to consider how they value sites for future acquisitions.

It is worth considering that the Housing and Planning Bill, as currently drafted, seeks to remove the control local planning authorities place on tenure type (as well as adding Starter Homes as an authorised affordable housing tenure type).  It does not, however, remove the relatively common requirement that affordable housing is transferred to, owned and operated by Housing Associations.

Council's and Housing Associations may want to take this opportunity to mend their relationship after it was, unintentionally, diminished by the voluntary Right to Buy negotiations.  Housing Associations, given affordable land under Section 106 Agreements and free reign to build what they want, may use the opportunity to build a greater mix of tenures rather than purely focusing on home ownership.

For house builders though, how sites are valued will be determined by what represents the better value to them, selling, potentially, 25% of their properties at a 20% discount or selling the land to a Housing Association for a reduced value (or maybe even no value), but who will still have those units built.  Housing Associations should consider in their plans partnering more closely with local authorities and house builders so everyone achieves their aims.

One of the largest question marks remains over exactly how the voluntary Right to Buy will work in practice. The current pilot schemes appear to be more palatable to the sector.  The five Housing Associations involved have been free to set their own exemptions. In fact, it's even been suggested that all properties delivered under a Section 106 Agreement could be exempted).  In addition, at least for the pilot programme, tenants are required to have lived in their social housing for a minimum of ten years.  If Housing Associations are given this degree of latitude when it is rolled out countrywide, then the voluntary Right to Buy could become more acceptable than previously thought.  Housing Associations need to start considering now the exemptions they will want to include in their policies.

It is clear that the Government expects housing providers to deliver more for less. The next comprehensive spending review is not expected for another five years, but given the current focus of Government policy, Housing Associations would be best advised to build robust business plans that have in mind future policy decisions, such as a continuation of the 1% rent cut for a further five years, and ensure that their core business can be substantially insulated against those changes.

This article was originally published by 24housing.co.uk

About the Author

As the Head of our New Homes sales team, Chris oversees the firm's sales offerings to our Developer clients.

Chris Carr
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