Hope for social housing

Posted on January 25, 2019 · Posted in Accounting & Business

Housing associations are feeling more confident and more positive.  Prime minister Theresa May made a major speech this autumn at the annual conference of the National Housing Federation, the body representing English housing associations.

 

“I can announce that new longer-term partnerships will be opened-up to the most ambitious housing associations through a ground-breaking £2bn initiative,” she told her audience.  This was part of a change in government approach moving towards longer term, confirmed, funding arrangements, as requested by associations.  The new funding allows funding applications through to 2028/29 and follows the awarding of £600m of longer-term deals with eight associations, which have already enabled the building of nearly 15,000 new homes.

 

In August, a green paper ‘A new deal for social housing’ was published, indicating the direction of travel of government policy.  It contained five principles that the government said “will underpin a new, fairer deal for social housing residents”.  Those principles are the provision of safe and decent homes; faster and better complaint handling; resident empowerment and landlord accountability; tackling social housing stigma; and building sufficient social housing.

 

David Orr, the outgoing chief executive of the National Housing Federation, responded to the prime minister’s promise of new funding.  “This represents a total step change,” he said. “For years, the way that money was allocated meant housing associations couldn’t be sure of long-term funding to build much-needed affordable housing.  Now, by changing the way in which they allocate funding, ministers have given long-term confidence and confirmed that we are trusted partners in solving the housing crisis, building new homes and communities.  Ultimately, this will have a huge impact on building the affordable homes that thousands of people across the country desperately need.”

 

The Prime Minister’s announcement of extra, longer-term, funding for English housing associations could lead to additional funds for the devolved nations through the Barnett Formula.  David Stewart, policy lead at the Scottish Federation of Housing Associations, explained:We would hope that additional funds will become available to housing in Scotland via Barnett consequentials following the PM’s announcement.  We cannot be certain of this however and will need to see how the funds are allocated by the Scottish Government.  The potential for additional funding is also complicated by the fact that in England support for affordable housing is seldom in the form of grant to support new build social housing – the main focus of investment in Scotland.  It could be that the funds announced are for measures such as loans and financial guarantees so they may support other forms of development rather than funding to housing associations.

 

“I would say that housing associations in Scotland are in a sound financial position.  At present they are benefitting from an ambitious programme to build 50,000 affordable homes during the current Scottish Parliament, 35,000 for social rent.  They also have the most energy efficient homes by tenure after investment to meet quality and energy efficiency standards.  There are challenges, however – welfare reform is a strain on landlords and tenants, and there are Scottish Government proposals for higher energy efficiency standards and a requirement for sprinklers in new build social housing both of which would have significant cost implications.”

 

Ben Collins, chief executive of the Northern Ireland Federation of Housing Associations, has also requested clarification regarding a possible funding benefit via the Barnett Formula, in his case through a letter to the Northern Ireland secretary of state Karen Bradley.  Northern Ireland has specific challenges regarding the financing of social housing, in particular because of the lack of a functioning devolved Executive and Assembly.  One result of this is that unlike the other two devolved nations, Northern Ireland’s social housing sector continues to be classified as part of the public sector, with the resulting constraints on borrowing.

 

The Office for National Statistics, in accordance with the rules of the European System of Accounts, reclassified the social housing sector in England as part of the public sector in 2015 and in Scotland, Wales and Northern Ireland in 2016.  Subsequent legal changes have allowed those in Britain to now be reclassified back as private sector bodies.  The lack of a legislative assembly has prevented the same happening in Northern Ireland and while the Treasury has put in place a temporary derogation, there remain restrictions in the use of Financial Transactions Capital, which is used for co-ownership housing and some affordable housing schemes.

 

Aaron Hill, assistant director of policy and public affairs at Cartrefi Cymunedol Cymru (Community Housing Cymru) is positive about prospects for social housing in Wales.  He said: “[The] Welsh Government has committed to invest more than £1.5bn of funding in housing throughout this Assembly term, and [its new] draft budget saw an additional £35m assigned to Social Housing Grant. This is great news for housing associations, and means we are on target to deliver Welsh Government’s 20,000 home target during this Assembly term.”  He added that his organisation has the intention to develop 75,000 homes by 2036. The Welsh Government commissioned an independent review of affordable housing supply earlier this year to consider how to achieve this.

 

While additional funding is being made available for social housing across the four UK nations, the pressures on housing associations to meet the rising demand remain considerable.

 

Key numbers:

4 million – units of social housing in England, of which 2.4 million are owned and managed by housing associations and 1.6 million are owned by councils, down from 5 million in 1981. (National Audit Office, ‘Housing in England: Overview’.)

 

594,458 – units of social housing in Scotland, of which 277,905 are owned and managed by housing associations and 316,553 are owned by councils. (Scottish Government, ‘Social Tenants in Scotland 2016’, published 2018.)

 

230,044 – units of social housing in Wales, of which 142,600 were owned and managed by housing associations and 87,400 were owned by councils. (Welsh Government, ‘Social Landlord Housing Stock and Rent’.)

 

133,100 – units of social housing in Northern Ireland, of which 31,300 were owned and managed housing associations and 101,800 of which were owned and managed by the Northern Ireland Housing Executive, an arm’s-length government agency.