2018 – A step in the right direction for Social Housing

Over the last month I have been reflecting on what has been an interesting year in housing.  After the political debates in 2017, and the tragic events that occurred in June of that year, the housing sector has progressively moved forward in 2018.

There have been a lot of encouraging signs for the sector in 2018, and three areas in particular which I believe have seen the most fundamental change; the reaction from Grenfell; housing availability; and the commercialisation of the sector.

The Grenfell Effect

The aftermath of the Grenfell tragedy remains an important factor that will shape the sector for years to come, and rightly so. There have been three investigations of note since the fire. Sir Martin Moore‐Bick’s public inquiry continues to hear evidence ranging from building design to the actions of the authorities.
The Equalities & Human Rights Commission established a review, and the government has launched several consultations following Dame Judith Hackitt’s review.

The key takeaway from the Hackitt Review is its recommendation of a Joint Competent Authority (JCA) to oversee enforcements, determine clear roles of responsibility for duty holders, and provide more power for regulators to enforce greater penalties for breaches. If imposed, this will have significant implications for developers and building landlords.

The highly anticipated Social Housing Green Paper was published in August, focusing on tenant engagement and consumer issues. From my perspective, the Green Paper covers four key topics: ensuring homes are safe; empowering tenants; making the regulator more consumer-focused; and expanding the supply of home ownership. Of course, the commentary could have been more specific in detail and perhaps more strongly worded, but it’s certainly a step change in the right direction.

With tenant engagement increasingly in the spotlight, there has been a significant push for candidates to have a more rounded customer experience background. Property Directors, for instance, need to possess not only a breadth of technical and compliance knowledge, but an understanding of creating a first class customer experience for the tenant, and need to drive this culture throughout the organisation.

Housing Supply

A recent study by the Chartered Institute of Housing has shown that, in England, there is a current backlog of four million households with housing needs. With the lack of housing across the UK it was refreshing to see, in September, Theresa May’s announcement of £2bn of new funding for housing associations to build homes, with social housing being put at the heart of the nation’s priorities. Another important milestone, in July, was the government’s agency, Homes England, announcing strategic partnerships across the UK to deliver over 23,500 additional homes. This will be delivered through to March 2022, with Homes England providing £590m of additional funds to assist with the shortage of homes.

In addition, Theresa May also abolished the HRA cap on how much councils can borrow against their housing revenue account. The Office for Budget Responsibility reports that councils will now deliver 9,000 additional homes over the next five years. On the other hand, Savills believes that authorities could release £10bn‐£15bn of extra borrowing capacity, capable of delivering a total of around 100,000 new homes. Either way, this will hopefully transform council house building and increase supply for the undeniable demand for homes.

Commercialisation of the Sector

What has been a richly debated topic in the sector over 2018 is the launch of ‘for profit’ housing associations, with both Blackstone (SAGE) and Legal & General either buying or setting up their own associations over the past year. This sparked an interesting debate, particularly with the National Housing Federation, which has argued they are not ‘housing associations’ as they are not re‐investing their surpluses to deliver their social purpose, instead using it for commercial gain.

Housing associations have arguably become more commercially savvy over the course of 2018, particularly with the ongoing partnerships of L&Q and Trafford Housing Trust to deliver more homes across the North of England. In addition, more associations – such as Regenda, Riverside and, most notably, Thirteen Group with the acquisition of Gus Robinson Developments at the end of last year – are building their own outright sale homes.

There has been a significant push for candidates from a housebuilding background to move across to the housing sector, to cope with the ambitious build programmes set by associations across the UK.

On reflection, it has certainly been a busy time within the housing sector in 2018, both politically and economically. It will be interesting to see how the legislation and papers are acted on in 2019, and how
associations maintain the relationship between building new homes and supporting their existing tenant base.

Tom Neely is a Consultant within Berwick Partners’ Real Estate practice, and leads on Social Housing.