Stock options appraisal

Stock transfer is still attractive,say Hal Pawson, housing professor at Heriot Watt university and David Mullins, housing professor at the University of Birmingham

After two decades of stock transfers, council housing has become a thing of the past in almost half of England’s local authorities. In Wales, virtually devoid of transfers until 2006, we have seen a late surge of activity, with ‘yes’ votes now recorded in more than a third of all councils.

lsewhere across Britain, however, the transfer dynamic had been ebbing for several years before the 2009 publication of government housing revenue account reform plans was widely hailed as sounding the death knell for stock transfer.

‘Under the planned HRA reforms, a re-distribution of housing debt across English councils would see the creation of a self-financing and supposedly sustainable financial regime for council housing. Assuming the plans are taken forward by the coalition government, any resumption of transfers on the scale seen in the policy’s 1998 to 2006 hey day seems unlikely. However, with a quarter of arm’s-length management organisations said to favour transfer (Inside Housing, 30 April) and four currently converting to housing association status (Inside Housing, 7 April), the option clearly has some appeal.

‘Indeed, there are several scenarios which might well result in a future revival of the transfer process. First, HRA reform is still far from a done deal. Risks remain that the plan might founder - either because of a lack of ministerial commitment or because certain individual councils baulk at their greatly increased debt under the proposed settlement. If the deal folds, many councils could rush for transfer to finance maintaining the decent homes standard.

‘Second, many ALMOs have got the taste for (semi) independence and may seek to persuade councils that tenants might not back a return to full council control, even if that is the authority’s preference. It is expected that any proposed change in managerial arrangements would need tenant endorsement similar to that which authorised original ALMO establishment.

‘Third, even assuming that the HRA reform package proceeds as planned, councils will still depend on central government capital allocations. In this sense, greater financial freedoms enjoyed by housing associations may well continue to exercise attraction for council housing directors, particularly as they contemplate the investment required to meet rising energy efficiency standards for existing homes.

‘Fourth, given the crisis for public finances over the next few years, the Treasury might well see ‘positive value’ stock transfers as a tempting opportunity to ‘cash in’ on state-owned assets. Resulting capital receipts could help to balance the national books and such transfers might even be ‘sold’ to the relevant councils and their tenants to fund new affordable house building.

‘Finally, stock transfer (particularly at estate level) fits well with prime minister David Cameron’s ‘big society’ ideal. Transfer chimes with several stated goals of the coalition government including giving communities more powers, encouraging people to take an active role in their communities - co-operative and mutual transfer models have already been developed.

‘Housing transfer is easily the most sustainable vehicle for community empowerment via asset transfer, because of the dependable rental income associated with this asset.

‘For all these reasons it remains possible that claims of stock transfer’s terminal demise are misplaced.’

After council housing: Britain’s new social landlords, by Hal Pawson and David Mullins is published by Palgrave Macmillan

Nothing tops democratic accountability, says Paul Price, Association of Retained Council Housing executive board member and Tendring Council director of housing

‘Council housing is ready for a comeback. The fact is that, despite 30 years with political and financial odds stacked decidedly against stock retention, more than 1 million residents in England alone have chosen their local authority as their landlord.

‘Membership of the Association of Retained Council Housing has grown rapidly since the body launched with a handful of members in 2006. It now numbers more than 50 councils of all political hues. The benefits of directly owning and managing properties are increasingly evident.

ouncils are currently building new homes for the first time in decades and, with a fairer finance system in place, council housing can be a popular, cost-effective and sustainable mainstream housing option again in future.

‘The fourth annual ARCH Tenants’ and Residents’ conference, hosted last month by Birmingham Council, showed the strength of feeling among people who live in local authority homes.

‘Council housing has a vital place at the heart of communities. The ARCH and Association for Public Service Excellence research report Under one roof: the holistic benefits of retained council housing, shows how stock retainers are delivering social, environmental and economic value in addition to their housing role.

‘Keeping housing in-house dovetails perfectly with regeneration, planning, community cohesion, economic development, tackling homelessness, environmental considerations, improving health and well-being, addressing anti-social behaviour and a whole host of other priorities.

‘This was evidenced in case studies in the report, which looked at a range of authorities including Canterbury, Warwick, Wandsworth and West Lancashire. These demonstrate how staff working within a single organisation can liaise more closely to deliver truly ‘joined up’ services.

Interviews with tenants also revealed how involvement in decisions about their homes has been a catalyst for engagement in improving other local services.

‘No one doubts the achievements of housing associations and ALMOs. But where tenants have decided that they want a democratically accountable local authority landlord, they should not be penalised for that choice.

‘Last year’s Joseph Rowntree Foundation publication showing positive results of transfer to housing associations said that since 1988 the associations’ collective repairs programme has been facilitated by funding totalling some £24 billion. A House of Commons public accounts committee report this spring highlighted that stock retainers had to meet the decent homes programme out of their own pockets, while councils taking the stock transfer or ALMO routes received extra funds. It went on to say that while ALMOs had spent more per property on improvements than those that retained stock, they had not demonstrated any better value for money.

‘We are anxiously awaiting news of the housing finance review under the new coalition government.

‘Giving councils control over resources would take away the need for stock transfer. It would enable local authorities to respond to local housing need in a way that also helps deliver wider local social, environmental and economic objectives.

‘ARCH will continue to make its case on behalf of those one million tenants - and we hope the new housing minister has the sense to listen.’

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