Friday, 25 April 2014

Trade on your assets

Would taking a long-term view be the best solution to fix the short-term lack of investment in housing? The Housing Forum’s latest bulletin At the heart is housing - making affordable rent happen, published last week certainly argues that it would. Drawing on the views of many leading public, not-for-profit and private sector organisations, the report gives a clear perspective of how housing associations might develop in the future.

Building for affordable rent does more than provide rented homes using less subsidy, it comes with greater financial obligations for housing associations and to meet these, greater commerciality must run alongside the traditional social housing business.

While banks have seen the sector as safe, they are increasingly looking to lend short term. Perversely, there is an increased cost of borrowing despite the lowest interest rates for many years. Alternative plans for investment with other institutions over a longer time span, using leaseback arrangements for periods of 30 to 50 years, can produce a major capital receipt.

The sector is and needs to explore new innovative forms of funding, building on the experience of some in the capital markets and the recent leasing transaction in which Aviva funded the £45 million transfer of 839 properties from Home Group to Derwent Living (Inside Housing,
13 September).

Having raised funding, a housing association could then build a much wider range of homes - some for rent and some for sale. The association’s housing stock would need to maintain value over this time period, requiring a commercial approach to asset management of their property portfolio.

Offering housing services to other organisations is another way of diversifying. For example, providing locally based maintenance services to other housing associations is one way, but why not offer more services direct to the local council? Property management and environmental services could be a start.

Building or buying homes to rent into the private rented sector can offer accessibility and choice backed up by the reputation and visibility of a housing association landlord. Where there is a substantial local presence, a housing association could offer a cost effective management service for private landlords and contribute to balanced communities.

Modernising our housing services must become a priority - a ‘market- led’ approach means operating viewing and tenancy services at evenings and weekends, for example.

Protecting the value of a home as an asset for the landlord will be a high priority so that housing associations can expand, and the growth of a landlord’s business is one way to ensure we can continue to build affordable homes for those who will need them in the future.

Shelagh Grant is chief executive of the Housing Forum

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