The end of the world as we know it?
How will the social housing sector fare in 2012? Jess McCabe gathers a round table of industry experts to get their predictions.
The ancient Mayans’ calendar comes to its 5,125-year conclusion in 2012, and some doommongers have deduced this means the world will end.
The Central American civilization was, perhaps unsurprisingly, silent on what the year holds for social landlords in the UK. So, to fill the gap, Inside Housing, with support from property, facilities and energy management firm Mitie, gathered together 10 of the good and the great from the social housing world to make their predictions.
Over lunch in a Park Lane hotel, our modern-day futurists forecast a year of trials - and opportunities. Read on to find out what they said…
Homes for Haringey
Housing will rise up the political agenda
Housing will graduate to a bigger role on the political stage this year, Paul Bridge, chief executive of 21,000-home arm’s-length management organisation Homes for Haringey, and other members of our panel predict. Its prominence will increase at both local and national level as concerns about the affordability and availability of housing become more acute.
‘It’s quite obvious we’re in a huge housing crisis in terms of affordability,’ notes Mr Bridge.
‘But as far as I can see the government’s housing policy seems to be mostly focused on meeting people’s aspirations for homeownership.’
‘The hit TV show next year will be something along the lines of “I’m a Celebrity Get me a Mortgage”,’ adds Neil Litherland, interim chief executive of 35,700-home Lambeth Living, another ALMO.
This year will see the average age for a first-time buyer rise from 37 to 42, notes Mr Bridge, but addressing this will be ‘really challenging’.
Institutional investment in the private rented sector will be needed - and, Mr Bridge says, ‘the role of housing associations is likely to be absolutely critical to get into that market’.
But whether the government agrees is another matter. ‘It sees social housing as part of the problem rather than being part of the solution,’ states Sue Roberts, chair of 23,000-home ALMO Wolverhampton Homes and of the National Federation of ALMOs.
It will be a year of tenant hardship
‘Our residents, our communities, are probably going to struggle more than anyone to get through the period of austerity,’ says Mr Litherland.
There’s consensus among the housing professionals present that 2012 is set to be a year of hardship for social housing tenants, many of whom will feel the pinch as a result of benefit cuts and rising unemployment, which reached a 17-year high of 2.64 million at the end of last year.
Many social landlords will be making more of their position as employers, treating their residents as a recruitment pool and taking on more young apprentices, members of the panel agree.
The year ahead will be made even more difficult for tenants as a result of emergence of a neo-Victorian distinction between the ‘deserving’ and
the ‘undeserving’ poor, the panel predicts.
Those deemed to be not contributing to the economy or society are likely to be hardest hit by welfare reforms, with ‘people who are benefit-dependent squeezed and squeezed’, says Mark Gaynor, director of housing at Dacorum Council, which owns more than 11,000 homes in Hertfordshire.
‘I think we’re going to have to start dealing with a growing issue of stigmatisation,’ agrees Kevin Lowry, interim head of housing services at Northumberland Council.
A frosty start for affordable warmth
The government hopes the green deal, which begins this autumn, will unlock a major market in energy efficiency. Insulation will be available at no upfront cost - instead residents will pay for it through savings on their energy bills.
But Paul Reader, a director at Mitie, and some of the other panel members, believe the green deal will get off to a slow start next year. They question whether the legislation will achieve the government’s aim of insulating Britain’s built environment, and also whether it will be a viable option for most social landlords.
‘Following the recent changes to the feed-in tariff [a government payment to producers of renewable electricity, which was halved on 12 December - although this was ruled illegal by a High Court judge on 21 December], I think both investors and other commercial organisations will take a lot slower approach to things like the renewable heat incentive [a payment for renewable heat] and the green deal,’ forecasts Mr Reader.
Brendan Sarsfield, chief executive of Family Mosaic, who dismisses the green deal as ‘a nonsense’, argues the only way his 23,000-home organisation could pay for the £350 million it estimates it needs to invest in energy-efficient improvements to its housing stock would be to increase rents.
Others gathered around the table, however, will not be put off.
Mr Lowry insists Northumberland will not slow down its green deal drive. ‘The commitment across the piece doesn’t alter, the pace doesn’t alter,’ he says. ‘Every time we get challenged, housing organisations come up with an innovative way of making the most of it.’
Self-financing will lead to a building boom
Councils will start to build housing once again this year, the panel believes, enabled by the abolishment of the housing revenue account in April.
‘It isn’t going to be like it was 20 years ago or more, with monolithic council estates - but new build is a possibility,’ says Dacorum Council’s Mr Gaynor.
Instead of collecting rents from council housing tenants and paying them into the central HRA, authorities will be able to keep rental income. They will also be able to borrow for the first time. On the flipside, though, the £30 billion debt associated with council housing stock will move from the government’s balance sheets to those of local authorities.
‘I certainly see changes in HRA as a big opportunity for us to start working with local authorities,’ adds Mr Reader from Mitie, giving the contractor perspective.
From this year local authority housing departments will begin looking and acting more like housing associations, the professionals predict.
‘I used to envy chief executives of housing associations, because they could balance their own assets, make their own decisions, take their own risks - and we were always told that’s why they were paid more as well,’ notes Lambeth Living’s Mr Litherland, for whom HRA reform can’t come soon enough. ‘I wish I could have seen it 20 years ago,’ he states.
Chartered Insitute of Housing
The government will be tested over right to buy
This year will see further developments around the reinvigoration of the right to buy, formally introduced in the government’s housing strategy in November. Under current proposals, local authorities will be able to keep the right to buy receipts, if they can build a new home for each one sold, but members of the panel expect councils will need to fight to keep the cash.
‘Working through the policy detail of the right to buy will be the biggest test yet of the government’s commitment to localism, because the logical thing to do, from the government’s perspective, would be to take the money centrally [and distribute it to the organisations that can most efficiently build new homes and deliver value for money] - and a localist government can’t do that,’ sums up Abigail Davies, assistant director of policy and practice at the Chartered Institute of Housing.
Dacorum Council’s Mr Gaynor believes that for self-financing and right to buy to work, local authorities will have to keep the cash. The policies won’t deliver ‘if the government keeps coming back and having a little nibble’, he says.
Landlords will experiment with affordable rent - and they could fail
This year, for the first time, landlords will be able to charge an ‘affordable’ rent of up to 80 per cent of market rates on new build and some re-let properties.
Under the Homes and Communities Agency’s affordable homes programme, from April landlords will also be able to offer new tenants shorter fixed-term tenancies instead of lifetime tenancies.
This will usher in a year of experimentation by social landlords, predicts Family Mosaic’s Mr Sarsfield, with associations likely to veer off in different directions.
His association will offer five-year tenancies, the government’s proposed norm, and charge the old social rents. ‘We certainly see five-year tenancies as a pilot, not as anything more,’ he says.
‘I think there will be a lot more experimentation during the year in the types of tenancies we’ll be granting and the rents that are being charged - and this will change the nature of our relationship with our customers. It’ll be a really interesting year for us.’
Talk to any scientist, and they’ll tell you that failure is part of experimentation. And not everyone in the room predicts success. Tony Stacey, chief executive of 6,000-home South Yorkshire Housing, sees trouble ahead for housing associations, and imagines there will be a ‘re-shaking of the programme half way through the year if that turns out to be the case’.
South Yorkshire Housing
Tenants won’t be ‘doing it themselves’
One policy Mr Stacey and others gathered predict will be a resounding failure this year is tenant cashback - the government scheme that will hand money to residents for repairing their own homes. Asked if there are any fans of the policy in the room, there is moment’s silence, before people start to pile in with a list of the legal and practical problems.
Most crucially there is simply a lack of demand from tenants, as demonstrated by the failure of similar initiatives, such as the right to repair scheme introduced in 1994, begins Mr Stacey. ‘If we genuinely go and ask our residents if they want it - we’re not getting the answer the housing minister’s getting.’
Tenants expect that keeping the property in good nick is the landlord’s responsibility, points out Northumberland’s Mr Lowry. ‘If you have scores of tenants wanting to do it, we really should be looking at the landlord, because something must be wrong.’
Councils with arm’s-length management organisations will make big decisions
Many councils that set up ALMOs to manage their housing stock 10 years ago will be thinking about bringing them back in-house, several people on the panel predict, particularly because of the opportunities presented by the HRA self-financing reforms.
Councils considering making this move will need to pay attention to tenant wishes, says Wolverhampton Homes’ Ms Roberts.. ‘The Localism Act is strong on tenant involvement - it should be tenants leading the way forward, and that’s what ALMOs are good at,’ she says.
However, some councils may go the other way, predicts Lambeth Living’s Mr Litherland. He goes so far as to say that 2012 could see a local authority ‘admit it was too quick to dissolve its ALMO and resurrect it in a new and more ambitious guise once they’ve seen the opportunities self-financing can bring’ when using an ALMO model.
Landlords will need to start tackling under-occupation early
Early this year the government will seek to pass the Welfare Reform Bill, which, among many other things, aims to end under-occupation of social homes. If passed, it will see tenants paying extra for ‘spare rooms’ and an absolute cap on the amount of benefits families can receive.
After our round table event took place last month, members of the House of Lords voted to accept an amendment to the bill to water down the proposals, put forward by Lord Richard Best. The amendment would allow tenants to continue to receive full housing benefit if they have no more than one spare room and if no other suitable alternative accommodation is available.
Northumberland Council’s Mr Lowry and our other guests will hope members of the House of Commons back the Lords’ decision when they vote on it later this year. Although the ‘bedroom tax’ as it has become known, will come into force in April 2013, Mr Lowry says social landlords will need to start preparations this year. This is particularly the case in the north of England where the housing stock mainly consists of family-sized homes, so there aren’t enough smaller properties for under-occupying tenants to move into.
The bedroom tax would have an immediate impact in the north east, where 47 per cent of social tenants under-occupy their homes, warns
West Mercia Housing Group
Housing will find out what the financial crisis really means
If the impact of the foundering economy on tenants seems only grim, the impact on landlords is more opaque.
The panel is still largely waiting to find out what the eurozone financial crisis will mean for their organisations. As Pat Brandum, chief executive of 24,800-home West Mercia Housing Group, explains: ‘We keep hearing about it, but no one seems to know what this means. The issue then for us is about money and funding, and what that costs and how much we can get - whether [the amount available] can match our ambitions as a sector as well as an organisation.’
Also unclear is what role, if any, house building will play in kick-starting the economy. Homes for Haringey’s Mr Bridge, notes pensively: ‘I thought that getting shovels out and building houses was a no brainer. Could it happen next year?’