The warning by some of the country’s most powerful housing associations that UK housing policy is ‘broken’ and will not deliver the number of social homes the government wants (12th September) comes to me as no surprise because of the sector’s over reliance on the fluctuating fortunes of the commercial money markets to finance their activities. To date, housing associations’ over reliance on the money markets has resulted in higher rents and less rights and security for their tenants in relation to counterparts living in local authority owned housing stock.
For the most part, housing associations are registered at Company’s House with articles of association not disimilar to those of a local football club. Naturally, banks lending to those associations want security for their loans i.e. the homes in which tenants live. Additionally, legislation permits housing associations to placate banks by having the right to increase tenants’ rents to commercial market rates in the event of their running into financial difficulties.
Housing assocations’ tenants are informed by the great and the good that the Housing Corporation would not let such events transpire, yet neither the Corporation or the Government actually guarantee or underwrite those loans and why would reference to commercial rent hikes be included in the Housing Act if it would never be enforced?.
A survey by Baker Tilly referred to in your Journal (12th September 2008) States that seventy-five per cent of respondents say they expect to see other housing associations run into ‘significant financial difficulties in the next 12 months’. Almost a third say they have encountered their own ‘difficulties with lenders’ because of the credit crunch.
Surely, it is time for the Government to recognise that local authorities collectively as the primary deliverer of public housing should be the preferred model to provides a service and security of tenure that tenants on low incomes want and deserve.