How strategic leadership can aid sector development

What challenges are facing our sector leaders? What shapes a strategy? In a world of conflicting pressures, how can one balance the needs of the business, the people and the communities that rely on us?

I recently spoke about these challenges at a round table event on strategic leadership, reflecting on my time at Sovereign.

I joined the association 10 years after transfer, and the previous strategy had been entirely focused on growth as Sovereign expanded rapidly across the South West.

By 2000, we had 11,000 homes from Berkshire to Cornwall and most places in between. It’s taken the last 17 years to rebalance the organisation, building a more efficient and effective regional housing association.

“How can one balance the needs of the business, the people and the communities that rely on us?”

By the end of this year we’ll have 57,000 homes in a tighter geography, increasing our stock density to over 850 homes per local authority, which we believe is far greater than other similar-sized housing associations.

So since 2000 our strategy has been about growing at an appropriate pace, balanced with making our extended geography more efficient.

We have done this through a combination of targeted development, mergers and stock rationalisation. We’ve sold, swapped and purchased stock with other housing associations across 41 local authority areas in the last five years, and the new Sovereign is the product of 11 mergers.

This approach means we’re now a more efficient business, developing new homes in those areas where we’ve made a long-term commitment.

‘Old’ Sovereign has always been a major developer with a programme of 1,000 new homes each year. This has been boosted to around 1,600 following our merger with Spectrum. We’ve also recently signed a new £150m lending deal with the European Investment Bank to support our development aspirations.

We’re confident that our detailed knowledge of the markets in our more focused geography will enable us to maximise output and minimise risk. 

We fully embrace the need for growth and recognise more needs to be done to address the broken housing market. However, our early experience at Sovereign taught me that a focus just on numbers can cause challenges in the longer term, especially around sustainability and service delivery.

In the current environment, with welfare benefit changes and increasing inflation we’re also concerned about the affordability of even some of our social rented homes in areas where incomes are particularly low.

However, being more efficient has given us the ability to make the decision not to convert our social rented homes to affordable rent, thus enabling us to support local communities more effectively.

As we grow, our development programme needs to include products that are genuinely affordable in the local market. We firmly believe that a continued supply of discounted rented homes is necessary and the majority of our local authority partners share this view, regardless of their political persuasion. 

“As we grow our development programme needs to include products that are genuinely affordable in the local market.”

Our development pipeline therefore reflects these principles and over the next five years our new homes programme will be predominantly focused on sub-market products.

Potentially our approach could be flexed and output increased if we built more homes for outright sale. However, as we work largely in rural areas and market towns, we believe our approach is appropriate for our business, particularly in the current environment.

So, back to leadership.

This is an exciting time in housing with a government that recognises the scale of the problem and is taking very positive steps to make the housing market more effective. 

The leadership challenge for our sector is to step up and deliver, but the solutions for individual associations will be different depending on capacity, local markets and risk appetite. 

Delicately balancing the business, and political and social pressures is certainly a challenge – and a big responsibility. But it’s what sets our sector apart.

Reflecting on Sovereign’s journey, I’ve learned that strategy is a long game, not a three-year plan, and in terms of growth the old mantra of ‘right product, right place’ absolutely holds true.