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The regulator is right to place lease-based providers under the spotlight
A recent High Court case challenged the regulator’s power to investigate and criticise housing associations operating a lease-based model. But it is right to shine a spotlight on these organisations, writes Pete Apps
Inclusion’s decision to bring a legal challenge to the Regulator of Social Housing was a high-risk move.
Had it succeeded, it may have put up a serious barrier to the regulator’s ongoing and detailed investigation of the housing associations operating a risky financial model in supported housing.
Instead it lost. And now with the backing of the High Court, the regulator appears to be emboldened to step up its work and its rhetoric regarding these providers.
Much has been written in Inside Housing about the model operated by these housing associations, and the funds they lease their homes from.
There are big questions about the long-term financial viability of these businesses, the value they provide to the taxpayer and – most importantly of all – the quality of the service they provide to tenants.
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More than one of these associations has also faced the very real risk of insolvency. This could have implications for the rest of the sector, given the weight more traditional investors place on its zero-default record, and again raises important questions about how the vulnerable tenants who rely on these organisations for housing would be protected.
“The complex and risky nature of their business models means, at the very least, they require the absolute highest standards of governance”
All this means it is entirely right that the regulator should examine these businesses as thoroughly as possible. In the social housing sector the price of failure is too often paid by vulnerable people, which means high-risk models cannot be tolerated in the same way they are in other parts of the private sector.
For their part, the housing associations under the spotlight must accept that scrutiny as the price for operating in the social housing sector. Wise organisations learn from the regulator’s criticism.
The complex and risky nature of their business models means, at the very least, that they require the absolute highest standards of governance.
But the lease-based providers and their backers are correct when they argue that the housing they provide is much needed.
It is undoubtedly true that the lack of homes for those with additional needs is among the most acute of this country’s housing shortages. Local authorities would not agree to pay the sometimes eye-watering rents charged by lease-based providers if there were other options available.
This points to a bigger policy failure. We have these high-risk models because the state is failing to provide homes for people in need, but the need has not gone away. In the long term, that is the problem that really needs solving.
Peter Apps, deputy editor, Inside Housing
