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The status quo will not help housing

Policy Exchange got blood pressure rising this week by suggesting that landlords should be able to buy their way out of historic grant and become ‘free housing associations’, unrestricted by regulation.

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Policy Exchange got blood pressure rising this week by suggesting that landlords should be able to buy their way out of historic grant and become ‘free housing associations’ unrestricted by regulation. 

These grant-free associations would be able to build more, and would be freed from constraints on who they house and the rents they charge, suggested the Policy Exchange report – and money raised by the scheme could be ploughed back into grant.

Any proposal to effectively create a Right to Buy on an institutional level is bound to excite debate, but all the more so given the think tank’s connections and track record of influencing Conservative policy.

It is an inescapable truth that the status quo is not an option if we want to solve the housing crisis

Freeing housing associations

Those in favour point to the benefits of cutting red tape and of being free to be bolder and take more risks. Having greater autonomy over everything from setting rent levels to diversifying to generate more revenue would give free housing associations the opportunity to be more sustainable and therefore to build more, they argue.  Of the 15 unnamed housing associations that took part in the Policy Exchange research, almost half had some appetite for paying to write off their grants.

The position is given short shrift by opponents, who object strongly on ideological grounds. This is nothing short of privatisation that will result in putting profits before people, they argue. Without grant and regulation, free housing associations would be devoid of social purpose, they fear.

It is true that there are plenty of unanswered questions and areas for concern. Is regulation really the thing holding housing associations back? (After all, many are successfully becoming ever more commercial, and in other highly regulated industries it is possible to find creative solutions.)

What discounts would apply when buying out of grant? Would being freed from red tape outweigh the potential impact on debt costs? Could government be trusted to reinvest revenue raised into social housing or even housing, or would it line Treasury pockets? And, given that this is an all-or-nothing scenario, on a practical level how many associations could actually find a way of buying their way out?

Equally, there are reasonable challenges to the ideological concerns: regulation is by no means the only or best way to ensure social purpose. Many associations are charitable, and as such have an enshrined purpose. It might be argued that the brand of ‘charity’ is more trusted than that of ‘state’.

Whatever your concerns, it is an inescapable truth that the status quo is not an option if we want to solve the housing crisis. The volume house builders will not be able to sufficiently increase their output of new homes, and government is neither willing nor able to invest significant extra sums to the extent needed to bridge the gap.

Diversity is a hallmark of the sector – from local to national, tiny to large, charities and not. Given the limits on government grant, if social housing is to keep pace we need even greater diversity in approaches to funding and delivery. Something similar to the free housing association model may have a part to play.

What we need next is a nuanced debate about what will work both for individual organisations and for the sector as a whole.

 

EMMA MAIER 311px
Freeing housing associations
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