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How Scotland’s housing associations grew from nothing over 50 years
Mary Taylor and Lynn McCulloch’s new book, Homes by Association: 50 Years of Housing Associations in Scotland, tracks the emergence of a new entity called a housing association in Scotland. Today we publish an extract from Chapter 11, ‘Bringing it together’
Mary Taylor and Lynn McCulloch’s new book, Homes by Association: 50 Years of Housing Associations in Scotland, tracks the emergence of a new entity called a housing association in Scotland. Today we publish an extract from Chapter 11, ‘Bringing it together’ #UKhousingOur story started with decades-old policy problems piling up – dereliction in private housing (urban and rural), underperforming, constrained public landlords, and unmet needs arising from social and demographic change. From the early 1960s there had been recognition of pressure building in the housing system and some experimentation in the intermediate space between owning and renting; but by the early 1970s there was a consensus emerging that something had to change to enable associations to make their potential contribution effective.
The appearance of legislation in 1974 made it possible for governments to fund something called a ‘housing association’ – then virtually unknown in Scotland – with access to generous subsidy, as long as they registered. The proposals had cross-party support at the time. They were not considered world-shattering; indeed, the legislation was barely noticed outside the housing community, unlike the very controversial and consequential decision in 1980 to award rights to tenants to buy their home at discount. Another Act of Parliament, in 1988, turned upside down the basis of association finance, reinforcing the private nature of these voluntary, not-for-profit bodies. Most controversy about that legislation in 1988 was the changing status of tenancy rights in public housing rather than a radical structural change in funding for housing associations. These developments together have changed the face of housing, certainly in Scotland, and broadly but differently across Great Britain.
The chart above tracks tenure change in Scotland over the 50+ years from 1971. It shows no recognition of housing associations as a phenomenon before 1981; a very modest share of all dwellings by 1997; steady growth until a sudden burst in 2003 and still growing to the position now, of one third of all rented housing in Scotland.
The changes wrought over the years have not all been about top-down legislation. Indeed not much of the transformation has resulted directly from legislation or a coherent national plan for associations. Instead, initiative and innovation by people on the ground have been significant, at least as much as legislation – and, indeed, arguably more than legislation. Very little policy has been explicitly directed at creating a certain number of housing associations, or a sector of a certain scale or purpose, beyond vague statements in the 1960s about needing a ‘third arm’. Wider events in the UK have played as much of a part in shaping developments as policy or law.
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The original Act in 1974 came about because the Minister asked the lead representative of the sector at the time for a solution to produce enough affordable housing, because nothing else that had been tried was working. Parliamentary agreement produced a funding formula of close to 100 per cent grant with soft loans for associations. Successive UK governments dedicated considerable public funding to making housing affordable on this basis, recognising that although voluntary motivation and action was useful, it was not sufficient. Access to generous public funds for just 13 years from 1974 allowed people in many different spheres and communities to form and develop associations to meet needs.
From 1974 action on the ground was rapid, with housing output mostly in two strands: ‘special needs’ and rehabilitation / renovation. By the end of HCiS’ [the Housing Corporation in Scotland’s] existence as a funding body in March 1989, total stock completions by associations had hit 39,258 since 1974, with a healthy pipeline of projects to follow. That is a measure of how ready and eager people in the early associations were to act without much of a blueprint.
It is remarkable now to appreciate that there was no plan or strategy as such to create a sector or certain numbers of registrations, or to achieve certain outputs, targets, outcomes or impacts. It almost seems now as though there was a willingness in the 1974 Labour Government (and its immediate predecessor) to throw money at the problems and see what stuck. Quite a lot, as it turned out! Credit is due to the politicians and officials who took the initial steps, and then made it possible over the years to direct funds towards affordable housing through associations.
There is a hint of a plan in 1988, when – introducing the second reading of the Housing Bill, the (Conservative) Minister said: ‘The output of new and rehabilitated dwellings for rent is now beginning to outstrip that of local government, and we see [associations] as the major providers of social housing for the future. That is what Part II of the Bill is really about.’
Over the years to 1989 (when the financial regime really started to change), associations not only registered but had a chance to take root, to thrive. Those that did survive inspired more to follow suit in rural communities and peripheral urban estates. The years from 1989 to 1997 brought waves of turmoil to associations in Scotland – in terms of institutional structures, in policy priorities and in methods of funding. Some key structural factors changed directly as a result of the financial regime for associations.
The Conservative-controlled Scottish Office lacked political clarity about direction. Added to a vacuum of administrative procedures for Scottish Homes¹ transfers, opportunity opened up for experimentation in matters of valuation and private funding – access and structure. New forms of social landlord emerged, which became registered as housing associations – some eventually, though not initially. Before political devolution in 1998, a pattern settled through Scottish Homes transfers which catalysed a different way for associations to form, develop and borrow – outside public finance restraints. And that shaped policy and practice when Labour initially took office in 1997, with an emphasis on long-term private finance.
Meanwhile, associations had formed in the English home counties – Tory shires – almost in parallel to new landlords emerging from Scottish Homes. These twin transfer routes, north and south of the border, harnessed new technology in financial modelling enabled by spreadsheets. Knowledge was disseminated and exchanged between jurisdictions by consultants informing local decision-making. The appetite of new associations for borrowing to fund transfer / acquisition was accompanied by a burgeoning appetite among private lenders post-1991 to lend money. Let’s not forget that in 1992 EU member states committed to various economic convergence criteria. These included containing total government debt of their country to 60 per cent of gross domestic product (GDP). Inevitably this contributed to shrinking state ownership of assets by transferring ownership, including that of public housing for which historic public borrowing had been significant. Constraints on public borrowing were not going to fade any time soon.
By the end of 1996 the collective stock of associations in Scotland had grown to 115,000 units: most of the growth of the sector in that period was without subsidy – not through growth in the overall housing supply, but through acquisition of existing housing funded by private borrowing. The election of Labour in 1997 served to accelerate the shift towards private funding for acquisition. Some 28,000 houses – already existing – were added to association stock by 2002, taking the total to 143,000, and a further 120,000 houses were added in the following years to 2007. That final shift was accompanied and assisted not by any legislative acts or subsidy as such, but by a commitment by HM Treasury to write off councils’ historic debt. This was conditional on the relevant council’s agreement to transfer (to a housing association) and if the receipt did not cover the council’s historic debt. That was transformative for Glasgow, and for the new housing associations, whose borrowing was almost entirely unencumbered.
“Disruption from Brexit and the pandemic made for stuttering progress, but growth in stock nonetheless, by fewer associations”
By the mid-2000s, some in government policymaking on housing may have concluded that the scope for borrowing showed that capital subsidy was no longer required. But subsequent events within another ten years, prompted by the financial crisis of 2008, proved the opposite by revealing that private lending could dry up very quickly. Where governments had been unwilling to commit to public investment, Quantitative Easing by the Treasury made it possible for subsidy to be injected into the system to keep supply going, and this served to rekindle lenders’ appetite.
A fallow period ensued after the financial crisis of 2008 and austerity from 2010: there was very little expansion through either transfer or new supply. However the housing stock started growing again from 2016, when a development programme was resurrected with Scottish Government committing to significant capital investment. Disruption from Brexit and the pandemic made for stuttering progress, but growth in stock nonetheless, by fewer associations. A total of 307,000 houses was reached in 2023, latterly through a programme of building with subsidy rather than significant acquisition shifts.
During that six-year fallow period and since then, associations have been focused on protecting tenants from welfare cuts, and alleviating fuel poverty and the cost of living increases. They diversified and expanded their community wellbeing activities as well as bringing existing housing up to the rising standards set by the Scottish Government. The period since 2007 shows the greatest policy and funding divergence from England, mainly through commitment to public capital funding to associations for new supply, resurrected by the Scottish Government in 2016.
¹ Scottish Homes was a national governmental agency set up in 1989, accountable to the then Scottish Office. It replaced the Housing Corporation in Scotland as regulator and funder, and the Scottish Special Housing Association as a very large landlord with regeneration expertise. Scottish Homes remaining enabling functions were taken over by Communities Scotland in 2001.
In their new book, ‘Homes by Association: 50 Years of Housing Associations in Scotland’ , Mary Taylor, former chief executive of the Scottish Federation of Housing Associations, along with Lynn McCulloch, former chief executive of Cube Housing Association and former chair of the Chartered Institute of Housing Scotland, use their decades of experience in the sector to explore how housing associations have transformed the housing landscape across the country.
‘Homes by Association: 50 Years of Housing Associations in Scotland’ is published by Porto Press and is out now. It is available for purchase here.
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