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Time to cut the red tape

The Office for National Statistics’ (ONS) decision last year to reclassify English housing associations as public bodies rocked the sector and prompted the government to begin a massive deregulation programme. As Scotland, Wales and Northern Ireland face their own judgement days, Heather Spurr and Pete Apps report on what is set to change.

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NORTHERN IRELAND

Although the Northern Ireland Executive has yet to produce a list of exactly which regulations it will remove, the Department for Communities is staking out what it will need to do in the event of reclassification. Máirtín Ó Muilleoir, the country’s finance minister, told housing associations last month: “We will move swiftly to ensure that whatever the classification from the ONS we will get that resolved for you.”

Northern Ireland is expected to implement the same deregulation measures as in England - such as removing consent rules and the ability of the regulator to appoint board members. However, the government will have to wait and look carefully at what the ONS says in its decision at the end of September. Stephen Bull, partner at Campbell Tickell, says existing state controls in Northern Ireland are stronger than in England, which is an indication that NI associations run a greater risk of reclassification than their English counterparts. For one thing, regulation is done directly by government in Northern Ireland rather than an arm’s-length body.

The Right to Buy (or ‘House Sales Scheme’) covers housing associations as well as the state-owned Northern Ireland Housing Executive in this country and there is an expectation that this may have to be repealed. Cameron Watt, chief executive of the Northern Ireland Federation of Housing Associations (NIFHA) says: “We expect the House Sales Scheme will need to be repealed for housing associations.” The government has not confirmed what exactly it is looking at, but it does say it is working with NIFHA on its contingency plans. 

 

SCOTLAND

The Scottish Government has been clear that it wants housing associations to continue to be part of the private sector ever since the ONS began its review. Nicola Sturgeon, the first minister, last week unveiled a plan to ensure landlords can be reclassified if the ONS decides they should be public bodies. The Housing (Amendment) Bill will remove the need to receive consent for stock disposals and mergers, as well as limit the ability of the Scottish Housing Regulator (SHR) to appoint members and managers to housing associations.

David Bookbinder, director of the Glasgow and West of Scotland Forum of Housing Associations, notes that this is the “same recipe” used to deregulate landlords south of the border. However, deregulating the sector in this way is likely to have more of an impact in Scotland because its regulator takes intervention far more often in this small and diverse sector. Indeed, the SHR appointed a special manager to one housing association just this month when it was found to have flouted its own governance rules.

Lenders say the safety net of the regulator makes providing finance to housing associations more attractive. So will the deregulation drive cause lenders to take a step back? Ian Brennan, director of regulation at the SHR, says lender confidence could be hit. “The regulator must be left with sufficient levers to persuade lenders that their interests are adequately protected,” he warned in June.

Gordon Campbell, former head of social housing at Dunfermline Building Society, adds: “I think lenders that know the sector well will be able to respond to [deregulation] positively - my fear is that new lenders will be put off.”

 

WALES

The Welsh Government has not moved yet on reclassification, but the suggestion is that it will not take long. In January, a spokesperson said rather cryptically that the Welsh Government is “watching with interest the steps the UK government is taking as a result of the [reclassification]”.  

Like Scotland and Northern Ireland, this is very likely to be a live issue for Wales. The key regulatory powers that triggered the reclassification in England are present in Wales and it would be very inconsistent indeed if the ONS chose to overlook the country’s associations from reclassification having deemed it appropriate at the other end of the M4.

Some housing figures had expected the government to move before the ONS - there was talk that a bill abolishing the Right to Buy in Wales would be brought forward immediately after the elections in May, with a deregulation package tacked on. That hasn’t happened yet, but there is no cause for alarm.

Sector sources say the government plans to wait and see what the ONS judgement says, and use that as a guide for which areas of regulation it should strip out. The government has been working closely with the sector on this for months and it is expected to act quickly once a decision is made. The government has committed to building 20,000 affordable homes during the life of this parliament - a doubling of output - and it needs housing associations to borrow freely, and privately, to make this happen.


READ MORE

NI minister pledges swift response in event of reclassificationNI minister pledges swift response in event of reclassification
ONS decision due within weeksONS decision due within weeks
RTB for NI associations could be scrappedRTB for NI associations could be scrapped
Sturgeon announces association deregulation billSturgeon announces association deregulation bill

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