Housing associations warned over risk and costs
Published by Max Salsbury for 24dash.com in Housing and also in Central Government
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Housing associations must make a fresh offer to government that shows they are managing risk and offering value for money, said Julian Ashby, chair of the Homes and Communities Agency’s regulation committee, at the CIH Housing 2012 conference and exhibition.
Associations can no longer be certain of development grant or even a steady income based on social rents, he said. Instead, they must demonstrate that they are using their surpluses effectively and borrowing money in a way that does not expose themselves to unnecessary risk.
Diversification was bound to bring some new risks, but innovative financing schemes were not always the best option. “Innovation doesn't inevitably work out well,” he said. “Innovate, but keeping things simple is not necessarily wrong.”
Volatility in the financial markets was an ever-present threat, while welfare reform meant the “triple whammy” of uncertain rent receipts, higher collection costs and even more expensive borrowing. “Astonishingly there are still some associations that don't have this on their risk maps”, he said.
Warning associations that “the buck stops with you”, Julian Ashby said the new regulator would not manage risk on behalf of the sector but ensure providers did it themselves. Achieving value for money was the “critical buffer” that would enable them to pay for future house building.
Prior to the next Comprehensive Spending Review, they must convince ministers that a further affordable homes programme (AHP) was a worthwhile use of public money.
“There has never been a more critical time for the sector to make an offer that meets the objectives of the Department for Communities and Local Government, the Department of Work and Pensions and the Treasury,” he added. “You either shape the future or it will shape you.”
Matthew Gardiner, chief executive of Trafford Housing Trust, said associations were seeing the effects of the “toasting of the Tenant Services Authority” but should make the most of the new environment.
“The risk of getting innovation wrong has just gone up a couple of notches,” he said. “We don't have good matrices for measuring value, but we need to get these urgently.”