The end of social housing prompts more questions than answers

Published by 24publishing for 24dash.com in Housing and also in Communities, Legal, Local Government

With levels of grant diminishing and welfare reform capping the revenue coming into social housing, are providers just clinging on to the idea they can continue to provide affordable housing?

Ross Macmillan canvases the views from those on the front line at a specially-organised 24housing magazine roundtable with housing consultancy Altair.

It is a sign of the times that during a two-hour discussion on the future of housing supply – with both housing associations and councils present – 'social' housing is barely even mentioned.

It did, however, take a good hour for most around the table at the Anchor Trust's offices in central London to really accept the idea that social housing is gone and even its successor, the more expensive ‘Affordable Rent’, will become increasingly difficult to cling on to in the future.

The current erosion of social rent through the Government’s Affordable Rent programme is like a slow, painful death to the genuinely cheap rented housing waiting list applicants used to be able to expect. Back then it was prioritised with subsidy available from Government.

Now the subsidy has been cut – with both new and existing homes (through conversions) moving to the near-market priced tenure and with only a slice of the subsidy available per unit.

Will there be any grant post-2015 to build affordable homes – does the Government even believe it needs to provide affordable homes?

Challenging

Two South East-based providers encapsulate the current struggles with future development programmes. Moat has pulled out of developing four-bed homes because they can’t be covered by next year’s £500 a week household benefit cap, while Catalyst envisages it will only be able to hand over a third of affordable/social homes on future schemes, the other two thirds being made up of shared ownership and outright sale.

Elsewhere Anchor Trust – which specialises in elderly provision – has given up on the affordable/social model; while Birmingham-based Midland Heart warns about gearing and available security when referring to the pressures of the Affordable Rent programme. It’s also seeing fewer conversions than it had forecast on its Homes and Communities Agency bid.

But what about councils? Barking and Dagenham has formed a special purpose vehicle with a private investor to deliver sub-market homes, but warns pressures on its temporary accommodation could force it to move people to cheaper areas or tower blocks; while Hillingdon warns about its struggles to work with housing associations and the level of distrust caused by the Affordable Rent programme.

These snapshots emphasise the difficulty social landlords are facing in delivering sub-market homes in a period of reduced capital expenditure and welfare cuts.

“Haven’t you got to conclude that with everything going on, after 2015 there is no affordable housing? That the concept has come to an end,” says Chris Wood, partner at housing consultancy Altair.

“We’ve had in the past capital subsidy and revenue subsidy. The theory was that if you didn’t put in the capital subsidy, you’d have to pay for it through revenue. What the Government has done with welfare reform is cap that so that the opportunity to take revenue subsidy into housing is capped. I think it [the Government] is now thinking, ‘why do we need affordable housing?’”

Wood believes the Government sees housing associations as the “regulated private rented sector”.

“We’ve invented endless variations of affordable housing/social housing, sub-market/intermediate/shared ownership. We’re just clinging to this idea of traditional social housing – I think it’s gone.”

Motive

Moat chief Brian Johnson, who becomes the new boss of Metropolitan next month, believes the consequences of pulling at both ends of the subsidy chain – capital expenditure and housing benefit – is not fully understood by the Government or MPs. In fact, he believes explaining and ensuring the message is crystal clear should be the sector’s main lobbying focus.

“I’m not sure this is fault by design,” he says. “I haven’t heard the two departments express a rationale connection between housing and benefits. I don’t think the sector has expressed it clearly to people about how we build homes.”

Wood agrees, but believes the Government doesn’t want to know. “I don’t think they understand the detailed implications and I don’t think they understand the nuts and bolts,” he says. “But I don’t think they want to. What they do understand is the philosophy that’s informing where they’re going. Their mindset, I believe, is that ‘we used to have a welfare state and we’re going to do it differently in the future. And there’s going to be some friction and turbulence along the way, but that’s the pain you’ve got to take to get to where you want to go.’”

Stark

However, allowing the market to be the equaliser won’t help councils with their statutory duty to house those in need.

Both Barking and Dagenham and Hillingdon referred to growing pressures on their waiting lists – and, in the case of Barking, the situation is becoming stark.

Labour councillor Phil Waker, cabinet member for housing, said the council currently has 124 families languishing in bed and breakfasts (B&Bs) over the statutory six-week period.

“The big problem is the pressure on temporary accommodation we’re getting,” he says.

“We’re constantly in a legal position of having families in B&Bs for over six weeks. We got a letter from the housing minister when we had over 30 families; we’re now up to 124 – that’s despite converting elderly accommodation to temporary accommodation and we're even looking at allocating tower blocks to be honest.

“I see no choice for us in the end than having to move people to much cheaper areas.

“Against that background, and with income levels where they are and everything else, if there is no sustainability for the road we are on to expand our social and affordable housing, we’ll have a hell of a situation to be honest.”

Mr Waker says the Housing Revenue Account (HRA) reform has presented the council with opportunities to build new homes which it has taken up.

He says: "We have a lot more money available and we are using it as much as we can to build new homes. We're using all the opportunities available to us including working with the private sector where the homes eventually become ours through a special purpose vehicle."

He says the council was also using the Government's Affordable Rent model to create mixed communities where some of its stock was being let at 65 percent of the market rent.

He adds: "What I don't understand is why local authorities with housing can't come out of the public sector borrowing rules.”

Everyone around the table agrees that better relationships between councils and housing associations could help boost affordable homes supply.

Neil Stubbings, deputy director of social care, health and housing at Hillingdon Council, is also a member of the housing directors steering group for London Councils. He says it is important for councils and housing associations to come together but that the HCA, through the Affordable Rent programme, has helped to create a “level of distrust” between them, which is proving to be a barrier to engagement.

“They have fostered that level of distrust because they weren’t engaging with local authorities and leaving it to housing associations to engage,” he says. “We’re still facing that as local authorities – still struggling to get information from the HCA on the Affordable Rent model and what money has been allocated.”

Former Housing Corporation boss Steve Douglas, now a partner at Altair, warns that in the next 10 to 20 years Affordable Rent conversions could completely change the profile of housing associations and their stock.

“All those who received programmes this year are potentially charging higher rents for potentially a different client group.

“The conversions will fundamentally change the profile of associations and their stock over the next 10 to 20 years.”

This is what Stubbings fears, as it will add to the huge pressure on temporary accommodation.

“What we need to put into the picture is who actually gets access to the affordable homes,” he says. “Every local authority is currently identifying a tenancy strategy. My concern is that whatever public subsidy goes into affordable housing, it’s not going to go to people in most need. Therefore, if we do manage to build the houses, I fear we’ll still end up with a large number of people in temporary accommodation.”