Opinion: What does 2014 have in store for social housing?
Published by Max Salsbury for 24dash.com in Housing
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By Stuart Black, executive chairman of Lakehouse
We are in the midst of a social housing crisis and so far the government hasn’t acted quickly enough. This needs to change in 2014 – addressing the significant shortage of social housing should be top of the agenda. Affordable housing is a crucial investment, not only for communities, but for the broader economy.
A recent report by Savills the property consultancy highlighted a supply gap of 115,000 homes in London over the next five years across all tenures (London Residential Development: Where next? (February 2013)). There are a number of government initiatives underway that are attempting to bridge the gap between supply and demand of new homes. Hopefully these will help to address the problem but we need to be pragmatic in 2014 and recognise that there’s still more to be done – we do not yet have an entire solution.
Alongside increasing demand for new homes, the shortage of social housing also emphasises the need for refurbishment of existing homes to the appropriate standard. The Decent Homes programme, established in 2001, is substantially complete with only 6.4% of social housing stock now listed as “non-decent”. However, 39% of this total is located in London, which means that for boroughs in the capital there is still work to be done and this must be a focus in 2014.
As part of the Housing Revenue Account reforms, implemented by the government early last year, local authorities are now required to have a 30-year business plan explaining how they are going to maintain their stock. This has never been a requirement before as all budgetary planning was controlled via central government. This new system will make it much easier for contractors to work constructively with providers and in turn maximise the value of planned investments and works. However, it is not just about having these plans in place; it is what local authorities choose to do with these plans – and we must stay focused in 2014.
Already ranking high on the government’s agenda, sustainability and energy efficiency will continue to be a key driver for the social housing sector in 2014; in the long term, standards will become more ambitious and regulation will tighten. While investment and incentives may be under review, regulation is only going one way.
Local authorities and housing associations are still in the early stages of commissioning sustainable energy projects and many do not have fully developed strategies in place. 2014 needs to be the year for thinking big. For local authorities, rather than taking a project-by-project approach, it is important to look at a whole section of the housing stock. Thinking bigger opens up economies of scale, cross-subsidies for improvements across a varied portfolio, and higher carbon returns for ECO funding. For example, prioritising those sections of a housing portfolio with ‘hard-to-treat’ wall cavities means that the cost of more expensive external wall insulation can be reduced. Such approaches help to maximise ECO funding and increase the technical and economic viability of projects.
The proposed changes to the Energy Companies Obligation towards the end of 2013 raised questions about the future of the political consensus we need on sustainability policy. Crucially, the changes to ECO risk limiting investment in hard-to-treat insulation which will really make the difference to those living in fuel poverty.
Notwithstanding the obvious political pressure around this issue, it is important that this year the government stays focused on market confidence in the insulation and sustainability sector. While the original target of £1 billion investment by 2015 was probably unrealistic, doubling the timetable sends the wrong signal to the market. If we are going to support a green economy in 2014, the industry needs a clear and consistent policy direction – without this, it is more challenging to sign deals, more challenging to access finance, and more challenging to invest in the skills that will help transform our housing stock. With government policy consistency and good collaboration on long-term improvement plans, 2014 stands to be a positive year for social housing.