Leading housing associations are losing their integrity as charitable organisations. They continue to trade on a set of myths about the sector that no longer hold true – writes Suz Muna.
Housing Associations Build Social Housing
Associations are increasingly indistinguishable from private developers and landlords, and their activities are increasingly focussed on market-level rents and sales. The result is that the interests of tenants and leaseholders trail in the wake of the board’s need to generate large surpluses and satisfy their lenders.
Associations generate larger profit margins by developing for market sale and rent than from any other activity. Inevitably, the profits are greatest in London where house prices are higher. The boards of Associations increasingly gravitate towards construction, and especially in the South East. They are aided and abetted by government policy, regulatory institutions and finance houses.
Analysis of the sector shows that there has been a considerable shift in its stock profile over the last few years. For example, in 2019 the category of housing with the largest percentage of growth was in market sale (non-social leasehold), jumping almost 16% (8,500 units) on the previous year.
The change in profile over a seven year period spanning 2012 and 2019 illustrates a sharp jump in Low Cost Home Ownership (LCHO) units, and a corresponding decline in supported housing. The ring-fencing of grants under the Supporting People programme ended in 2009.
Stock profile changes include conversions from the more secure types of tenancy with cheaper rents attached such as social rent which is capped at 50% of market rents. Often these are converted to less secure tenancies with higher rents.
Property lawyers Savills captured this trend in May 2019 when they noted that “the amount housing associations generated from new open market home sales increased 16% (£221 million) to £1.61 billion between 2016/17 and 2017/18, with 37,000 homes for sale contractually committed to be built in the 18 months from December 2018”.
Housing Associations Fund Their Activities from Rents
This is a myth that should be busted, not least because it implies a stability that is absent. In fact, house building in particular is funded through debt leveraged on existing homes. The Regulator for Social Housing anticipates that debt of £42 billion will be added to the sector’s debts over the next five years. And ratings agency Standard & Poor predicted that the need for housing associations to rely on debt to fund their activities will increase not decline in the future.
Housing Associations are Governed by People with a Commitment to Social Housing
One trend drives another. The focus on development means that associations deliberately attract board members with backgrounds in equity and finance, squeezing out those with any genuine commitment to, or experience of, social housing. The exceptions are occasional hand-picked and often financially reimbursed ‘tenant board members’ with no democratic mandate.
Many housing associations publish brief biographies for their board members. What these show is just how widespread board-level involvement has become by people whose careers span financial services, planning, development, property markets, private finance initiatives, and insurance industries.
There also exists a golden circle whereby the housing association and housing sector institutions populate each others’ boards. One Housing Group, St Mungos, Clarion, Paradigm, and Onward Housing for example, are all led by ex-employees of the Regulator of Social Housing. The Chair of Peabody’s board, Lord Kerslake, previously headed the Homes and Communities Agency.
The corporate plans developed by associations inevitably reflect the highly commercial interests of its board members, and the vicious circle is complete.
Associations Have Inclusive Cultures
An inclusive culture would in fact be a terrible hindrance to an ambitious housing association, and frowned upon by its institutional backers. To help ensure that associations are unchecked in their commercial direction of travel, they are moving away from democratic influence by tenants and residents, preferring methods of engagement over which the landlord has almost exclusive control.
Tenant and Resident Associations (TRAs), the most democratic of engagement models, are being replaced by Tenant Scrutiny Panels whose members are appointed by the landlord. This is akin to the derecognition of a trade union in favour of an employer appointed staff council – something that many associations also seek to do.
The Greater London Assembly noted in 2018 that the Grenfell Tower fire had “brought into sharp focus the lack of effective mechanisms for social housing residents to have their concerns addressed and to hold their landlords accountable for property standards and management.” The Assembly also noted that TRAs were being actively undermined by having recognition by the landlord made contingent on adoption of the association’s model constitution.
What these trends produce for tenants is inadequate repairs and maintenance services, high rents and service charges, anti-social behaviour problems, discrimination against those with disabilities, unsafe homes, and the cladding scandal. Despite huge leaps forward in communication technology, alerting the landlord to a problem is becoming increasingly difficult, and attempts to find a resolution too often feel like a war of attrition.
It Doesn’t Have to be Like This
It is all too clear to the tenants, residents and staff of housing associations that this sector has undergone a fundamental transformation, but that public perception has yet to catch up. It is wealthy, powerful and almost wholly unaccountable. Remedy is needed in the shape of much firmer, independent scrutiny and regulation, rent controls, and a supply of genuinely affordable housing through local authorities.
The Social Housing Action Campaign (SHAC) is a democratic, voluntary network of tenants, residents, and workers in housing associations and cooperatives. It campaigns to improve the lives of those who live in HA accommodation and reduce the commercialisation of the sector. SHAC is keen to build links with Labour councillors and MPs with an interest in housing. It is developing a political representatives network and would welcome contact via email@example.com.