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Guilt by Associations

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 shac.action@gmail.com.

<strong><span class="has-inline-color has-accent-color">Suzanne Muna</span></strong>
Suzanne Muna

Suzanne Muna has worked in housing for the last 20 years, serving continuously as a trade union representative alongside her paid work. She is secretary of the Social Housing Action Campaign, a trustee of the Public Interest Law Centre, and a member of the Unite Housing Workers branch committee

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Dangerous cladding: The government must end this crisis now

As Shadow Secretary of State for Housing, I am extremely concerned about the remediation of unsafe cladding on residential blocks and the impact this is having on leaseholders.

I have been contacted by pregnant women trapped in dangerous flats, elderly people unable to move into retirement accommodation and families on the brink of bankruptcy after receiving five-figure bills for a problem they did not cause. These are just a few of the heart-breaking stories now common across the country.

Because the government response has been so painfully slow, hundreds of thousands of leaseholders across the country remain trapped in unsafe blocks during a third lockdown, facing increasing interim costs. When you look at the knock-on effects, including those unable to sell or re-mortgage their property, the number of people affected is much higher.

Broken Tory promises

This week, the government announced another package of measures to try to fix the cladding scandal. While headline-grabbing figure of £3.5 billion is a huge victory for Labour and the campaigners across the country who have worked tirelessly on this, it will not protect many leaseholders from mounting debt.

For many of the people affected by this crisis, this latest announcement will feel like a betrayal. On at least 17 occasions, government ministers promised that leaseholders will not be left with the bill.

Sadly, these promises have been broken by this week’s announcement, which includes the detail that funds to fix buildings will only be given to those over 18 metres tall – and the residents of lower buildings will be forced to take out loans to pay to fix fire safety problems. You can watch my speech here.

This is not the first time that leaseholders have been let down in this this crisis. A year ago, the Chancellor said, “all unsafe combustible cladding will be removed from every private and social residential building above 18 metres high.” This has not happened. Buildings haven’t been able to access the fund. Nine of every ten pounds has not been paid out.

Many of these problems stem from a refusal to properly evaluate the risks. Three and a half years on from the Grenfell Tower disaster, the government still has not done a proper investigation of the number of buildings involved, the risks or the cost of reducing that risk. Until we know the scale and nature of the problem, any response will be ineffectual.

Labour’s plan

I am leading Labour’s response to this problem and am working with campaigners and specialists from across this country – and in other countries too – to get justice for those affected.

Last week I forced a vote in Parliament calling on the Government to: urgently establish the extent of dangerous cladding and prioritise buildings according to risk; provide upfront funding to ensure cladding remediation can start immediately; and protect leaseholders and taxpayers from the cost by pursuing those responsible for the cladding crisis. I am disappointed the government did not back the motion, they chose to abstain – despite many backbench Tory MPs speaking out to protect leaseholders in their constituencies.

I believe the UK Government must establish a National Cladding Taskforce to address unsafe cladding and protect leaseholders from the costs of remediation. The Taskforce should be underpinned with strong powers to establish the full extent of dangerous materials on buildings, prioritise them according to risk and ensure there is enforcement against those who refuse to undertake works. It must be backed with up-front funding and include a legally enforceable deadline of 2022 to make all homes safe. There is more on Labour’s plan here.

What’s next?

I spoke about the problems faced by leaseholders on Question Time last week, when a member of the audience spoke about how she is trapped in an unsafe flat, with no end in sight. I will be doing all I can to keep the pressure up and spur the government into action.

The next opportunity to force further changes out of the government will come on 24 February, when the Fire Safety Bill comes back to the Commons.

This date will be a chance for the Government to reflect on the failing of their latest announcement and bring forward a set of legally binding commitments to deliver on the promises they made to leaseholders. 

I am hopeful that Conservative backbenchers will also see sense and vote with us. I am particularly encouraged by the response from some Tories this week, who were vocal in their disappointment with Robert Jenrick’s latest announcement.

Last week, Keir Starmer challenged Boris Johnson on this during Prime Minister’s Questions. Justice for all those affected will continue to be one of my top priorities over the coming weeks and months.

<strong><span class="has-inline-color has-accent-color">Thangam Debbonaire </span></strong>
Thangam Debbonaire

Thangam Debbonaire is the Labour Member of Parliament for Bristol West and
Shadow Secretary of State for Housing.

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Fire safety still a major concern for residents three years after Grenfell tragedy

The Fire Safety Bill has passed its second reading in Parliament but not without bringing the fears of multi-occupancy residents back to the centre of the housing safety conversation.

The bill seeks to amend the Regulatory Reform (Fire Safety) Order 2005, to clarify which parts of buildings are covered by requirements to manage and reduce the risk of fire by responsible owners. Whilst the bill makes necessary changes to fire safety law, it does not go far enough to meet the Government’s pledge to prevent another Grenfell Tower tragedy.

The Housing, Communities and Local Government Committee has published the findings of a survey into the progress of remediation work to improve fire safety in residential buildings.

The survey found residents continue to face bills of thousands of pounds for remedial or safety measures for a range of issues including combustible cladding, inadequate fire breaks and timber balconies or walkways. It also found that out of 1,352 respondents, 70% said they still had combustible cladding on their building.

Residents of multi-occupancy households have called on the Government to go further in its efforts to improve fire safety. Further to the £1 billion Building Safety Fund announced in the 2020 Spring Budget, residents have called for a pledge to ensure that all forms of dangerous cladding be removed and other safety defects dealt with.

During the 2nd reading of the Fire Safety Bill, I raised concerns of a constituent who had expressed fears to me regarding a tower block in a neighbouring constituency that was covered in combustible cladding which the landlord was refusing to remove.

The survey conducted by the HCLG committee has given us an insight into the reality of the fear thousands of people face across the country following the Grenfell Tragedy. As we have seen in the previous three years, where a loophole exists some will exploit it, despite the risk posed to residents.

One respondent to the survey said:

“I have highly flammable insulation, missing fire breaks, missing compartmentation, poorly fitted fire protection to the structural steel and poorly fitted fire doors. I fear for my life on a daily basis.”

As many raised during the Fire Safety Bill debate, the Government needs to do much more to ensure the safety of residents in multi-occupancy residences. Like many colleagues pointed out in the debate, the Grenfell Tower tragedy was one that should have been avoided.

As part of my role on the HCLG I will be continuing to hold the Government and industry to account over its failings to support residents in feeling safe in their own homes, so that we never have to experience such a devastating and preventable loss of life again.

<strong><span class="has-inline-color has-accent-color">Abena Oppong-Asare</span></strong>
Abena Oppong-Asare

Abena Oppong-Asare is the Member of Parliament for Erith and Thamesmead. She was elected as MP in December 2019 and has since been appointed to the Shadow Treasury Team as PPS to Anneliese Dodds.

Abena also sits on the Housing, Communities and Local Government Committee with specific interests in affordable housing and local government funding.