Social housing win themes for 2016
Social Housing was attacked on all fronts in 2015 through government pledges that were set to rock the sector and change it forever.A combination of strikes made social housing the favourite political punch bag.But as Star Wars Battlefront was getting ready for its big launch later in the year, social housing gameplay, showed that it does have resilience, making its political manoeuvre, coming out fighting. Despite inevitable change that will take place across the sector, there is still plenty to get excited about. So how will the force awaken in 2016? Here is Morgan Hunt’s compendium of 8 social housing win themes for 2016:
Extension of Right-to-buyA watershed moment for the social housing sector but what the politicians didn’t dwell on is that RTB isn’t a new initiative, a vote winner maybe, but not a new innovation. RTB was introduced in the 1980’s yet turned out to be one of the biggest housing debates of 2015.Last year the Government made homeownership its priority, shifting all government, affordable housing, capital funding, into products such as Starter Homes and shared ownership, yet many thought this not the slam dunk expected. Concerns still prevail around market distortion and of allowing the poorest to buy.The heroes of the day, the National Housing Federation (NHF), helped broker an agreement that made RTB look a bit more manageable than originally perceived, to give housing associations more leeway to manage their stock and their responsibilities. We accept that not everyone sees NHF as knights in shining armour, but if the deal allows housing associations to be in more control of their futures, protect jobs and housing for the vulnerable, which it does, then this has to be seen as a good thing. This is why we’ve flipped RTB into a win theme for 2016.
Rebuilding the sectorIn the midst of the political firepower, social housing base command was getting on with the job and last year, despite a fall in their housing association grants, they managed to increase the level of completions which rose by 53% in 2015 over the previous year.New housing stock gives the chance for housing association’s to own and manage more cost efficient homes, to generate their own money, which they did by investing 84 pence in every pound from their own finances.Breaking news just one week into the New Year the Government announced that 100 of the country’s most run-down, sink housing estates will be replaced with government and private sector money.Old housing stock is costly to maintain but new development, funded from RTB, at housing association discretion has to be a win theme for the sector longer term.
Welfare reformRemoval of housing support for 18-21 year olds and lowering of the benefit cap is no doubt a tricky business for all housing associations.The National Living Wage also impacts the cost of delivering care contracts on behalf of local authorities and contracts will need to be renegotiated. Welfare Reform represents an uncomfortable set of hard choices for social institutions to make.The burning platform for change forces going back to basics, re writing the rule book and thinking outside the box in terms products delivered. Housing associations are in the unenviable position of determining who gets and who doesn’t and Welform Reform has exacerbated the decision criteria. None-the-less there is much misconception about social housing tenants and people on housing benefit, and the impact of reform is felt more keenly with housing associations than with any other social care agency.But in the end we believe that social housing will garner its creativity for this to be a win theme long term, albeit that it will need to think hard about delivering services under different models.
Rent cutsHousing associations will have to cut social housing rents by 1 per cent each year for the next four years from April 2016 to help reduce the country’s housing benefit bill. The reversal of the rental formula, which currently allows housing associations to raise rents in line with the consumer prices index (CPI) plus 1 per cent, forms a significant part of the investment profile. This impacts long term loans which may need review and overhaul.Rent cuts a win theme, are we serious?Yes we are. Interest rates are still at an all-time low and investors are still keen to invest. More affordable rents will mean less arrears and more certainty on income and are thus more prudent. Also under different housing provision models, the rent will be only part of the income generated.
EfficiencyEfficiency is about getting more out of using less resource and we see this win theme from more than one perspective:
Devolution as we’ve seen in Greater Manchester is giving local control of housing investment to get home building kick started from additional money. Although this could be a double edged sword as borrowing caps may need to be removed, efficiencies can be made from pooled local housing funds. Local control of knowing where and how to invest makes the Treasury a tad nervous but a total of 34 bids from England regions have already been submitted.
Efficiencies can also be gained through innovation in house building factories or from modular building schemes to churn out hundreds of homes. The Government through InnovateUK is currently investing in supply chain research to see how this could come to fruition.
Delivery modelsThis is our favourite win theme; there is more than one kind of housing provision model.The deregulation package announced by Brandon Lewis which includes removing the constitutional consents regime could be the springboard that enables housing associations to be more flexible in their delivery models. Under this proposal housing associations will no longer need permission from the regulator before they make certain kinds of changes including mergers, restructuring, winding up and dissolution.The idea is to give more flexibility to housing associations to manage their own funds in order to build more affordable homes and help more people into ownership while ensuring that the historical grant is reinvested in housing.Hybrid housing delivery, working with the private sector could bridge the housing gap. Private sector landlords have also been the brunt of political attack – housing associations could be a lifeline for them too. Global Institutional investors have promised and are being courted for millions in UK social housing equity funding – an exciting time for housing.
Asset managementMore efficiently run DLO could make big contributions in managing and preserving stock. To insource or outsource can transform the cost of social housing's biggest expense. But like all decisions, it needs to be made in context of all other inputs yet this has great potential under our win themes.
Talent managementLast, but not least of our win themes - managing talent.Talent is a construct that Morgan Hunt is passionate about. There is no single definition, it means different things to different organisations and is made up of skills, knowledge and ability. Since this amalgam is unique to each organisation there are many approaches to talent management and many contexts for the definition but managing your talent and ensuring that you recruit the best does matter.It matters that housing associations can define what talents they are missing in order to reach their full potential, and it matters that they have a plan of how and where they might find and accommodate for the range of skills and knowledge required in a changing housing landscape. In this article, ‘Social Housing, gameplay battlefront 2015’, Morgan Hunt has taken the ‘cup half full approach’ in its chosen win themes because change needs fresh thinking, doing things differently with helicopter insight, courage to do the right things and the talent to carry it out.For more information on managing your social housing talent email us.