Gavin Barwell revealed he will reassess the rules on the use of Right to Buy receipts because future government projections suggest they will not be able to replace the homes sold.

He said: “I do want to look at the rules in relation to Right to Buy receipts… because my own view is that Right to Buy is a good thing but it’s only politically justifiable if I deliver a replacement.”

“At the moment the policy is… we have three years to do the replacement and at the moment we’re delivering on that but the projection suggests in the future at some point we will not be and therefore I’m willing to look at what we can do to make sure we can get those replacement homes built.”

So far less than 7,000 have been built to replace over 48,000 homes sold

The government has pledged to replace all “additional” homes sold as a result of its decision to increase discounts to £77,000 and £103,900 in London.

Southwark Council expressed its “sincere regret” today as it pleaded guilty to fire safety failures relating to a tower block fire that killed six people. The fire at Lakanal House in 2009 caused the deaths of six people, including three children.

At Southwark Crown Court g the council pleaded guilty to all four counts brought by the London Fire Brigade. These included failure to carry out risk assessments, failure to take precautions to prevent fire spreading and protect escape means, failure to take fire precautions to protect employees and non-employees, and failure to ensure the building had a suitable system of maintenance.

The court heard extracts from a report by fire safety expert David Crowder. His report revealed that timber staircases that cut across general use corridors were “very weakly” boxed in and provided “negligible protection” which “seriously compromised” the escape route.

No doors in the building had fireproof strips or seals and suspended ceilings did not have cavity barriers which could have reduced the risk of the fire spreading, it said.

The council accepted that, had these problems been rectified, the fire risk would have been “significantly reduced”.

According to Inside Housing:

“Richard Matthews QC, representing the council, said it is of “enormous disappointment and regret” that improvements the council made in 2006 and 2007 “did not identify defects”.

The council has offered to pay £300,000 of the London Fire Brigade’s legal costs and is also expected to pay a fine after the judge passes sentence on Tuesday.

The fire was caused by a piece of electrical equipment and spread up the outside of the building into a flat above and out into the corridor. Burning debris fell onto several floors below, starting separate fires.

The prosecution’s lawyer, Stephen Walsh QC, said the prosecution is concerned with the fire risks before the fire occurred rather than the deaths themselves. These were investigated in a coroner’s inquest in 2013.

Lakanal House has been empty since the fire but the council plans to move tenants in again in March after an £11m refurbishment is completed.

Since 2009 the council has spent £62m on its fire risk assessment programme and associated fire safety works for all social housing in the borough and meets regularly with the London Fire Brigade.

The London Fire Brigade had brought 22 charges against the council but these were amended to four charges, agreed by both parties.

Stephanie Cryan, cabinet member for housing at Southwark Council, said: “We took the decision to plead guilty to all four counts of breach of fire safety regulations associated with the Lakanal building on 2 July 2009, the day before the fire. This is because, as an authority, we fully accept responsibility for the fire safety of all our council homes. The fact remains that the council did not have a fire risk assessment for Lakanal in place on this date. Without this record, we can never categorically decide on the fire safety of the building before the fire happened.” “

The HCA is calling HAs to properly consult tenants before disposing of properties or making a change in management, after warning some have not been “upfront” about potential risks.

The Homes and Communities Agency (HCA) is consulting on a “strengthened” Tenant Involvement and Empowerment Standard following a failure by some housing associations seeking to sell properties or making management changes to properly consult with tenants.

Here are the documents (consultation will run until 22 March):

Statutory_consultation_on_Tenant_Involvement_and_Empowerment_Standard

Letter_to_providers_on_deregulation_measures_and_TIE_consultation

This is what Inside Housing quotes had to say:

“Jim Bennett, assistant director for regulatory strategy at the HCA, said the regulator has had to “frequently” tell housing associations to do more to consult tenants about disposals because consultations have not been of “sufficient quality”.

He also said some housing associations have not been “completely upfront” about the potential consequences of their disposal plans, “so we’ve asked them to go back and properly explain to tenants what they’re planning”.

From 6 April, as part of the deregulatory package designed by government, housing associations will no longer require the regulator’s approval to dispose of stock.

The deregulation is part of the package of measures the regulator is introducing in a bid to reverse the Office for National Statistics’ decision to reclassify associations as part of the public sector.

Mr Bennett said the “broader message” from the regulator once the deregulation measures are in place is that housing associations need to make sure they are using their “additional operating freedoms responsibly”.

Fiona MacGregor, director of regulation at the HCA, said: “Although the government’s de-regulatory measures from April will give greater freedoms to providers; these will need to be managed responsibly. Providers will still need to adhere to regulatory standards and take into account the potential impact on their reputation and that of the sector.” “

The Housing White Paper, suggested the government may hold Coucils to account for promises on land and homes. It will use a new standardised method to assess local housing need, the starting point for drafting a Local Plan.

Councils will be held to account on their own Local Plan target, which is based on a number of factors including local need and, crucially, the availability of land its said later.

“The housing association acquired a controlling stake in the business in 2012 in order to handle its development activity.

However it has encountered financial difficulties since, particularly following the collapse of its main contractor, Southdale Homes, in 2015. The HCA judgement said the 5,600-home organisation is exposed to “a combination of material losses, impairment and write-offs” as a result. It says the association has made loans to the struggling builder, with on-lent investment at risk now totalling £18m.

Following an in-depth assessment by regulators at the HCA last spring, an independent review was commissioned which “identified weaknesses” contributing to the difficulties.

“These included insufficiently robust, independent challenge by the BHA board, poor quality operational information to the BHA board hampering its ability to make effective decisions, and a failure to mitigate the risk to an extent that it is reliant on third parties, such as auditors and funders, not enforcing security or calling in guarantees,” it said.

“Allowing BHA and the commercial subsidiaries to be in this position is a serious failure of governance at the most basic level.”

The Broadacres group also contains the Richmond and Hambleton Furniture Store, a furniture sales subsidiary; Broadacres Services Limited, which develops building projects; and Market Gate Residential Management Company, which rents and operates homes.

The judgement maintained a complaint V2 grading for the provider’s financial viability, saying it could absorb the impact of the impairment and continue to meet funders’ loan covenants.

The regulator recommended a “wide-ranging independent review of its governance arrangements”.

Broadacres pays its board members, with chair Colin Wilkie receiving £10,000 in the last financial year, and the 12-person board paid a total of more than £40,000.

A spokesperson for Broadacres said: “As stated in December 2016, this relates to one of our development subsidiaries, Mulberry Homes Yorkshire, which unfortunately suffered when a contractor, Southdale Homes, went into administration.

“The Broadacres board has since agreed a plan to address the situation and is working with the HCA to return to G1/V1 grading as soon as possible.” “

The Local Housing Allowance cap for supported housing risks “breaking” sheltered housing, three major specialist housing providers have warned.

Anchor, Hanover and Housing & Care 21 warn the proposals could result in up to a £64m annual shortfall across their services in a joint response to the government’s consultation on supported housing funding.

The three organisations provide services for almost 100,000 residents and estimate they will face a £64m shortfall if the cap is brought in and the one-bed Local Housing Allowance (LHA) rate is applied to all the sheltered housing they own combined.

There is an estimated £58m shortfall if the two-bed rate is applied to those living in two-bedroom properties.

Here are some useful summaries:

Housing White Paper Summary 15a. 2017 1

CIH What you need to know Housing White Paper

Meanwhile:

Ratings agency Moody’s has warned the Housing White Paper’s emphasis on scaling up housing association development will drive negative credit ratings for the sector.

The agency, which provides ratings to housing associations owning 40% of the sector’s stock saidthat “continued pressure” on associations to build more homes could result in a “material increase in debt-funded development risk”.

This, it said, would continue to determine credit quality in the sector, because new development is largely – and increasingly – funded by debt and market sales surpluses, as opposed to grant.

Here is a useful look back report from the left wing think tank – the resolution foundation on where we are:

The-Housing-Headwind

Heer are some charts from the resolution  foundation were produced aead of the paper but are a good summary of where we are:

Six key charts ahead of the housing White Paper

Inside Housing provided us wiht the following snippets:

In the 2015/16 Global Accounts, published by the Homes and Communities Agency (HCA), overall debt for the housing sector increased by £2.2bn, from £69.8bn to £72bn. Of this, £1.9bn was due for renewal within one year, a figure the agency said it expected to be refinanced with extended banking facilities.

The HCA, said: “We would expect debt to rise as the sector develops – that’s the way the model works. They gear up to build more assets. The sector seems to have the ability to raise debt at favourable rates – that model is working.”

The sector invested £7.5bn in new or existing housing properties, compared with a 2015 total of £7.7bn and a 2014 total of £7.1bn. Of the £7.5bn, £2bn was invested in existing stock and the rest reserved for new development.

In total, 42,000 units were developed by housing associations during the year – a decrease from 46,000 the year before, which was boosted at the end of the last grant funding window.

The figures which cover the period before the rent cut took effectwere described by the HCA as “steady as she goes” for the sector.

Operating expenditure grew by £0.6bn in the year, but when factoring in additions of units, overall costs per unit grew by only 1%, below inflation by 0.3%. The HCA said it expected efficiencies, brought about by mergers and cost-cutting, to be more apparent in the following year’s results.

The sector posted a total surplus of £3.4bn before tax – a £0.8bn increase on the previous year. The overall operating margin was 27.5%, an increase of around 0.1 percentage point on the previous year. Turnover increased 8% to £20bn.

Increasing property values contributed to gearing – the ratio of debt to assets – remaining stable at around 50%.

For the first time, the HCA has published consolidated accounts, which factors in subsidiaries undertaking non-social housing activities.

Figures released in the Global Accounts reflect changes in accounting standards in 2016, with the 2014/15 figures restated.

Sales

Just 10 housing associations were responsible for three-quarters of the sale activity carried out by UK landlords in 2015/16, while the total proceeds from such sales grew by 39%.

According to the Homes and Communities Agency’s (HCA) 2015/16 Global Accounts, turnover from sales increased to £2.8bn, covering shared ownership and outright sale, a 39% leap from the previous year.

The overall sales figure is 14% of total housing association turnover, which is the highest rate recorded in the HCA’s accounts – a leap from the 10.7% recorded in 2014/15. The surplus on outright sale increased by £162m (68%) to £402m in 2016, with 75% of this surplus concentrated in just 10 providers.

The HCA warned housing associations that this increase in market sale activity should be balanced with appropriate risk management.

Turnover from sales rises

£2.8bn from sales activity, including shared ownership in 2015/16 – a 39% rise

14% of overall turnover from sales, the highest ever recorded by the HCA

£402m surplus from market sale activity, concentrated in 10 large landlords

The HCA, said: “Providers have got to keep their risk management up to speed with what they’re doing, before they embark on a new activity or an expansion of an existing one.

“We have examples of providers who haven’t done that so well, and you wouldn’t want to be another one of them.”

Credit agencies have also warned over the increasing exposure of housing associations to the sales market, with downgrades issued due to sales exposure.

Several large housing associations contacted by Inside Housing said their market sale development programme had expanded to form between 20% and 45% of their overall housing delivery.”

The white paper set out the government’s intention to address uncertainty over the future of rent policy.

The National Housing Federation (NHF), have been asking for clarity over what follows the 1% annual rent cut is essential for long-term business planning.

The NHF have suggested that a 2 tier rents for those building HAs and those who are not might be considered. The NHF has suggested that first, the Government needs to consider its principle motivation: is it to limit welfare expenditure or to boost supply an that the Government needs to consider how lenders confidence will be boosted and how they will guarantee the rent settlement (having gone back on previous promises).

This iswhat the NHF said:

“We at the NHF have recently consulted our members on this matter. The response has been clear: continuing government involvement in the way rents are set limits our ambitions.

The consultation has underlined the support for rent freedom that exists within the sector. Empowering housing associations to set their own rents will enable the sector to build on our strong offer to new and existing customers, managing and building more great homes for more people.

As independent, mature businesses with a social purpose it is right that housing association boards have control over their main income stream.

Control over rent-setting improves boards’ ability to plan for the future and respond to changes in the operating environment.

If government interference in rent-setting was a thing of the past, boards would benefit from increased lender confidence and could take long-term investment decisions to realise their supply ambitions.

There is a view that if given rent freedom, housing associations would seek to maximise income by increasing rents across the board.

This is a misconception. Rent freedom has the potential to deliver greater fairness for tenants currently paying rents divorced from household income and with limited relevance to local housing markets.

Responses to our consultation demonstrate that housing associations would seek to implement rent freedom in such a way as to improve affordability for the lowest-income tenants, with rents for households in receipt of housing benefit unlikely to increase.

“Rent freedom has the potential to deliver greater fairness for tenants.”

By referencing the future of rents in the Housing White Paper, the government has signalled that it understands that continued uncertainty must end.

It is clear there are a range of options currently under consideration.

One of those may be a deal-based approach with individual associations able to raise rents in return for a guaranteed, contractual commitment on supply.

There are, however, significant risks to this approach. The danger of a two-tier rent system would likely act as a disincentive for those associations that have an ambition to deliver but, for sound business reasons, are not yet able to make a supply offer to government.

In addition to limiting future capacity, associations with no ‘deal’ would be unable to flex rents to find innovative solutions to issues such as affordable rent levels and housing for single people under 35.

A future rent policy must work for all and rent freedom offers the best way for the sector to own our future and attain the certainty we need to continue to manage and deliver the quality homes this country so desperately needs. ”

James Prestwich, head of policy, National Housing Federation