The social housing regulator has warned that housing associations risk damaging the reputation of the sector if they sell stock inhabited by social tenants.

Fiona MacGregor, executive director of regulation at the Homes and Communities Agency (HCA), said the agency would be keeping a particularly keen eye on social landlords disposing of tenanted stock because of a potential public backlash.

As part of a deregulation drive, ministers have removed the need for associations to obtain regulatory permission to dispose of social assets, although they will still have to notify the HCA of sales.

This is a useful summary from Inside Housing of the 3 day HA conference:

Preacher Dave

The National Housing Federation’s (NHF) enigmatic chief executive was on fine form as he opened the conference on Wednesday. The housing sector has always been something of a religious order, and David Orr was very much in fired-up preacher mode – firing off some shots at those who say housing associations have lost touch with their social purpose (“they’re talking out of a hole in their hats”) and making a big play of the NHF’s Owning Our Future message to send out a signal of independence to any watching government officials. The big message, though – the NHF is going to push very hard for some flexibility over housing grant in the Autumn Statement. And it is sounding increasingly confident.

‘That’ video

www.youtube.com/watch?v=0XngRTR3nEw

It looks like it was produced by Michael Bay – with epic super-slow-mo shots of pigeons circling tower blocks and a soundtrack that jumped straight out of a Marvel blockbuster. But there is no doubt that the NHF’s promo video for the sector – on display before many of the keynote sessions, is a slick, glossy, impressive and professional piece of marketing. The strapline, “If you want a great home, come to a housing association”, is punchier than most previous attempts and could actually catch on. Still though, some of those chief executives were enjoying the chance to glower intensely at the camera a little too much. David Montague’s blue steel glare surely says a modelling career is an option if he ever gets tired of building affordable housing.

Yes, minister

Gavin Barwell introduced himself to the housing association sector on Thursday, and genuinely went down well with a low-key but sensible speech. “There genuinely wasn’t any politics in it, he is here to do business,” said Mr Montague later. “He’s a lot more impressive in person, he looks about 12 in his Twitter bio,” said another unnamed chief executive. In terms of substance, Mr Barwell continued to soften the edges of the homeownership rhetoric – specifically calling for sub-market rent, and promising to listen to calls for flexibility over grant. We will see come the Autumn Statement whether the Treasury is listening to him.

A new Starter?

The future of Starter Homes dominated conversations in some of the bars and coffee shops around the conference. Those in the know suggested the government is after flexibility – but doesn’t want the political drama of breaking a manifesto pledge. As a result the wording of the manifesto is coming under the microscope – could another product be a home with a 20% discount, available to first-time buyers under 40? If so, there is an easy way out. Any sector figures with ideas: Gavin Barwell said he was in listening mode.

Merger mania

The recent high-profile collapse of several housing association mega-mergers was one of the major talking points. Everybody had a view on what went wrong and were full of speculation about other mergers that might, or might not, be on the horizon. Needless to say, those currently involved in merger preparations were eager to stress all is well with their plans.

Fresh ‘LHA cap’ angst

Darrell Smith, a senior Department for Work and Pensions civil servant, confirmed beyond all doubt that the ‘Local Housing Allowance (LHA) cap’ will apply to existing, as well as new, supported housing tenants from 2019. Although some people had interpreted this to be the case, previous announcements had not been clear. Many delegates were surprised by Mr Smith’s comments, and angry that the policy will affect more schemes than they had thought.

The ‘dark side’

Thinktank Policy Exchange has in the past been seen unfavourably by many in the sector, largely due to its ideas around selling high-value social stock. This conference saw it unveil a new report calling for associations to be allowed to raise rents in return for building more homes. While some audience members said there was a lot to like in the report, others took issue with some of its conclusions. When Cym D’Souza, chief executive of Arawak housing association, said she took “umbrage” with the report’s assertion that there should be fewer housing associations, there was a loud applause in the auditorium. Paul Tennant, chief executive of Orbit, which co-sponsored the report, admitted: “We wanted to work with the dark side.”

Devo delay opportunity

Although many commentators have questioned the future of devolution deals after their main architect, George Osborne, left the government, housing associations see the slight slowdown in pace as a chance for them to pitch for a greater role for housing in the deals that are being shaped. Chief executive of Plus Dane, Barbara Spicer, told the conference it was crucial for housing associations to have their say on devolution deals in their areas rather than get left behind as local authorities take the lead.

Paul Smith, cabinet member for housing at Bristol City Council, said he was disappointed by the lack of housing plans in the South West’s emerging deal but this hasn’t stopped Bristol pushing ahead with ambitious plans to up housing numbers after years of under-delivery.

Other delegates speculated about whether the Homes and Communities Agency’s investment arm has much of a future as money is increasingly devolved to combined authorities.

Social purpose

Social purpose is playing on the minds of housing associations this year. In one session the audience were asked to raise a hand if their board had discussed concerns about losing its social purpose over the past year. Nearly every hand went up. At a time when the 1% rent cut is making a dent in finances and business plans are being re-jigged to meet the government’s demand for more development, board members are clearly keen to not lose their founding values.

One chief executive said associations’ renewed focus on development is leaving the upkeep of existing stock out in the cold. He said many associations are stripping their repairs and maintenance budgets to boost funding for new homes. It’s a tricky balance to strike.”

The judgement said Saffron had informed the regulator that problems in the governance process and failures to comply with its rules meant some board members had not been appointed properly. This continued over a period “of several years”.

“Significant decisions were made during this period involving third parties and funders and there was uncertainty about the validity of all the decisions that had been made at those meetings given some board meetings had been inquorate,” the regulator added.

“It is understood that Saffron became aware of this issue in 2011 – it appears to have been known at the highest levels within the organisation – yet the matter was not properly and appropriately rectified, nor was it raised with the regulator.”

It said Saffron’s “failure to work openly with the regulator” represented a “fundamental breakdown in trust”.

Saffron’s board is now properly constituted and has ratified all of the decisions made previously by the illegitimate board.

A Saffron spokesperson said: “As an organisation, we are determined to ensure that the historic failings that have come to light are not repeated and that we have correct and robust governance to ensure a stable, compliant and successful future.”

Moody’s had confirmed its credit rating has not changed in light of the discoveries. Saffron said itsfinancial position was unaffected by the error.

Meanwhile, St Vincent’s Housing Association and Tower Hamlets Community Housing (THCH) were each issued with regulatory notices because of breaches over their fire safety procedures.

A spokesperson for St Vincent’s said “bringing these works up to date has been the number one priority for the organisation”. A THCH spokesperson said it had “immediately put in place a recovery plan around fire assessment”.

Colne Housing Society was downgraded to a compliant G2 after failing to submit accurate financial information to its board and the regulator. A spokesperson said an improvement plan was in place to address the HCA’s findings. Aldwyck Housing Group was reissued with a compliant G2 and V2 governance and viability grading following an in-depth assessment with the regulator.

Full list of judgements – narrative and strapline recntly issued by the HCA

“New research by Savills Housing Consultancy shows the ‘net present value’ (NPV) of social housing properties has dropped in eight of nine English regions.

The NPV is the value of the social housing unit to the landlord – in basic terms the rental income the landlord can expect over a four year period less costs.

The data, based on information covering 420,000 homes, showed London was the only area where NPVs rose, with an average fall of 15, 9% elsewhere and a peak of 38.3% in the south west.

Savills said this was because landlords had not yet put in place plans to cut back costs, which would see the value of the properties rise.

Instead, Savills said, the majority of landlords have responded by reducing planned maintenance spend to deliver an immediate reduction in expenditure.

Due to rules protecting lenders from the rent cut should they ever repossess a home, valuations for loan purposes do not fall as quickly.

However, over the four-year period of the rent cut they will begin to deteriorate

Mervyn Jones, head of Savills Housing Consultancy, said: “The data shows that, in general, housing providers are responding to the rent cut by making savings in planned maintenance, but to maintain NPVs they need to go further and look at reducing day-to-day costs. This latter aspect does take longer, but it must be part of a balanced approach to cost savings.

“If housing providers do not take further action, it is likely this will reduce their financial capacity to develop homes. There is a risk that it will potentially seriously affect their business plans as it feeds into loan covenants.”

The values in London had not fallen because an increase in market activity boosted average incomes in the capital, Mr Jones said.

The research from Savills comes just a week after the regulator said it would probe housing associations’ response to the rent cut to ensure repairs cuts are not a sign of a failure to maintain stock.”

The Secretary of State for Work and Pensions provided a written statement to the House of Commons setting out some detail about how supported housing will be funded in the future. It follows concerns that elements of the government’s plans to cut spending on housing benefit (HB)/universal credit (UC) would disproportionately affect providers of supported housing and force some schemes to close.

This is a useful summary from CIH

What you need to know future funding supported hsg

According to Inside Housing:

“The communities secretary, in a speech to the Conservative Party Conference today, said “we need to do much better” at delivering homes. He described the 170,000 homes added to the housing stock in 2014/15 as “not a bad number but far fewer than we need”.

He said: “Everyone agrees we need to build more homes, but too many of us object to them being built next to us. We’ve got to change that attitude.”

He added: “Local leaders must be prepared to make difficult calls, even if they’re unpopular, and so must MPs and councillors.

“Of course, there are valid reasons to oppose some planning applications: if they’re in the wrong place, or there’s not enough infrastructure, or they’re just plain ugly. But all of us have a duty to think about the long-term consequences of every decision we make.”

Mr Javid also said the government remains committed to building one million new homes by 2020.

He outlined several measures today to boost housebuilding (see below) including £5bn of loan finance.

The government would achieve better value for taxpayers’ money if it built 100,000 new social rented homes a year even in a struggling post-Brexit economy, research has concluded.

Here is a useful article from the Guardian on the rise of homelessness from the ending of provate sector short term tenure:

https://www.theguardian.com/society/2016/sep/28/eviction-by-private-landlord-making-record-numbers-homeless-in-uk?utm_source=Chartered%20Institute%20of%20Housing&utm_medium=email&utm_campaign=7600064_News%20and%20views%3A%205%20October%202016&utm_content=England%20news%3A%20Record%20numbers%20homeless%20after%20ending%20assured%20shorthold%20tenancy&dm_i=YRX,4IW8W,50VN0X,GQZO0,1

Inside Housing understands civil servants from the DCLG have drawn up draft regulations for ministers which include an exemption in areas where the difference between market rent and social rent is very small. Under Pay to Stay, social tenants with household incomes of more than £31,000, or £40,000 in London, have to pay up to market rent levels. Councils have to administer the scheme, returning the extra income to the Treasury.

Under the latest regulations, councils would compare the market and social rents in the area, deduct an administrative cost per tenant which is likely to be set by the government, and if the difference between the rents is small then a council could receive an exemption. It is not yet clear what definition of ‘small’ will be used. The government has said councils will be able to determine market rent levels.

Housing bodies, including the Association of Retained Council Housing (ARCH) and the National Federation of Arms-Length Management Organisations, have been lobbying the government to exempt tenants where market and social rents are similar. They argue that the policy would place a signficant burden on councils and therefore should not apply where income generated is minimal.

Officials are also keen for councils to make several attempts to obtain a tenant’s income details before moving them on to market rent.

If a tenant fails to tell the council their income details then they will be charged market rent. However, the DCLG could include a requirement for a face-to-face conversation, before tenants are moved onto higher rents.

Inside Housing understands no final decisions have been made about the regulations.

A spokesperson for the DCLG said: “We will make an announcement in due course.”