Mergers and alignments

This is a hot topic given the suggestion that 1 in 3 of the largest 250 HAs might not survive the changes in rent – let alone the loss of income and homes under the RTB.

Service Matters from Orbit Housing umake the following suggestions for support:

Alignment and Simplification

 

Relet times are falling

The number of days social landlords are taking to re-let empty homes is dropping despite the impact of the bedroom tax, exclusive research has revealed.

Here is the report from Housemark:

void-survey

A survey of 178 social landlords by benchmarking experts Housemark reveals the average void turnaround time dropped by two days in 2014/15 compared to 2013/14, equalling the 25.7 day average recorded in the year before the bedroom tax came into effect.

It backs up Inside Housing research last summer showing that, despite an initial worsening in performance after the bedroom tax came into effect in 2013, landlords are successfully putting in place measures to reduce re-let times and minimise reductions in rental income.

The research showed that the amount of rental income lost due to empty properties has fallen year-on-year by £32m to £208.5m in 2014/15, according to responses from 148 landlords.

Landlords have changed their processes to let vacant properties more quickly, while some are looking to let properties to different types of tenants.

 

New housing apprentice standard

The government has published details of a new apprenticeship standard for housing management assistants.

According to Inside Housing:

The standard, one of 59 new standards across a range of industries published today, sets out the skills employees are expected to have in order to meet the needs of employers in the housing sector. It follows two other housing apprenticeship standards, for housing management and senior housing management, published in March.

The standards were developed by 16 housing associations alongside the National Housing Federation (NHF), Chartered Institute of Housing, the National Federation of Property Professionals and managing agents Rendall & Rittner.

Disability benefits overhaul

Iain Duncan Smith has pledged to change the way people are assessed as capable of work.

According to Inside Housing:

The secretary of state for work and pensions will today say that under the ‘binary’ Employment and Support Allowance (ESA), which was brought in by the Labour government in 2008, people are divided into those that can work and those that can’t.

Mr Duncan Smith said: “A person has to be incapable of all work or available for all work.

“This needs to change – things are rarely that simplistic. We need to look at the system and in particular the assessment we use for ESA – and I want to look at changing it so that it comes into line with the positive functioning of Universal Credit… and as such is better geared towards helping to get people prepared for and into what work they may be capable of, rather than parking them beyond work.

“We need a system focused on what a claimant can do and the support they’ll need – and not just on what they can’t do.”

The government has attracted criticism for its system of work capability assessments, which are used to determine whether somebody is capable of working. The work and pensions committee of MPs last year said work capability assessments often fail to provide an accurate picture of a claimant’s ability to work.

Mr Duncan Smith will announce that he is planning to overhaul ESA and work capability assessments over the coming months, although he is not expected to provide detail of exactly how at this stage.

The government will also announce a full rollout of the Fit for Work service, a scheme in which employees who have been off sick are referred to an occupational health professional.

All party parliamentary group to look at housing crisis

A new All-Party Parliamentary Group (APPG) of MPs and peers has been set up to examine ways of tackling the housing crisis.

The group, supported by the Royal Institution of Chartered Surveyors (RICS), will look at ways of increasing numbers of homes for rent and home ownership and make recommendations to government.

The group will be chaired by Conservative MP James Cartlidge and will also include former housing minister Mark Prisk and crossbench peer Lord Richard Best.

Mr Cartlidge said: ‘There are a whole raft of complex issues in housing and planning today, but I hope that our APPG can make a real contribution to the debate.’

The group replaces a committee chaired jointly by Conservative MP Tim Yeo and Labour MP Clive Betts. APPGs are informal cross-party groups that do not have official status in parliament.

Latest downgrades from the HCA

The social housing regulator has issued two more financial viability rating downgrades, as the trend for lower gradings in the sector continues.

Insiie Housing has been reporting on the latest news – here are some highlights from their report…

The Homes and Communities Agency (HCA)  downgraded the viability ratings of two older people’s housing specialists, Abbeyfield Society and Central & Cecil Housing Trust.

The downgrades bring the number of organisations currently graded ‘V2’ – the second highest rating – to 45, up from 37 in May. The other 209 landlords the HCA all rates have the maximum ‘V1’ rating. V2 means landlords comply with HCA standards but need to ‘manage material risks’.

The HCA, in one of five judgements today, raised concerns that the Abbeyfield Society’s developmentplans are ‘predicated on a doubling of fund-raising income over four years’ and on ‘significant levels’ of sales income.

The judgement said: ‘There are insufficiently detailed strategies in place to manage financialfluctuations… Sensitivity testing has been basic in nature.

Central & Cecil Housing Trust, which owns more than 2,100 homes, also had its viability downgraded to ‘V2’. The HCA said the London-based organisation has ‘an increasing reliance on sales income’ in order to fund its development programme, under which it is building 200 new homes.

The judgement said Central & Cecil Housing Trust has identified strategies to mitigate the risk, including converting unsold homes to market rent, postponing development and reducing repairs spend. A spokesperson described the ‘V2’ downgrading as a ‘signal of our ambition’.

In other judgements, Johnnie Johnson Housing Trust had its governance rating upgraded from ‘G3’ to ‘G2’, meaning it now complies with standards. Johnnie Johnson in February 2014 had its governance ratings downgraded to non-compliance due to ‘deficiencies in management of risk’ which lead to delays and overspend on a development scheme.

Since then, Johnnie Johnson has carried out a governance review, strengthened its board and updated its business plan.

Two other landlords, Network Housing Group and Viridian Housing, both had their governance ratings upgraded to the maximum ‘G1’ grading.

LATEST HCA JUDGEMENTS
Organisation Governance Viability
Abbeyfield Society G2 V2
Central & Cecil Housing Trust G1 V2
Johnnie Johnson Housing Trust G2 V2
Network Housing Group G1 V1
Viridian Housing G1 V1

Have your say

Deregistration of HAs

The government is “very, very receptive” to a controversial Policy Exchange report which suggested housing associations should deregister, says a report in Inside Housing:

“The Policy Exchange report,published last November, argued that 100,000 homes could be built by associations if they were allowed to deregister and given freedom to select their own tenants and set their own rents.

Also in Inside Housing:

“Mr Hadden, CEO at Genesis used the interview with Inside Housing to set out his plans to stop developing homes for affordable and social rent in the future, and attempt to “reconfigure” current pipeline commitments to do so where it no longer “stacks up”.

The full interview is available here.”

Also in Inside Housing:

“Housing associations have sought legal advice on deregistering as social landlords, as they consider their options following the Budget’s rent cut.

Lawyers and consultants have told Inside Housing that they have fielded queries in recent weeks from tens of landlords mulling deregistration.

The move – which would likely require the repayment of historic social housing grant – would see organisations no longer bound by social housing regulations, such as the four-year rent reduction, and be free to act as private bodies.

However, such a move would require the approval of the Homes and Communities Agency (HCA), which would assess any bid for deregistration against rigorous published guidance.

Andrew Cowan, a partner at Devonshires Solicitors, said: “We have been approached by a handful of clients, but it’s very early days – all they are doing is asking for scoping advice.”

Catherine Hand, a partner at Trowers and Hamlins, added: “A lot of people have contacted us to see if deregistration is an option.”

Under HCA guidance, an association can deregister if it is no longer providing social housing, is adequately regulated by another body or able to demonstrate that arrangements are in place to protecttenants and prevent misuse of public funds. Affordable Homes Programme rules also stipulate that grant must be repaid if an organisation deregisters, although this can be waived by the HCA.

Jonathan Walters, deputy director of strategy and performance at the HCA, said: “We would have to see evidence about how they meet our published criteria, and we would look at it on a case-by-case basis.”

Ms Hand said the criteria meant it was ‘unlikely’ that a large mainstream provider could deregister, although specialist organisations may have more chance if regulated by another body such as the CareQuality Commission.

Neil Hadden, chief executive of Genesis Housing Association, said: “I would hope that [in a year’s time] we were a long way down a path which would lead to a more sensible relationship between us, government and the regulator. If that led to deregistration, would I be upset? No.”

However, Rod Cahill, chief executive of Catalyst Housing Group, said Catalyst did not have any plans to deregister.

The news about landlords seeking deregistration advice comes a day after Genesis Housing Association revealed it will no longer build homes for social or affordable rent.

Guide to deregistration

According to regulatory guidelines, a housing association can deregister if:

  • It no longer is or intends to be a provider of social housing in England
  • It is subject to regulation by another authority whose control is likely to be sufficient
  • Or it meets any relevant criteria for deregistration, defined as providing satisfactory arrangements for protecting tenants and ensuring no misuse of public funds

Source: Homes and Communities Agency”

Largest surpluses are with the big develoing HAs

The vast majority of the social housing sector’s most active developers are also in the top 30 list of those with the biggest surpluses.

 

Surpluses are used to cross-subsidise development activity and help landlords cushion against risk. The research was prompted by recent media criticism of housing associations’ efficiency and record on building new homes. The Communities and Local Government committee of MPs last week launched an inquiry into development which will look at whether associations are using their surpluses effectively.

L&Q, which reported the largest surplus of £163.8m in 2013/14 – increasing to £209m last year – plans to build 17,900 homes by 2020. It tops the table for surpluses and planned development.

 

Here is thr list, thanks to Inside Housing:

TOP DEVELOPERS
Provider Homes by 2020 Surplus table position Surplus 2013/14 (£m)
1 L&Q 17,900 1 163.8
2 Home Group 9,700 17 27
3 Orbit** 8,418 5 56.7
4 Notting Hill 6,830 6 53.7
5 Places for People 6,631 27 20.1
6 Hyde 5,942 10 44.1
7 Affinity Sutton 5,918 3 78.3
8 Metropolitan 5,777 9 44.7
9 Sovereign 5,775 15 31.1
10 DCH 5,099 28 18.9
11 Aster 5,000 25 20.6
11 Genesis 5,000 11 39.5
13 Sanctuary 4,889 26 20.2
14 Peabody 4,600 13 33.8
15 A2 Dominion 4,500 16 29.1
16 Guinness 4,300 2 86.7
17 Family Mosaic 4,172 4 63.1
18 Waterloo 4,087 98 6.5
19 Riverside 3,966 8 47.9
20 One 3,913 21 21.5
21 Moat 3,600 20 23
22 Stonewater* 3,500 N/A N/A
23 Catalyst 3,379 7 48.9
24 WDH 3,292 30 17.6
25 Bromford 3,281 12 34.1

*Stonewater did not exist in 2013/14, however the combined surplus of its predecessor organisations Raglan and Jephson was £23.5m

**Figure for Orbit’s surplus is a combination of separate figures in the Homes and Communities Agency’s accounts for Orbit Group and Orbit South

Thames Valley did not respond to Inside Housing’s development survey, or respond to queries about their development enquiry in time to inform the above article. However, Thames Valley has now indicated it is building 8,618 homes by 2020. This would have put them third in the development list with the 18th biggest surplus.

50+ Councils looking to set up a housing company

More than 50 councils in England have either set up or are considering setting up their own housing company, according to a survey published by regeneration firm 3Fox International.

According to Inside Housing:

“Council-owned housing companies can allow local authorities greater borrowing power and flexibility in rents and tenures, as well as exempting properties from the Right to Buy. They have so far beenparticularly popular in London boroughs, including Newham, Ealing and Greenwich.

3Fox International’s report found that around 14 of the 112 participating councils have already set up a housing company, while a further 38 are contemplating the move.

“Setting up a housing company is currently very much a hot topic for councils. A significant proportion of local authorities are considering doing so, are already in the process of doing so, or have already done so,” the report concludes.

“But with housing minister Brandon Lewis indicating government plans to limit council-owned housing companies circumventing Right to Buy rules, the issue is looking to be on the public agenda. With thehousing market coming under increasing pressure, providing long-term housing solutions is a key priority of many (planned) housing companies.”

The need for long-term housing solutions was cited as a major motivation by 61% of councils that have either set up or are planning to set up a company.

Amid increasing government cuts to council funding, another key objective is increased revenue creation, with 34% of councils saying this was one of their main reasons for setting up or considering a private housing company.

A further 15% of councils surveyed cited short-term housing provision as their key objective for creating a company, and 3% said their goal was to stimulate the local economy.

The councils contemplating a housing company are largely located in and around London, and along the south coast, with smaller clusters in the Midlands and the north of England.

3Fox contacted 311 of the country’s 326 local authorities, and received responses from 112 councils.”

Increase in home loss payments

A person is entitled to a home loss payment when they are permanently displaced from their home in various circumstances specified in section 29 of the Land Compensation Act 1973 including improvements and redevelopment by housing associations (which includes change of use) and compulsory purchase orders by local authorities.

According to our friends at Anthony Collins Solicitors:

New Regulations, the Home Loss Payments (Prescribed Amounts) (England) Regulations 2015, have been passed so that for displacements occurring on or after 1 October 2015 the home loss payment due:

  • to a person with an owner’s interest (so a long leaseholder or freeholder) will be calculated as 10% of the value of the property subject to:
    • a minimum of £5,300 (up from £4,900); and
    • a maximum of £53,000 (up from £49,000).
  • to a person in any other circumstance (so in reality a tenant) £5,300 (up from £4,900).

Registered Providers will need to ensure that budget forecasts for redevelopment are adjusted to take account of the change, policy documents are updated and accurate offers made to occupiers who are due to be displaced on or after 1 October 2015.  There is also a practical question of whether landlords offer voluntary increases in payments now to incentivise people to move out now rather than waiting to October to receive the higher payments.

For more information

For more information about home loss payments or guidance on how this affects your redevelopment/decant plans , please contact Emma Hardman or Helen Tucker.