What does the Social Housing Green Paper mean for the world of housing association finance?

05 December 2018

The new ideas set out could have significant implications for the sector’s finances, which do after all, underpin everything that we collectively seek to achieve.

The Social Housing Green Paper is clearly a watershed moment for the housing association sector, asking big questions about the role that social housing should play, how it should be built and managed and what the relationship between landlords and tenants should be. The NHF’s response sets out our view, based upon extensive consultation with members and their tenants, and how we believe the sector can play a positive and proactive role in delivering on the shared objectives of tenants, landlords and government.

Transparency and reputation

Housing associations are well versed in the measurement, analysis and reporting of financial performance information. The Sector Scorecard demonstrates the sector’s commitment to transparency in this area and is evidence of what can be achieved when we decide to take collective action to address a clear need. The Green Paper raises the important question of transparency in other areas; how do landlords, tenants, government and other stakeholders access information about service quality and the experience of tenants?

Many housing associations report against local offers agreed with their tenants, or participate in the STAR survey, but is this consistent, accessible and well understood by our important stakeholders? It is clear that greater transparency in this area must be a focus going forward, and this has implications for regulation, reputation and therefore relationships with lenders and investors. Housing association boards must take the lead in gaining assurance about the quality of the services they provide and ensuring this is successfully communicated to the outside world. 

Existing homes and tenants

The housing association sector is a major developer of new affordable housing in England and at the forefront of delivering the vital, quality, mixed-tenure homes and places that the country needs. Maintaining and increasing the supply of new homes has required ingenuity and innovation in recent years as the policy landscape has changed and capital investment by the Government has failed to return to pre-2010 levels. This has had implications for the sector’s finances and business models.

The parts of the Green Paper that focus on existing homes and tenants add urgency to the questions that housing associations have long been grappling with. What should be the balance between investment in existing homes and services and the development of new homes for new tenants? Within the context of reducing income (the -1% rent cut is after all still with us) and reduced government grant, to what extent can and should existing assets be leveraged in order to generate resources for new supply? Add to this mix, the prospect of a new Decent Homes Standard and the implications that this could have for asset management and investment profiles, and it is certainly time to consider where and how limited resources are best deployed.

Reducing stigma and restoring pride in social housing

Housing associations have always taken pride in the delivery of their core purpose and mission: the provision of quality and affordable homes and services to diverse customers. But the policy environment, the media, and at times politicians, have in different ways contributed to negative perceptions of social housing and social housing tenants. The Green Paper is an opportunity to reset this dynamic and change the narrative. As mission-driven, community benefit, organisations with business models that are uniquely placed to deliver social value, housing associations have a key role to play in articulating the positive impact that the provision of affordable housing has in communities across the country.

Our focus on, and communication of, mission, values and impact must not be supplementary but inherent, it must run through our financial reporting, our internal models and assumptions, and our investment appraisals. If we can make that a reality, and communicate how we do it to the outside world, we will surely be on the way to delivering a new deal for social housing in this country.