The housing association ‘sector’ is irrelevant and deluded?

The overwhelming majority of all those I have ever met working in social housing believe in the social housing model.  In the simplest terms working for a council or housing association landlord is not just a job, its a vocation and you can make a difference.

Social housing has a social purpose in the simplest terms and a term that is being scrutinised more each day and which Colin Wiles distilled recently into a cleavage between traditionalists and pragmatists: In very simple terms and taken to polarities, Traditionalists prioritise social purpose above all else while Pragmatists prioritise financial security with as much social purpose as that allows.

Why these differences and cleavages have come about and receiving so much scrutiny is (also very simply) that successive governments have de-prioritised the social housing model with reducing ‘subsidy’ and not allowing LA’s to build and a rising population, increasing demand, greater relationship breakdown, Russian oligarchs driving up London house prices, and literally scores of other factors.

All of these factors then get distilled into a universally accepted common, NIMBY objectors aside, that we need to build 250,000 new houses per year.

What is also ‘accepted’ within that 250,000 figure is that Private Enterprise can and/or will only build 140,000 of that yearly figure which leaves a 110,000 per year shortfall in that accepted necessary target.

What we know as fact is that housing associations had a record output last year of 40,000 new houses built – and what we know as a matter of the most simplest arithmetic is that still leaves a 70,000 per year shortfall.

The only other house builder is local councils – who are effectively excluded from development of new housing by borrowing restrictions imposed by central government.

Two broad options therefore exist presuming the 140,000 Private Enterprise figure is a given  – and note since 2010 they are building 110,000 per year) – and these are:

1. Increase HA build capacity from 40,000 to 110,000 per year, or

2. Allow councils to borrow in order to build.

The issue with point 2 is a political decision at the 100% behest of government and despite some small signs of movement in that direction they are embryonic and we have become accustomed to councils not building new houses as we have to food banks becoming a structural part of welfare!

The issue with point 1 is housing association capacity.  Can the HA sector triple its house building output and noting that would be a tripling from a record output?

That appears highly improbable and raises the question that titles this – Are Housing Associations (a) irrelevant, and (b) deluded … in terms of solving the housing crisis of under supply?

Irrelevant?

 

The figures in terms of house building capacity suggest HA’s are irrelevant as their capacity even at last years record output level equates to just 16% of the UK total new housing need.

Deluded?

While the label ‘deluded’ will undoubtedly get the backs up of Housing Associations when perhaps mistaken or disingenuous would be a better term, it is a delusion to think and to promote as the NHF are doing that they are the way to solve the accepted under supply housing crisis.

Give us more freedoms to build what we want and/or can is one strand of the HA argument being put forward by the NHF and stems from its ‘Pragmatist’ part in the simple analogy.  Let us build more houses for outright sale and outright private rent and more for higher rents in order to cross subsidise the (later) development of more at the ‘Traditionalist’ social rent level is what this means.

Give us more money to build these is a second and linked strand in that Pragmatist end-game.  Yet even when housing associations had more money (or the misnamed subsidy) than they are calling for now they failed to build in any relevant level of quantity as the official data and number self-evidently reveal.

Politically, this government strongly support the aim of building more for home ownership or HA’s building for outright immediate sale as UK home ownership levels have fallen to 64% when they were as high as 71% under Blair.  This government’s overarching central economic rationale (and that of Labour) is the greater the home ownership the more economic growth will result – this growth fuelled by home ownership is something that is becoming less and less accepted by economists yet is still pervasive in political and politico-economic thought.

Rightly or wrongly, the political imperative is to increase home ownership and is accompanied by the usual superficial political rhetoric you would expect of everyone wants to own their own home and ‘aspiration’ to that end sees aspiration become fact – or in short I may want a Ferrari but the chances of getting one are minimal – and such underpinnings of political thought are nonsensical.

In much more pragmatic terms it is also easier for Private Enterprise to increase from 140,000 units per year to 210,000 or a 50% increase in their output than to increase HA house building output from 40,000 to 110,000 or a 175% increase.

What is also known is the UK Private Enterprise has the known capacity to build 210,000 units a year and they have got close to that figure in the past while housing associations record output is just 40,000 and thus there is huge doubt, or delusion, that housing associations have the capacity – even if given greater freedoms and greater subsidy!

Many of the expected business maxims have also been given by the NHF on behalf of its member housing associations that caused for example a rush down the blind alley or merger, merger, merger and economies of scale that, not unsurprisingly, failed to materialise as a whole range of excuses have been given such as cultural differences as to why these mergers never materialised – and after huge wasted cost on the ‘consultants’ who sold this route as easy of taking candy off a baby to very willing Pragmatists in the housing association sector!

Finally, housing associations at a social rent level are 13% higher than council landlords social rent levels and both types of social landlord have enjoyed inflation busting increases for decades (RPI+0.5%, CPI+1%, etc) yet in the case of housing associations who have always been allowed to build, this largesse of public funding (HB) failed to result in the house building output it could and arguably should have done.

Or, housing associations had the money and the freedom in the past yet didn’t build with the very same factors you are now calling for so why should government (or anyone outside of the HA sector) believe you will do this now?

I would welcome 110,000 more HA units per year and any genuine pragmatist would welcome that even at a combination of 13% higher than council’s social rent levels or even at 50% higher rather than 110,000 more at private rent levels.  I don’t have any prejudicial aversion to housing associations per se, yet I do object strongly to their delusions and their irrelevance in terms of solving the housing crisis of under supply.