Housing Associations – Wolves in sheep’s clothing

The UK housing regulator gives housing associations their correct name of PRIVATE Registered Providers with good reason – they are private landlords and private companies.


Today I read that one of the largest housing associations in the country in London & Quadrant (L&Q) has announced plans for 25,000 private rented homes that are mostly in London and other high rent areas.

25,000 PRIVATELY rented homes from a (so-called) social landlord!

Housing Associations operate and develop properties for their own profit while council landlords are social and operate and develop for local housing need.

This L&Q announcement is the epitome of that very simple fact – a fact housing associations do all they can to conceal.

30 years ago over 20% of UK housing was under public ownership with council landlords.  Today it is down to around 5% an so three-quarters of housing that was under public ownership and could be used for social housing need has now gone in a generation to the private housing associations or to private ownership.

That is a monumental change and has massive impacts on how the country provides for those most in vulnerable housing need which is a cornerstone of any democracy or first-world country to ensure is provided.  Now the UK cannot do that as 95% of housing in the UK is in private hands and operates according to profit rather than to need.

Housing associations like to say they are social landlords a term that has only been around 30 years as in 1988 over 6 in every 7 social housing properties were council houses.  Now housing associations have around 2.7 million of the 4.3 million total social housing stock and circa 2 in every 3 social housing properties.

Housing associations receive around 13% more per property in housing benefit at an average £94.22 per week to council landlords £82.94 according to the latest housing benefit figures.  If housing associations received the same levels of housing benefit as council landlords then the housing benefit bill would reduce by £1.1 billion per year.

The taxpayer is paying £1.1 billion more per year in revenue subsidy to these private registered providers through housing benefit and that figure will only increase each year.

Yet are their properties any better than council ones?  As over 1.6 million of them or 60% are former council properties that is unlikely and a strong argument that the taxpayer is being conned can be made.

The emergence of housing associations as the main social (sic) housing provider came about for one simple reason – local council’s were prohibited from borrowing to improve their existing housing stock or to develop new housing by central government.

The rationale was such borrowing while making perfect economic sense over the medium and longer term went onto the Public Sector Borrowing Requirement (PSBR) in the immediate and short-term.  It as a political rationale and a political decision not an economic one that today sees the crisis of under supply and costs today’s taxpayer hugely.

The same 100% logical economic rationale for local councils borrowing to build new social and public sector housing still holds good today as even very laissez faire economists admit in the SHOUT report and even the BBC admits this to be the case that I reported on here.

YET because of the PSBR factor local councils were effectively forced to transfer their housing to (mostly) newly created housing associations in what was called Large Scale Voluntary Transfer or LSVT though there was nothing voluntary about it and, more importantly, it transferred public ownership of rented housing to private ownership in housing associations.

Housing associations because they are private companies by definition meant their borrowings were not included on the PUBLIC Sector Borrowing Requirement.

Housing Associations are private and always have been as the LSVT and PSBR discussion makes clear and unambiguous  … yet that hasn’t stopped them from citing at every turn they are charitable and social and hoodwinking all and sundry that they are deserving of the benefits of being classed as social landlords and quasi-public sector ones, whilst being able to act in exactly the same way as private landlords.

Ever since 2010 when the Tory government cut what is wrongly called ‘subsidy’ to social landlords by 60% we have seen housing associations become increasingly private in outlook and less and less social.  In crude yet valid terms the government is giving us less money so let’s take more from the social tenant by consequence.

The increase in intermediate housing model which rapidly increased with the affordable (sic) rent model are examples of this screw the tenant for all you can operational activity.  Now with the L&Q announcement we see this in all its capitalist glory of bugger the lower rent paying social tenant let’s go direct and in huge numbers to maximise our rental stream.

I am not making any political judgements on that or arguing either way whether housing associations need to or should do that – I am merely stating what IS happening as the L&Q announcement epitomises.  Housing Associations as private organisations are free to do what they wish because they are private organisations and I hasten to add it is NOT all of the 1500 or so UK housing associations who are doing this.

It is a tiny majority of mostly London-based housing associations -the G15 cabal  – the largest 15 housing associations in London who are doing this of which L&Q is one.  Yet while the G15 having just 15 out of 1500 may appear to be just 1% of housing associations those 15 private housing associations account for 550,000 properties and 21% of all HA properties  and have a combined turnover of £4.6 billion per year.

It is these housing associations who are chasing the money, who are being anti-social not just asocial and who are giving every housing association the reputation of being overtly private ‘money-grabbing bastards.’  Reputation and perception are two extremely important business issues and just ask Gerald Ratner if you are foolish to not consider their importance.

The L&Q announcement of the choice of a purportedly social landlord choosing to develop 25,000 houses for private rent and to take advantage of their bottom line first, second and third reveals what housing associations are in PRIVATE Registered Providers.

Doubtless some will offer up the one bad apple defence and many LSVT’s will rightly claim as they only operate in one locale and therefore do include local housing need and do not chase the tenant money through widescale private renting options.  Yet the die has been cast and all housing associations will be seen as the private and private and profit focused organisations they have been all along.

Even if L&Q were the only ‘bad apple’ that reputation would spread to all housing associations yet L&Q are not the only one.

We had Kate Davies the CEO of Notting Hill Housing Association trying to justify that less than 10% of its developments over the past 7 years have been for social rent and that in that time NHHA has reduced its social rent capacity by 15%.

We have had the National Housing Federation openly stating they want 120,000 new units of which precisely ZERO are for social rent yet forever claiming to be social when they are not.  The NHF have 554 members out of the 1500+ housing associations just 35% yet they speak on behalf of the housing association ‘sector’ while many believe they are merely the mouthpiece and puppet of the G15 and focus solely on the perverse London housing issues that do not affect the 87% of UK housing outside the capital.  The NHF is as privately focused as you can be.

It is little surprise that the NHF choose to focus exclusively on one single housing crisis of under supply when their principal members simply want to be the new feodary – the feudal landlords of the 21st century.  Around 80%+ of all housing associations do not develop new properties and yet the NHF exclusively focus on build build build and propagating the myth they they have the capacity to address the under supply of housing which they do not.

The NHF do not care a jot that housing benefit policy change in the benefit cap will mean that all fully occupied housing association properties are financially toxic to the benefit tenant and despite over 70% of current HA tenants being on housing benefit.  Just allocate to the non benefit tenant when the 270,000 existing properties have new tenants each year and refuse the benefit tenant, which they can as they are private landlords.

Socially dumping the benefit tenant is not their problem and is a problem for councils to house as Genesis HA CEO Mark Hadden said.  Yet when for example we find that in 36 of the 39 local authority areas which comprise the North West have no council housing, a whopping 93%, we begin to see the horrors and consequences of transferring public ownership of housing to the private ownership with housing associations has.  One such impact could be 500,000 more homeless children per year as a result as HA’s refuse to take the benefit tenant.

The benefit cap hammers the nail in the coffin of affordability and social purpose of housing association properties – the shit hitting the fan in simple terms – that will soon be there for all to see and by which time it will of course be too late.

It is policies such as the benefit cap that in essence force housing associations to abandon social rent, social purpose and the social housing model and a strong argument exists for that.  However, housing associations have been more than complicit in this in not challenging such policies whilst having eyes like cartoon characters with $ signs in them at the prospect of just how much more than can charge the London tenant with announcements such as 25,000 in the private rented sector – kerching!!

Tenants are expendable.  They are mere customers who cannot chop and change provider when something goes wrong or they dislike.  Tenants can like it or lump it is the distinctly asocial and feodaric position they are now taking.  That same principle was found in Severn Vale Housing Association the former Tewkesbury council landlord (see here) who now have as policy that they will not allocate a property to anyone under 36 years of age as a result of another HB policy change in the shared accommodation rate or SAR they announced last year.

How housing associations are RESPONDING TO the many change in housing benefit entitlement that we wrongly call ‘welfare reform’ is the issue.  Severn Vale if they were still the council landlord would NOT be able to impose sweeping allocation policy changes such as banning all under 36 if they were still a council landlord.  Yet as a housing association they can … and yet another example of HA’s putting their profits ahead of local housing need.

Yet housing associations are also negligent in their housing view as only this week saw David Orr issue his 12 pronouncements and priorities for housing associations this year which while include the LHA Maxima Cap housing benefit change for supported housing saw him miss the fact the same policy will affect 500,000+ pensioners in general needs social housing!  Such is the state of the London-only focus of the National (sic) Housing Federation they fail to see this consequence as it does NOT affect pensioners in London in general needs social housing!

The love of money being the root of all evil could have been specifically written for the National Housing Federation and its G15 puppet masters.

Social landlords? No.  Housing associations are rapidly and incessantly becoming the new feudal landlords obsessed with profits and not giving a damn about the tenant as the L&Q announcement today illustrates just the latest in a long line of travelling down the privateering route.

I genuinely have sympathy for the many housing associations and particularly their staff who do have a social conscience, who do believe in the social housing model and all it means and for the many who do go above and beyond to be social in all its meanings.  They are and will be all seen as the same as the money grabbing bastards who run L&Q and other G15 housing associations (and other non London based non embers of the G15 too.)

Yet my real concern is for the social tenant who typically does need to claim housing benefit an regardless of because of low pay, being disabled or sick or unemployed or even a pensioner.  It is 3,181,638 social housing tenants who are HB recipients as well as an unknown number who are on Universal Credit and receive its version of housing benefit who are getting shafted by the wolf in sheep’s clothing who are PRIVATE Registered Providers.  That number will also increase as these so called social landlords increasingly become ever more private landlords in their operations and focus.

The feudal housing association landlords have won the day and the naturally fit with the Tory government’s stance of eradicating the social housing model founded in the 1948 Welfare State.  Yet despite huge evidence that more and far deeper cuts and more damage has been inflicted to the housing solution the Welfare State create than to the health creation in the NHS, the general public shows little concern about it.

Very soon Where will my children live and Where will my grandchildren live  and even Where will my ailing parents now live will become phrases spoken by the same couldn’t care less general public with increasing frequency and exasperation and anger.

And it will only be then that the taxpayer will really start to say why with all the ‘welfare cuts’ is this costing me more and more an why are so many more people begging on the streets and why does my local council say they can only afford to collects the bins once a month.

The current and apparently unstoppable direction of travel of what we misname as social housing adversely affects the tenant, the private tenant, the home owner, the taxpayer, the local council and the UK government finances.  It is unchecked madness in societal, political and economic terms and housing associations are a major part of this obfuscation and problem and perhaps the biggest wolves dressed in wool that they love to pull over our eyes.


Appearances can be deceptive

13 thoughts on “Housing Associations – Wolves in sheep’s clothing

  1. Totally agree with your argument there Joe. It needs to asked why is the ‘sector’ still under the delusion that HAs are non-for-profits? Its time to look pass the veneer of social mission and the hogwash of corporate social responsibility.

  2. Morning Joe and Happy New Year

    I haven’t the time to study your text and therefore go into detail in my reply as I am just a little busy making MONEY !!! After all I have to latest Porsche to pay for as well as all those lavish foreign holidays I take every year on the back the oppressed tenants?!…..SERIOUSLY???

    I think you really must be stuck for something to say if you think YOUR comments should be taken seriously? I may be conceited in thinking that your comment, “I genuinely have sympathy for the many housing associations and particularly their staff who do have a social conscience, who do believe in the social housing model and all it means and for the many who do go above and beyond to be social in all its meanings” might just apply to me? (No I don’t drive a Porsche or have lavish holidays abroad) however it appears that I will be , “seen as the same as the money grabbing bastards who run L&Q”?

    Now I don’t know enough about L&Q (and I suspect you don’t either) to know whether they are, “money grabbing bastards” or not and it is up to others to say whether they think I am, but it appears you ARE saying that (or encouraging your readers to do so) and at that I take offence.Hang me from the nearest tree if you like but I see now harm in providing houses for a different market and using the ‘profits’ (should that be surpluses?) to help provide the housing which the Government does not give enough money to provide for.

    I think you mix up feudal with charity and I appreciate that ‘charity’ is seen as a bad word in some circles but for me it speaks of kindness and love. There are so many complex issues which you have stirred into your broth and sprinkled with a generous measure of misinformation.

    My Association was started with real money from real people, not handouts from Government. You could say that those people were motivated by greed (when they waved goodbye forever to that money) and wanted to create a cash cow for no good purpose? Oh yes they took the money from Government when it came on stream later and who can blame them, but was this about filling their boots and building their property empire or fiefdom? So are you going to stand there and tell me (in the absence of adequate alternatives from Government) that I can’t build a private rented development with the sole purpose of helping to provide private profit to help fund our main stream charitable work because I and my shareholders (The £1 non profit receiving ones) are wanting to stuff the rest of our tenants? You stand on a soap box in front of my tenants and tell them that you want to stop me from doing that in order to pursue some idealist socialist dream (presumable based on the concept of ‘Jam tomorrow?).

    This is a very poor piece of work. As for me, I’d prefer to be seen as a sheep in wolf’s clothing.

    1. You really should read the full text as if for no other reason how can you say it is a very poor piece of work if you haven’t?

      You will see I ‘categorise’ the L&Qs of this world and their antithesis – yes just two types when there are dozens if not scores of different types of HA landlord operating in at least 340 different English markets alone as there is at least one distinct housing ‘market’ in every LA.
      Idealist socialist dream? Not at all and do you apply that errant simplistic nonsense to the SHOUT report which says that the council housing model is best for the county in economic terms and having been drafted by a self-confessed laissez faire very right wing economist?
      I agree with you that I touch on a great many issues and I emphasise ‘touch on’ these interrelated issues which are necessary and the piece could have been tens ties its length, yet as you admit you haven’t read its comparatively short length …it only proves my oft stated point that aversion to any form of criticism in the HA sector raises its head once more.
      L&Q has chosen to seek 25,000 (!!!!!) PRS units – 25,000 – which would make its PRS stock holding alone higher than all but 18 of the 1500 housing associations total stock – dwell on that when the HA sector extols ad nauseam how social it is.
      I genuinely welcome your initial anger at the piece and my use of the word genuine here and in the piece is genuinely meant. The ‘sector’ should get angry, bloody angry in fact and perhaps reflect on what the ‘sector’ has become – the exact same issue as the reputational risk I touch on that this blatant private move by L&Q takes to a whole new level.
      Like any blog aimed at the ‘sector’ (which I do not accept exists such is the very diverse nature of UK social housing provision) the aim is to promote discussion and to shake the hell out of the malaise of ‘housing think’ that pervades and if the initial reaction of some if how dare you then so be it.
      Yet I am sure you will see that I discuss housing issues that rarely get raised – the 83% of English social housing and 87% of GB social housing that is not London with its hugely perverse housing conditions that dominate housing discussion – and which the housing conditions you describe for your organisation are so far removed from. Regrettably where London (and G15!) leads invariably many others follow in this so-called sector, a sector which is set in its ways and often each individual of HA believe errantly that their localised housing conditions reflect the entirety of social housing.

  3. I appreciate the discussion provoking but you do yourself a disservice in swiping so far and wide. I have not responded by reading in depth? Let’s start with paragraph 1. PRIVATE Registered Providers may be a correct name for you…but not for me. My organisation is labeled with the title and I don’t like it. I prefer Charitable Housing Association but the Government calls the shots and we have to put up with it until another title is dreamt up. My organisation and by extension of this the rest of the social housing providers are not Private Landlords or Private Companies in the way which is ‘implied’. It does of course depend on what you mean by “Private” or “Company” (because that itself is a complex legal issue discussion of which could easily switch people off) It is generally understood by the public that “Private” means for private profit (and when I say profit I mean for that individual’s personal gain rather than be ploughed back into wider public good which is what housing associations do). “Company” generates thoughts of greedy directors filling their pockets which is not the case with housing associations, certainly not mine as I like to continue to stress!

    1. You can take issue with the “Private” tag yet it is the official title of housing associations and I have included this at the end of the article above.

      Housing Associations are not public sector organisations and compared to the only other social landlords in councils who are public sector, HA’s ARE able to borrow to develop and can choose to set up huge PRS arms as L&Q has done – with all the very adverse consequences that has for social housing provision.

      There are huge subtleties as to what is and is not private and many complex obfuscating structures that can be put in place to make a private company appear to be the quasi-public entities that HA’s like to claim to be – yet if it walks like a duck is how everyone will correctly perceive the L&Q 25,000 PRS ‘construct.’

      L&Q’s PRS only part at 25,000 properties makes just that PRS part bigger than 99% of housing associations in the UK. It is a seismic shift with huge implications. So to say it is not how you perceive ‘private’ or ‘company’ or to try to dismiss my article as ‘very poor’ for such reasons is just another excuse and typical one of housing blaming the messenger and failing to discuss the reality which is under its nose and which ‘housing’ wants at all costs NOT to discuss or even become known.

      For stating this, which of course is my opinion albeit evidenced, I am accused of ‘swiping far and wide’ and ‘a very poor article’ for which the only substantiation is you do not LIKE the term ‘private’ can only be seen as an aversion to debate – and brings in personal slights which neither of us want and as previous discussions we have had confirm is what we both seek to avoid.

      I am going to follow this post up on that specific subject – the absence of debate and openly, honestly and at times painfully will be issues raised. There is no forum or arena within housing for this and you are one of a tiny few who does and has debated issues I have raised here previously which is to your credit.

      1. It is the oldest trick in the book to set up a ‘not for profit’ organisation but pay yourself a huge salary.

        Council housing was ultimately the responsibility of elected officials who we could get rid of. Wherei s the accountability now?

        Finally, ditching council housing was political in another way too. The Tories regard/ed council housing as a way of Labour councils buying votes. To break that link, they brought in HA’s

  4. Private Registered Providers (of Social Rented Housing) is a title which has been placed on us by Government for their own ends. I have to live with that but it doesn’t define my organisation. Instead of Private, I would suggest,”Independent”.What’s in a name eh? The way you use the word invites comparison with the PRS and you know that’s not fair.

    I seem to recall David Cameron standing up in Parliament last year (or was it 2015?) and stating that Housing associations were part of the Public Sector but that was part of a separate bullying exercise and of course the ONS appear to agree which is why we have been temporarily shifted onto the PSBR. As you are aware legislation is being put into place to correct that and put us back into the Private Sector.
    Your analogy with the argument of the duck is not a good one as the story of The Ugly Duckling demonstrates, however if it is Government that stops Councils borrowing for the purpose of building new homes (and this has been in the news recently) then turn your anger that way and not on those who sought to find a way out of the log jam by moving Council stock into new forms of management. So L&Q can borrow? So why is that a problem only if they choose some of that to go towards market rented stock which might produce more resources long term to build more affordable housing or at least help safeguard what they have already (which I don’t think is going to diminish in stock size?). I don’t know what you mean about “complex obfuscating structures” and why that should in itself be bad. My organisation is registered with the Financial Conduct Authority (ooo don’t they regulate companies which means that they must be dodgy) and all that side of things is very difficult to get your head around because its written in legalese. Sorry but that’s the Law!

    You have still not explained why L&Q should not build for the Market Rented Sector.or why this represents (an unspecified effect) a seismic shift? Maybe then I would be in a position to appreciate better your position? Your evidence base may be true in individual parts but put together in such a way as to come to a wrong outcome in my opinion which is why I offer this alternative. I have plenty to say about this but I have other calls on my time which are more pressing such as administering to meet my tenant’s needs (or as you suggest everyone else believes, feathering my nest just like L&Q).

    Paragraphs 2,3&4 – What is social? Here we go again. Just because your definition is clearly not the same as mine doesn’t make you correct. To use your analogy, if it looks like a council tenant and is in a system which is regulated like a council tenant and if a council tenant is deemed to be a social tenant then we are talking about the same thing. The word, “profit” is used loosely and to convey a negative impression. Housing Associations make surpluses which (unlike profits in the general sense) are not distributed to shareholders but instead put back into the communities they serve. Local authorities I presume do the same?

    Paragraphs 5&6 – If true then this is mixing in the use of Right to Buy which is a major discussion point itself and not one relevant to L&Q, but rather one to complain about to the Government.

    Paragraphs 7&8 – I was around when the term Social Housing was identified and I can’t think what the term was before then (was ir residual housing?) but it has nothing to do with the separate drift of Council stock joining the housing association movement (which of course has been around a lot longer than that)

    Paragraphs 9&10 – I have no idea if you are correct but I suggest that you may be comparing apples and pears since actions by the Labour Government where intended to create a pariity between Council and HA rents by lifting the former up and stabilising or dropping the latter. Its all gone a bit out of the window perhaps since 2012 but what’s the point.Councils are not generally building houses (don’t blame me, blame the Government) and HA’s are (using the extra revenue you identify to facilitate) What about the true PRS where the money paid in HB goes into private pockets?
    Paragraph 11 – “conned”…honestly…how…?

    Paragraphs 12 to 16 – No comment here apart from pointing out that Council tenants were given the choice to transfer. In some cases some voted to stay as Council. It wasn’t forced on them.
    Paragraph 17- What is the problem with citng our charitable status (i’m rather proud of ours) and you are plain wrong in saying that we can act, “exactly like Private Landlords (if by which you mean the PRS)” We are regulated for a start.

    Paragraphs 18 to 20 – Sorry you ARE making a political statement and a judgemental one too. Let’s leave the ‘buggery” argument for another day.

    I’ll leave it at that for the moment and have some breakfast

  5. Hi Joe. Sorry to jump on the bandwagon but I have to agree with the other commenters. L&Q diversifying into PRS is a great thing and more developers (private and social) should do it. I hope the white paper out soon will incentivise build to rent, as it would begin to tackle a lot of problems the housing sector has – it’s not cyclical like building for sale, so developers might be more confident to invest in modern methods of construction. It also would mean developers are incentivised to build as much and as quickly as possible in order to get their revenue stream, as opposed to building for sale, where delays in construction typically mean you can sell for an even higher price. Not to mention that large organisations typically make better landlords than buy to let investors. Personally I think it’s great that L&Q and many other housing associations are being trail blazers.

    On the “How do HAs justify more HB per property?” issue, you’ve answered the question yourself: it’s because they finance development. I hope to see borrowing caps lifted in the housing white paper so that councils can develop again. But I suspect that if they are allowed to build more, they will probably use the housing association model of cross subsidy too. Why? Because it works. And because we need more homes of every tenure to tackle housing need.

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