moving up a gear: new challenges for housing associations The Smith Institute The Smith Institute is an independent think tank that has been set up to look at issues which flow from the changing relationship between social values and economic imperatives. If you would like to know more about the Smith Institute please write to: new challenges for housing associations Edited by Denise Chevin The Director The Smith Institute 3rd Floor 52 Grosvenor Gardens London SW1W 0AW Telephone +44 (0)20 7823 4240 Fax +44 (0)20 7823 4823 Email [email protected] Website www.smith-institute.org.uk Registered Charity No. 1062967 2008 Designed and produced by Owen & Owen THE SMITH INSTITUTE moving up a gear: new challenges for housing associations Edited by Denise Chevin Published by the Smith Institute ISBN 1 905370 32 6 This report, like all Smith Institute monographs, represents the views of the authors and not those of the Smith Institute. © The Smith Institute 2008 THE SMITH INSTITUTE Contents Preface Wilf Stevenson, Director, Smith Institute 3 Introduction Denise Chevin, Editor of Building 5 Chapter 1: Housing policy and the role of housing associations Andy Love MP, Co-chair of the All-party Group on Homelessness & Housing Need 12 Chapter 2: New landscapes in affordable housing Peter Marsh, Deputy Chief Executive of the Housing Corporation 20 Chapter 3: Mutual respect to deliver the communities we want David Orr, Chief Executive of the National Housing Federation 28 Chapter 4: From meeting need to matching housing aspirations David Cowans, Group Chief Executive of Places for People 36 Chapter 5: Community engagement and tenant empowerment Richard Clark OBE, Chief Executive of Midland Heart 44 Chapter 6: Government reforms and incentivising housing associations Tony Shoults, former Chief Executive of the Metropolitan Housing Partnership 54 Chapter 7: The London context Tom Titherington, Group Business Development Director at the Hyde Group 64 Chapter 8: Re-regulating social housing Professor Martin Cave, Director of the Centre for Management under 74 Regulation at the University of Warwick Chapter 9: Developing new forms of funding Richard Parker, Partner at PricewaterhouseCoopers 80 Chapter 10: Forming new housing partnerships for a step change in delivery Stephen Trusler, Strategy Director of Wates Living Space 88 Chapter 11: Delivering good design Richard Simmons, Chief Executive, and Dominic Church, Senior Policy Adviser, 96 at the Commission for Architecture & the Built Environment 2 THE SMITH INSTITUTE Preface Wilf Stevenson, Director, Smith Institute The Smith Institute is an independent think tank which has been set up to undertake research and education in issues that flow from the changing relationship between social values and economic imperatives. In recent years the institute has centred its work on the policy implications arising from the interactions of equality, enterprise and equity. Affordable housing is at the top of the political agenda, with the government aiming to achieve a considerable increase in the building of affordable homes over the next three years, to 70,000 a year (including a 50% rise in new social rented homes), with extra funding to promote mixed-income communities, eco-homes and greater housing choice. In addition, ministers have pledged to bring all existing social housing up to a decent standard by 2010 and to reform housing-related welfare support to tackle benefit dependency and worklessness – which is concentrated in the social rented sector. Housing associations, which are the largest social landlords and the main suppliers of new social rented and shared-ownership properties, are central to the success of this ambitious housing programme. Without their co-operation and support, the government is unlikely to meet its housing targets. The housing association sector has expanded year on year since the 1980s under the auspices of the housing stock transfer programme, and has now overtaken local councils as the largest group of social landlords. Many of the big housing associations are lead partners in major regeneration developments and most are actively engaged in neighbourhood renewal projects and “place-making” initiatives with their local council. However, the sector is far from homogenous and the size and reach of housing associations varies enormously. Although recipients of government grants and regulated by public agencies, housing associations are not creatures of central or local government. Most are independent charities with a long history of housing management and local community activity. Against the backcloth of major changes in the affordable housing market, such as the creation of the new Homes & Communities Agency, reforms to the housing subsidy system and a new social housing regulator (Oftenant), this collection of essays debate what potential opportunities and risks lie ahead for the sector. The focus is on the future roles and performance of housing associations and how the sector can adapt and grow. The authors also show how housing associations in different ways can help shape the 3 THE SMITH INSTITUTE future, not least in developing new approaches to funding affordable housing and improving partnerships with both local government and the private sector. Most importantly, this monograph demonstrates that the sector is changing and has fresh ideas about how to meet the complex housing challenges that face us all. The Smith Institute thanks Denise Chevin (editor of Building magazine) for agreeing to edit this collection of essays and gratefully acknowledges the support of the Metropolitan Housing Trust, Places for People and PricewaterhouseCoopers LLP towards this publication and the associated seminar. 4 THE SMITH INSTITUTE Introduction Denise Chevin, Editor of Building This monograph on housing associations could not be more timely. Examining the role and the future of housing associations is critical now for three key reasons. First, the acute shortage of housing and the need for an urgent remedy is one of the most pressing issues on the political agenda. Gordon Brown has pledged to build 3 million new homes by 2020, including large increases in the number of affordable homes for rent and shared ownership, and as the largest provider and developer of social housing, it is essential that housing associations step up to the plate. Second, the investment and regulatory framework under which housing associations operate is set for a radical overhaul. The rules of the game by which housing associations play will change next April, when the provisions set down in the new Housing & Regeneration Bill should come into force. The Housing Corporation, which has been both the public banker and the regulator for housing associations, will be merged with English Partnerships to form the Homes & Communities Agency, and with this may come a new funding regime. Meanwhile, the regulatory role is to be taken over by a new agency – the Office for Tenants & Social Landlords (Oftenant). In addition to regulating housing associations as the Housing Corporation did, it will give a powerful new voice to housing association tenants. As Professor Martin Cave explains in his chapter, a bigger role for housing associations in the provision of community services will become enshrined in law – along with, on paper at least, the muscle to force housing associations and councils to work more effectively together. And third, the sector is going through a period of consolidation and structural change that the proposals in the Housing & Regeneration Bill will only serve to accelerate. At present, fewer than 20 housing associations together own more than a third of the total housing association stock of 2.2 million social houses, and fewer than 50 have the capacity to engage in major developments. So at one end of the spectrum there are the small local organisations with a handful of properties, whilst at the other end are the mega-landlords heading towards 100,000 homes, operating on a national basis, with divisions that produce homes for sale and private rent. This loss of homogeneity makes it increasingly difficult for the sector to speak with a single voice – the needs and priorities of the two types of organisation are so different. This divergence of the sector into the very large and the small brings its own tensions, not 5 THE SMITH INSTITUTE least the debate as to whether big necessarily means better; a point raised by Peter Marsh, deputy chief executive of the Housing Corporation. “RSLs need to be of sufficient size to achieve economies of scale,” he says; “we must avoid replacing local public monopolies with national private ones.” So while on the one hand housing associations have never had so much opportunity, the uncertainties and changes they face could not be greater. In addition to this already brimming cauldron, there is for the first time in decades the prospect of more competition for government funding from councils, who are being encouraged to build affordable homes again, as well as the private sector. And all new housing has to be built to more exacting standards of sustainability. The papers in this monograph examine this shifting policy landscape for housing associations, and in doing so raise a number of fundamental issues. Is the new regulatory framework the right one? Will it provide a barrier to delivery rather than oiling its machinery, as some of the authors suggest? Or are housing associations simply showing a characteristic allergy to regulation? Furthermore, are we heading for a two-tier sector, with the nationals doing all the development and the rest specialising in housing management? And if we are to increase greatly the volume of social housing being built, how is it going to be paid for? What comes across loud and clear in a number of the chapters is the growing mistrust, even at times antipathy that exists between the sector and the government, and the tensions this is creating. Both sides appear to want the same thing: to build more homes, to create thriving mixed communities that help to pull the poorest in society out of poverty, and to improve the services they offer their tenants and the efficiency of their organisations.