So what should social housing do now…Covid-19 and all that

By Mark Seaborn, Managing Director of Pennington Choices

Much has changed already. But I suspect we have only experienced the tip of the total ‘change’ iceberg that the current crisis represents. There is no shortage of commentators providing incite as to what this might mean around our use of technology, how we work and interact and what this might mean for all of us. So what might the near term future for social housing look like and what should social landlords (of all types) be doing about it?

The impact on the social housing supply chain will be substantial. Probably worse than the era following the financial crash of 2008. Expect some suppliers to go bust. Expect them to struggle to deliver operationally. The period of highest financial risk for suppliers is not now – it’s later in the year when we have started to get back to some sense of normality and the government support is switched off. Understanding the risk profile of each of your key suppliers should be high up your operational planning agenda. If you want to keep them, then use the flexibility that Government has provided around the usual procurement rules to do so. If not. Expect casualties. In the longer term it is entirely foreseeable that we will see consolidation with stronger firms acquiring weaker ones, so expect less choice in the market and consequentially less influence over how suppliers respond to your needs.

Of course it’s not just commercial entities that can acquire suppliers. After the 2008 financial crash we saw a steady trickle of social landlords either setting up their own in-house operations or acquiring suppliers of services relevant to social landlords. Some of these actions were about securing the supply chain, some about taking advantage of the opportunity to acquire at a reduced value, while a much smaller number were part of a commercial diversification strategy. Whatever the driver relevant to you, at least evaluating the merits or otherwise of acquiring ‘supplier’ businesses whether in contract with you or not should be part of your strategic agenda at present. The presence of a clear strategic plan that provides appropriate context for any acquisition decision, is a ‘must have’ from both a regulatory and sound decision making perspective.

It is foreseeable that the housing market will be fairly stagnate for the duration of this crisis. Just like after 2008, we can anticipate that house builders will have immediate short term cash issues. While some may go bust and prejudice both social housing developments and S106 deals, it is likely to also present opportunity for social landlords. Fortune favours the brave, so says a Latin proverb so now is the time to be actively seeking to acquire stalled or completed development stock at a good discount. Yes, you might have to hold them empty for a while due to Covid-19, but we know that there is demand for good quality, well managed rented housing, so build it into your financial model, hold your nerve and recognise that these are long term assets you would be acquiring; which demand a long term investment mindset.

What has been most interesting to me over the last few weeks has been the widely differing ‘response’ of social landlords to the crisis. Notwithstanding what their senior leadership teams might otherwise tell their Boards, to the casual observer some would be in receipt of a decidedly ‘average’ end of term report card. While some others have smashed it out of the park. So why the difference? For me, there is a clear and obvious relationship between performance in this crisis and clarity of ‘Purpose’. Those organisations who are really clear as to what they are about, what they stand for and how they want to be remembered have been securing the top grades. None of us really know what our work worlds will look like in a years’ time. But we can probably all agree that it will be quite different. Those organisations with clarity of purpose will undoubtedly do better at navigating this journey and will ultimately prevail. So if your organisations ‘purpose’ is not clear – or just as importantly – compelling, then now is the time to remedy this. And fast.

How Pennington Choices can help…

At Pennington Choices we have over 20 years’ experience in providing consultancy services to clients of all sizes across a range of sectors including: social housing, property, healthcare and sports and leisure. We know what good looks like, and our clients can support this.

If you would like to find out more about how we can help, speak with our experts today by emailing consultancy@pennington.org.uk.

You can also find out more about how we are continuing to deliver during these exceptional times here.