Social Housing in 2018

Following another thought-provoking year in the housing sector, we have summarised some of the key activity and learnings from 2018, with details of several important announcements and reports, which have helped to shape our ever-evolving housing sector.

1. Findings from Grenfell

The fire at Grenfell took place on 14 June 2017, yet the follow up reports that have emerged from this tragedy continued to shape the social housing sector throughout the whole of 2018. A significant finding of the inquiry was that the cladding material used on Grenfell tower was up to five grades lower than it should have been in order to comply with basic standards of building guidance. A later inquiry found that there were 228 other buildings where similar cladding failed safety tests.  Shortly after, in May 2018, Dame Judith Hackitt released her review of the current state of building regulations in England and was criticised by some for failing to call for a ban on combustible cladding, despite Theresa May later pledging £400 million to pay for its removal.

Fifteen months after the fire took place, survivors welcomed a total ban on combustible cladding and the inquiry continues with phase two, which began on 12 December 2018. The aftermath of Grenfell will certainly continue to shape the housing sector in 2019 as ensuring the safety of tenants becomes a top priority for Registered Providers.

2. MOT style changes to Gas Servicing

A number of amendments were made to the Gas Safety Regulations on 6^th April 2018, including the introduction of a new clause to Regulation 36. Before such changes, providers were regularly completing Landlord Gas Safety Records (LGSRs) early in order to ensure compliance with the 12 month time frame, which in turn meant they were undertaking more service visits than required by statutory obligations.

The new changes, introduced in April 2018, mean that landlords can now undertake LGSRs within a period of 10-12 months after the previous check and, following completion of the check, the LGSR could be treated as if it had been carried out on the last day of the 12 month period of validity. This is just like the case with motor vehicles. This is important for the social housing sector, since this added flexibility to gas servicing programmes allows for both time, cost and efficiency savings for all Registered Providers who chose to utilise it. It also provides continuity for tenants who can expect their LGSR appointment the same time every year.

3. The Social Housing Green Paper

The sector anticipated Social Housing Green Paper, published on the 14^th August 2018, highlighted the government’s plans of a new deal for social housing. The paper detailed several key statements, which included; government plans to build over 300,000 new homes within the next 10 years with affordability being recognised and incorporated into home ownership schemes; residents being given a voice in decision making; the future of social housing involving a reformed regulation process; and, the government providing £400 million to make social housing safe for both tenants and landlords through fire safety reforms.

The government made a number of claims in the report which, if delivered, could have a marked impact on the sector. Yet, with Brexit looming and government resources seemingly already being stretched, the question remains as to whether this Green Paper really does mark the start of a “new deal” for social housing.

4. Consumer Regulation Review

As summer drew to a close, the Regulator of Social Housing released the consumer regulation review, which identified changes that Registered Providers should be aware of. Providers must ensure that they are aware that contracting out the delivery of property compliance, such as gas and fire safety, does not move the responsibility in meeting legislation.

The review made note of the significant increase in providers referring themselves to the Regulator, which is believed to be motivated by the Grenfell Fire incident, which caused providers to take pro-active actions to ensure tenant safety. As strong advocates of open and honest dialogue with the regulator, it is our opinion that this will only serve to benefit all stakeholders moving forward.

5. Opportunity to increase diversity?

In October, Inside Housing released research that discovered that 44 housing association chief executives had retired since 2015. The research reviewed the extent to which this had been utilised as an opportunity to increase diversity and inclusivity in the sector. Some view the significant increase in retirements as an opportunity for the sector to diversify in terms of gender and ethnic equality, whilst others question the relationship between retirement and the recent rent reduction and sector changes.

Chris Spencer, our Head of People Resourcing and in-house expert, viewed this paper as a much needed opportunity to educate the sector on the need for diversification in CEO positions. We pride ourselves in being experts at recruiting underrepresented groups because we know what accomplished and qualified candidates look like, regardless of gender or ethnicity.

6. Sector Risk Profile

On 11^th October, the Regulator released the sector risk profile, summarising the main risks facing the social housing sector and the recommended actions providers should be taking to manage these risks. The data release highlighted the influence that Grenfell has had on the social housing sector, since providers are now investing significantly more in fire safety measures as the awareness of fire risk has increased.

Boards are responsible for the safety of their tenants and therefore they must ensure that they take into account the needs of a range of stakeholders whilst continuing to deliver affordable housing. The paper highlighted the need for the social housing sector to consider these risks in everyday procedures.

7. Private Registered Providers (PRPs) increased the amount of social housing stock that they own

The statistical data return, also published in October 2018, highlighted that PRPs have increased the amount of social housing stock they own by 1.1% since 2017, the highest percentage growth rate since the first statistical data return was released. In addition, there was a record-breaking volume of transfers of social housing stock into Private Registered Providers ownership,

The statistical data return is fundamental for providers and stakeholders to remain confident in the role the Regulator plays in the social housing sector. In the next year, it is important that the sector continues to grow to meet the ever-increasing demand for social housing.

8. Total value of social housing sector market deals rose by 70%

Research by the magazine Social Housing, informed us that the social housing sector has significantly increased its deal activity, frequency and size, and that 12 months of almost continuous funding has resulted in a 70% rise in the total value of housing deals.

Some have suggested that this increase in financial activity has demonstrated greater confidence in the housing market and is therefore a positive position for the sector to be moving towards. Others have indicated this is an example of organisations preparing for the possibility of restricted funding activity in light of political changes ahead of Brexit.

9. 2018 Housing Budget

On 29^th October, the Chancellor delivered his Housing Budget speech, announcing a potential 9000 additional homes in the next few years. In addition, his speech informed the housing sector of several important changes including; an extra £1.7 billion in Universal Credit Work Allowances; a 2-year extension of the Help to Buy scheme; local authority borrowing caps being lifted and an extra £500 million being made available for the Housing Infrastructure fund.

Some may argue that the autumn budget offered a solution for the housing sector to improve supply and affordability in housing stock, however others argue that the changes are not sufficient to fix the housing market. The year 2019 may provide answers to whether the announcements will lead to the extensive changes needed in the sector.

10. 2% increase in net additional dwellings

The government released their net additional dwellings data in 2018 and found that the year saw a 2% increase in supply, providing a positive outlook for future housing construction, since it provides assurance that future housing supply will come closer to meeting real world demand. There is risk that future supply will be put at risk when policies such as the Help to Buy scheme end, therefore it will be interesting to see if the positive trajectory continues into 2019.

Despite the housing sector having a long way to go in order to solve the housing crisis, the positive changes that have been seen in 2018 are demonstrative of a housing sector that is well positioned to achieve the housing targets set out by government.

Our consultancy team understand the incredibly complex operating environment that exists within the social housing sector but we continue to deliver expert led solutions to your problems. We look forward to the challenges 2019 will undoubtedly bring.