Government reforms raise issues on how Britain’s poorest will be housed in the future

Stonewater, a leading UK social housing provider, has said that the Government’s new housing reforms which aim to make housing associations more efficient and business-like, will fundamentally change the way associations meet housing needs, raising issues on how the nation’s poorest will be housed in the future.

Giving oral evidence in Westminster to the Department for Communities and Local Government Select Committee’s (DCLG) inquiry into housing associations and Right to Buy - which enables social housing tenants to buy the home they are living in at a significant discount - Stonewater Deputy Chief Executive Nicholas Harris said:

“The Government has called on the sector to become more commercially minded and efficient and while this is very much supported by Stonewater and many other housing associations, reforms such as Right to Buy, Pay to Stay, changes to S106 agreements, and the 1% reduction in social housing rents, will force the pace and direction of the sector and require substantial structural change. This shift in focus will prevent associations from housing poorer parts of the community, as we have done in the past, which will create new challenges for the regulator and for policymakers.”

Stonewater’s views reflect issues raised last month at a round table discussion the organisation led in advance of the Government’s Housing Bill and planned sector reforms which was attended by MP Clive Betts, Chair of the DCLG Select Committee, and other housing association chief executives.

“We are concerned that a combination of the benefits cap reduction, decrease in the number of social rents, and reduction in the number of affordable homes available will make housing unaffordable for a significant number of people. It could leave the less well-off unable to afford housing, particularly in high-demand, high-value parts of the country like the South,” said Nicholas Harris. “As their nature shifts, housing associations will meet a growing and genuine need for affordable housing for relatively higher income earners and will provide the opportunity to diversify products to meet their homeownership aspirations. It does so at the expense of those at the poorest end of the spectrum. The question of where they will go and the impact on other social care budgets will be a significant one for the Government and local authorities.”

Stonewater, which manages and owns 30,000 homes across England, supports the Government’s Pay to Stay scheme (where social housing tenants earning over £30,000 (£40,000 in London) pay a higher rent to stay in their home) but would also like measures in place to help people in the £30,000-£40,000 income bracket who are unlikely to be able to afford market rent in expensive housing areas of the country.

“We await detail on the Government’s plans to taper the impact of Pay to Stay for those households earning just over £30,000. However, it is clear that in higher-value areas outside of London the £30,000 threshold is set too low, which will penalise families unable to afford market rents, and is not the stated purpose of the policy,” said Nicholas Harris.

While the affordable housing provider welcomes Government plans to increase the opportunities for homeownership, the impact of Right to Buy which requires housing associations to sell homes at significant discounts, combined with the 1% cut in social housing rents, will reduce the number of homes housing providers can afford to build in the future and where they build them.

“Our current position is that our build programme will have to be scaled down given the overall reduction in financial capacity brought about by rent reduction. Providing one-for-one replacements in areas with higher land prices and greater demand may also prove unsustainable. We would want to maximise value and build replacement homes, where land prices are lower and there is less competition for land,” said Nicholas Harris. “Over time, this may see a withdrawal of housing associations from certain areas of the country, particularly the south-east of England, and the onus to house those unable to afford market rates increasingly falling on local authorities.”

For housing associations that are geographically restricted, he believes there would be little option to provide one-for-one replacements in cheaper other parts of the country. “Combined with the additional cost burdens of reducing rents and other recently announced measures, these smaller housing associations may find it difficult to replace their stock and could become unviable, leading to mergers and fewer, larger providers.”

Housing associations build around 45,000 affordable homes and 5,000 private homes across the country every year. According to Nicholas Harris, organisations like Stonewater are keen to work with all levels of government to bring their expertise and considerable investment potential together to tackle the housing crisis. It’s vital however, that they have the means to deliver the right mix of affordable homes in parts of the country where they are needed most.