Housing association law and policy continues to develop and evolve. Primarily this is because housing is such a political football, successive governments want to intervene in the housing market for different reasons. One way of doing this is to tweak the way that housing associations behave in the housing market. Adjustments to the legal and regulatory frameworks are tools that government can use to carry out such interventions. Although it has to be said that not always do the different strands of government act in unison.
A further tool is to change the funding regime for investment into affordable housing. Since it still is housing associations which primarily benefit from the Homes England (HE) funding programmes, shifts in the way the regime works impacts significantly on housing association behaviour. Take for example the recent shift to New Ways of Working (NWOW) by HE. This has led to a series of bidding rounds by housing associations to capture as much funding over the next four years (and possibly much longer depending on continued government funding) to support their development programmes. HE heralds this as a vanguard approach at forming long-term strategic relationships and a shift away from its current approach of continuous market engagement where individual associations submit funding requests for projects which tended to favour home owners and rent to buy products.
There has been a rush by housing associations to gain NWOW status. Gaining the status and getting funding means building to the priorities of government with an emphasis on affordable housing including rent and even social rent as well as supporting homes ownership products. This is how government can shift behaviour. Although admittedly the shift is in part due to the pressure from the sector itself on the need for affordable rent funding. If we take the example of ‘social rent’ as a priority such project can only be funded in localities which have been designated by government based upon the premise that there is at least £30 per week difference between the market rent and the social rent for those areas. Thus very little social rented housing will be built in places other than the designated localities which favour the South East of England.
A yet further tool at the disposal of government is the informal regulatory pressure. At the end of February the Regulator of Social Housing warned the sector to prepare for a no deal Brexit. A letter from the Chief Executive of the Regulator identified six key areas of risks, including the threat of a housing market crash, the lack of availability of building materials for repairs, interest rate rises and labour shortages. The tone of the letter identifying these issues was risk averse. Of course preparing for a no deal Brexit makes good business sense regardless of the Regulator’s entreaties. But the tone of the letter does suggest the regulator does wish associations to dial back their risk appetites. Is the government speaking behind the regulator? One would assume it is. The letter quoted the requirement of the governance and financial viability standard.
This surely though is at odds with the wish of HE who wants associations to build more (as a result of the Prime Minister’s announcement of more funding in October 2018), which inevitably means taking on more risk. Dialling back development would potentially place further deflationary force to the housing market. Perhaps in part this is an inevitable consequence of separating regulation from investment. There seems to be inherent contradiction in policy ambitions. But if government is behind (surely) these shifts in emphasis there should be a relatively consistent approach adopted by the two agencies.
Housing Associations: a legal handbook £50 / ISBN 9781912273157 is available to buy online and from Marston Book Services: 01235 465577