The Regulator of Social Housing has just published its latest Sector Risk Profile, which is the Regulator’s view of the most significant risks to ongoing compliance with its standards.
October’s analysis laid bare some of the stark challenges facing Registered Providers. The triple threat of inflation driving spiralling build costs, increased borrowing rates and instability in income means have come together to land housing associations with impossible choices.
The Regulator was blunt:
“Against this backdrop, providers are looking to undertake substantial investment in existing stock to deliver against quality, building safety, and decarbonisation commitments, as well as continuing to invest in much needed new housing supply.”
Reduced financial headroom is likely to reduce some providers’ capacity to cope with further financial shock and some boards will need to make difficult decisions to maintain financial resilience while delivering essential services.”
We face the very real prospect that some established providers could breach their financial covenants, and possibly even fail.
So, what can be done to rescue the situation?
Bringing forward public land for develop has got to be part of the solution. Strategic land gazumping which has helped fuel the house price bubble could be tackled through a land commission to make sure that good building happens in the right places.
While the public purse is looking pretty threadbare, there remains a compelling argument for a generous programme of capital subsidy which helps accelerate building and drive-up quality so that homes cost less to run. Adopting housing into the national infrastructure plan would create jobs, save on the benefits bill and put carbon reduction targets within our grasp.
Changing the regulatory regime to make it easier for institutional investment to be channelled into social housing would also help. No one wants to see risky deals like Westmoreland proliferate, but would it really be so bad to allow pension funds looking for stable, long-term returns to help deliver much needed new homes?
We can’t keep tinkering at the edges and expecting the step change we need. It’s time to be bold on housing and for Government to act in the national interest or future generations will never forgive us.
Carli Harper-Penman
Carli is a strategy and communications expert who has spent most of her career in-house helping businesses with social purpose become more operationally effective, grow and be heard by policy makers.
