Housing associations have had an uneasy relationship with the voluntary sector, despite being not-for-profit organisations and, in some cases, even registered as charities. A common criticism is that they do not do enough for their communities, given their financial strength. There is great hope that they might invest more in non-housing activities and use their spending power to buy goods and services from social enterprises and charities. But is criticism justified?
It is interesting to contrast the role of the Homes and Communities Agency, the regulator for housing associations, with that of the Charity Commission or the Office of the Regulator of Community Interest Companies. The chair of HCA’s regulation committee wrote recently that “our priority should be to protect social housing assets. This safeguards public investment, lenders and tenants.” By focusing on financial discipline, the HCA aims to maintain the social housing sector’s ability to borrow money to build more homes. Consequently, more scrutiny is placed on organisations delivering non-housing activities.
The chief executive of any housing association will tell you two external challenges keep them awake at night: the change to direct payments and the need for affordable housing stock. In the transition to universal credit, housing benefit will be paid direct to tenants. The principle is sound, but it will have a financial impact by making housing organisations dependent for rental income on a multitude of low-income customers – tenants – rather than the government. Bad debts are almost certain to rise, opening the door for the banks to renegotiate their debt agreements. A small rise in borrowing rates would have a large impact.
Many housing associations focus on tackling the shortfall of affordable housing. A lack of new housing leads to rising house prices. We shouldn’t be surprised, then, to find that community investment will tend to play second fiddle to house-building. Despite the constraints, I’ve been impressed by what is getting done. Many focus on house-building, but a significant minority are diversifying as social businesses. Trident Housing, for example, has rebranded as a social investment group.
Ironically, charities are faced by a regulator that offers relatively light financial scrutiny, whereas housing associations have one that is myopic in its attention to financial discipline. Housing associations need to be financially healthy, but the HCA should take the shackles off and unlock their ambition for being more than house-builders.
I have been particularly impressed by the PlaceShapers group, a network of about 100 housing associations dedicated to doing more in their communities, despite their regulator. These organisations are willing and able to build partnerships with charities and social enterprises. By creating closer ties, housing associations can meet the challenge to give people not only beds but also a reason to get out of them. But is the HCA listening?