I was most heartened to read in Inside Housing today that a senior officer of Genesis has resigned on a point of principle following the decision of Genesis to focus its future development work on homes for sale, not for rent.
It takes great courage to take a principled stand by resigning one’s employment, especially at a time like this.
A couple of weeks ago there was an attack on housing association is in the Spectator magazine and in The Times. Channel 4 News also gave extensive coverage to the criticisms of the sector.
The attacks suggested that housing associations are the “true villains” of the housing crisis for not building enough homes, allegations of poor performance, and inflated salaries of chief executives. My criticism is that the large developers, the likes of Genesis, are not building enough homes with social rents. It is therefore should be no surprise that I take my hat off and salute the (former) manager at Genesis for her courage and principles.
David Orr, the chief executive of the National Housing Federation gave a characteristically robust defence of housing associations in the face of the media attacks. He is someone I greatly admire.
He referred to the fact that housing associations had built 40,000 homes, around one fifth of all new homes built during the last parliament, and that for every £1 of public investment into housing associations, associations themselves invested a further £6 of their own money.
My problem with the track record of large housing association is they’re building the wrong homes. As I have written on several occasions, building itself is not enough if they are not building homes with social rents.
When housing associations claim it is “their own money” they ignore the fact that the original surpluses generated by housing association will largely be down to homes originally developed with generous grant, and even when that was reduced, with high rents subsidised by working and unemployed tenants claiming housing benefit. Housing associations were forced to increase rents in order to service the loans from financial institutions. (Another way in which bankers are subsidised by public funds).
Housing benefit is a form of public subsidy, the wrong priority to my mind. I favour direct investment in bricks and mortar to reduce the need for high levels of revenue subsidy through housing benefit. But this is something that successive governments, back to the days of Margaret Thatcher, have failed to do. It has been short-term economics resulting in huge cost yesterday and today, and greater cost tomorrow.
An enquiry has been launched by MPs on the Communities and Local Government Committee that will look at, amongst other things, how housing associations use their surpluses. In the last fortnight, several housing associations have reported their surpluses for the year ending 31 March 2015. Affinity Sutton for example increased its surplus to £124 million from £75 million on the back of sale activity in London. Notting Hill Housing Trust reported a surplus of £121.3 million, up from £65.7 million the previous year. It generated £68.5 million from its first tranche of shared ownership sales while revenues from property sales increased from £49.4 million to £76.8 million over the same period.
This may be good news for finance directors and chief executives of these associations, but the homes that they are building are increasingly not available for rent for people on low and medium incomes.
(In defence of Affinity Sutton, they have recently announced that they will be renting some homes at living rent levels. This is to be welcomed and I hope others will follow suit, especially in places like Brighton and Hove.)
As I have written recently, the housing association world is in meltdown. I imagine that by the end of this Parliament the majority of large associations with no longer be regulated and will act, more and more, as private businesses.
The question is whether they will be able to retain their charitable status and whether it is appropriate that they do so if they are no longer achieving the charitable objectives set out by the founders.
in the meantime, I take encouragement that there are people in the social housing world who remain passionate and committed to housing with social rents.