Introduction

Over the course of May and June a range of stakeholders responded to the invitation to contribute to this project.

Responses came in two forms: tailored written submissions (the majority) and other papers and articles sent over that responders thought of as relevant. In addition a number of contributors made talking heads videos.

Also – during the project government announced a range of relevant policy changes. First the right to buy to include Housing Association owned homes was included in the Queen’s speech. And then, as part of the July 2015 emergency budget the following changes were tabled:

  • Social rents to be cut by 1% a year for the next four years and the ten year rent settlement shelved until 2020
  • Higher earning social housing tenants will have to pay market rents
  • Benefits to be frozen for four years, and
  • An intention to limit lifetime tenancies

As a result the Office of Budget Responsibility has issued a forecast stating that 14,000 fewer new homes will be built, due to the social rent cuts and a warning that the Office of National Statistics may reclassify HAs as public bodies and as such transfer around £60 billion of debt onto the public balance sheet.

Obviously these changes directly effect the area this project is investigating and, as is the case with the wider HA world, their implications are just beginning to be explored..

Summary of Responses

A range of responses were received representing something of a mixed bag that cannot really be considered to provide a comprehensive range of proposals. Only a few factored in the right to buy and none the later policy announcements (due to the timing of this announcement).

A useful summary of THT’s thinking can be found here.

Responses can be grouped into the following themes:

  • Changing the way rent levels are calculated, including submissions related to the recent proposals for: a Living Rent; means tested rents; and approaches that saw rent and support levels flex in response to a range of factors. Included in this category and worthy of note in itself is the idea of using market mechanisms to define rental levels.
  • Spinning out or devolving assets and so empowering communities. Proposals received suggested this could be done in a number of ways: through individual home ownership; and various forms of partial or full mutual ownership. Other “smart” ways of achieving this were suggested including individual and community sweat equity and the development of a community vulture fund to assist people to buy their own homes and then retain a portion of ownership for community benefit.
  • A range of different ways (generally long term in focus) to enrich and increase the value of assets (built and human) which then would have knock on impacts on rent levels charged and / or ownership. Ideas proposed included community collaboration around energy generation and usage, infrastructure investment to stimulate demand and therefore increase property values, and linkages to key worker employers to reduce rent levels and increase social benefit. All of these proposals require thinking and adoption at a level wider than just thinking about rent levels, but each has relevance to and impact on the debate about rental levels.
  • In addition two proposals were received for what might be called “alternative instruments”, namely the stimulation of an alternative currency to create local social and economic value and a loyalty card type scheme where tenants are rewarded with points, redeemable for home improvements, where they engage with activities to build their personal financial resilience.

One notable omission from papers submitted was the proposition that rents should be maximised in order to provide the highest level of resources to THT in order that it may deliver on its mission, whether that be realised through additional house building, poverty alleviation or community cohesion programmes.

A Little Meta-Analysis

Contributors provided some useful meta-analyses of the state of the macro social and economic environment surrounding social housing in the UK now and likely for the next decade or more. It is worth spending some time exploring these as they help set the scene within which decisions about rental policy will be set. In particular the papers submitted by Matt Leach and Lorraine Hart provide this and cover the following key points:

  • That an ageing population and the associated increasing service requirement and decreasing tax take will leave more and more tenants unable to pay their way or pay for non-state provided care. Within this context HAs will want to consider both their liabilities from and their obligations to this constituency.
  • That social mobility is decreasing and quality jobs available to middle income and middle class individuals are diminishing. This, alongside some welfare reform measures makes it increasingly likely that social housing will become increasingly the realm of disadvantaged and socially immobile individuals.
  • That welfare reforms are as much driven by the reality of seismic shifts in economic and social realms than they are by political ideology and that HAs would do well to focus on the bigger, longer term trends than on the latest shift in policy. With this in mind some of the commentary submitted suggests a focus on individual and collective ownership as a necessary and next logical step for Housing Associations.

Some Sensible Next Steps

The whole issue of setting rent levels opens up a more profound set of questions related to:

  • The overall vision and mission of THT
  • The direction of government policy in the short and medium term, and
  • Medium and long term macro economic and social trends.

Beginning to explore possible approaches to setting rent levels, while experiencing the political ground shifting under our feet, has led to a sense of needing to tackle this question at a much more profound level than the limited initial remit of this work allows for.

So as a headline next step THT should bundle this conversation into a wider review of its overall direction of travel.

In terms of immediate next steps the board needs to review which, if any, of these proposals they would like to explore further between July and December and then allocate staff time to work out what the practicalities and potential impacts of these would be on the organisation.

In addition, a pragmatic and powerful point was made by Lorraine Hart in her submission that a practical next step would be to audit, at a micro level, the physical and human assets that comprise THT’s world. It is only by doing this that the real value of assets that THT engages with can be understood and from this realistic and optimum rental levels be set, as well as optimal benefit to the beneficiaries be realised.