Largest housing associations in London call for review of regulatory structure

There is a strong case for reviewing the regulatory structure for housing associations, the g15 group of London’s largest associations has said.

In a submission to the Communities and Local Government committee's inquiry into the sector’s viability and sustainability, the group said on the issue of the Regulation Committee of the Homes & Communities Agency: “The role of the HCA in the financial health and confidence in the housing sector is vital. However, it will need to adapt to its approach to respond to this time of considerable change.

“We believe there is a strong case for reviewing the current regulatory system: this would enable the smaller number of housing associations which deliver the vast majority of new homes built by the sector, to increase their capacity. This would retain focus on protecting public investment, but also create freedoms for financially sound HAs to build more.”

The group argued that there was scope for a more flexible approach in which the HCA focused its resources on those organisations which presented the highest risk or poorest performance, “enabling high performing, developing HAs greater freedoms”.

These could be used to explore new models for developing homes, including innovative partnerships with the private sector, and rise to the challenges of the new operating environment, the submission said.

“There is of course a fine balance but the example of Cosmopolitan HA, which was a rare exception, has led to a risk averse culture. This needs rebalancing.”

The submission’s other key points were:

• Housing association business model and surpluses: “We believe that understanding how our business models work (using surpluses to provide essential finance for delivering new housing) will help the Committee to understand the impact of the Right to Buy and proposals from the recent Budget. Ultimately, the g15 are net borrowers every year i.e. collectively we spend more than our surpluses and borrow more on top from various lenders, to fund the development of new homes. Smaller surpluses will result in reduced supply of new homes from housing associations.”
• The Right to Buy: “g15 members welcome help for our residents to buy a home of their own but the design of this policy will be critical to its success. We want to work closely with the Government to ensure that it does not decrease the amount of affordable housing in London. A critical aspect to this will be ensuring that HAs receive 100% cash reimbursement for any discount given to tenants buying a home, and that there are exemptions to protect certain properties, particularly those that were built without public funding.”
• Proposals in the Budget: “the Government has set the HA sector a big challenge by cutting rents. We are being asked to deliver development with less funding. This is a challenge we will meet by becoming even more efficient and carefully scrutinising all of our spending. We are determined to keep developing but it is highly likely that the number of affordable homes for rent will be a smaller proportion of overall building.”
• Welfare changes: “so far the majority of our tenants have coped with changes to benefits. It is very hard to predict the exact impact; however the new welfare cap and changes to tax credits will affect many more residents.”

The g15’s submission can be accessed here. The group owns one in ten homes and build one in four of all new homes the capital. In March 2015 the group’s members collectively had ambitions to deliver at least 93,000 homes over the next ten years.