Category Archives: Housing Associations

L&Q and THT talk takeover

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A big housing association is having talks about taking over a not quite as big housing association.

London-based L&Q has announced that it’s holding talks with Manchester-based Trafford Housing Trust (THT) around a possible acquisition.

If all goes according to plan, L&Q will acquire THT’s 9,000-home stock, adding to its already impressive collection of 90,000 properties.

With most of its homes existing in London and the South East, the THT takeover would give L&Q a strong foothold in the north.

Subject to due diligence, naturally, both HAs hope the deal will be completed in June, just in time for the summer. Tenants and other stakeholders will be consulted, and a five-year business plan will be developed.

According to L&Q and THT, the deal will unlock £4 billion of investment in the North West and see 20,000 new homes built over the next 10 years, half of which will be ‘affordable’, which is clearly not to be sniffed at.

L&Q’s group chief executive, David Montague, seems pleased with the way things are going: ‘L&Q has an ambitious plan to build 100,000 quality new homes over the next 10 years to tackle the national housing crisis. We see THT as a gateway to the North West, an area of outstanding growth that needs more high quality, affordable homes.’

Larry Gold, meanwhile, THT’s acting chief executive, said: ‘This is a unique creation that will be built on true partnership and the strength of our vision, and the people who will deliver it.

‘As part of L&Q, we’ll create significant social impact in the North West at scale and pace and strive to find solutions to the national housing crisis. We will deliver an extensive programme of new development and regeneration projects, as well as improving homes and services for our existing customers.’

And the two providers have history: a joint venture partnership launched in April 2017 has led to 679 new build starts with a further 1,493 planned.

Social landlords are building homes and boosting finances – yet are still being slammed. Why?

By Alistair McIntosh, HQN CEO

Associations are working harder than ever to bulk up financial strength and build more homes. So why are you getting criticised so much?

In many ways, you are trapped by a couple of paradoxes. To get stronger you may need to merge, and that means you deal with a wider set of people in many different places.

Can you keep them all happy? It’s a tall order. You try to build homes quickly and that means working with developers. Time and again their standards of building fall well short of what any reasonable person would expect.

All too often it’s the association that gets hammered as the developer runs for cover. Then you try to sell homes to subsidise rented ones. And those leaseholders go over every bill you send with a fine toothcomb, as is their right.

So, you wind up covering bigger areas than ever and managing the expectations of a wider demographic than you imagined you would. In many ways, that’s all good news.

But in the days of phone cameras and social media, everyone is a journalist. If you screw up, there is no hiding place. And the board and chief executive are usually the last to know. On top of this we have febrile politics. So Momentum and others are boosting tenant campaigns. And there’s no point whinging about this as that’s their job.

So, what do we do about it? That’s what our reputation management event in London this month will explore.

There is no doubt that we are losing the reputation battle. We’ve seen savage criticism from MPs, massive social media campaigns, tabloid exposes and brutal documentaries on UK and even Russian TV lambasting us. It’s painful to watch, regardless of the rights and wrongs of it.

The housing minister, Kit Malthouse, tells us he’s tired of being the post bag for complaints about his local associations. But he also praises L&Q for their honesty and determination to sort things out. That’s why we’ve invited L&Q to share their learning – good and bad – at this event.

Karen Buck will also tell you about her vigorous work over many years to make sure social and private landlords do the right thing for her constituents. All too often, it’s been an uphill struggle. What are her dos and don’ts?

This won’t be a day for the fainthearted. You’ll hear a lot of home truths. As you know, there are plenty of well-funded private landlords waiting in the wings to replace you. It’s essential that we recover our reputation to prove that councils, associations and ALMOs are the best option. We’ve a lot of ground to make up and our speakers will help you to do that.

Hosted by communications expert Helen Reynolds, our ‘Reputation rollercoaster – how to stay on track’ will cover:

  • How to build a trusted brand
  • Practice what you preach – clarity of mission and sticking to your values
  • Putting residents at the heart of decision making
  • The importance of engaged employees and a happy workforce
  • Stakeholder engagement strategies – working with politicians and the media
  • Making social media a friend not an enemy
  • Understanding where reputational risk comes from and how to deal with it

To learn more and to book, click here.

 

 

 

Towards a housing finance system that works

By Alistair McIntosh, CEO HQN

It’s baffling, isn’t it? You go to see a housing association and they tell you how hard it is to get social rents to stack up. And they’re right. Then you read the new Shelter report which says social housing pays for itself. And they’re right too. How can this be?

It’s because we are looking at everything the wrong way. Shelter is bringing in the savings to benefit bills from charging social rents instead of private rents. They are saying that this is how the Treasury should do its sums.

That’s how to get to the true costs and benefits. But this is not part and parcel of the viability appraisals done by individual associations. And for a very good reason. As things stand it doesn’t matter a jot. They stand or fall based on their own accounts, not those of the UK. This is what is leading to short-term every-man-for-himself thinking. It’s got to change. We must take the blinkers off. And we are not the only ones.

Hitachi is telling our government that they’d get things done faster if they just bit the bullet and nationalised big projects. Of course, they are talking about nuclear power stations. But there is something in this for us, too. If we are building new towns or doing a complex regeneration, it could be a good idea to get government to hold the ring. The risk is just too big for associations, councils or companies to take on by themselves. Something is bound to go wrong. It usually does. You will always hit technical problems that you didn’t foresee. That’s just the way it is. And if you are relying on profits from sales, that will come back to bite you at the worst time.

A few years ago, I was talking to some tenants on an estate that was going to be flattened. And, boy oh boy, did it have issues. Something needed to be done. The developers were promising to replace it with the New Jerusalem.

Yes, every tenant would get a splendid new home. It did look very exciting. What did I say? Don’t bother listening to these promises. The people making them will not be the ones delivering them down the line. There will be some type of cock-up and the plans will change.

It won’t be for the better. The risk would be a lot less if the state was in charge from the get-go. And of course it would bring in investors and experts to do the day to day lifting. If we gave tenants firm promises at the start we could break some logjams, couldn’t we?

So, for the really big stuff I think we do need to look to government. But most of the time councils and associations are the right answer. The Green Paper needs to make them more accountable. But how do we put them on a better financial footing? We need a new financial regime for housing.

At the moment we have a clash. Housing associations and councils struggle to put the money in place to build homes at social rents. It doesn’t stack up. Yet the Treasury should be crying out for them to save money and boost the economy. How do we get back on track?

First things first. The Treasury should run a check on the Shelter figures. They will be right as Capital Economics put them together and they are a top-notch outfit. But there is always room for debate on these things as there are so many assumptions about what happens and when. So knock the heads together and just agree a figure on the savings and use it to boost the grants to councils and associations today. That’s a quick fix.

But we also need to change how we do accounts for social housing. These need to show the savings to the benefits bill of low rents. And landlords must be compensated for this by the government so they can stay viable. According to the Shelter figures, there should be enough money in there to keep the landlords and the Treasury sweet.

Does this sound fanciful? Well, it’s the best I can do. And it’s a hell of a lot better than going on a roller coaster ride of relying on sales. You’re bound to come off at some point. It’s time for a fresh start. We will need to save money and boost the economy under Brexit. Cutting rents and building homes is a win-win. Go for it.

Landlords awash with dosh: But will it be enough?

By Alistair McIntosh, HQN CEO

Breaking Bad was a classic box set, wasn’t it? The hero of the hour was Walter White. He spent a lot of his time looking after huge piles of cash. My goodness, we do need him back, don’t we? Housing associations have exactly the same problem as he did. (Though I hasten to add that the money has come from bonds not drugs.)

There’s not a landlord in the country that isn’t ready for the Credit Crunch of yore. We are awash with dosh. That’s great as it shows we are learning from the past. But is liquidity enough to see us through the next crisis? Well, it’s a start but there’s still a lot of hazards to watch out for.

The dream scenario is that you have cash when no one else does. So you can snap up sites and blocks for a song. It’s a good idea and it worked like stink for some last time out.

But will it go so well now? You could be outbid by firms from stronger economies. The power of the Dollar or Euro or Renminbi might swat your peely-wally Pound aside. Then what do you? You could be sitting on cash that earns less in interest than you are paying for it. And inflation could be eating away at it, too. Your cash will be evaporating. Not so much the Angel’s share but the special place in Hell’s share.

But there’s plenty of things you could do with the money. You could bail out your suppliers. Some of them are bound to run short. They just can’t raise money as easily as associations. You need to keep the builders and IT firms going so you could have no option other than to prop them up. And if we go back to austerity the axe will fall on benefits. That means you might need to help tenants get by. Also, it could be the time to go easy on the shared owners. And there’s more. What if we get the riots the police are warning us about? Will you have to spend more money on security? The list goes on.

What’s the problem? Well, if you don’t do what you said with the cash from the bond, that could affect your credit rating. That means when you ask for more money the price goes up. The business just isn’t as strong as you told them it would be. And there’s a penalty for that.

Of course I am painting a bleak picture. Yes, it is tremendous that associations have gone out and got cash. But please do keep stress testing. Too many of us thought that market sales or private rents were the answer to everything. They’re not. As Newton said, for every action there is an equal and opposite reaction.

In other words, whatever you do has an upside and a downside.  And on no account blame Brexit for your ills. That won’t wash. You must have noticed Nigel Farage’s long campaign. If you didn’t have it on the radar then we’ve got to ask a big question. What else are you missing? Don’t fall into that trap.

 

Over 630,000 living in ‘hazardous conditions’, report

A major report has revealed that 631,000 people in England are living in ‘hazardous conditions’.

In response to 2017’s Grenfell Tower disaster, and commissioned by homelessness charity Shelter, ‘A Vision for Social Housing’ consulted over 31,000 people from across the country and brought together 16 commissioners from across the political spectrum.

The report reveals that 3.1 million people in England need a social home – and of the 1.27m in greatest need: 631,000 live in hazardous conditions; 240,000 live in overcrowded accommodation; 194,00 live with ill health or disability; 128,000 are rough sleeping and hidden; and 79,900 are homeless and in temporary accommodation.

Asking ‘what is the future of social housing’, the authors state that the country is ‘feeling the effects of 40 years of failure in housing policy’ and specifically blame:

  • A failure to build enough homes. Over the past five years, housebuilding has averaged 166,000 a year, yet government wants to deliver 300,000 homes a year
  • Huge waiting lists for social homes. Today, 277,000 people are homeless
  • The explosion in the numbers renting privately, unable to buy or access social housing
  • Huge rises in welfare costs to government, driven by more people renting privately at higher costs

According to the report, if the crisis is to be solved, 3m new social homes must be built over the next 20 years.

The commission warns that without a ‘radically different approach’ the country faces a future in which:

  • A generation of young families will be trapped renting privately for their whole lives, while more and more will face living in dangerous accommodation or going into debt
  • By 2040, as many as one-third of 60-year-olds could be renting privately, facing unaffordable rent increases or eviction at any point
  • £billions more in welfare costs will be paid to private landlords due to a lack of more affordable social housing
  • Over the next 20 years, hundreds of thousands more people will be forced into homelessness by insecure tenancies and sky-high housing costs

Nadine, a private renter who contributed to the report, lives with her teenage daughter and works two jobs – yet still struggles to keep up with the rent. She said: ‘My rent is over half my monthly income, so that’s where most of my money goes. It’s hard to afford other things we need. I am cutting back and doing the best I can, but there are times we can’t live on the money we’ve got.

‘We budget on our food and it’s very rare that I buy anything full price. I shop around to take advantage of all the vouchers and deals I can get.

‘No one should have to spend more than a third of their income on rent. If they are going to set a minimum wage, then there should be places you can afford to rent on that income – how can it be a living wage if you can’t find anywhere to live on it?’

One of those who contributed to the report’s recommendations on reforming social renting was Rob Gershon, Lead of the HQN Residents’ Network, who said: ‘I’ve always thought of myself as incredibly lucky to be a social housing tenant… On the two occasions I’ve come to rely on social housing, it has been there to make sure my family has had somewhere to live.’

The commission recommends:

  • Setting clearer standards
  • Ensuring speedier redress for individual complaints
  • Proactive enforcement of regulation to protect social renters
  • Giving residents a voice in landlord governance and decision-making
  • Giving residents a voice in decisions made by national, regional, and local government

Click here to download the full report.

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