After weeks of back and forth between the House of Lords and the House of Commons, the Housing and Planning Bill 2016 finally gained royal assent on the 12th May 2016. The effects will be broad and, yes, it will primarily be councils and council house tenants that will be affected, but there will be huge implications for housing associations as well, particularly when it comes to the Right to Buy and Pay to Stay schemes.
Right to Buy
It was just a year ago that the government reaffirmed their plans to extend Right to Buy to the 1.3 million currently living in housing association properties. For those that don’t know, Right to Buy is a scheme that allows council house tenants to buy their council house at a discounted price. By extending this scheme to housing associations, there were fears that that this would effectively discount the value of their stock, and this would impact how many replacement properties could be built for every house sold.
In actual fact, the scheme has been implemented on a voluntary basis for housing associations, with there being built-in flexibility about the types of property that could be made exempt from this scheme. In addition the government has confirmed it will cover the cost of the discount. The end result is that, all being well, Right to Buy could be somewhat of an opportunity for Housing Associations to build new homes and enable tenants to own their own home, all whilst retaining or increasing the size of their own stock.
If this sounds too good to be true then I applaud your cynicism because as with any scheme of this magnitude there are many potential pitfalls, the most obvious of which is how on earth is this going to be funded? In fact, the availability of the Right to Buy scheme will be dictated by what is available in the ‘pot’. If the scheme proves to be popular, too popular for the amount of money available, housing associations will be saddled with a levy of customers asking why they can’t buy their property and that’s going to negatively affect customer satisfaction.
There’s also the possibility that a number of Housing Associations, those which run a focused number of estates that are mostly social housing, will see their estates fragmented as residents take up the Right to Buy scheme. Of course this won’t be new for most associations, however for those that do see their estates become more fragmented than they’re used to, resource will have to be managed carefully, particularly when it comes to maintenance and repairs. It will therefore be imperative to understand and track which issues are most important to tenants.
Pay to Stay
Another key area of the Housing and Planning Bill that could affect Housing Associations is ‘Pay to Stay’. Being one of the more controversial elements of the bill, Pay to Stay is once again voluntary for Housing Associations. Essentially it states that any household earning over £30,000 (or £40,000 in London) should pay market rate rent, rather than discounted social rent rates. Again this could actually be an opportunity for some Housing Associations. In a year where Housing Associations are being asked to cut rent by 1%, again, the potential for additional income coming from those paying market rent could help retain capital that could be used for improvement of services or building new homes.
It also means that the needs of tenants as a whole are likely to morph over time as the social and demographic makeup of tenants changes. It is therefore crucial for Housing Associations to be aware of the needs of individual groups of people and to be able to adapt to feedback and insight as it emerges.
Of course the Housing and Planning Bill is just one side of the government’s fight against the housing crisis, and their apparent desire to make everyone a home owner isn’t looking to fade any time soon. At this point we’re still waiting to understand exactly how some of these policies will be implemented, however the one thing we do know is that there are changes coming, changes which it is important to be prepared for.
Jack has managed research for multiple housing associations – just get in touch if you’d like to speak to him more about this.
