Penfold Associates

Reviewing a Conference 4,000 miles away may seem an odd pastime but modern technology – and especially the news flow from the Conference website and Inside Housing – makes it possible, so why not?

Logistically and socially Manchester seems to have been a great success. Travel will have been easier for the majority of delegates. Judging by comments on Twitter, the hotels, bars and restaurants were up to scratch and so were the Conference and Exhibition facilities.

The overall mood of the Conference seems to have been one of frustrated energy. People can see that we are facing a housing crisis which shows every sign of worsening. They have the desire, energy, ideas and skills to do more about it but there are barriers in the way. Many of those barriers stem from the economic recession but people in the sector know that housing investment can help deal with that recession. Many see the lack of a comprehensive and cohesive strategy from Government as a major barrier.

Paul Johnson from the Institute of Fiscal Studies reminded delegates that the majority of public spending cuts were still to come and would continue beyond the 2015 General Election. He said the best prospect for the sector was to argue that cheaper borrowing backed by the Government would allow housing investment to benefit the economy as a whole. CIH President, Robin Lawler, echoed this: “Housing is, and can be, the silver bullet for the economy. The scale of the crisis demands us to stretch ourselves, to question assumptions and be prepared to contest received wisdoms. All with one purpose – to ensure that housing’s offer to the nation is the best it can possibly be”.

Gavin Smart, CIH Director of Policy and Practice, said sector-led solutions were vital to boosting the number of new homes but it was necessary to consider new models and products including building for market rent and finance through REITs. But he also warned: “Subsidised housing needs subsidy. It doesn’t work without it” – subsidy could come from grant, through Government investment agencies taking a stake in new schemes or through Government guarantees. Alison Thain, of Fabrick Housing Group, also argued that associations must put together balanced portfolios that include homes for market and sub-market rent as well as social housing. She said this would help attract the bond market and other investors. Mick Kent of Bromford Housing Group which is piloting direct payment of Housing Benefit to tenants warned that this change threatens income streams and threatens investor confidence.

Julian Ashby, Chair of the HCA’s Regulation Committee, made it clear that there will be a more rigorous approach to economic regulation. He said associations must demonstrate to the HCA that they are managing risk and offering value for money. He warned that diversification brought new risks, that innovative financing schemes were not always the best option, that volatile financial markets were a threat, and that welfare reform was a “triple whammy” bringing uncertain rent receipts, higher collection costs and even more expensive borrowing.

The new UK Housing Review Briefing Paper was launched at the Conference and gives more detail on the extent of the UK’s housing crisis. While affordability problems for first-time buyers have eased slightly, mortgage availability and large deposits are big problems. Transactions are still only running at half the level of five years ago and there are relatively few new entrants to the market. Grainia Long, CIH Chief Executive, welcomed the NewBuy and FirstBuy initiatives but said more action was needed to have a significant impact on the problem and aid economic recovery. She also pointed to IMF and EU pressures for the UK Government to do more to stimulate the economy through remedying defects in the housing market. She pointed to the rapid impact of housing investment compared with other infrastructure projects.

Grant Shapps portrayed himself as a Housing Minister “batting for housing”. He effectively admitted that the Government’s housing strategy published last year was not the final product and Government is looking for ways to get more homes built. He recognized housing’s contribution to GDP and the sector’s addition of £15Bn to the Government’s £4.5Bn allocation to the Affordable Homes Programme. He defended the new under-occupation rules for Housing Benefit: “Using taxpayers’ money to fund empty rooms is part of the problem. It’s right to use taxpayers’ money to help people on housing waiting lists”. Significantly, the Minister said housing would be ”an absolutely essential component” of the next Comprehensive Spending Review. DCLG chief and head of the Civil Service Sir Bob Kerslake claimed housing had become a Government priority but said it was up to the sector to come forward with fresh ideas on how to build more homes – and providers should not expect the Treasury to pay for it. He admitted, too, that Ministers tend to think first of the private sector and the challenge to the rest of the housing world is “to show that it can bring something to the party”. He particularly indicated the need to get the most out of housing association balance sheets.

Well, there we are, then. There are huge housing problems and the housing market is not functioning properly. The economy is struggling to show any signs of growth. There is more austerity still to come. Housing investment, though, can actually do a lot to kick-start the economy. It is up to people in the sector to keep making the case for that. It is also up to people in the sector to work together and with others – using existing models and new ones – to make as much progress as possible in these difficult times.