CIH Conference 2015 – Was the timing wrong?

It was in no way the fault of the organisers but the 2015 CIH Conference probably came at the wrong time. Everyone wanted to know what the new Government is going to do but the detail will come in the July Budget and the Autumn Spending Review. All that is known comes from the Conservatives’ election manifesto and the Queen’s Speech.

Housing Minister Brandon Lewis certainly had nothing to add. Most delegates were probably unreceptive to his charm offensive on the Right to Buy. He claimed the policy supports aspiration and called upon housing associations not to frustrate their tenants’ desire for owner-occupation. He reiterated that there would be one-for-one replacement and claimed the revitalized RTB for council housing has achieved this – his evidence seems different from most reports! More usefully, he said: “We need to build more housing that is affordable, whether people want to build it or rent it.” He said we need to diversify the way we build homes and cited the Government’s commitment to new-build and self-build as examples. He also reiterated the promise to release more publicly owned land for building. However, he could make no promise about the future scale of the Affordable Homes Programme and said the Chancellor was rightly cautious about lifting the HRA borrowing cap. The Minister could not answer whether grant-free homes would escape the RTB and could not promise that no one would become homeless because of the next round of welfare reforms. Beyond this, Lewis merely listed housing items from the manifesto – stressing the emphasis on home ownership – and reiterated the news that building starts are at the highest level since 2007 with 570,000 completions since April 2010 of which 260,000 were affordable. He did not relate these figures to the boost in output that is desperately needed.

CIH Chief Executive Terrie Alafat said she was energised and enthused by being at the Conference and hoped the sector would continue to innovate. She had picked up that some delegates felt there needed to be more discussion on upgrading the country’s existing housing stock. She said CIH is ready to engage with Government over RTB and other policy issues and would bring evidence forward. She said the discussion needed to include how to achieve increased supply of housing and more choice for tenants. She warned of unexpected damage that could come in the Chancellor’s July emergency Budget beyond RTB, the lower benefits cap and the cut in tax credits that we already know about.

Linking the housing crisis and the need for efficient use of public money, there was renewed debate about the fundamental balance between subsidising people through housing benefit and subsidising bricks and mortar through capital grants to get more homes built. This was raised by Tim Montgomerie of the ConservativeHome blog. He said a lot of Tory MPs had come back to Westminster with heightened awareness of housing problems from talking to voters. He also said private polling by the Conservative Party in the run-up to the election had shown voters’ concerns. Montgomerie said it was necessary to recognise that immigration links to housing need and is not just a UKIP issue. He also recognized that relationship breakdown is another cause of rising housing demand. He called for a 10-year house building strategy and said there should be encouragement for older home-owners to down-size. Montgomerie also warned that Government would fail to deliver the Northern Powerhouse if it took benefits cuts and tax credit reduction too far.

There was some revealing discussion about diversification in the sector. Adam Challis of Jones Lang LaSalle reported that 50% of housing associations are involved in market sale, 35% are building for private rent, and 13.4% have student housing. Only 7.5% have no private business at all. His research showed that only 40% engage in commercial activity with the primary objective of cross-subsidising affordable housing – raising the issue of why the others do it? Challis warned that diversification necessitates staying on top of the risks and that if it fails to do so the sector runs the risk of losing its “golden ticket of cheap debt on the capital markets. The fact that no housing association has ever defaulted is very important, he said. Linked to this, Mick Warner of the HCA said asset and liabilities registers are vital if an organisation gets into a Cosmopolitan situation. They provide information essential to a rescuing body. Failing to have a proper asset and liabilities register could cause a down-grade. HCA’s chief executive, Matthew Bailes, repeated the message that their prime purpose is to prevent social housing assets being sold off because of financial failure.

Interesting times!