Penfold Associates

It is ironic that in the week following introduction of “new freedoms” there should be a major furore over the performance of housing associations and the quality of the new housing they are providing. While this has blown up in London it has implications for the sector throughout the country.

We should remember that this de-regulation is neither visionary nor idealistic. It certainly does not reflect society’s regard for the sector. The changes are a pragmatic reaction to housing associations’ re-designation by the Office for National Statistics as public bodies – thereby adding £60Bn to the public debt overnight.

There are significant changes. These particularly relate to disposals of property, securing loans against housing stock, and constitutional changes such as mergers and restructuring. It is no longer necessary to obtain consent from the Homes and Communities Agency for these actions, although there are notification requirements. Also, there are new limits on HCA powers to appoint or remove managers or officers. Particularly applicable to LSVT bodies, there will be restrictions on the level of local authority influence.

However, housing associations remain regulated bodies. The HCA may no longer have to sign off the individual actions listed above but it still has responsibility for ensuring that financial viability and governance standards are met. This means they will be interested in the implications of decisions and in how decisions are made. The HCA has been quick to point out that the changes actually put more pressure on housing association boards by transferring risk from the HCA to those boards.

Perhaps the greatest danger is that some players could see more in the new freedoms than is really there. Some might be tempted to see the impact as at last making housing associations truly part of the private sector with the purely commercial ethos that goes with it. The NHF has reiterated that there is no suggestion that associations will move away from their underlying social purpose. That may or may not be true, but the political flak in London suggests that some key decision-makers see it as a real danger and are very concerned about current delivery standards. Those perceptions are important and they are not just limited to London. They are likely to impact on the reception that will be given to arguments about real freedoms – about rent-setting especially. The whole sector needs to be aware of the danger.

Kim Penfold
April 2017