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By Rob Chilton, Account Executive
The past twenty years have seen unprecedented change in the housing sector, not least in social housing. The social housing boom in the UK, prompted by inner-city slum clearances, were municipal corporation initiatives, mainly beginning before the war and continuing in the 1950s and 1960s. The largest and most famous examples in the UK being the Becontree estate in London and the Wythenshawe estate in Manchester.
The rate of council-house building slowed in the 1970s, and has continued to decline since then. Since ‘Right To Buy’ was introduced in the 1980’s, the amount of social housing available to the expanding population has decreased exponentially, as local authorities have lacked the wherewithal to replace homes bought by tenants under the scheme. Today, over one million people are on a social housing waiting list, and the demand continues to grow.
Aside from occasional new social housing developments, often funded by national government and delivered by arms-length management companies or housing associations, there is little appetite amongst developers to deliver social housing schemes. The ‘Affordable Housing’ requirement built into Council’s Section 106 agreements often only results in a tiny amount of social housing within larger schemes, and in practice is often substituted for a financial arrangement to ensure the viability of a development.
The halcyon days of local authorities building, owning, and managing all the social housing within their boundaries (and in the case of large cities, overspill estates beyond) are far behind us. Today, almost no housing is directly managed by local authorities. Although roughly half of social housing is still owned by councils, it is usually managed by arms-length local organisations, or by housing associations.
Despite some smaller housing associations struggling with the maintenance requirements of these vast swathes of housing estate (as local authorities did before the stock transfer boom of the 1990s/2000s), many larger housing associations have diversified their operations into general residential and retail development, expanding their financial base and the viability of their overall business. This has enabled them to inject the profits into the maintenance and improvement of creaking 20th century housing stock, and even deliver new social housing on a larger scale.
There has been a recent trend towards mergers of these hyper-local housing associations into larger concerns covering a wider area or acquisition by other, larger companies in other parts of the country. This economy of scale has inevitably improved the ability of these associations to cope with the downturn in public finances, and to grasp opportunities to invest in private residential and commercial schemes, in order to improve and expand their social housing stock.
Given the increasingly parlous financial position that local authorities find themselves in, it is now clear that one of the few remaining routes towards investment in high-quality social housing is in the coalescing of social housing associations into larger companies. The challenge will arise as to how local communities and their elected representatives are able to hold these more remote organisations to account, and ensure they do not lose sight of their core purpose.
As ever, time will tell….
If you would like to discuss the changing landscape of local government and how it might impact your council, business or local community, please get in touch.