F@#k social, go private

“So what exactly is a social housing organisation?”.  This is a question that I have frankly never been asked by any of my mates, I can only guess the reason being:

  1. They don’t care
  2. They already know
  3. They really don’t care

It’s probably a combination of 1 and 3, but I can’t be certain.  As alluded to in my previous post, the primary role of social housing organisations is to provide cheap accommodation to those who can’t afford to buy or rent from the private market.  In addition they provide formal and informal support, money advice, employment advice and generally help out those in a bit of a bind.  They are vastly undervalued by both the general public and Central Government but continue to provide invaluable services, help and support to those individuals/families who most people don’t give a flying monkey’s about.

Despite its good work the sector is coming under increasing pressure from a number of sides.  Already mentioned welfare reforms are biting, but long term attitude changes, both in the mind of the public but also politicians, are also having an effect.A Century of Home Ownership

Social housing been on a downward trend for the best part of 3 decades (notice the pretty info-graphic courtesy of the ONS). Partly this is due to the aspiration of most of you ugly buggers to buy a house.  But it is also the result of a sustained assault on the sector by both Labour and the Conservatives (Lib Dems you get a mention when you form your own Government).

Funding for social housing from Central Government has nosedived (note the not so pretty graph).  Expectations however have risen.  In the 2008-11 programme 155,000 properties were expected to be built with £8.4billion of central Government investment.  In the 2015-18 programme 165,000 homes are expeted to be built with just £1.7billion.Capital Funding

Why does this matter? Well it is changing the shape of social housing organisations, the ones people know nothing about and don’t care about.  As funding dries up the sector has to look at other means of funding new builds.

A prime example is London and Quadrant, a 70,000 unit social landlord based in London.  In 2012/13 it spent whopping £147million on affordable housing.  Impressive, but it spent even more on homes to sell and rent on the private market.  To be precise £225million.  Granted they operate in London so this probably got them a leaky 1 bed apartment in Soho, but the figures tell a very distinct story.  Sell private to fund social.

Well more precisely use public finance, a lot of re-investment from surplus (profit to you and me) and a lot of borrowing from private lenders to fund social.  This is being replicated across the sector.  Essentially the sector is cross-subsidising and mortgaging itself to the hilt in order to build.  Great in the short term and brilliant for the Government, as it’s getting much more for less.  But the stakes are high and not everyone is able to play the game.  Step forward Cosmopolitan Housing Group and their utter failure in attempting to get in on the student accommodation market.

In order to tap into private finances social housing organisations are having to become more business like and a lot more professional.  Moving further and further from their historical routes.  Whilst modernisation is welcome (and desperately needed in some cases, just look at some of their websites) the sector is undergoing something of a soul searching period.  Many now refer to themselves as social businesses or enterprises rather than solely social housing organisations.  Personally I don’t care what they call themselves as long as they continue providing the houses and support millions desperately need.

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2 thoughts on “F@#k social, go private

  1. Pingback: Big is beautiful (again) | The Housing Blog

  2. Pingback: Don’t Despair, Organise | The Housing Blog

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