Grown Up Talk

Historically you’d barely have time to finish the “ue” in posing the question Does the sector provide Value For Money? when most housing associations would throw their toys out of the pram so violently you’d be amazed if those in the near vicinity got out unscathed. It is a reaction that has needed to change, and very gradually it is.

Play Time is Over

As businesses, housing associations rely on public funding for a very large proportion of the money that makes up their profits. Either directly from Central Government in Capital Grant, or indirectly via Housing Benefit/Universal Credit. Therefore it is not unreasonable for the public interest to be protected by a higher level of expectation regarding scrutiny over VFM than otherwise might be the case. It is an agenda we would do well to properly engage with. As in the long run damage to both the reputation of the sector in the eyes of the public, and of Government is at stake.

Whilst the Eye of Sauron attention of Government/the media has shifted from blaming housing associations for the housing crisis by not building enough, it is likely that the focus will once again return on what more we need to/why it’s all our fault. There are noises coming on VFM and the sector, ones we would be wise to heed as they offer risk, but also opportunity. Because it will be by engaging the agenda of Value For Money that the sector can own the teams of the debate and promote its own interests at the same time. The development of the VFM scorecard via a variety of organisations with the support of the DCLG is a welcome start in the process. Albeit with a feeling that the sector is looking to jump before being pushed*.

There are over 1,200 organisations doing essentially the same thing, inevitably some will be more efficient and provide better VFM than others

We are no longer the amateur-hour/slightly bent housing organisations that were set up in the 60s and 70s. Nor are we Local Authority housing departments. We cannot simply ignore outside scrutiny and hope it will go away and/or block it via meaningless bureaucracy. There are over 1,200 organisations doing essentially the same thing, inevitably some will be more efficient and provide better VFM than others. We need to recognise this and make improvements where necessary. The best way to do that is to have an methodology of measurement, which we currently lack. Something that ties into the legacy of crap benchmarking in the sector. But that’s a blog for another day.

Learning from History

Landlords must provide value for money – and they need to be able to evidence it.

As ever I’m not the first to write on this subject- check out Emma Maier’s piece in Inside Housing, as well as Mark Henderson’s, for further info/insight. In particular I agree with Emma when she notes that “Landlords must provide value for money – and they need to be able to evidence it”. The VFM Scorecard is potentially a way to achieve both this and to work more closely with Government. It increases the transparency of organisations within the sector. It gets on board with an element of the current Government’s agenda that is not a major impact on our finances. Fundamentally it helps to build trust.

If we, as a sector, want to be treated like grown ups in a relationship with Government, we need to act like grown ups. That means engaging and facilitating policy changes that can fit with our own agendas and policy preferences. The aim being to create a critical friend relationship, where the mutual benefits of working together, regardless of politics, can be seen. Only from that standpoint can we enact meaningful change. Pissing from the outside, whilst no doubt exhilarating, does not always enable one to move forward their agenda and influence policy.

As ever, you can find more of my stuff here and follow me on Twitter here.

Photo CreditMyXI – Tongue & Groovy (2009)

*It’s nice to see that we’re consistent in our approach to enacting change. Not so much ‘nudge’ theory in play, but ‘shove’ theory.

 

 

Sharing’s Caring

The rise of Shared Ownership as a genuine tenure option is both a welcome and worrying sight. The news that it is now seen a key route to getting on the housing ladder shows the fruits of labour of the CIH and its partners. But it is also a sign that for many home ownership remains a very difficult dream to achieve and that the market is failing them.

Unlikely Cheerleaders

In an ideal there wouldn’t be a Shared Ownership programme. And certainly not the gearing up of a tenure as is currently being seen. This is because Shared Ownership is the sign of market failure. Or at least, severe market dysfunction. Shared Ownership exists because people aren’t able to scrape together enough collateral to convince banks and/or building societies to lend them enough cash to buy a house. If household incomes and price of houses/their increase broadly matched there would be no need for such a product.

Sadly we don’t live an ideal world, we live in this one. Shared Ownership is needed and for a number of reasons it has had a welcome kick up the sweetspot. Firstly Government has bought into it, big time. From the point of view of the previous Prime Minister it was a perfect product to suit his Government’s agenda around increasing Home Ownership (see chart below, this was becoming an issue).

Chart 1 Falling Housing Owership

housing-tenure(3)Thus, instead of social rent housing, shared ownership was to become the new housing for poor people. Something that aligned with the thoughts of one or two in the sector as well. In addition to a few Think Tanks tied to Number 10. Secondly, the sector finally got round to looking at the long list of issues with Shared Ownership as a product (like maybe promoting it would be a good idea). Thirdly housing is becoming so unaffordable in parts of the country that products like Shared Ownership actually start to make sense.

Increasing Popularity, Increasing Problems

The CIH and Orbit* (plus other partners) reports on Shared Ownership – creatively called Shared Ownership 2.0, and Shared Ownership 2.1 have made genuine progress in terms of refining a product that for years was the inbred forgotten cousin of the sector. They might not like to admit it but Housing Associations did Shared Ownership the same way Nuns in Catholic Schools did the awkward bits of teaching sex education in biology i.e. embarrassingly blundering their way through in the hope that no-one was paying any attention because they didn’t have a clue.

The report rightly highlights the dissatisfaction with some of the aspects of rights and responsibilities. Always a grey area where there has been a substantial amount of confusion. Typically around who should do/pay for repairs (the customer) restrictions on sub-letting/adaptations (many) and the fact that when the rented element, mortgage, service charges and associated additional charges/red tape involved with stair-casing it wasn’t always the best deal for the buyer. These existing kinks have sought to be addressed by a variety of measures including ensuring greater levels of consistency of service across providers, tweaking the rules around eligibility and generally making the offer a bit more flexible.

Location, Location, Location

However, there are some issues with Shared Ownership that can’t be as easily ironed out. It is a perfect product in rising housing markets, where increased equity enables the part owner to leap onto a ‘proper’ i.e. fully owned house when looking to sell. It is also why as a product it works so well in London, the South, South East and South West (Chart 2, highlights the distinct regional variations). But if you’re in a shared ownership property in a depressed market where prices are stagnant, or worse, regressing, you’re more or less fucked. In such a market it would always make more sense to buy outright and avoid the red-tape (still a significant drawback).

Chart 2 – All dwellings annual house price rates of change: UK, country and regions

figure-5-all-dwellings-annual-house-price-rates-of-change-uk-country-and-regions
Source ONS – 12 month percentage change year up to Jan 2016

But, for those looking to buy in areas of increasing house prices Shared Ownership is an easy sell in every sense of the word. Hardly surprising as it was first conceived as a way of resolving affordability issues in and around the Greater London housing market for those on modest incomes. And as the report shows the product is much more affordable than outright ownership across a wider area (on day one, at least).

Putting it into Perspective

Shared Ownership is still a small proportion of the overall market, but as a tenure it is set to grow quite dramatically. As better exposure through Help to Buy branding (and the £4.1bn in funding), HAs getting their arse in gear (and the £4.1bn in funding), and massive pressures on the housing market in particular locations (can’t stress that last one enough, have I mentioned the increased funding?) all have an impact. More tweaks are needed, but progress is at last being made.

As ever, you can find more of my stuff here and follow me on Twitter here.

Photo Credit – Tom Page – Img_3852

*Full disclosure, I work for Orbit although like hell would they put me anywhere near something like this. Mostly because it’s not anything to do with my current role. Mostly…

Generation Snowflake

So the joke goes, this generation never had it so good. Millennials have Xbox’s, PlayStations, PacMan video games and iPads. Their predecessors simply had the ability to buy their first home before they were 30. These days it seems, those looking to get on the mythical ladder to The Faraway Tree home ownership have everything but a home to call their own. The picture is often more complex than that, below is my thoughts on the current situation. Warning, whinging millennial mode engaged.

Trust me it’s not the negative press or a lack of rolling up one’s sleeves that’s stopping me from buying a house, it’s the money involved.

Nice One Grandma, Cheers Dad

The recently released Resolution Foundation report has caught the attention of the press. The piece notes that Millennials (i.e. me and my mates) will potentially be the first ever generation to record lower lifetime earning than their predecessors. That our inability to buy a home will have implications on lifetime standards and that redistribution of taxes via the welfare state are tilted in the favour of the Baby Boomers and their elders, and how this impacts on inter-generational ties. Yea, it’s a real chirpy read*.

Decreasing numbers of younger homeowners

home-ownership

ONS Digital (2015) Housing and Home Ownership in the UK

In his blog that preceded the Resolution Foundation’s report (via an article in The Times) David Willetts argued that whilst a proportion of the population is reaping the benefits of being the baby boomers. It needs to do more to help the younger generations†. It’s an interesting, well thought out article with a helpful analogy (or is it a metaphor, always shit at these) of big birth cohorts like baby boomers being akin to a pig that’s been swallowed by a Python. Something that creates enormous strains, but also opportunities (well, not for the pig, he’s fucked).

However, as I’ve blogged before recently policies have either largely ignored those struggling to sort their housing situation or have been distorted by ideology, with interventions such as help to buy having the very opposite of their intended effect. And whilst I concur with Mr Willetts deliberations, there is concern his view, and that of the Resolution Foundation might not be heard.

It’s all so simple

If you believe parts of the press (step forward Daily Telegraph) we’re all a bunch of whinging areses who’ve never had it so good. Because despite trebled tuition fees, greater levels of insecure working, greater levels of household debt, Brexit and spiralling housing costs as rents and house prices outstrip wage increases, we need to pull our fingers out. Why? Because it turns out that despite masses of evidence to the contrary, we can buy a house. This is apparently the case due to affordability factors getting  back to their long-term average and deposits no longer being an issue due to the fact we can simply get a 100pc mortgage with a parental guarantee. Trust me it’s not the negative press or  me being a whinge-bag and not rolling up my sleeves that’s stopping me from buying a house. 100pc mortgage or not, it’s the money involved that’s the problem, period.

Declining Number of First Time Buyers (Number of mortgage loans for first time buyers, UK, 1980 to 2013)

first-time-buyers-mortgages

ONS Digital (2015) Housing and Home Ownership in the UK

Moving Forward

There has been a number of suggested solutions ranging from the genuinely innovative to the downright odd. Including, but not limited to, live in converted shipping containers, rely on your rich relatives to die/give you money, live in houses that don’t meet space standards to make them cheaper, fuck off to Europe, increase shared ownership. Some of the above may help, others not so much. But they need to be pulled together into a coherent strategy, where the state, the private sector and social housing sector play complementary roles.

Teresa May is increasingly putting forward a case for the state to be involved in improving the lives of those struggling in society. That our society is not a just a big one, but a shared one. And whilst John Rentoul is right to note she is very good at saying a lot without actually saying anything, the rhetoric is welcome. Hopefully it will be backed with policy and cash. Otherwise the inter-generational gap will only widen and with it the life chances of future generations will undoubtedly decrease.

As ever, you can find more of my stuff here and follow me on Twitter here.

Photo Credit: herefordcat (2008): Georgian Terrace

+Updated 11/01/2017 to include graphs

*For a legitimately amusing aside, check out these millennial v baby bloomer tweets.
†An argument that is slightly undermined by the fact that Mr Willetts was the Minister of State for Universities and Science who trebled tuition fees, thus negatively impacting on the life chances of younger generations via increasing their debt burden. Cheers Dave.