Feb 12th, 12:25
Blog 12th February 2018
In this week’s blog, I refer to: the Chartered Institute of Public Finance & Accountancy, the Local Government Chronicle, Northamptonshire County Council, Impact Housing Association, Eden Housing Association, South Lakes Housing, Westfield Housing, the Riverside Group, Homes England, Grenfell Tower, Wandsworth Borough Council, Service Charges, the Scottish Government and the Scottish Housing Regulator.
The news that Northamptonshire County Council is in financial difficulties and has issued a section 114 notice hit the headlines last week. However, they are not alone in facing financial difficulties with Rob Whiteman, Chief Executive of the Chartered Institute of Public Finance & Accountancy warning in the ‘Local Government Chronicle’ that another half dozen councils could follow:
“What you see at the more alarming end of the spectrum is councils that have already used up their reserves and are not delivering savings to prevent the need in later years.”
It appears that a combination of ‘austerity’ and ‘financial mismanagement’ is responsible.
In recent blogs and newsletters, I have written about the proposed takeover of Impact Housing Association by the Riverside Group. Until 2015, I was Chair of Impact and I continue to be a shareholding member.
When I was Chair of Impact Housing Association I was approached by a Liverpool-based housing consultant who said that he was acting on behalf of a large housing association that wished to expand by acquiring smaller housing associations. He said that they had identified Impact as a suitable candidate because of the potential to gain economies of scale by integrating Impact’s operations with their existing operations in Cumbria. At the time, we declined the invitation to discuss this further.
Subsequently, the same housing consultant applied unsuccessfully for a senior position at Impact Housing Association.
The Board had discussed its attitude towards potential mergers both formally and informally. We took the view that it could be advantageous to Impact Housing Association and its tenants to merge with another association if economies of scale could be gained and if there were shared values. We wanted to continue to be locally based and to continue to be a ‘place shaper’ providing a range of services to support communities including Foyers, housing support, training and furniture recycling – as well as just providing housing. We identified three other housing associations as potential partners: Eden Housing Association, South Lakes Housing and Westfield Housing.
After I had left the Board, Eden Housing Association and Impact Housing Association started discussions about a potential merger. I understand that informal discussions took place with South Lakes Housing. I am not aware of what discussions took place, if any, with Westfield Housing.
I understand that Impact Housing Association discussed their plans with the Homes & Communities Agency (now Homes England). Apparently, the Homes & Communities Agency were not happy with the proposed approach as they favoured small associations being absorbed into larger ones to improve capacity - I understand that this was about increasing potential development activity rather than reducing risk.
However, the Housing & Planning Act 2016 had reduced the powers of the Homes & Communities Agency to regulate mergers as part of a package of measures to ensure that housing associations could continue to be classified as private bodies rather than public bodies. This means that the Homes & Communities Agency can neither enforce nor prevent a merger taking place and must rely on associations making a ‘voluntary undertaking’. As we know, Impact Housing Association did make a ‘voluntary undertaking’ following its downgrading by the regulator.
I think that this sequence of events raises some interesting questions – both for Impact Housing Association and for housing associations generally - to which I intend to return in future blogs.
As I have mentioned before, Homes England assure me that the takeover cannot go ahead without the approval of the shareholding members. Impact has had a long-standing policy of encouraging tenants and others in the local community to become shareholding members. It only costs £1 and should ensure a say in the takeover. I would advise tenants and anyone else with an interest in Impact to apply to join. To view or download an application form, please click HERE
Following the fire at Grenfell Tower in Kensington in June 2017, many landlords are retro-fitting sprinklers in the higher floors of high rise flats. These include Wandsworth Borough Council that is planning to install sprinkler systems in all 6,400 flats in its tower blocks of ten storeys and above. The total cost of the works will be £24million and the Council plans to recover part of this through leaseholder service charges; with 2,358 leaseholders being charged between £3,000 and £4,000 over four years. The Council has taken legal advice and believes that as these works are necessary and chargeable under the terms of the lease then the Council is under a duty to recharge, but many leaseholders disagree with this interpretation. The Council has made a ‘pro-active application’ to the first-tier property tribunal after five residents’ associations objected to the proposed service charges.
Our seminar ‘All You Want to Know about Service Charges in Social Housing’ that will be held in London on 27th February 2018 is proving very popular and we only have a handful of places left. This is a very useful introduction and overview of this very important subject. For further information or to make a booking, please click HERE
Last week we launched our 2018 seminar ‘All You Want to Know about Scottish Social Housing Finance’ that will be held in Edinburgh on Tuesday 5th June 2018.
Social housing is becoming increasingly important in Scotland at a time of rising demand for affordable housing. Terms on which loans are available are less favourable than in the past. The Scottish Government has passed the Housing (Scotland) Act 2014, reformed the Scottish Housing Regulator, ended the ‘Right to Buy’ ended in Scotland on 31st July 2016 and is promoting and funding an ambitious development programme. The Scottish Housing Regulator’s new approach emphasises ‘Value for Money’. The United Kingdom government is ‘reforming’ welfare with significant implications for Scottish tenants and landlords but some welfare powers have now been devolved to Scotland. Scottish local authorities and housing associations therefore face significant challenges, not least the need to meet the Scottish Government's aspirations for development.
This seminar provides an introduction and overview of this important subject.
Our next seminars are on: