Blog 19th April 2017

Apr 19th 2017, 13:51

Blog 19th April 2017

Since last week we have published two new briefing papers. One is on the global accounts of housing associations and the other is on the government’s new Flexible Homelessness Support Grant.

The 2016 Global Accounts of Registered Providers provides a financial overview of the social housing sector based on an analysis of the regulatory financial returns of private registered providers with over 1,000 social homes in ownership or management. These associations are responsible for over 95% of the sector’s stock. The Global Accounts were published by the Homes & Communities Agency in February 2017. These global accounts show the continuation of many trends that we have seen during recent years: The sector continues to expand, surpluses continue to be generated and there is diversification of activity from renting social housing to providing affordable and market housing and a range of services to communities.

However, the global accounts also show some areas of concern:

  • Rents will be reduced by 1% a year between 2016 and 2019 under the Welfare Reform and Work Act 2016 and only 80% of service costs are recovered through service charges.
  • Housing associations will have to reduce their expenditure at a time when inflation is increasing.
  • Development was lower in 2016 than in 2015 and a significant number of homes were sold or demolished. Development is now dependent on internally generated surpluses as grants dry up and capacity for borrowing becomes fully utilised. If revenue surpluses are reduced it follows that development programmes will reduce. This will happen at a time of increasing housing need.
  • Housing Associations that have diversified into housing sales are vulnerable to a down-turn in the housing market that is widely forecast.
  • Housing Associations are largely debt funded. Interest rates have been at historically low levels since 2008 but this may not be sustained.
  • Welfare Reform will affect tenants and therefore landlords. This will especially affect those with specialisms in supported and sheltered housing. Concerns include the capping of housing benefit at local housing allowance rates, the proposed reforms to the funding of supported and sheltered housing and the removal of entitlement to housing benefit for most people aged under 21.
  • Non-social housing activity often needs to be cross-subsidised from social lettings and this may not be sustainable.
  • The United Kingdom government and therefore the Homes & Communities Agency are focused on the development of low-cost home ownership products and on value for money. Housing associations will have to ensure that they can demonstrate that they are addressing these agendas.

Your copy of my briefing paper on the global accounts can be freely downloaded from HERE

The Department for Communities & Local Government announced the arrangements for the administration of the Flexible Homelessness Support Grant in March 2017. The Flexible Homelessness Support Grant is designed to transform the way councils fund homelessness services to give them greater flexibility to prioritise the prevention of homelessness. It is described as a radical replacement of the tightly controlled funding currently given to source and manage temporary accommodation for homeless individuals and their families.

Homelessness is an increasing problem in England that is resulting in increasing numbers of people living in temporary accommodation at considerable cost. The introduction of the Flexible Homelessness Support Grant is part of a package of measures that are designed to address this. The objective is to reduce homelessness (and to reduce expenditure on homelessness) by taking preventative action to ensure that people do not become homeless in the first place.

The approach is consistent with the Homelessness Reduction Bill that has been passed by Parliament and is awaiting royal assent. It provides local authorities with more funding that they can use more flexibly, that is ring-fenced and that is targeted at areas of greatest need.

The Flexible Homelessness Support Grant has been welcomed in the local government and housing sectors as a step forward. However, there are concerns that the government’s measures will not be sufficient to address homelessness adequately and that there is a need for increased resources, a higher level of Local Housing Allowance and increased provision of new social housing.

Your copy of my briefing paper on the Flexible Homeless Support Grant can be freely downloaded from HERE

We have recently updated our website with the following new and revised pages that you may like to view by clicking on the following links:

Our next seminar on ‘All You Want to Know about Service Charges in Social Housing’ in England will be held in Leeds on 17th May 2017. As usual this seminar is proving popular but there are still some places available. For more information or to make a booking please click HERE

This will be followed by ‘All You Want to Know about Housing Association Finance’ that will be held in London on 24th May 2017. For more information or to make a booking please click HERE

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