Brexit and the role of Social Housing - why it is time to look beyond the ‘bottom line’ to the important role the sector can play
July 25, 2016
In the immediate aftermath of the EU Referendum result, it was no surprise that this year’s CIH Conference in Manchester was dominated by discussion on the impact the exit would have on the Housing sector. With predictions of falling house prices and sales, at a time when rental reductions have already led to significant changes to business plans and financial forecasts, the stress testing scenarios many had been considering, had suddenly become ‘real life.’
Never has there been a time for the sector to demonstrate both its resilience and ability to innovate. Housing supply remains a critical issue for the country and although the ‘one million new homes by 2020’ target set by the former Minister for Housing may now at best be viewed as aspirational (some argued it was never more than this), one thing that remains certain is the acute need to build homes to meet demand.
Following the appointment of a new Prime Minister, the sector is making its case to address the housing supply shortage and is lobbying hard for greater flexibility over the use of Government grants. Such flexibility would enable housing providers control over housing tenure and the ability to build more homes for sub-market rent. At present, the Government grant available is primarily for home ownership options but a volatile housing market could make achieving sales more challenging. This theme was continued at the National Housing Federation (NHF) Brexit Conference last week where the Chief Executive of the NHF, David Orr, put an offer to the Government for greater flexibility in funding without the conditions on housing tenure to enable the sector to build homes.
The reasons why the country voted to dis-engage from the EU are, arguably complex, but one cause gaining traction is the breakdown of communities and the emergence of societal issues and cases of underlying social tensions as a result of diverging views on immigration. This is happening at a time when housing providers are investing significantly less in social projects by tightening costs in response to the rental reductions. Whilst it is absolutely right that the sector understands its cost base and strives to make efficiencies, there has been considerable frustration about the restrictions it is experiencing in being able to develop affordable homes and to support local people and communities. The broader costs of this policy are emerging for those willing to look and they are easily a significant multiple of the funding that has been withdrawn from the sector.
The sector’s potential to address the housing supply shortage and instil social cohesion at a time when communities are divided should be re-appraised by Government as a priority. There is a window of opportunity for the sector to re-present this case to Government which it is clearly doing and for all parties to look ‘beyond the bottom line’ and recognise the broader social and economic benefits of social housing. The new Housing Minister Gavin Barwell has declared this week that there is a, “powerful case for further investment in affordable housing”, a statement that brings renewed hope.