Housing associations and the Right to Buy Contents

10The future

Lifetime tenancies

113.In the Summer Budget 2015, the Government announced that it would “review the use of lifetime tenancies in social housing to limit their use … and ensure the best use is made of the social housing stock.”116 Lifetime tenancies are known as secure tenancies and are granted by local authorities: such tenancies offer tenants a lifelong home which could be passed on to their next of kin in certain circumstances. Schedule 7 of the Housing and Planning Bill restricts the granting of secure tenancies to terms of between two and five years. Under the terms of the Bill, councils will be required to review tenancies regularly, with tenants potentially being required to move to an alternative property that better suits their needs. Stephen Hills described how this might affect South Cambridgeshire:

“We are 350 square miles, 103 villages. We have not got any towns at the moment. Those village communities are really important to people, and, if people have got caring commitments, local work or childcare commitments, they need to be able to live and to form part of that community. As to the thought that we would somehow have to move people on every few years, I cannot see how that would work. There are so few houses that come available in most of those villages, and if you move to the other side of the district, you might as well be moving to Mars for some people … I think it would have quite a negative effect on the ability to sustain rural life in those areas.”117

114.Cllr Lib Peck, Leader of the London Borough of Lambeth, also argued that “we have talked a lot about housing as a building concept, but we are talking really about creating places and creating communities, and therefore you need an element of stability.”118 We note the concern from some witnesses that ending lifetime tenancies may have a detrimental effect on community cohesion and make long-term planning for decisions such as school choice harder for some tenants. However regular reviews and conversations between tenant and landlord can lead to a more efficient use of housing stock and to the tenant having a home that better suits their needs. We will continue to monitor the impacts of ending lifetime tenancies.

The housing association sector

115.There is a growing trend for housing associations to consolidate and merge to achieve greater efficiencies and reduced staff costs. David Montague cited the examples of Genesis and Thames Valley, and Circle, Anglia and Affinity Sutton as two instances of the rent reduction triggering consolidation.119 It is likely therefore that in future there will be a smaller number of associations with bigger asset bases covering a wider area. However alongside the big commercial operations such as the proposed Affinity Sutton-Circle merger, which will become Europe’s largest housing association, smaller providers will remain and continue to deliver vital services to their tenants. Whilst diversity in providers can help to meet the diverse needs of the population, it is important that all housing associations continue to balance their social and development roles. We believe that all housing associations should remain mindful of their social mission and not sacrifice philanthropy in pursuit of surpluses. Lord Kerslake, Chair of the Peabody housing association in London, explained:

“[H]ousing associations have to start with their mission. What are they there for? In the case of Peabody, it is to ameliorate the condition of the poor and needy in this great metropolis, London. That is our mission. That is what we were set by George Peabody … It is not that we do not build for sale; we do, and are quite happy to do that. However, we cannot only build for sale. We must be producing social rented and accessible shared ownership. For me, that is part of the deal of being Peabody. It is part of our mission. So we may shift the mix, but it should stay there. Almost as important as their charitable status—that is for them to examine—is their mission: why are they there?”120

116.Regardless of size, housing associations need to maintain their links to local communities and deliver high quality services to residents. We support measures to increase tenant participation and engagement to help deliver this, and believe that they should, where possible, be extended to housing association leaseholders. Providers should work with their residents to develop business plans, maintenance schedules and other initiatives. The Tenants Participation Advisory Service describe the role of involved tenants:

“As well as paying rent in return for housing services, these people help to scrutinise service delivery, agree and monitor maintenance contracts, prioritise and address neighbourhood issues, inform business priorities, and so on. We refer to them as ‘involved tenants’–because they engage with their landlords and understand how housing associations operate.”121

117.We believe that the tenants of housing associations should have a say in how their provider delivers services and be able to hold them to account. As well as having the potential to deliver savings, tenant involvement can provide social dividends such as more cohesive communities.

118.As some housing associations increase in size and become more commercial and ambitious in their development plans, it will be essential that corporate governance remains effective. National and regional associations should also ensure that they have locally based and responsive management arrangements. As discussed earlier in this report, the Regulator at the HCA must ensure that monitoring is nuanced enough to capture all types of provider. This must include the ability to understand the increasingly complex operating arrangements of bigger organisations. Housing associations enter into a range of working relationships with each other, developers and private finance, and these must be accompanied by robust governance arrangements. Governance risks can exist in big or small associations, but the failures of larger providers will affect more tenants and mergers therefore should be carefully monitored. For example if the Affinity Sutton-Circle merger goes ahead, the new body would become the landlord for 500,000 people in 127,000 homes, or 5 per cent of the country’s housing association sector.122 It is worrying that Circle was the subject of a judgement from the Regulator in April 2015 that cited “chronic failure” in its governance:

“In implementing its plan to rationalise suppliers and create fewer, larger contracts for responsive repairs and planned maintenance, Circle has failed to control delivery of a core service and respond effectively to serious underperformance. This is consistent with a systemic problem in the organisation’s risk management and internal controls.”123

119.If mergers proceed, they must spread good practice, rather than spreading existing failings to more residents. The priority for mergers must be to deliver on housing associations’ social purpose, through improving services and enabling the building of more affordable homes. Increasing surpluses and saving money cannot be the sole motivator, and the Regulator and NHF have a role in ensuring this does not happen.

120.The Government has ambitious plans to address the severe housing shortage and is seeking to do so by prioritising affordable home ownership. We welcome their efforts to increase the supply of new homes and the increased funding to tackle the housing crisis. However it remains important to not lose sight of the need to deliver homes that are truly affordable. Home ownership is the aspiration of many, but homes for affordable rent must still be provided for those who cannot afford to, or do not want to, buy a home. Rented housing—at full market rents and sub-market rents—will continue to be essential to meet the needs of many in our society and should exist alongside other forms of housing.

116 Summer Budget 2015, para 1.155

117 Q202 [Stephen Hills]

118 Q202 [Cllr Lib Peck]

119 Q74

120 Q274

121 Tenants Participation Advisory Service (RTB 059), para 1.2

122Giant landlords enter talks over 127,000-home merger’, Inside Housing, 22 July 2015

123 Homes and Communities Agency, ‘HCA Regulatory Judgement on Circle Anglia Limited – LH4046’, April 2015

© Parliamentary copyright 2015

Prepared 8 February 2016