2018 has drawn to a close with Brexit continuing to dominate headlines and the national conversation. There is perhaps little respite until March 2019 when (and if) the UK leaves the EU.
But what does 2019 hold in store for social housing providers? Winckworth Sherwood’s social housing team point to five things every social housing provider will need to consider in the year ahead.
The growth of for-profit RPs
Will Rutter, Social Housing partner, says: "2019 is likely to be the year of the for-profit registered provider. For-profit RPs are already making an impact through section 106 acquisitions and are starting to get involved in more major large-scale projects. They are also making an impact through increased stock rationalisation programmes, and we expect that to continue despite the Regulator’s misgivings. We welcome their contribution, provided it is appropriately regulated - a diverse housing offer is good for the sector and for occupiers.”
Disrepair claims continue to gather pace
Liam Hale, a solicitor in the Social Housing team focusing on disputes says: “Social media and advertising campaigns targeting tenants continue to drive high levels of disrepair claims and we do not expect this to quieten down. In fact, with the introduction of the Fitness for Human Habitation Bill expected to make the statute books this year, we would expect claims to increase further still. Registered providers should review their repair policies and recording systems as a matter of some urgency.”
Diversification of funding
The options available to registered providers funding new social housing developments have increased in recent years, with bonds and private placements on the capital markets becoming increasingly popular.
Louise Leaver, partner and head of the Housing Finance team, expects this diversification to continue in 2019: “In particular, issuances by registered providers on the capital markets are attracting interest from US and other overseas investors. We are also seeing increased interest in different structures for financing developments, including joint ventures and development financing, where the funding is generally provided to develop a specific site, and ring-fenced accordingly.”
Strategic partnerships are also on the rise, says Louise: “The August 2018 social housing green paper voiced the Government’s commitment to these strategic partnerships, and will bring new development opportunities to the providers selected.”
Modular and micro homes
Innovative and different thinking in the delivery of new homes will move from the fringes to the mainstream, says Charlie Proddow, a partner in the Real Estate and Social Housing teams.
Charlie says: “Modern methods of construction and modular homes will become commonplace as social housing developers look to bring forward new homes quicker and in a more cost-effective way. The acceptance of modular homes by funders will increasingly become less of an issue. We are also likely to see new types of homes coming onto the market. Smaller homes for key-workers and individuals and couples on lower salaries will feature more prominently as planners accept their position in the housing mix.”
And finally, Brexit
There is, unfortunately, no avoiding it. The shape of the UK’s exit from the EU remains uncertain, making it hard for social housing providers to plan ahead.
Eleanor Kilminster, a partner and Head of Construction Law at Winckworth Sherwood says: “There is a very real risk that the cost of construction materials – particularly those sourced from across the EU – will increase. We have yet to see the full extent of the Government’s post-Brexit immigration policy, but already we are seeing a tightening of the labour market in the construction sector.”