2019 will probably be remembered as one of the most tumultuous years of the past decade. Brexit, financial and political uncertainty and the climate pretty much dominated the national conversation. But social housing providers have had to contend with much more.
Winckworth Sherwood’s social housing team point to six things every social housing provider will need to consider in the year ahead.
1: Capital markets funding becomes mainstream
Housing associations will turn to the capital markets in increasing numbers to raise finance, says Housing Finance Partner Ruby Giblin.
Ruby says: “We have surveyed housing association finance directors and the large majority believe that capital markets funding will grow significantly in 2020. Capital markets funding will shift too from bond issues towards private placements as smaller housing associations tap into this funding route. We also expect a greater number and diversity of lenders to enter the market.”
2: RPs lead on social care
Reform of social care has long been discussed by our politicians with little action, says Partner Charlotte Cook.
Charlotte comments: “It is likely that in the absence of a coordinated national strategy social housing providers will take a greater lead in the provision of social care for residents. RPs have always been asked to do more than simply provide bricks and mortar with wider obligations towards society and the communities where they work. The provision of social care is perhaps the next big step.”
3: The rise of local authority housing
Local authorities will rediscover the benefits of developing and managing its own housing stock, says Partner Will Rutter.
Will says: “Local authorities are developing more housing than most people realise. Research from University College London estimates that some 13,000 homes were built by local authorities in the last year, and we predict that will increase. And whilst the Stirling Prize for architecture in 2019 went to a scheme developed by Doncaster Council, we would expect local authorities to focus more on developing long-last homes in managed environments. It is a welcome addition to the housing mix.”
4: Climate Change
Climate change has been one of the major issues of 2019, with Extinction Rebellion capturing headlines for months at a time. Social housing providers will face increasing pressure in 2020 to decarbonise their homes with a move towards sustainability and energy efficiency, says Partner Ruby Giblin.
Ruby continues: “Social housing providers are already making great strides in developing environmentally sensitive homes but face considerable costs to decarbonise existing stock. And given that the government estimates that some 20% of social housing stock was built before 1920 that will not necessarily be easy. The calls will become louder and those providers that do not respond will find themselves in a potentially uncomfortable position. MMC may provide a solution with inbuilt efficiencies if Government/RPs can stimulate economies of scale and build in cost savings too.”
5: Right to buy/right to acquire
The Conservative government has promised to extend the voluntary right to buy to social housing tenants, but it may be rigorously resisted by social housing providers, says Partner Charlie Proddow.
Charlie adds: “We applaud all efforts to help people buy their own homes but we believe the sector will have its reservations. Social housing providers will not want to see stock leave the sector preferring to offer shared ownership schemes as a route to home ownership.”
The impact of Advice Note 14, issued by the government last year, continues to have an effect on sales of high-rise units and the value of existing units notes, says Senior Associate, Charis Beverton.
Charis had this to say: “The release of EWS1, a form agreed by RICS, UK Finance and the Building Societies Association, may help unblock the market; however, completion of EWS1 requires RPs to engage a fire engineer to inspect external walls physically or via a desk top review and such personnel will be in short supply. If remedial work is required to any building it may be possible to recoup costs from the designers and/or construction parties of the external walls. If it is not possible to recover, then the question is who then should bear the cost of remediation.
“This is an urgent and potentially expensive issue that may well run beyond 2020 before resolution.”