A big challenge for the housing association sector over the next couple of years will be balancing the contrasting attitudes of financial institutions and the general public.
Several years ago I went on two visits to the Netherlands. During the first visit the housing association sector in that country was characterised by supreme confidence. It had healthy balance sheets and there was little that it could not achieve.
However, just twelve months later, we found the sector in crisis. The Dutch government, in order to deflect criticism resulting from social disorder, high unemployment, and economic problems, had turned on the housing association sector. The public, politicians and the media demanded to know why this sector, with such healthy balance sheets and surpluses, was not doing more to “nurse” the communities within which they work.
The Dutch housing associations did not know which way to turn and were fearful of their own shadows. The same could become true for housing associations in the UK if politicians and the media need a scapegoat should current economic and social policies fail.
Just before the abolition of the Tenant Services Authority at the end of March, the TSA published the global accounts of housing associations which revealed pre-tax surpluses had increased from £609 million in 2009/10 to £1.16 billion in 2010/11.
Notwithstanding this, landlords have warned that their balance sheets could not be able to sustain taking on more debt to fund a second round of affordable homes in which landlords let properties at up to 80% of the market rate.
Financial institutions will understand this concern, but it is a very different thing when the sector tries to explain this to politicians at national and local levels, the media and the population at large.
Housing associations must begin, right now, to redouble their efforts to engage with local communities to explain what they are doing to address housing need in different localities. If the sector finds itself on the back foot having to explain huge surpluses and healthy balance sheets, the battle will already be half lost.
The National Housing Federation does a brilliant job promoting the value of housing associations, and David Orr is most impressive when appearing on radio and television. However, it is housing associations themselves that must be seen to be delivering locally. The move to large, national groups does not assist with this.
Of course housing associations must maintain the confidence of the banks, but if they do not retain confidence at a local level the sector could find itself at odds with the popular and political mood.