A report by Lloyds Bank has been published that says half of England’s 2,000 housing associations are considering mergers. Whether this is true or not, there has been a great deal of pressure placed on housing associations to merge, the argument often being that mergers produce efficiencies and improves value for money, and that as a result more homes can be built.
For the last ten years there has been merger mania, with supergroups emerging including, most recently, Clarion with 125,000 homes. Clarion’s family tree shows at least twelve former housing associations including William Sutton, Downland, Circle, Broomley, and Ridgehill. The mighty BHT could have been part of this by adding our … 318 homes had we not demerged from Affinity Sutton a few years ago, a recognition of the specialist nature of BHT.
New homes are needed. According to the government, the number of ‘affordable homes’ is at a 24 year low. This is in spite of merger mania. And ‘affordable’ they are not as affordable in this context refers to rents at 80% of the market locally. In Brighton the average one bed flat in the private rented sector is now £983 a month, making the ‘affordable’ rent around £785 per month. Housing benefit will pay £612 per month for accommodation in the private rented sector.
The low rate of development is due to massive reductions in capital investment by government, hugely inflated land prices, and uncertainty resulting from government policies (including the 1% year on year reduction in rents and the forthcoming cap on the amounts claimants can receive towards their rent).
The market has failed people and will only make matters worse unless government intervenes.
The solution isn’t rocket science. The government needs to give greater freedoms to local councils to build homes with social rents, invest in the cost of building these homes and those being built by housing associations so that rents can remain low rather than in subsidising rents through housing benefit, and restrict the use of land so that housing need can be met rather than developments being for speculative gain.
This would also need an end to the Right to Buy so that the homes remain for those in need rather than being recycled into the private rented sector with rents three or four times greater than the social rents.
Over the lifetime of each house, the government will save far more by not shelling out, year after year, higher rates of housing benefit.
It has been said often enough, but can’t be repeated enough: housing should not be an investment opportunity but where people live.