Don't write off small associations

We work with housing associations of all shapes and sizes. From the largest in the country with over 90,000 plus homes to some of the smallest who manage a few hundred.

Last year we carried out a piece of research for the smallest associations operating in London, which are collectively known as g320, and there are some interesting facts that I think are worth sharing. Not least because having just spoken at a national conference of small associations, I was struck by how little their development capacity was understood or appreciated.

Our research was called “Another 5,500 new homes and counting: the sum of small developments”. It looked at a sample of 20 members of g320, reviewing their balance sheets, their development pipelines, and their plans for development.

There is also an opportunity for a new form of SME joint venture or partnership. One where the skills of the smaller developer or contractor is combined with the capacity of the small association.

If this analysis were extrapolated to the total membership of g320, we concluded that the capacity could potentially deliver an indicative programme of almost 15,000 homes.

But hardly any of it is being realised. The problem seems to be that there are worries about risk, about capacity and expertise, and about finding sites. The challenge it seems to me is to determine whether those working on development do have sufficient experience and expertise. We suggested that boards in particular might wish to consider both their skills and experience in appraising risk. Our experience suggests there is a capacity to undertake more development, it just needs a bit more confidence.

And perhaps more than that, it needs a trusted partner that can share some risk, share some upside, and share some experience. Some associations are getting together to share development experience; others are looking to advisers to help them; others still are working with local SMEs, starting with major works and refurbishment projects and then extending it to new build schemes.

We had some thoughts for local authorities and for government and its agencies to encourage small associations. But it occurs to me that there is also an opportunity for a new form of SME joint venture or partnership. One where the skills of the smaller developer or contractor is combined with the capacity of the small association. These registered providers have got land, they’ve got financial capacity and they’ve got a development appetite – they might just welcome a conversation with a smart developer who wants a long-term relationship that can make a difference and bring their ambitions to fruition.

Steve Douglas is a partner at Altair