Mary Lynch of Lovell argues that good things will come of the Housing Corporation offering its entire £1.67bn annual budget to housebuilders and developers (24 March, page 21). I do not think so.

Lynch says there will be less regulation for private developers, so even the registered social landlords will clamour to source social housing grant through this new route.

But that is an argument for easing the burden of regulation for housing associations.

It seems foolhardy to offer the profit-making, unregulated housebuilder a lighter level of regulation. These companies have no experience of owning and managing social housing. They do not have to meet the high standards of governance required for housing associations (whose board members, for example, cannot benefit from the contracts they place; whose tenants are likely to be represented on the board; and so on). Companies can be taken over or go out of business. And the Housing Corporation has few sanctions if things go wrong.

Associations frequently report the hassles they face to get housebuilders to agree not to segregate the social housing on the worst part of their site, and then to deliver what was promised at the outset. Will the corporation have the staff to take over this role on behalf of future tenants?

Lynch also argues that large developers want to be in control of social housing and its management in order to protect their investment in the neighbouring housing for sale. Since housebuilders will be able to sell the rented housing when it comes vacant at some point in the future, they can look forward to capital gains from the increase in property values. But the gains for their shareholders are losses for social housing.

If we had invented this system in place of the arrangements in the Housing Act 1974, the social housing created since then – and now worth billions – could be sold by housebuilders or developers as it comes vacant. Instead, thank goodness, the increase in property values from all these homes has been captured for public benefit.

There are distinct differences between the nature of profit-making companies and non-profit organisations established for social purposes. It is not just that the latter are subject to ongoing regulation. Nor just that they do not exist to generate and distribute surpluses for private gain. It is also because these voluntary bodies bring a special set of skills, values, commitment to people and to communities, and stability.

In other words, there is real value in a Third Way between public and private sectors.

No, housing associations and housebuilders are not the same.

Richard Best, director, Joseph Rowntree Foundation

Source

Housing Today