In association with Seam Capital
There was a lot to digest during Northern Housing’s debut Leaders Roundtable – and not just the food
THE discussion proved wide-ranging and in-depth, as guests got their teeth in to the deceptively simple theme for our very first roundtable.
Hosted by Seam Capital at Manchester’s Albert Square Chop House, the roundtable brought together some of the Northern Powerhouse’s leading movers and shakers in the housing association sector. The theme was ‘The Agile Boardroom: Improving Financial & Asset Flexibility’, and it certainly got this season of roundtables off to a flying start.
“We are very pleased to be helping to make this happen,” said Seam Capital’s Ray Christopher, welcoming guests. “Here we are in the shadow of Manchester Town Hall, which if you think about it is a Victorian, neo-gothic celebration of the industrial revolution; we are in the teeth of a new revolution – the technology revolution – and the thing about technology and having the tools, is it’s all about connectivity. We are connecting with each other, similar people wanting to do a good job.”
You might say how to continue doing a good job is what the discussion was all about. The context (see below) was provided by figures culled from the social housing regulator’s latest global accounts and its annexe on value for money, published in December 2018.
With this in mind, topics explored the sector’s changing risk profile, given its increased activities in private rent and homes for sale; the sustainability of the sector’s increasing debt exposure and what alternative capital sources might be available; how rising costs and reduced rents are hitting margins, and how it might manage these impacts; how the sector can manage and mitigate risks; changes to the regulatory environment; building more homes; and achieving greater efficiencies and tighter control of operating costs.
Yes, a lot of ground, and it’s fair to say that discussions did tend to blend into one another; through it all, however, it is perhaps no exaggeration to summarise the mood as upbeat and positive overall.
Location, location, location
Chairing the roundtable, Riverside’s Carol Matthews invited guests to explain what they were doing in their respective areas, and as something of an ice-breaker, asked how the Brexit shenanigans are affecting things. Well, it is an element of the sector’s risk profile.
Generally, the mood around the table was that Brexit is having little impact, at least for now; the realities of the market locally are more dominant factors affecting business.
Talking about shared ownership, Great Places’ Pete Bojar, said: “There is clearly demand.” But he explained this varied according to local circumstances generally, and in terms of Brexit, how local people felt about the potential consequences of leaving the EU.
Karbon Homes’ Paul Fiddaman said you have got to understand your local markets. He explained that in some parts of its territory, shared ownership properties sold rapidly off-plan; in others, uptake has been more “sticky”.
“We always appraise them as a rental proposition,” he added. That way properties that are initially earmarked as shared ownership, say, can be reallocated as rental units.
Being able to flip tenures in this way is a “magnificent tool we’ve got in our armouries” said Torus chief Steve Coffey; new flexibilities offered to housing associations open up that power. “We’ve got some shared ownership in Heswall, which is part of the Wirral. Unusually, we struggled with this because people coming in had too much money to qualify for shared ownership. So, we flipped them to outright sale rather than shared ownership.”
Prices are on the up in the places where ForViva operates, said the organisation’s deputy group chief executive Colette McKune; again, pointing out the value of location and local markets. “We’re not having any problems moving shared ownership,” she said. “We’re not having any problem renting PRS. We’re not having any problems selling properties. And that has nothing to do negatively or positively with Brexit. It’s market forces. We’re benefiting from the expansion of Media City. We’re benefiting from the regeneration of Manchester. It’s purely on location.”
ForViva is doing every tenure, including social. It’s also doing what it calls ‘sub-social’; a product it is creating to help and prevent homelessness. “We’ve only been able to do that because we’re taking the money from commercial profit,” McKune said, adding: “It’s all about building the right product at the right time in the right market. We’re just taking advantage of the market.”
Karbon Homes has set the broad parameters for a mix of shared ownership, private rent and affordable tenures, Fiddaman added, but the organisation is working on some “hard analysis” of income levels to gain a better understanding of need.
“We’ll have a really good nuanced understanding of what rent would be affordable in different communities,” he said. “The ideal would be to build a product that works at the rent in that community. So, if that drives market, fine; if that drives sub-social, fine – the onus is to be affordable to average earners in the communities.”
Working the margins
When it comes to squeezing more out of the margins, Karbon Homes is looking at smarter working; this isn’t just about the bottom line of the business but also about the relationship with tenants.
“There is an appetite for rebalancing the relationship between landlord and tenant,” said Fiddaman. “We are going to have a find a way to make sure that the efficiencies that we can squeeze out of the digitalisation of the services can be reinvested in the front line, so we can ensure that people who need more from us can get it and will get the support they need to live independently.”
He added: “We have to treat people as sentient consumers with choices, treat them with respect and dignity, and give them a say. That requires, ultimately, that our people on the frontline be receptive to feedback from the people they are working with… That’s a different philosophy.”
Simon Morris of Salix Homes turned the conversation to technology, offering his peers a quick rundown of how it has changed IT business operations since completing the migration of its systems from the council. It’s not about kit and software, per se, but about the efficiencies and cost-savings the organisation can derive.
This prompted a point about Amazon and other now commonplace online services, and the realtime tracking of deliveries; social landlords need to develop that level of flexibility for repairs and maintenance. “Our customers are already buying things from their mobile phones; we’re behind that curve,” Matthews said.
But the sector is experimenting with the potential of technology. ForViva, for example, is experimenting with robots to handle rules-based systems, such as invoicing. The point of the technology, as both McKune and Matthews emphasised, is to free people to do other things (rather than, as some may fear, simply shed staff).
“We need people talking to people,” McKune added. “When people are disadvantaged, where they are vulnerable, in the areas of money advice, in the areas of vulnerability, of support, that’s what we need. Because I believe moving forward that social housing will become more about supported housing than it will ever be general needs.
“In 10 years’ time, our population will be older, they’ll need more support, and that’s ultimately where we will shift, the whole paradigm – we will be a support service for those people… So it is absolutely vital that technology is used, but that the message to staff is very clear. We’re doing this to enable you to do what you should be doing – supporting people to live in their homes.”
What about regulation, Matthews asked. Where does the sector stand with this, post-Grenfell, and with all the other challenges coming the sector’s way? Broadly speaking, the guests thought regulation was in a good place, but they were concerned about pressures that may ‘turn the clock back’ to a less flexible age.
“We seem to have arrived at a point where this co-regulatory framework is stable and there is a lot of pressure to rip that up and do something very different,” said Fiddaman. “That would be a real mistake. There are babies and bathwater at play here, and we need to protect the former because I think there’s a real risk we come up with something that doesn’t serve anybody’s purpose.
“The last thing anybody wants is a landscape that looks like it was 20 years ago, when you had your key lines of enquiry. Everybody was managing the business in accordance with these constraints that had nothing to do with customers, nothing to do with what good service looked like, but what some ‘little anorak’ in a cupboard somewhere in the Audit Commission felt good service looked like.”
Strength of feeling there, but he wasn’t alone in his concern. Regulation, McKune said, “has been mature and hopefully it will still continue to be mature”, but she also feared that the sector ends up going backwards. To return to something like the KLOEs and the old Audit Commission regime would be a “backward step” she feels. “Because I don’t think we could do it anymore,” she added. “We’ve got more complex, we’ve got more sophisticated, we’ve got more mature.”
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- Capital investment increased in 2018, with £1.7 billion in existing stock and £10.8 billion in new housing supply, which includes social housing and properties for sale and market rent
- The sector raised more than £10 billion (2017: £7.6 billion) in new debt facilities from banks and capital markets with borrowings (drawn debt) increased by £3 billion to £72.5 billion
- Expenditure on repairs and maintenance of existing social stock at £5 billion increased by 3% compared to 2017
- The operating surplus from social housing lettings decreased by 2% to £5 billion. The period covers the second year of 1% rent reductions on general needs homes and, for the first time in 2017-18, providers also had to reduce rents on most supported housing properties
- The value of the properties held for sale at the year-end was £5.6 billion, mainly consisting of land and work in progress rather than completed properties. This was an increase of 17% on 2017
The sector’s future capital commitments totalled £28.6 billion (of which £12.4 billion has been contracted) is an increase of 17% compared to the figure reported in 2017
(Source: Global Accounts of Private Registered Providers, Social Housing Regulator, December 2018)
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Chair: Carol Matthews, chief executive, Riverside
Host: Ray Christopher, Seam Capital
Pete Bojar, executive director of growth and assets, Great Places Housing Group
Steve Coffey, chief executive, Torus Group
Colette McKune, deputy group chief executive, ForViva
Paul Fiddaman, chief executive, Karbon Homes
Rachel Taylor, interim director of finance, Mosscare St Vincent’s Housing Group
Simon Morris, executive director of resources, Salix Homes
Carmel Chambers, director of resources, Stockport Homes
Did someone say lunch?
Mark Cantrell, editor, Northern Housing magazine, Crosby Associates Media
This roundtable first appeared in Northern Housing magazine #3 Spring 2019.