David Montague's September 2011 round-up

Where next for affordable housing?

September was the month that we launched Where Next (pdf) – our third report with PricewaterhouseCoopers.

"Where Next" describes a dual housing crisis where the vulnerable and the young professional are fighting it out in the market rented sector. The prize for the winner? Six months security, variable quality and a cost which is now higher than buying outright for ninety percent of people.

Our report calls for the controlled expansion of the market rented sector using public land to attract the institutional investor and demanding greater security and better quality in return.

It calls for new freedoms and flexibilities which could enable housing associations to raise £20 billion to invest in new affordable homes.

It calls for stronger partnership between local authorities and housing associations, with local authorities using the £54 billion benefit arising from the reform of council housing finance which is now taking place.

And it concludes that, however affordable housing is financed in future, it will always require government support.

It is our job to drive efficiency and take measured risks to minimise the call on the public purse, but subsidised housing needs subsidy. In September L&Q took the proposals in Where Next to the Lib Dem and Labour Party conferences – a chance for us to understand the priorities of our local authority partners, to explain how we are using new government flexibilities in a responsible way, and to talk about the future.

The key messages I took away from the conferences were these:

• First, that affordable housing is back at the top of the political agenda. Housing is one of the key drivers of economic growth; there is a desperate need for more of it; and it is our job to provide it.
• Second, the increasing importance of partnership. There is a lot we can do to tackle the growing housing crisis, but we can do an awful lot more together.
• And third, the vital importance of staying in touch and getting the basics right. So long as we are listening, and providing a great service to our residents, the decision makers will want to know what we think.

This week, I’m at the Tory conference in Manchester.

Tenure and tenancies

In September L&Q’s Group Board discussed tenure – how we propose to use new flexibilities to balance carefully the need for security with getting the very best use out of our affordable housing stock.

In future we plan to offer a one year probationary tenancy, as now, followed by a five year tenancy. This change will only affect new tenancies – it will not affect existing tenancies; and we plan to exclude elderly and vulnerable tenants.

It is our expectation that in the vast majority of cases the new tenancy will be extended for a further five years. But in the longer term, perhaps in fifteen year’s time, we hope it will give us the opportunity to offer under occupying tenants a more suitable home, and by doing this, offer our overcrowded families a larger home.

We are now discussing our proposals with local authority partners with a view to implementation later on in this year.

Resident Board and a neighbourhood committee

In September I visited our Resident Board to discuss with them the changes which we are going through.

We discussed how L&Q is adapting to a new world of localism, an age of austerity and to the new affordable rent model. We discussed our thoughts on tenure. And we reviewed L&Q's operating performance.

I also visited L&Q's South West Neighbourhood Committee where most of our time was spent looking at neighbourhood investment proposals and making the difficult choice between projects to achieve maximum impact within a fixed budget.

This is co-regulation in action, and it is working.

Out and about

In September, I had a number of meetings to talk about the future:

• I attended Grant Shapps' 'summit' where he invited the fifty largest developing housing associations to discuss how we get the most out of Affordable Rent. His main message? To thank us for stepping up to the challenge.
• We held our annual lenders event to present our results for last year and plans for the future. Lenders now invest more in housing associations than government, and their confidence in us is crucial if we want to continue providing new homes. In September, thanks to the relative stability of UK social housing, associations could raise private money at historically low rates. A time of opportunity, provided we understand the risks we are taking and don’t over commit.
• I attended a round table event to discuss ways of getting the private rented sector to play its part in the housing supply challenge. We looked at successful private rented schemes like the Barbican and considered what we could learn from them to create sustainable and responsible growth.
• And I attended another round table event to discuss 'life after grant' – what happens in 2015 when all current government commitments are honoured? Is it possible that the tap will be turned off completely? The consensus view is that a level of public investment will be maintained, but no one is looking forward to a return of the glory days of high grant rates. Which means that we need to develop a new sustainable model. In our view, Where Next has at least some of the answers.

Back at L&Q:

• We gave James Brokenshire MP a tour of our new office in Sidcup, which is in his constituency. This was an opportunity for us to discuss constituency matters but also to update him on our wider business plan. Our organisational structure is designed to maintain this regular contact with MPs and councillors as well and to get closer to residents – all essential in a new localist world.
• I attended our Governance and Remuneration Committee to discuss Board development, improving our complaints process and executive pay.
• I met with some of our 56 employee champions – the people who have taken on the responsibility to hold L&Q to account over our new workplace pledge – what people want from L&Q as an employer and what L&Q expects in return. The pledge is an important sign of our ongoing commitment to remain a great place to work.
• And I attended the European Diversity Awards where we were shortlisted for our Women in Governance project. Sadly we didn’t win, but it was great for L&Q to be recognised for breaking new ground.

Quite a month; one in which housing rose back up the political agenda, a time of opportunity to attract private funds at very competitive rates, and a time, perhaps, when we will see a united response from local authorities, housing associations and government.

See you in October

David