Preparing for change

At L&Q we are preparing for change. In a few months’ time we will face a general election. Whatever the outcome the future is local, and whoever the chancellor is, public spending will be reduced. What won’t change is the huge demand for housing across all tenures, but localism alone won’t meet this demand. There are two other vital ingredients – social enterprise and partnership. That’s where housing associations come in, but what kind of economic conditions should we be planning for?

L&Q is seeing continued signs of optimism amongst homebuyers in London and the South East, driven by a belief that house prices are rising. UK gross mortgage lending is increasing, but in mid November the banks raised mortgage rates and introduced stricter lending criteria due to concerns that this year’s house-price recovery is not sustainable. In these conditions it is likely that house builders will place very safe, very short and very long term bets, but medium term risk will be avoided until the market is easier to call.

Where does this leave us? In a market where high earners will still have access to mortgage finance, the most vulnerable will still have access to cash limited social rented housing, and with a huge and growing hole in the middle. We face a chronic undersupply of new homes, which is bad news for anyone thinking of starting a home of their own, but a time of opportunity for housing associations.

Why? Because we are able to take a long term view of the housing market and adapt to changing patterns of housing demand. We build for rent, for sale and everything in between. We borrow long, we retain and reinvest our surpluses in our social mission and we deliver locally. But the question is, what do we deliver in a world with little or no grant?

At L&Q we have set ourselves the challenge of moving towards a subsidy free development programme. This might seem like a tall order but now is the time to start that journey. How? By developing new partnership and housing models with local authorities and house builders, driving efficiency, taking measured risks and boosting our investment capability.

Everyone at L&Q is working to two simple targets – maximising resident satisfaction and boosting our financial strength, not one in favour of the other, but both. If we look after our residents and our bottom line, they will look after us, and we can face change with confidence.

This article is taken from the latest issue of Creating Places, L&Q's magazine with news and views on housing issues.