Be Careful What You Wish For.

I often think there is nothing new in housing. If you wait long enough old ideas come around again. People have talked about deregulation in the sector for as long as I can remember. They have also proposed having the freedom to set our own rents. I remember discussions in the early 1990s about doing this within the Fair Rent Regime.
I have always supported regulation. I believe there are many examples where regulation has benefitted social housing, not just in financial and governance issues but also in areas that have directly benefitted tenants and residents. Involving tenants in our work increased when it became a regulatory priority. Diversity, both in employment and service delivery, improved when the regulator intervened. It is no coincidence that we have gone backwards on ethnic diversity since it fell off the regulator’s radar, and subsequently housing’s radar.
This is why I have concerns about the current call for deregulation and within that a proposal to allow housing associations to set their own rent. We are already witnessing a huge reduction in social rent homes. The Chartered Institute of Housing estimates around 250,000 will be lost by 2020. If the average house size is three to four people, that is nearly one million people we will not be able to provide homes for. This is something we should all be concerned about. But sadly the sector is almost silent on the subject.
One of the reasons for this loss is converting social rents to so-called affordable rents. I fear that the ability to set our own rents will only accelerate this loss and that housing associations will move further away from providing real social housing. All of the research I have seen only talks about the headroom to increase rents and the funds it will free up to boost development. I have seen no research on reducing rents or more importantly the effect of higher rents on current and future tenants. There is growing evidence that increasing rents and reducing benefits is leading to the exclusion of people on low and no incomes from social housing. This proposal could lead to more people being excluded.
The counter argument is that the ability to set rents will allow housing associations to build more and set rents to allow for local circumstances. I am not aware of any evidence that supports this. I am concerned that the likely outcome will be, at best, a two tier system, and greater residualisation. One where there will be different levels of service depending on what rent you pay. I also fear that when boards have to make tough decisions about rent levels, financial imperatives will take priority over social purpose and values.
Boards and staff have little experience in rent setting. I can see that this proposal will increase the use of advisors and consultants and lead to extra costs. I can also see that it will reduce pressures to become more efficient and reduce costs when cost increases can be met by increased rents. Over the years cost inflation and price inflation usually runs ahead of income increases. In the long run our homes will become more unaffordable to the most vulnerable in our society. The people we were set up to help. I am not aware that anyone has looked at the effects on future benefit payments. But if they increase, the government will come under pressure to make further cuts or introduce caps.
If anyone doubts that these things are possible, look at the utilities. They were deregulated and privatised and since then we have only seen their prices increase to unaffordable levels. This is causing so much concern that both major parties are proposing to cap and control prices. Is this a possible future for housing associations if this proposal is implemented? Be careful what you wish for. We might think that today’s leaders will stay true to their social purpose, but what of tomorrow’s?
This blog recently appeared in Inside Housing under a different title.