Housing associations are instrumental in the English housing sector – providing housing management and landlord services to 16% of all households in England. In addition to providing vital social housing and community services, they also provide home ownership options for those seeking to get on the housing ladder. But housing associations are facing some serious challenges.
Housing quality is a real concern. About a third of social housing has mould and condensation. And while the UK has some of the dampest housing stock in Europe, problems with condensation and mould in the social housing sector are over twice as bad than in the private sector. With rising heating costs and fuel poverty, the worst off are often the most impacted.
Housing associations are making record investment to improve their housing stock – but at a cost. According to the Regulator’s measure of financial health – EBITDA MRI Interest cover – housing associations are at their lowest levels of interest cover since 2010. With inflation sticking, rising repairs and maintenance costs will continue to challenge financial performance. This challenge will grow as decarbonisation retrofit programmes take off in earnest and societal expectations continue to rise.
Social housing providers are grappling with a range of major external economic pressures. At the same time, they are spending record amounts on improving their tenants’ homes and fixing problems like damp and mould.
- Will Perry, Director of Strategy at Regulator of Social Housing
Despite these challenges, on aggregate the sector continues to have strong financial performance. But some associations are much worse off than others. When housing associations don’t perform, tenants lose out.
While the Regulator has had a tight grip on “economic” standards, until recent legislation, its powers to intervene on “consumer” standards, such housing and service quality, have been limited. Now, the Social Housing (Regulation) Act 2023 gives the regulator new enforcement powers and residents the ability to compare their landlord’s performance to others. And the Regulator will be looking at new ways to intervene when providers aren’t compliant with their standards – including up to £1m in financial penalties, revoking a regulatory registration, appointing a manager and potentially takeover or merger. Boards of directors are also now personally accountable – and could face fines or even imprisonment – for health and safety failures.
Our current government has been openly critical of housing associations, with various efforts to “name and shame” those who fall short. We expect that if Labour is elected later this year, pressures to reform the sector will continue but with added demands to deliver towards Labour’s vision of 1.5 million new homes. This inflection point for housing associations means that real change has to happen, and soon.
