Predicting the results of surveys is hard. There are always surprises. In the latest Social Housing Barometer, which provides a snapshot of business and economic confidence across housing associations, a welcome surprise is the very evident commitment to increasing housing development by most participating housing associations.
Despite concerns about the wider economy and some anxiety (particularly in London and the South East) over the property market, most housing associations are planning to develop more homes than anticipated in previous plans.
This is encouraging news. It’s a clear sign that housing associations are willing to step up and play a vital role in addressing the UK’s housing crisis. They are displaying a rising risk appetite and looking for new development opportunities. At the time of asking, organisations were confident in the government’s commitment to supporting the social housing sector and took encouragement from the five-year rent settlement in place. The question now is whether the optimism remains, given the new government in place, especially as the September Spending Review didn’t deliver as much as the sector expected or hoped for.
However, today’s environment isn’t an easy one for housing associations. We found uncertainty over the future strength of the UK economy, particularly in the event of a no-deal Brexit – which now appears a more likely outcome than ever before. Associations see many associated challenges – rising costs, shortages of supplies and labour, funding pressures and financial problems for tenants, to name a few.
On the other hand, some associations are also identifying potential opportunities in a post-Brexit era – including long-term low interest rates and the potential to buy land and properties at discounted prices. We found that housing associations are taking steps to both mitigate the risks they see and position themselves to be ready to take advantage of any opportunities that do arise. Again, this shows the resilience of the UK’s social housing sector and associations’ determination to do their best for their customers.
The widespread and continued focus on health and safety is another key theme this year. Health and safety tops the risk rankings and has significantly increased in priority as a board and management agenda item since our last survey. Spending on health and safety is a major factor behind many falls in anticipated financial surpluses. This is as we might expect. The social housing sector is still responding to the changing environment post Grenfell and associations want to ensure they are maintaining a safe environment for tenants. Doing so requires board attention and cash.
Another priority of board and management teams has been the focus on driving efficiency and innovation. Our New Economy policies highlight the role of the government in creating the right environment for the advancement of businesses. BDO believe the government should invest in smart infrastructure which will aid the development of the housing sector and the wider economy.
Download our report, we hope this sector insight will facilitate conversations for board and management teams and help you benchmark your organisation’s key risks and strategic priorities.
Phil Cliftlands, Head of Not for Profit at BDO.