Housing was once again firmly at the top of the news agenda in 2018.
The fallout from last year’s Grenfell Tower tragedy still dominated the headlines, with the inquiry into the fire opening and Dame Judith Hackitt releasing her controversial report into building regulations.
We also found the extent to which cladding similar to that which encased Grenfell has been used on hundreds of blocks up and down the country. The battle to have these removed is still raging, and could go well into next year.
But it wasn’t just Grenfell that exercised the minds of the housing sector. The year also saw the publishing of the Social Housing Green Paper, the government document which may – at long last – signal a change of attitude from Westminster when it comes to how it deals with the sector.
That change of attitude has already been reflected in the introduction of strategic partnerships with housing associations and the scrapping of the borrowing cap for local authorities. Of course, both initiatives are squarely aimed at one goal: reversing the trend of decreasing housing numbers.
We won’t know how successful these strategies have been for some time. Nor will we know if the Homelessness Reduction Act has made any impact on the all-too-visible rise in homelessness and rough sleeping.
But, as with so much, 2019 might be the year when answers to these questions start to reveal themselves.
Below, our team of journalists reflect on another busy – and at times difficult – year:
The Social Housing Green Paper
As the year began, the government continued its series of ‘roadshows’, asking tenants about what should be in its forthcoming Green Paper. While these were held behind closed doors, Inside Housing obtained a letter from then housing minister Alok Sharma revealing concern from tenants about issues including the level of so-called ‘affordable rents’.
But before the roadshows were complete Mr Sharma hit the road in a different way – reshuffled out of his job and into the Department for Work and Pensions. In his place came Dominic Raab, who carried out the last roadshow and continued to work behind the scenes on drafting the policy document which Sajid Javid, the communities secretary hadpromised would be the “most substantial report of its kind for a generation”.
But then Mr Javid left too – moving to the Home Office to take over when Amber Rudd fell on the sword marked Windrush scandal. He was replaced by James Brokenshire, and we entered a period of promises made and promises broken over when the paper would be published. Behind the scenes – Inside Housing understands – the revolving door of ministers tinkered with the content, each seeking to put their own stamp on the document.
In July Inside Housing learned one of the key measures would be the introduction of ‘league tables’ of social housing providers. In August, this was confirmed when the 76-page document was finally released.
It contained the league table suggestion, as expected, as well a promise to give the regulator sharper teeth to act on residents’ concerns – teeth which, it must be noted, were removed by Grant Shapps in 2010 as the coalition government’s “bonfire of the Quangos” raged.
The paper received a lukewarm response. Its measures to tackle stigma were flimsy (street parties). The opposition and the national media attacked it for lacking muscular policies to build new social homes. The housing association sector frothed over the potential negative consequences of league tables. Grenfell survivors slammed it for not going far enough.
As summer receded into autumn, the consultation opened and closed on November 5. We now await the findings and the next steps. Behind the scenes, experts say the regulator is adamant that consumer regulation will become a much bigger part of its role and is evidencing this already in recent judgements.
The next step is the official response to the consultation from ministers. But with Whitehall’s gears now chronically clogged with Brexit, the story of the year mirrors a script by Harold Pinter – halting dialogue, a cast of the powerless, and a plot which ends in the same place it began.
Development: Homes England’s strategic partnerships
Nick Walkley, chief executive of Homes England, is spearheading the new delivery of a new house building programme
The dawning of the new year also saw the birth of a new delivery body for the government’s housebuilding programme: Homes England.
More important than a name change for the erstwhile Homes and Communities Agency was a fresh approach to development. As revealed by Inside Housing in January, Homes England launched its strategic partnership project, which chief executive Nick Walkley described as a move away from a “parent and child” relationship with housing associations.
Mirroring the approach taken in London by the mayor’s office, these partnerships would see the government body help with land assembly and financing, as well as grant.
The first wave of partnerships was announced in July, with eight associations or groups of associations sharing £590m and a promise to build more than 14,000 affordable homes by 2022.
A further eight partners were named in October, with a funding pot of £653m from the government’s Affordable Homes Programme.
The change in approach seemed to mirror a new phase of the relationship between government and housing associations. This was never more evident than at September’s National Housing Federation (NHF) annual summit at which Theresa May gave the keynote speech.
The prime minister gave her backing to the strategic partnership model, but challenged associations to use government support to build more homes. She also announced an extra £2bn of funding for the post-2022 Affordable Homes Programme.
However, that speech came against a backdrop of falling delivery. At the same summit, the NHF released research showing that soaring land costs had driven down the number of new homes its members were completing.
With the spectre of Brexit looming over the country – and build costs likely to be hit hardest by a no-deal outcome – only time will tell whether the government’s rhetoric will be matched by reality in 2019.
Diversity among social housing leadership teams, or the lack thereof, has been one of the major topics of 2018 and in January Inside Housing launched a new Inclusive Futures campaign to shine a spotlight on the issue further.
Inclusive Futures research showed the scale of the challenge facing the sector when it came to inclusive leadership teams. Just 4.5% of executive teams were BME. The figures also revealed just three out of 64 associations to respond were led by a BME chief executive, while just 34% of chief executives were female, 1% had a disability and just 1.6% of board members were LGBT.
We set the sector a five-step challenge to ensure an inclusive future, including prioritising inclusion, collecting data on the diversity of the workforce and setting targets for recruitment from under-represented groups.
Inside Housing also pledged action, including taking forward the Women In Housing Awards, convening the first ever Inside Housing Inclusive Futures Summit in October and publishing the first in a series of diversity audits of our own coverage. In June we published our first ever BME leaders list.
Several housing associations pledged to adopt the Rooney Rule, which obliges them to shortlist women and BME candidates for senior roles, while the first batch of graduates completed the Leadership 2025 programme, which aims to help BME leaders into senior positions and is sponsored by L&Q, Optivo, BME London and supported by the mayor of London
The Grenfell Inquiry began in May with heart-wrenching testimonies from friends and relatives of the victims.
As the inquiry progressed, detailed expert reports were released, which bought to light new facts about the deficiencies with the tower’s refurbishment.
Then came months of cross-examination of the firefighters who battled the blaze. This period of the inquiry was painful – the scrutiny of how the London Fire Brigade dealt with the fire, how well prepared it was for a major disaster and how useful its equipment had been was clearly necessary, but it was tough on the men and women called to answer for these failings, many of whom were battling their own trauma from the night.
Nonetheless, when it concluded we knew a lot more about the failure of the stay put advice and the apparent lack of information which led to it being issued, the poor communications equipment firefighters relied on, and the lack of knowledge or preparation in the force for a cladding fire like Grenfell.
“During closing statements, corporate participants pushed the blame around or refused to speak at all”
Then came the testimonies of survivors. These were, if anything, even harder to hear. They did expose though the extent of failure in some key aspects of the building’s refurbishment which may have contributed to the spread of the fire. There was evidence of endemic problems with fire doors and extensive complaints about new windows which have been blamed for letting the fire in and out.
More evidence followed in recent weeks, including from Robert Black, chief executive of the Kensington and Chelsea Management Organisation (KCTMO), who compounded some of the anger against his organisation by revealing that he sat on information needed by firefighters for two hours without forwarding it, and spent some of the night preparing for media questions the next day.
During closing statements, corporate participants pushed the blame around or refused to speak at all, while survivors called on the chair to issue robust interim findings and expressed anger at senior members of the fire service.
We close the year in the knowledge that the inquiry will not return for its second phase until 2020 – a lengthy delay and one that has sparked fear among some that justice could be denied.
The annual Inside Housing/Chartered Institute of Housing Rising Stars competition, which showcases the talent and commitment of up-and-coming housing professionals, was revamped in 2018.
Ten shortlisted candidates wrote blogs for Inside Housing, took part in a live Twitter chat and faced off in a public vote. The finalists then participated in a round table debate with judges and sector leaders.
After a fierce competition, Oliver Harling, a trainee surveyor at Irwell Valley Housing Association, emerged as the winner.
Movers and shakers
Kate Henderson was appointed chief executive of the National Housing Federation
There were several high-profile appointments and moves among senior executives in the sector in 2018.
David Orr brought his 13-year reign as chief executive of the National Housing Federation to an end when he stepped down in September.
In June, the NHF announced that Mr Orr’s replacement would be Kate Henderson, chief executive of the Town and Country Planning Association. Ms Henderson was described in June in an Inside Housing profile as “a passionate advocate of garden cities who has not been shy to criticise government”.
Jo Boaden announced her retirement as Northern Housing Consortium chief executive in December and will be succeeded in 2019 by her deputy Tracy Harrison.
Clarion Housing Group had no less than three chief executives in 2018. Long-serving CEO Keith Exford retired at the end of March, handing over the reins to Midland Heart boss Ruth Cooke. However in a shock move just five months into her tenure, Ms Cooke announced her resignation from the role, citing “personal reasons”. Clare Miller, director of governance and compliance, took over as chief executive.
Elsewhere there were new chief executives for several large housing associations, including Catalyst, Southern, Midland Heart, Sovereign and Gentoo, while David Bennett announced he will be standing down as chief executive of Sanctuary after 27 years in January, to be succeeded by chief financial officer Craig Moule.
Exclusive Inside Housing research in October revealed 44 chief executives of the largest housing associations in the UK have left their role since January 2015, taking with them 511 years of experience.
The borrowing cap scrap
One of the major housing policy announcements last year waschancellor Philip Hammond’s deal to allow councils to bid for £1bn of additional borrowing capacity for housebuilding.
In 2018, the government went one better. At the Conservative Party conference in October, Theresa May used her keynote speech to announce that the Housing Revenue Account (HRA) borrowing cap would be scrapped altogether.
The HRA cap had set individual limits on local authorities’ ability to borrow for investment in new homes since 2012.
The prime minister’s announcement was warmly welcomed – particularly by Lord Gary Porter, chair of the Local Government Association, who told Inside Housing it was “the single biggest change in social housing since Thatcher”.
Behind the scenes, some in the sector remain wary, concerned that there may still be onerous strings attached to the new borrowing freedoms.
“The single biggest change in social housing since Thatcher” Lord Gary Porter on the axing of the cap
However, the HRA cap was abolished less than a month later on the 30 October, with loans then only subject to the same prudential rules as other local authority borrowing.
It was all quite a surprise – though arguably, this policy had been coming for some time. As Inside Housing reported in July, bids for the pot offered by Mr Hammond had flooded in over the summer. Applications eventually easily surpassed the £1bn mark, and ministers have said the level of demand for this programme was instrumental in the decision to scrap the cap.
Furthermore, a number of councils – led by Stoke-on-Trent, Sheffield and Newark and Sherwood – had been in talks with the government over expanding their HRA debt capacities since early 2017, and had been met with definite interest from ministers.
Of course, this is all about housebuilding numbers, and the big question now will be whether town halls can deliver on ambitious promises. Estimates on how many extra council homes can be built in the absence of borrowing restrictions vary from just 9,000 to around 100,000. The main sticking point is likely to be capacity: building hundreds or thousands of homes from virtually a standing start is far from easy.
The Homelessness Reduction Act came into force in England in April, conferring duties on local authorities to prevent homelessness. As a result, councils are now required to assess more homeless applications, provide more advice services and support people to enter or remain in stable accommodation for a longer period.
In July we looked in depth at how two councils were responding to the challenge, while official figures in December showed councils haveaccepted homelessness duties for more than 65,000 households in the first three months after the law came into effect.
Despite the new law, many councils found it a struggle to house people, and we revealed in August that 290 councils spent nearly £1bn on temporary accommodation in 2017/18.
In December we uncovered figures suggesting Universal Credit is making people homeless
2018 saw a number of firsts in Welsh housing policy, including the launch of Rent to Own in February- a government-backed home ownership initiative for Welsh housing associations –and, in a victory for Inside Housing’s Homes for Cathy campaign, the announcement in February of a Housing First programme to combat homelessness.
The Welsh government’s housing regulation team also published its first ever ‘lessons learned’ report in December following intervention in Cardiff Community Housing Association in March.
It was a busy year on the housing front for the Welsh government, which announced an overhaul of its grant regime in October.
Ministers ditched plans for one huge grant programme incorporating housing and non-housing funds, after concerns were raised that this could lead to Supporting People funding being diverted elsewhere.
The Welsh government finished the year with an announcement thatthe rent settlement for 2019/20 would allow landlords to increase rents by inflation only.
Also in the headlines in 2018 was housing association Trivallis, which is introducing a modified version of Living Rent for its tenants.
The impact of the Grenfell Tower fire on the country’s other high-rise blocks and their cladding systems would be a persistent theme of 2018.
In January the government’s Building Safety Programme had identified 299 buildings with aluminium composite material (ACM) cladding – by the end of the year that number would rise to 441.
It emerged that private leaseholders could face bills of tens of thousands of pounds as freeholders and developers refused to act and pay for the work.
In March, residents at the Citiscape tower block in Croydon were told they would have to pay £2m to re-clad the block after losing a property tribunal case. It was a similar story for blocks in London, Manchester and Leeds.
Barratt would become the first developer to offer to cover the costs of re-cladding in April, when it agreed to foot the £2m for work on Citiscape. Only a handful of other companies would follow suit.
For the majority of blocks action would be slow, with 243 private blocks still yet to see their cladding removed.
Councils and housing associations were faced with paying for the removal of cladding from nearly 160 of their blocks at the start of the year.
Mr Brokenshire finally brought in legislation banning combustible materials from high rises. He also vowed to provide financial support to local authorities to accelerate remediation work on private blocks
Under mounting pressure, prime minister Theresa May announced a£400m fund to pay for the removal of ACM cladding on social housing blocks.
In October, 31 housing associations received £116m and 12 local authorities were handed £132m to pay for the work.
Many of those who wanted to see firmer action taken on cladding were pinning their hopes on Dame Judith Hackitt’s review of building regulations, which was eventually published in May. However, it failed to include a recommendation for an outright ban on combustible cladding and was labelled a “whitewash” by critics. The government nevertheless announced in December it was to implement the recommendations in full.
In a dramatic twist hours after the report’s publication, housing secretary James Brokenshire announced he would consult on an outright ban of combustible materials despite no mention of such a ban in the review.
It was not until November that Mr Brokenshire finally brought in legislation banning combustible materials from high rises. He also vowed to provide financial support to local authorities to accelerate remediation work on private blocks.
However, questions have been raised over the effectiveness of both moves. Councils have said it could still take months or years for work to start, and freeholders would still likely force leaseholders to foot the bill.
The Housing, Communities and Local Government Committee said the ban did not go far enough and needed to cover all existing and planned high-rise blocks.
In Scotland, social landlords debated the ability of the sector to achieve the Holyrood government’s stated aim of building 50,000 affordable homes by 2021, with 35,000 at social rents. The government continued to pump money into the building of new homes. It also pledged to install sprinklers, in contrast to the government south of the border.
Meanwhile, in a bid to cut homelessness, Scottish ministers backed an expansion of the Housing First scheme, which seeks housing for rough sleepers and then builds in support around it.
In Glasgow, there was consternation over the planned eviction of asylum seekers from temporary accommodation in the city by outsourcing giant Serco.
It was a busy year for the regulator north of the border: it consulted on a new framework and flexed its muscles several times, intervening in a number of problem cases.
The rise of REITS and the First Priority saga
It was the second month of 2018 when investment funds with a newfound interest in social housing took their first hit.
After growing rapidly throughout 2017, real estate investment trusts (REITs) like Civitas and Triple Point, along with private equity investors like Henley, Equitix and Gravis Capital, seemed like they were in a strong position.
Interest from the stock market was still keen and funds were splashing the cash on supported living units leased to small housing associations across the UK.
In February, however, came a bolt from the blue. The Regulator of Social Housing declared that one of the funds’ larger housing association partners, First Priority, was non-compliant with its standards for financial viability and had a “fundamental failure of governance”.
The work to save First Priority began almost immediately and we now know that the housing association almost became insolvent in March thanks to unsustainable deals it had signed with investors. Inside Housing revealed this and more of the inside story of First Priority in an in-depth investigation last month.
First Priority’s crisis swiftly had an effect on the REITs’ share prices, even those that weren’t directly involved in the troubled association.Triple Point and Civitas both saw their share prices fall in April.
A couple of other REITs attempted to launch in the social housing space at around this time, with one of them, Fundamentum, warning as it did so: “There will be another First Priority.”
Fundamentum, however, failed to raise any money, with experts on the market telling Inside Housing it had picked the wrong time to enter the lease-based social housing space.
First Priority’s crisis swiftly had an effect on REITs’ share prices, even those that weren’t directly involved in the troubled association
At the same time, the regulator expanded its investigations into this sector-within-a-sector, writing to dozens of other housing associations with business models similar to First Priority, warning of “conflicts of interest”.
Starting in May, the regulator began putting lease-based housing associations on its ‘grading under review’ list, meaning they may be in breach of its standards on governance or financial viability.
In June, another REIT – Horizon – attempted to launch, but missed its fundraising target as well, with interest from the stock market still low.
Once the summer was over, however, activity from investors began to pick up, with Triple Point raising £100m on the stock market in October.
REITs and private equity funds alike continued to buy up properties,even leasing them to an association still under investigation by the regulator.
More and more housing associations were added to the regulator’s list over the summer, before it dropped another bombshell in November. Trinity Housing Association, it said, was non-compliant with standards on governance and financial viability. Another association,Westmoreland, followed soon after.
Two other housing associations remain on the regulator’s list, with judgements expected on both before too long.
This wasn’t the only outlet for private equity’s newfound interest in social housing, however; 2018 also saw the entrance of the world’s largest property investor, Blackstone, into the social housing sector.
Blackstone bought a registered provider of social housing, Sage, whilethe huge institutional investor Legal & General set up its own landlord.
Rumours abound in the financial markets of massive interest in setting up similar for-profit registered providers. Given the size of the funds already getting stuck into the sector, the scale of ambition here should not be underestimated. This is definitely a trend to keep an eye on in the new year.
How long could society continue to function without a government? It sounds like an essay title in an undergraduate political theory exam, but it is also an experiment that Northern Ireland has been living out for two consecutive years.
The power-sharing agreement between the unionist DUP and republican Sinn Féin collapsed in January 2017 and remains deadlocked, with the country passing the world record for longest period without a government in September.
As a consequence, this year has been one of little policy progress in the world of Northern Irish social housing – a policy devolved to a government which does not exist. In January, the Northern Ireland Housing Executive (NIHE) was required to put a contingency plan in place after the collapse of Carillion, with which it had a huge heating contract.
But later the story turned to the future of the NIHE itself. The giant landlord, which manages the country’s 86,500 social homes, revealed it faced a ‘perfect storm’ of funding pressure and political uncertainty which could lead it to effectively abandoning half of these homes to disrepair. The organisation wants to convert itself or transfer stock to become more like a housing association and therefore gain the freedom to invest – but without political leadership, this will continue to stall.
Elsewhere, housing associations started developing offsite schemes and private rented housing – and there was a focus on more mixed-tenure development.
But it was political uncertainty that was the dominant theme of the year, with the lack of a government meaning there was no mechanism to stop the bedroom tax impacting many more households despite a political commitment that it would not apply, nor to take the measures necessary to take housing associations off the national balance sheet.
The sector will be eager for more certainty next year.
The leaseholders stuck in buildings with Grenfell-style cladding
There are almost 300 private buildings around the country with Grenfell-style aluminium cladding, including 205 residential blocks.
Leaseholders face fears over fire and, in many cases, crippling bills to fund its removal.
This week the Housing Podcast visits two of these sites to ask what happens next.