News

  • Right to Buy makes no sense in growing Austrian market

    Austrian social housing chiefs facing strong price rises are astounded
    by the UK government's intention to extend the Right to Buy, arc4
    Director, Derek Long, has learnt.

    The Right to Buy policy attracted incredulity during an overview of
    current UK housing policy that Derek gave to 30 Austrian housing
    association Chief Executives and journalists in October. The
    undermining of the social rental asset base at a moment when
    affordability is crucial for economic recovery was considered by the
    Austrian delegation as a poor outcome, both for the UK as well as its
    associations.

    The fact-finding visit into UK social housing was organised by the
    Österreichischer Verband gemeinnütziger Bauvereinigungen - the
    Austrian version of the National Housing Federation for co-operatives
    and limited profit housing associations.

    Whilst Austrian housing prices have not increased as fast as the UK's
    in past year, the Austrian price to income affordability gap has grown
    faster even than in the UK. In the five years since 2010, house prices
    in Austria rose 18% more than incomes. This level of unaffordability
    is the highest of the developed countries in the OECD. The UK has the
    fourth highest increase after Germany and Switzerland at 8%. Austrian
    house prices were also outstripping rental increases at a slightly
    higher rate than in the UK.

    Commented Derek Long,

    "To deliver Right to Buy replacements successfully, HAs will need a
    forensic understanding of local markets."

    Category: News, Housing industry, Property, Arc4 Tags: right to buy, austrian housing market, arc4, Social housing
  • Are you in the market …?

    Delegates never return from the Federation’s Annual Conference saying they have seen something genuinely historic that will unlock new market opportunities for them. Yet, the opening of Grand Central – the new shopping mall above the redeveloped Birmingham New Street Station – has changed all that!

    In other news, from the Fed’s 2015 Annual Conference, Minister Greg Clark’s foisting of a voluntary Right to Buy regime onto the housing association movement is genuinely a historic shift, on a par with the 1988 Housing Act. Every significant association is now operating in the home ownership market. Regardless of size or inclination, they will be selling a chunk of their best rental properties and replacing them with sale or shared ownership products. The result of the NHF’s eight day “vote” on the voluntary code is a foregone conclusion. The large providers have already given their support and the counting will be by the amount of stock held.

    So, what are the key implications for associations?

    - All associations are in the home ownership business now. They will need to really understand their markets and their customers to a far greater extent than ever before. That will be a challenge – especially for those who are not already developing.

    - Decisions to reinvest in stock will have to be made in the context of the market – will this asset transfer as soon as the kitchen fitter has walked down the path?

    - The question of whether to renew sheltered housing assets has become even more difficult to determine.

    - Understanding the reaction of existing tenants will be pre-requisite intelligence for any major board decision. “Pay to stay” tenants will be at the front of the queue – and in some parts ethnic groups may also be very active in buying their homes.

    - Larger providers will use the receipts to spread risk and relocate their businesses into better markets thereby undermining the market where the RTB occurred.

    - Downstream, there will be much more competition for the remaining social rented stock as RTBs slide into private landlords’ hands.

    - This is going to produce interesting responses from the retail mortgage companies. Will red-lining of estates reoccur once defaulting follows the inevitable interest rate rises? Might this be a commercial opportunity to diversify into the private rental market?

    - The Minister’s two year replacement turnaround is very tight. Achieving the misleading 1 for 1 replacement will become a political and therefore regulatory issue in a couple of years.

    - And so on. This is a genuine paradigm shift. Government, regulator and the sector have only the broadest of ideas where the Birmingham announcement will end up.

    Lemonade?

    Given the housing crisis, RTB2 is clearly a daft policy. History will regard spending hundreds of millions of Pounds to end up with many fewer homes as immense folly. To disrupt the last remaining delivery mechanism for volume building in a recession will haunt future government’s economic policy. And undermining probably the strongest part of the third sector in Britain represents a cultural vandalism that weakens our civil society profoundly.

    So can associations make lemonade from the huge lemons they’ve been handed?

    Yes, but it will all hinge on using what government will pay in compensation quickly and effectively. Quickly, means replacing the lost property within two years, or the significant hole in rental income will be made deeper by the Treasury clawing back the compensation. Effectively, means using this opportunity to diversify into new markets – both locations and products – before the social rental base becomes too small to support significant growth. This can only happen where associations have a real and very precise understanding of their local housing markets. This forensic understanding can only be gained from real-time intelligence about what it costs to rent or buy down to street level and who their public and private competitors are.

    Like it or not, we’re all in the market now.

    Derek Long is a director at arc4, the housing and markets consultancy

    Category: News, Housing industry, Property, Social housing, Arc4 Tags: Social housing, Housing, natfed, right to buy
  • Arc4 assesses opportunities and challenges for registered providers

    With the Chancellor's Summer Budget adding momentum to the "Northern Powerhouse", Arc4’s Derek Long was invited to analyse the future opportunities and challenges for the new grouping of the Chairs of Greater Manchester Registered Providers. The group will now complement the longer-standing Chief Executive led providers group in the city region and will be a focus for non-executives' development.

    Category: News, Social housing, Arc4 Tags: Housing, Social housing, Registered providers

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