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Housing association reclassification threatens to reopen wounds

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LGC’s essential daily briefing.

“Housing associations… deliver an incredible social good, providing good quality homes for millions of people right across the country. They have such an important role to play in getting homes built, which is why this government has not hesitated to give them the resources they need to succeed.” 

Those were the words of the communities secretary this morning.

Unfortunately the apparent reluctance to give all councils similar borrowing freedoms suggests the government does not hold local authorities in the same regard. And yet both organisations deliver social housing which this government has recognised (albeit relatively recently) as being “treasured” by the nation.

While Mr Javid spoke today of wanting to give “financial headroom” to councils to build more housing, a source close to the communities secretary told LGC that offer is limited to areas in talks over bespoke housing deals.

As a result, it looks as if local government as a whole will have to continue to argue its case for lifting the borrowing cap for housing for a while yet.

And far from giving councils greater financial freedoms, Mr Javid today threatened 15 local authorities with getting civil servants in Whitehall to write their local plans – so much for localism!

LGC reported in September that relations between councils and housing associations are still recovering from the fallout of the government’s pledge to extend the right-to-buy (it’s still quiet on that front, by the way).

Today’s confirmation that the government is reversing a decision made two years ago to add housing association debt to the public sector balance sheet threatens to complicate matters further.

Not only do housing associations now have even greater freedoms than their council counterparts in relation to borrowing to build, but there are other factors at play too.

Hugo Stephens, partner at law firm Bevan Brittan, said section 93 of Housing and Planning Act (2016) is now effective from today. The regulations, which have since been passed into law, reduce the influence local authorities have over private registered providers of social housing.

Councils will now be restricted in the number of representatives they can have on a housing association’s board, while a local authority’s ability to hold voting rights as a member of a private registered provider will also be removed.

Mr Stephens said: “This will affect all the stock transfer associations in the country who still have their sponsoring local authorities as members and local authority nominated board members taking up more than 24% of the board.”

Housing associations will now have six months to amend their constitutions, said Mr Stephens.

Well, all of this is bound to do local relationships a lot of good then…

Speaking in September Chartered Institute of Housing chief executive Terrie Alafat said: “We are never going to deliver the housing the country needs unless we work better together… It’s also true government has its own work to do in terms of not undermining the crucial relationship [between councils and housing associations].

“The best government is the one that creates the enabling environment that allows us to get on and do our job.”

Based on current evidence, it would appear this government is doing the exact opposite of that.

Councils need to be wise to this and not blame their local partners.

If they haven’t done so already, now might be a good time for councils to start rebuilding relationships with their local housing associations. Without the financial freedoms councils crave, housing associations, and their renewed mandate to build even more homes, are perhaps the best hope local authorities have of delivering the social housing at scale their areas want and need.

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