SHAC: ‘Housing associations must return to their original social purpose’

The Social Housing Action Campaign (SHAC) is calling on housing associations (HAs) to waive rents and service charges for tenants suffering a negative economic impact as a result of the Covid-19 pandemic. For financially wealthy associations, SHAC demands that HAs write off any arrears, and pledge to avoid evictions even when the courts re-open in the last week of August.

If resources become tight, recognising the position of co-ops and smaller associations, SHAC calls on government to underwrite HA debt, as they did for the banks after the 2008 crash. Government effectively nationalised banking sector debt whilst allowing the banks to continue operating as distinct entities, retaining their own governance structures. The same model could be used to support any organisations whose financial viability comes under threat.

But why should SHAC even need to make this call? Aren’t housing associations dedicated to supporting the homeless and those in housing need? Wouldn’t they already do everything in their power, and target their resources, to diminish rather than increase the housing crisis?

In much of the press, the role of housing associations is largely ignored, and this often stems from a deeply outdated view.

Many people know of the registered housing association and charity Peabody. It was an organisation established in 1862 by philanthropist George Peabody who had a vision “of providing safe and affordable housing for the working poor”. It continues to retain and trade on this image. Yet strangely, its current mission statement is devoid of any reference to housing the poor. This is a clue that something is wrong.

Peabody, like many housing associations (HAs) sprang from deeply philanthropic roots and a strong social purpose. But a sample of employees, tenants and residents will testify that this image today is a mirage.

Peabody is one of a handful of corporations dominating the HA sector. A report in 2018/19, found that around 96 per cent of all HA homes were owned by just 20 per cent of the large (ie. owning more than 1,000 units) associations from the 1,600 or so total population. But in reality the sector is dominated by an even smaller cohort of giants. These include Peabody, with 66,000 homes, Clarion with 125,000 , Notting Hill Genesis with over 63,000 and London & Quadrant with over 110,000.

Of the many myths relating to these mega-corporations, one is that their primary aim is to provide homes at sub-market rents. This may be true for the sector collectively. HAs own around three million homes with around 85 per cent falling into the low-cost category. However, providing housing for the working poor is disappearing from the vision of sector leaders.

Take for example Peabody’s new development at Thames Reach. Of the 66 new homes, only 14 were allocated for social rent. Indeed, of 1,048 new homes developed by Peabody in 2019/20, just 426 were available as “much-needed social and affordable rented homes.” In other words, less than half. Similarly the Notting Hill Genesis development at Royal Albert Wharf in Newham comprising 1,800 units had an allocation of just 29 homes at social rent.

These examples reflect a powerful and broad trend among associations. A pan-sector report details the switch in tenures away from social renting. Between 2018 and 2019, conversions to ‘non-social leaseholds’ increased around 17 per cent (just under 9,000 properties) on the previous year. In this category, the association is simply the freeholder charging owners ground rent and sometimes service charges too. The second largest change was to the ‘social leasehold’ category, which increased around seven per cent on the previous year, with over 10,000 properties converted to this tenure.

Allied to this commercialisation is the move toward financial diversification. Financial reports describe an increasing array of financial instruments and mechanisms, including “entirely private subsidiaries, joint venture companies, and special purpose vehicles”. The trend is clear; large HAs are no longer social purpose organisations, but highly complex commercial operators. And their boards of management, with specialists from the fields of construction, commercial development, fund management, and finance houses, reflect this shift.

Providing housing for the working poor is disappearing from the vision of sector leaders

One consequence of the changed character of HAs is that their executives compare themselves to the chief executives of commercial developers, and expect commensurate salaries, bonuses and pensions. Places for People’s CEO David Cowans earned a basic salary of over £570,000 in 2018/19. Anchor Hanover’s Jane Ashcroft took home over £415,000, Clarion’s Clare Miller enjoyed basic pay of more than £380,000, and L&Q’s David Montague was close behind on over £335,000, according to an Inside Housing survey.

The change is expressed in their behaviour too. Increasingly tenants and residents are mere commodities.

But none of this is inevitable or necessary. The HA sector holds considerable wealth. It has a turnover of £23,570,000 and made a collective pre-tax surplus of over £3.5 billion in 2018/19. On this basis, there is no excuse for any association to evict on the basis of inability to pay. The sector collectively has the resources to continue housing those who have been unable to work or whose income has reduced as a result of the pandemic. In agreeing to take such a step, the large associations that have lost their way and would be taking a tentative step back towards their original social purpose.

Maintain the Moratorium

When the eviction moratorium ends on August 23, SHAC and other groups will be protesting between 12.30 noon and 1.30pm outside The Central London County Court, Royal Courts of Justice Thomas More Building, The Strand, London WC2A 2LL.

For more information, contact SHAC via email, Facebook, Twitter or at PO Box 66701 London E11 9FB

Do you agree with Suz? Do you have your own big ideas on how we can prevent homelessness and protect jobs in the wake of the Covid-19 pandemic? Let us know at rora@bigissue.com