Mark Henderson is Chief Executive of the Home Group.
What are housing associations and what is their purpose?
Outside of the sector, many people still conflate housing associations with council housing. It’s a simple mistake to make as they have both traditionally provided subsidised housing for those most in need.
Helping those in need was why Home Group was established by Act of Parliament in the 1930s – to tackle poor levels of housing and deprivation in north east England. If our raison d’etre 80 years ago was to tackle social inequality which resulted from slum housing, what should our modern day social mission be?
Simple market economics dictate there will always be a section of society which will never be able to afford their own home and Home Group, as well as other housing associations, will always be there to help them. But in 2016 the big housing issue is no longer slum landlords; it’s affordability of rent and getting on the housing ladder. For many the cost of property is prohibitive and for others even saving up for a deposit seems an unachievable goal – especially with house price inflation meaning a deposit can be an ever shifting finish line.
The Government has taken a number of steps including Help to Buy and Help to Buy ISAs. And of course the voluntary Right to Buy (vRTB) scheme will enable housing association tenants to buy a discounted home.
We know 87 per cent of Home Group’s customers aspire to own their home. But with vRTB likely requiring a ten-year tenancy qualification and the SNP vetoing the policy for our Scottish customers what help is available for those who would like a stake in their own home even if they might not be able to afford it outright?
Saving for a deposit while paying rent can be a significant barrier to home ownership. That is why later this year Home Group will run a pilot scheme on graduated ownership. It’s our way of helping our customers to achieve their aspirations by rewarding regular saving and giving them responsibility for the home they live in.
- Encourage customers to save by match funding the £1 contribution from government under Help to Buy ISA. For every £4 our customer saves they benefit from £1 from Government and £1 from us.
- Freeze the value of their property for five years once they start saving. Any subsequent house price inflation rises won’t see a corresponding rise in deposit required.
- Reduce rents in return for the customer taking on increased repairs responsibilities. This will free up cash from their weekly budgets and help them with savings but we think it’s also great preparation for the responsibilities of being a homeowner.
Housing associations do great work in helping some of our more vulnerable customers reach their potential.
But if we honestly ask ourselves: ‘What have we done for the majority of our customers; the ones who simply pay their rent on time and never trouble us?’ The answer is likely to be ‘very little beyond what we are contractually obliged’.
Graduated ownership intends to address that. We should be working to help all of our customers meet their aspirations and by re-investing the receipts from sales, we’ll continue to provide for those who may never own their home.
Do I think we’ll sell 87 per cent of our homes? I doubt it, but I want to at least give every customer the opportunity to fulfil their potential.