It’s been a tough time for Registered Providers over the last couple of years, and it’s not looking any easier in the foreseeable future. The Welfare Reform agenda has introduced some important changes with broad political support, but also radical and controversial changes to the way that Housing Benefit is calculated and paid are threatening their previously stable and reliable income.
The newly elected majority government has also promised to extend the Right To Buy to all Housing Association tenants. If legal challenges are overcome and the policy is carried through, then HAs will have to sell off potentially valuable stock at a substantial discount. The Government has stated that they will fully support a one-for-one replacement build programme, despite historical evidence that this is very hard to achieve.
To put the icing on the cake, this Summer’s budget reverses the previously agreed rent formula, and now rents will have to be reduced by 1% each year until 2020. This move has prompted some HAs to announce that they will cancel their new build planning, or to seek to deregister as a social housing provider altogether.
To survive this new era of austerity and at the same time provide desperately-needed housing, many providers are looking to explore commercial opportunities. Over the years the sector has seen a variety of ventures, ranging from low-risk ‘bread and butter’ operations such as offering an out-of-hours repairs service on behalf of other providers to more radical projects such as commercial software development. These have met with mixed success, and it’s well–documented that half of startup businesses in the UK fail within five years.
Nothing is guaranteed in business, but HAs do have a head start in some areas: notwithstanding the current focus on their liabilities, their hugely valuable asset base, relatively stable income and strong surpluses give them enviable borrowing and buying power; very often they have large delivery teams that can be repurposed for commercial operations. For example many organisations with a DLO are launching B2C services aimed at their own tenants or the wider public, such as gas servicing, household maintenance or ‘handyman’ services for ad hoc jobs. B2B channels are also being explored, such as outsourced repairs or full facilities management for education and healthcare sector clients. Other avenues being explored include new build for sale, private rental and shared ownership – all areas that providers are well-placed to deliver.
This new reality presents a significant challenge to the IT suppliers to the sector. Where once the word “customer” was taboo, now it is central to many of their clients’ plans. Great customer service and insight have always been important, but increasingly the drivers are to discover opportunity, maximise profitability and customer loyalty. The fledgling commercial operations in the sector need the same sales and marketing support as any other business, but there is the potential advantage that these could be integrated into their existing information landscape to realise an unparalleled customer knowledge platform, and minimise costs and inefficiency. We’re entering a time of change not seen since the formation of the social housing sector, and it’s going to be fascinating to see how providers and their suppliers respond!
Aidan Dunphy, Head of Product Strategy, Orchard