Housing Associations and
Welfare Reform
October 2013
Mary Taylor
Chief Executive
SFHA
Overview
• HAs in Scotland
• Current
challenges –
welfare
• What is needed
Sector profile
• 280,000 homes for rent,
– plus shared homes, part ownership and factoring
– plus mid market and intermediate rents
• 11% of all housing in Scotland
– 46% of all affordable rented housing
• 150 HAs and co-ops
– Range of sizes: 400, 4000, 40,000. Typical around 1800.
– Roles vary
– All regulated social landlords (RSLs) by the Scottish Housing Regulator
• More than just housing
– Support, care, regeneration, employment training, social enterprise,
garden schemes and more
• Rent debit c£1bn
– c55% of all rental income indirectly from HB – wide variation
Social Housing in Scotland
Social Rented sector
Private Rented sector
Mobility
40% in their home for more
than 10 years
A third in their home for less
than a year
Size
576,000 (24%)
325,000 (14%)
Property size
~80% one or two bedroom
~60% one or two bedroom
Turnover
12% 1br available (69,000)
At least a third? (107,000)
Demand
~350,000
Housing Benefit
65% claim HB, equates to
55% of rent received
30% claim LHA
Housing need
~45% ‘vulnerable’
Job movers, students
Age of tenants
54% are 45 or older
52% under 35
Economically inactive
52% (older tenants)
36% (student renters)
Cost (rent per week)
£62
~£160
?
Housing in Scotland cf GB
 High proportion of social housing stock
 High proportion of new housing starts as social housing
o = to NI
 High proportion of government spend on housing
o 3.3% cf 5.1% in NI
 High spend on housing per household
 Lowest average rent as a proportion of average earnings
 Lowest proportion of social tenants on HB
 Lowest average weekly HB spend for social renters
Current challenges in Scotland
High demand




Highest proportion of new HA lets going to homeless households
Higher proportion of social housing as temporary accommodation
Higher than average unemployment rate
Rising demand for intermediate rent property in some locations
Supply constraints




Highest RTB sales as a proportion of social housing stock – RTB to be abolished
Greatest loss of social housing over past 20 years
Lower than average RSL spend per unit when including private finance
Falling subsidy per unit drives rents up when changes to HB makes harder to afford
Welfare Cuts in Scotland
£32m £13m
Incapacity benefits
£50m
Tax Credits
£81m
£499m
£165m
1 per cent uprating
Child Benefit
£225m
Annual
impact in
2014/15
£1.66bn
(24%)
£290m
£302m
Disability Living Allowance
Housing Benefit: Local Housing
Allowance
Housing Benefit: Under-occupation
('bedroom tax')
Non-dependant deductions
Household benefit cap
Est’d Impact of welfare cuts on
Housing Associations in Scotland
£123m
£125
£95m
Annual Impact (£m)
£100
£75
£66m
£50
£30.0
£38m
£40.1
£39.5
£29.6
£25
£19.9
£16.7
£-
£9.9
£8.4
2013-14
2014-15
Housing Benefit
£50.3
£19.7
Other Welfare Benefits
£25.1
2015-16
CPI/RPI wedge
£33.5
2016-17
Distribution of HAs’ arrears
20%
0%
Bedroom Tax arrears
Any arrears
73%
73%
47%
45%
67%
97%
83%
72%
45%
49%
72%
68%
36%
46%
65%
29%
71%
65%
44%
42%
63%
36%
70%
62%
32%
35%
61%
28%
68%
58%
25%
32%
56%
30%
40%
53%
80%
13%
49%
60%
24%
100%
Bedroom Tax Share of LA
Arrears
…if three wishes?
1. Time to organise downsizing
2. Recognition that social housing requires
investment
3. Housing Benefit is a subsidy for housing
1. Time to help tenants to downsize
436
400
350
365
15%
300
300
10%
199
87
100
1%
2%
2%
3%
3%
5% 69
6%
16%
15%
13%
245
200
0
20%
# Under occupying
% Downsizing
192
9%
7%
103
88
113
10%
5%
30
0%
Downsizing tenants
Under occupying tenants
500
2. Recognition that social housing
requires investment
Housing is not like other
commodities
• Imperfections
•
•
•
•
Supply
Info
Location
Finance
• Equity
• Fair access
Hence intervention and public
investment
2. Investment
Private and Social Housing Completions in Scotland
1949 Housing Act
Public Sector &
Housing Association
1924 Wheatley
Act
35,000
20,000
Thatcher Era
1919 Addison
25,000
1974 Housing Act
10,000
5,000
WW2
15,000
920
922
924
926
928
930
932
934
936
938
940
942
944
946
948
950
952
954
956
958
960
962
964
966
968
970
972
974
976
978
980
982
984
986
988
990
992
994
996
998
000
002
004
006
008
010
Completions
30,000
1930
Greenwood Act
1964 Housing Act
Credit Crunch
40,000
Private
Sector
2. Investment
30,000
25,000
Social Housing Completions in Scotland
Housing Association
Completions
Local Authority
20,000
Other Public
15,000
10,000
5,000
3,919
1,096
0
£1,000
50%
£900
45%
£800
40%
£700
35%
£600
30%
£500
25%
£400
20%
£300
15%
£200
10%
£100
5%
£-
0%
HAG
Private finance
% Private
% Private
£ million
2. Investment
3. Housing Benefit is a Subsidy
for Housing
£25
£ billion (cash)
£20
£15
Housing Subsidy Spending in Great Britain
£23.1
Public investment in social
housing
Public expenditure on
Housing Benefit
£10
£5
£-
£6.5
3. Housing Benefit is a Subsidy
for Housing
Housing Subsidy Spending in Scotland
Reserved
Devolved
If I had just one wish?
What challenges lie ahead
People – governing bodies, employees , customers
• Demands and expectations of customers
• Values of providers
• Intellectual demands of future strategy
• Emotional demands - morale and resilience
• Attitude to risk
• Leadership
Doing things differently?
• Diversify e.g. into mid-market rent?
• New forms of finance – bonds, securitisation
• Different relationships with other bodies
– Contracting, partnerships, subsidiaries
• Services to people – older, poorer, more vulnerable
– relationship to health and social care agenda
• Any change could mean greater risks
– all sorts, everywhere …
– governance implications of assessing and treating risk
Prospects?
Prospects?
Greater risk with reduced
Housing Benefits
Shift from capital to
revenue subsidy
Cuts to Housing
Benefit to control
welfare spending
Direct payments
undermine ability to
collect rents
1% cap undermines
ability to inflate rents
Downward pressure
on credit ratings
Greater dependence
on private finance
Enough additional cash
to support borrowing?
Increased risk of alternative
funding sources relative to
inflation
Depressed value of
the homes used as
loan security
Risks no new homes for social rent
Worst that could happen?
•
•
•
•
•
•
•
Drop in demand, higher turnover
Repossessions and abandonments
Less funding (rent and borrowing)
Costlier procurement
Job losses and less contractor capacity
Reputational damage from getting it wrong
Sharing, partnering, merging
Best that could be achieved?
• New rented markets & business opportunities
– Eg selling services to others
• Opportunity to get closer to customer
– better customer relations
• Challenges provide imperative to
– greater efficiency
– focus on asset management
• Sharing, partnering, merging
Further information
Please contact:
Regina Serpa
Research and Information Officer
Email: rserpa@sfha.co.uk
Tel: 0141 332 8113
Mob: 07887 888 346