Housing Associations and Welfare Reform

1. Housing Associations and Welfare Reform October 2013 Mary Taylor Chief Executive SFHA

2. Overview • HAs in Scotland • Current challenges – welfare • What is needed

3. 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

5. Social Housing in Scotland

6. Housing in Scotland cf GB • High proportion of social housing stock • High proportion of new housing starts as social housing • = to NI • High proportion of government spend on housing • 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

7. Current challenges in Scotland

8. Welfare Cuts in Scotland £1.66bn (24%) Annual impact in 2014/15

9. Est’d Impact of welfare cuts on Housing Associations in Scotland

10. Distribution of HAs’ arrears

11. Bedroom Tax Share of LA Arrears

13. …three wishes? Time to organise downsizing Recognition that social housing requires investment Housing Benefit is a subsidy for housing

14. 1. Time to help tenants to downsize

15. 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

16. 2. Investment

17. 2. Investment

18. 2. Investment

19. 3. Housing Benefit is a Subsidy for Housing

20. 3. Housing Benefit is a Subsidy for Housing Housing Subsidy Spending in Scotland Reserved Devolved

21. If I had just one wish?

22. 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

23. 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

24. Prospects?

25. Prospects? Greater risk with reduced Housing Benefits Shift from capital to revenue subsidy Greater dependence on private finance Cuts to Housing Benefit to control welfare spending Enough additional cash to support borrowing? Direct payments undermine ability to collect rents Increased risk of alternative funding sources relative to inflation 1% cap undermines ability to inflate rents Depressed value of the homes used as loan security Downward pressure on credit ratings Risks no new homes for social rent

26. 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

27. Best that could happen? • 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