A client recently attended a presentation by the Regulator of Social Housing (RSH) and fed back to me that the message could be summed up as ‘optimise delivery in line with your objects and mission - and make sure you ‘don’t mess up’. It’s pithy, but perhaps useful to bear in mind when considering the use of the freedoms and responsibilities under the deregulatory regime.
Twelve months after the introduction of the deregulatory freedoms, how much has self-governance led to change?
As a quick recap, since April 2017 the boards of registered housing associations have enjoyed enhanced authority. Boards no longer need permission from the regulator before they undertake certain changes in their organisations such as mergers, change of status, restructuring or winding up. Nor do they need permission from the regulator for sales, charging for security and changes of ownership of social housing stock. Instead, a process of post-event notification applies, placing greater emphasis on good, informed decision making by boards.
So, how have these changes affected behaviour? We see a quietly growing interest in small-scale alternative use for assets that no longer perform well as social housing, in areas where the value of market renting or a form of home ownership would be higher. Looked at over a number of years, such a change of use may generate a significant pot of extra cash for re-investment in social housing. The strategy looks sound on paper and, IF genuine consultation with key stakeholders takes place, it should look sound in practice.
There are plenty of examples in the sector where this type of change has been well managed. The crucial issues here are whether all boards ask the right questions, and review their options for optimising delivery? Or does this feel too difficult?
Clearly, more challenging options can land on board agendas. For example, initiatives involving operating leases, or the sale of tenanted homes outside of the sector with reliance placed on the contractual agreement. Here a mixture of complexity, a gap in the skills around the table, or a weak internal process could lead to poor decisions. Boards know their association has an investment policy, but how many have formalised their own policy or approach to divestment?
Also, the issue of trust is here to stay. Public expectations can and do change swiftly – particular events can cause latent concerns to surface. Deregulation opens up some valid opportunities for providers to be more creative with their assets and to achieve more of their fundamental objectives. In considering options it is, as ever, key to have a skilled board that takes a long-term view, and sees the value of transparency and authentic stakeholder accountability. Your reputation and that of the sector depends on it. As the regulator might say, please ‘don’t mess up.’