Why housing associations are the true villains of the property crisis

They are not doing their job – while paying themselves handsomely

25 July 2015

9:00 AM

25 July 2015

9:00 AM

Housing associations are a bit like Network Rail. They are what Tony Blair christened his ‘Third Way’ between capitalism and socialism, in the hope they would combine the best elements of both. Instead, they combine some of the worst: public sector lethargy and private sector greed. According to a forthcoming investigation by Channel 4 News, 40 housing association executives are paid more than the Prime Minister for managing a pile of ex-council houses given to them on a plate and which were once managed by a clerk of works and a team of rent-collectors on no more than £30,000 a year. David Cameron’s government is making life a little harder for these associations, and, not surprisingly, they don’t like it. They have not lost an opportunity since the election to complain that the proposed extension of right to buy — George Osborne’s scheme to push more people on to the property ladder — will deprive them of their assets and that welfare reform will undermine their income. ‘The election didn’t make any difference to the underlying fact that we hadn’t built enough new homes,’ says David Orr, chief executive of the National Housing Federation, the trade body for housing associations. ‘We had not focused sufficiently on regeneration; unless we start doing both of these things very quickly we will not be able to house our children.’ So why aren’t housing associations taking the initiative and building more homes? Many people have been quick to accuse private housebuilders of sitting on landbanks to cause house price inflation. Ed Miliband even threatened them with compulsory purchase if they failed to develop their land. But private housebuilders are positively revving up their diggers compared with housing associations. Last year in England, private housebuilders started building works on 115,000 new homes. Housing associations managed just 23,300. Given that 1,500 such associations exist, that means they are each building on average just 15 homes a year. Even during the good times, housing associations were sitting on their hands. In 2007/08, when private housebuilders put up 146,000 homes, housing associations managed just 24,100. Compare that to the 121,000 homes councils built in 1977 and you can see why we have a housing crisis: it isn’t that the private sector is selfishly sitting on land, waiting for it to increase in value; it is that social housing isn’t getting built. Take Places for People, one of the largest housing associations, which manages 48,000 homes. Last year, it had a turnover of £485 million and made profits of £28 million. It owns assets of £3 billion. Its executives like to think of themselves as entrepreneurs and receive fat salaries. Chief executive David Cowans received £434,000 last year. And yet how many homes did it build during the year? Er, 792, of which 316 were affordable. According to David Orr, the reason associations are not building is government regulation. ‘To build houses you need either direct support from government or you need to be able to borrow the money, using your income stream to repay the debt,’ he says. ‘Direct support from government has fallen over the past few years while, to our extreme frustration, rents are fixed by the government. The Chancellor’s decision to reduce rents by 1 per cent a year for the next four years has taken tens of billions of pounds away from housing associations.’ What he didn’t seem interested in telling me was that George Osborne also announced that better-off social housing tenants (those earning more than £40,000 a year in London and more than £30,000 elsewhere) will in future have to pay market rents, increasing the revenue available to housing associations. The Treasury doesn’t seem to have worked out the net cost or benefit of these measures, but there is going to be some extra money coming in to compensate housing associations for what they lose. It is a bit rich claiming that housing associations have been starved of grants, even if it is correct that the government cut the size of their grants in 2010. Over the last 14 years, housing associations received £23 billion in government grants. That is enough to cover the building costs of 230,000 homes — nearly as many as the sector built over the period. If housing associations say they are struggling to build homes on government grants, perhaps they need to find a cheaper way of building them. When Channel 4 News asked associations how much it costs them to deliver a new home they said £150,000. Yet when they asked the Home Builders Federation (which represents private housebuilders) the same question, they quoted an average of £90,000 for a three-bed, land included. David Orr claims that councils are reluctant to sell land. ‘If you talk to most local authorities, they are reluctant to release land at below market value, or even at market value as they hope the value of the land will go up.’ This is a little hard to believe, given the number of private developments which have sprung up on playing fields, sites of old schools, leisure centres and so on in recent years. Moreover, it is in councils’ interests to sell surplus land to housing associations to increase the available social housing stock. If housing associations say they aren’t raising enough money from rents to finance the construction of new homes, then why not build more properties for shared ownership or outright sale, therefore giving them another source of income? There is a vast market for budget-priced housing among frustrated homebuyers, and nothing to stop housing associations from doing this. A few do, but it is a market which housing associations are largely not bothering to tap. Is that not because housing associations are less entrepreneurial than private house-builders? They see their job as managing the remnants of social housing left behind after Mrs Thatcher. When social housing is built it is often because a council has done a deal with a private developer in return for planning permission for private housing: the developer then puts up the housing on behalf of the housing association. But the housing associations have never really got their noses into the business of building homes because they lack sufficient incentive. The government’s plan to extend the right-to-buy to housing association tenants, with big discounts, has serious problems. On its own, it will reduce housing stock, which will not be replaced. But to listen to bleating housing association chiefs you might think they had some kind of answer to the housing crisis. Sadly, they do not.

Got something to add? Join the discussion and comment below.

The Channel 4 News investigation can be watched here.

You might disagree with half of it, but you’ll enjoy reading all of it. Try your first 10 weeks for just $10

Show comments
  • Precambrian

    Why is there a shortage of houses? Immigration, divorce, and second-homes.

    We don’t need to increase supply (developing greenfield and green belt). We need to reduce demand.

    • fundamentallyflawed

      This doesn’t help either. It costs around 15/20k to renovate a house as opposed to the cost of building new yet nobody seems bothered

      • Teacher

        You pay VAT on improvements and none on new builds, a ridiculous anomaly.

        • fundamentallyflawed

          there are (or were) similar issues on Listed buildings – basic repairs required for older buildings were charged VAT as well..

        • The Wiganer

          You also have to pay VAT on newbuild if you rent them out. Hence developers will leave houses empty rather than let them, if they are slow to sell.

    • itdoesntaddup

      There isn’t a shortage of houses. Only a property bubble and its consequences.

  • DJ

    What a load of rubbish. How a journalist could publish such a load of biased, misinformed and misleading article is beyond comprehension.

    • fundamentallyflawed

      In what way is it rubbish?
      Housing Associations have also driven down wages by sub contracting to maintenance companies and reducing existing staffs down to lower levels…

      • Derick Tulloch

        The article is entirely ignorant as to how housing finance works. It is little more than a series of unsubstantiated smears.

        • fundamentallyflawed

          Why does a business virtually given Assets to manage making 28m per year require government grants?

          • ChrisTavareIsMyIdol

            That’s a question you’ll never get answered.

          • Pacificweather

            He just did.

          • tohellwithit

            I think it’s less ‘require’ and more ‘can get’!

          • Pacificweather

            How do you think they acquired the assets?

        • GraveDave

          I dont know how true all this stuff is but I suspect it’s also another useful distraction to get our eyes away from the Tory landlord BTL kings.

    • Bluebottle

      ‘Journalist’….ho ho, very funny

  • TonyB58

    Having to buy my home under the shared ownership scheme (DIYSO) in the early nineties I can confirm that in this instance housing associations are particularly rapacious organisations. The “sub-leases” they issue leave all the liabilities with the sub-lease holder while all the benefits are held by the housing association. Of course the option is always there to buy out the housing association’s share in the property but that is at today’s market rate not that at the time of purchase. Naturally the “rent” they charge rises remorselessly and in my case is now twice the monthly mortgage rate I pay. I accept half a cake is better than none but do resent having to pay rent to the housing association, for the rest of my days, just because I’ve had to enjoy the “benefits” of “flexible”, hourly paid contracts for much of my working life, does rankle.

    • fundamentallyflawed

      Shared Ownership is a massive con.. In Stoke the rent is charged is the same at the same rate as you would pay for your mortgage… the outgoing cost is almost identical

      • TonyB58

        I am sure there is a case here that these shared ownership agreements amount to unfair contracts. The problem is that many people who enter these deals with housing associations, my self included, are desperate to get their own home so the long term consequences are not properly thought out. Indeed for many it’s the only option available even though, as you rightly observe, the payments are the same as if you had a mortgage on the whole property. I think fundamentallyflawed statement that they are a massive con is absolutely right.

        • Josie

          I totally agree with you a very bad scheme but at the time it seemed to be a good thing and I had assumed I would have increased salary and purchase the rest (not a hope) or move on with bigger mortgage and thats not possible and it was never explained about all the downsides until I was already trapped in it, legally I would like to see some changes as the HA seems to be able to get away with making up these rules as they go along and have an answer to any complaints you make and like you say it should be looked at as an unfair contract with 100% repairs falling on the shared owner who only owns a percentage same with service charges, I think more people are aware of the pitfalls now but they were never explained to me if the contract had said i.e.” you will be responsible for all the repairs we will not lift a finger to assist you you will have to replace the boiler repair all the faulty fittings put up fences, the buildings insurance we charge you will not cover windows fences and damaged taps in fact most things, you will pay all the estate agency fees on selling even if you sell through us we will charge you a fee based on the “whole” value of the property not the share, you will pay for our valuations and they only last 3 months so we will charge you again if you need another one, you will pay our legal fees, your rent will keep rising you will pay 100% service charge not to mention 75% of the properties surrounding you will be social housing), had this been in the contract I would have walked away but has only come to light later. Hindsight is great isn’t it?

    • Derick Tulloch

      Caveat Emptor.
      Shared ownership is an appalling deal for the sharing owner. Which is why housing assiations in Scotland at least simply don’t do it any more, and are generally attempting to buy out the shares of owners.

      • Josie

        I really wish this would happen here it’s a bad move and very difficult to move on from

    • Richety

      Blame the Shared Ownership system, not Housing Associations. The Shared Ownership product is good in terms of getting people who are likely to have an incremental increase in earnings over time get on the housing ladder, but it isn’t overall a great product in terms of the money you have to pay out and the fact you take all the home ownership burden. Much better to try to save large deposits and buy using the newer government grant.

      Shared Ownership does not make home ownership cheaper (I don’t think it ever intended to), it just helps you get a mortgage because you wouldn’t otherwise. That’s all it does at the end of the day and people shouldn’t pretend otherwise. One way of thinking about it is the ‘rent’ you pay isn’t really rent. It’s what you would have paid to the bank if you bought the whole property, but instead the Housing Association is effectively ‘lending’ it to you instead.

      • TonyB58

        The problem with your answer is that the “rent” is not like money lent by the bank if it was I would have bought my home by now and have no housing concerns just as if I had been able to purchased the property with a full mortgage. The rent is just that. It has doubled since the early ninetiesand in the over twenty odd years I have paid it it has not reduced by a penny the financial share of the housing association. This means that in real terms I have paid well over what I would have paid if I’d borrowed all the money from the bank in the first place. Indeed because I had/have a low income I’ve paid much more in real terms, and continue to do so for my home despite the originally mortgage/rent being marginally less than taking out the full mortgage.

        There was a program on this subject today (Thursday) on Radio Four and the problem seems to be that those joining the scheme believed that they would soon move out of low paid/insecure work allowing them to buy out the housing association,soon after joining the scheme.For many this did not happened and the wage increases enjoyed have not kept up with the increases in house prices making the prospect of increasing the sub-lease holders share or buying out the housing association altogether a distant dream.

        • Richety

          Yes I completely agree with you. Its not a good deal. I wasn’t really defending the system just explaining it. I think people need more information upfront. It is a flawed system that doesn’t work for everyone. My basic point was that the system is at fault not necessarily the people who offer the Government product.

        • styants64

          I am in the same boat as you Tony moved in 20 years ago took out a mortgage for 50 percent of the house price, I put money into my company share save scheme to buyout HA 50% but I developed a serious health condition the nhs were not diagnosing correctly when I got out of my job I had enough money to buy out the other half of my property but had to use it over the years just to fund my costs of living I could not receive any benefits because I had savings like you said the rent keeps going up and I have had to pay out £14,000 to replace windows the bathroom and kitchen because they were falling apart, it seems to me you know working class people are being ripped off left right and centre when I think of what’s happened to me in respects of my home and finances I feel like screaming.

          • TonyB58

            Sorry to hear about your circumstances and I hope things are better now. Yes my experience is that if you are one of the working poor, or your circumstances change through no fault of your own, you’re ripe to be ripped off! A shameful state of affairs.

          • Josie

            I put forward a miss selling application to the HA but they got out of it by making up a whole scenario that never happened at the time I tried with financial ombudsman but did not get far I got my MP involved but the HA told him they owned the property and I bought a bit and that I just had to sell!! Shameful

    • PaD

      My sympathies there mate…esp when you realise the greedy c…ts who manage HAs and what ridiculous salaries theyve chiselled out for themselves…and though you are working and fair play to you..most of the ‘income stream'(bullshit business jargon) from social housing comes from housing benefit…

    • Josie

      I have the same rising rent and what started out as affordable in the 90s is no longer the rent is nearly level with mortgage and they do nothing for it, poor new build and I should have Known better but got caught in the idea of a new house now stuck with all repairs a not enough to buy outright in retirement None of this was explained to me very quick to sign me up for it also did not explain how costly selling would be with all the fees falling on me whilst they the Ha walk away with half the profit having never maintained their property. Legally there is no ownership you only own a lease the HA rules they own it you just put down a big fee to secure a longer tenancy!

      • TonyB58

        Yes the actual terms and conditions of the scheme were not properly explained. Its a bad scheme and I do wonder if something can be done legally as these schemes are so one-sided they constitute unfair contracts. I don’t know you work hard and the powers that be see you as a mug to be fleeced.

      • TonyB58

        Yes its a rip-off. What makes me angry is that the actually money I spent from the start of buying my flat was about the same as if I had bought it for the full price with a mortgage but being on “flexible” hourly paid contracts I had to take the DIYSO scheme and so have t pay well over the odds for the pleasure of having those parasites on my back! Its almost like a punishment for being hourly paid!

        • Josie

          I love the description yes they are parasites and it makes you so angry supposed to be a homeowner but you get calls if your rent a day late and under pressure all the time from them don’t forget they rule! I could have bought outright at the time but my mistake there I went for a house rather than a full 100% flat but what a lesson it has been, because I cannot tolerate them and their rules and regulations the best thing is out even if it means renting such a trap and will only get more futile as time goes by not worth the hassle in my opinion, also the other point is you can never do equity release later on and will always be a “tenant” with a piggy bank share that you can never do anything with unless you sell of course and get out of the scam !

  • Bonkim

    Spot on – many Housing Association staff used to be in local councils and transferred over to the new associations complete with their gold plated pensions and later boosted pay scales. Objective of any organisation is to look after its interests – not housing.

    • red2black

      Perhaps some have become private landlords and own properties like those in places like Jaywick, and charge £600 a month in rent for something that would ordinarily be declared unfit for human habitation – in the full knowledge that the tenants are far more than likely to be on social welfare. The condition of properties and the circumstances of tenants appear to bear no relation to the levels of rent that can be imposed by private landlords.

      • Bonkim

        Supply and demand.

        • red2black

          The taxpayer supplies the money to pay for the extortionate rents demanded by private landlords from their unemployed tenants.

          • The Dybbuk

            And their employed tenants. Housing benefit not only protects the returns of BTL landlords but also employers paying wages that people cannot support themselves and their families on. A strange form of altruism indeed!

          • red2black

            That’s right, although there must be some businesses that are genuinely struggling to pay people a decent wage. The system we live under makes State intervention, regulation and provision absolutely necessary. £85bn+ a year in corporate welfare, on top of whatever the figure is for social welfare, is more than proof enough.

          • Pacificweather

            And from the subsidies provided to the employed ones. There are over a million people in full time employment receiving Housing Benefit of £90 per week at a cost to the tax payer of £4.9 billion a year. A massive employer subsidy.

        • Simon de Lancey

          Lack of regulation.

    • GraveDave

      Of course, you believe everything first hand don’t you?
      Because it probably chimes with your own interests.

      • Bonkim

        Nothing like first hand knowledge and experience. Interests?

    • fundamentallyflawed

      Many of the workers who transferred to housing associations face pay and pension cuts…. I can’t make any claims about middle and upper management mind

      • Bonkim

        That is the industry trend – the CEOs need to get their fat bonuses though.

    • συκοφάντης

      “It used to be local council, now it’s not local council and now it’s SH_T”
      This is all Greek to me – then sort it out!

      • Bonkim

        You should have been living in Greece. You could have had a job with a council or two and the local housing association and got paid for all the three jobs. Now the best deal is you also get a flat for each of the jobs, keep the best one for yourself, and sublet the other two. And you don’t pay tax on any of these five incomes. Apply for membership if Syriza.

  • AH

    I would be interested to know where the figure of £23billion government grants comes from (over the last 4 years).

    • Matisse

      Probably like all the other figures quoted – made up.

      • colin wiles

        He’s since changed it to 14 years. Sloppy journalism.

  • Paul Smith

    poor use of statistics, Yes there are 1500 housing associations, this includes Almshouses and a large number of tiny organisations. The development is almost all done by about 100 organisations. Also housing associations do not have diggers, their building is done by house builders and is determined largely by the supply of land through the planning system.

  • tohellwithit

    A smear piece to make people feel better about a Tory government seizing what is legally private property. A lot of the properties will be sold on at a healthy profit to private landlords who will charge market rates, a proportion of which will be paid by housing benefit. No new homes will be built and the bubble inflates. A tidy profit will be made.

    • ChrisTavareIsMyIdol

      Funny I thought council’s built those houses with taxpayers money? As for “seizing” any one earning £435k in the public sector for managing some property ought to be jailed for theft.

      • tohellwithit

        They were and then transfered to private non-profit organistions in something called a ‘contract’. If said contract has been broken by the LHA or councils and government any party can seek redress in the ‘courts’.

        They are not IN the public sector, they are working FOR the public sector and can pay whatever they like as long as it doesn’t break the terms of their contract.

        • PaD

          Yeah and the400grand a year ‘managers’ of H/As youll find were once ‘housing officers’ employed by Local Authorities…some made the career leap after fraudulently enabling tenants to form Tenant Management Organisations(TMOs) which once formed magically amalgamated with adjacent TMOs and became Housing Associations…relieving at a stroke local authorites responsibility for social housing..what a f….g gravytrain that is..and very much still going on….check out Watmos…a veritable empire covering Wolverhampton and expanding to cover virtually the whole of theMidlands…all started as individual TMOs…using cosy concepts like tenant empowerment..
          also check out David Walker a one-time manager of one of these H/As…he described them as empires too.

          • PaD

            Ps..this is not off topic as it concerns corruption in social housing provision.
            I havedirect experience of a TMO being foisted on block of flats where I live…the chairperson was a known fraudster..no checks were made on anyone involved it seems..he managed to steal 14oooquid and spend it on fruit machines and gay dating sites..the local authority actively enabled the formation of this TMO..luckily some of us got organised and had our block exempted from,in councils jargon, TMOs Area of Benefit…just made up bullshit slogans

          • tohellwithit

            All due, in part, to the binary mantra of ‘Public=Bad Private=Good’ that has allowed government at both local and national level to replace democratic accountability with commercial confidentiality.

            We have voted for this again and again and the mess it has created.

            There is an alternative but as we’ve seen recently it really ‘scares the horses’, as there might not be as many directorships to go round.

      • PaD

        Spot on!

    • Simon de Lancey

      And to add insult to injury the taxpayers will be subsidising the sales of the properties!

  • colin wiles

    This article is full of errors. £23 billion? The funding of housing associations over the past 4 years has been £4.5 billion. £90,000 to build a 3-bed house including land? Bulls***. An average of 15 homes for each of 1,500 housing associations? The majority of associations are tiny outfits like almshouse associations – they don’t develop new homes. Only the top 100 associations do any significant development. This piece has all the hallmarks of a softening up exercise before the government launches its full frontal assault on housing associations with right to buy 2. It would be interesting to know what motivated Ross Clark to write this rubbish.

    • RossClark

      £90,000 figure comes from House Builder’s Federation — for the country, not just London. Look, they are selling them for not much more than that up in Darlington. I presume the housebuilder is not making a loss http://www.rightmove.co.uk/new-homes-for-sale/property-45013495.html?premiumA=true

      • Richety

        Housing Associations generally are the builder. It might cost a builder £90,000 to build a home but as they are a private company and it’s a business they clearly are not going to charge that to a Housing Association. Average price to build across the country does not take into account the fact that the largest need for housing is in the South East where land is now very expensive. What good would thousands of cheap homes built in cheap parts of the country do when there is no need in those areas. There are already empty social (Council) homes in parts of the north because no one wants to live in them.

        Anyway, that listing on Rightmove if you had done some research you might have found that it was built by a social landlord called Coast & Country (one of the 1500 you criticise) that is offering some of those properties as affordable housing and therefore would likely have got a small amount of grant to help them buy it from a developer. It is possible they may already have owned the land or the land was Council owned and this was an affordable project done in partnership with the Council, without looking at the planning docs I can’t be sure.

        This article is propaganda nonsense that seeks to discredit a sector that actually saves the country millions in Housing Benefit by keeping low earners out of the extortionate private sector. We do need more homes, but you cant pin the blame solely on the shoulders of Housing Associations that were originally set up to buy properties and manage them for low earners. Not many are big enough, have the cash or the expertise to negotiate deals with private developers in order to provide low cost housing without losing money. Land is at a premium and developers would much rather not build affordable at all, they only do so because they have been obliged to as part of a planning system that the government is now beginning to undo.

        • itdoesntaddup

          Housing Associations have about 2.9 million dwellings, let on average at £93/week, or a little over £4,500 a year: supposedly this is 80% of market rent, so there is a subsidy of £1,125 per property, or somewhat over £3bn p.a. that is effectively granted and taken back in tax/revenue centralisation. On top of that, many HA tenants receive additional Housing Benefit. Many HAs have charitable status, reducing their tax liabilities compared with the private sector.

          The only way to remove the most of the rent subsidies it to create a fungible rental market across all tenures (this is helped by the move to “full market rents” for those in HA/council properties on higher incomes), and to unwind the property bubble so the differential between private and public sector rents is restored to the much lower levels in real terms that we had pre-bubble.

          • Matisse

            Housing associations don’t receive subsidies for rent. They just charge less than private landlords. A lot less.

          • itdoesntaddup

            Against market prices the effect is that they receive a subsidy which they pass on to tenants, but they are taxed the same amount. A similar effect applies to council homes.

          • colin wiles

            Social rents are not 80% of market rents, many are lower. The higher the rent they charge the higher will be the housing benefit bill for those tenants who rely on HB. Keeping the rent low helps the taxpayer. You cannot call the gap between a market rent and a social rent a “subsidy”. A great deal of social housing was built fifty or more years ago and it has paid for itself many times over. The “profit” is not creamed off by shareholders but is reinvented in more homes. That is a sound investment.

          • itdoesntaddup

            Where rents are below market prices there is a subsidy. The only issue is how it is accounted – on or off the books. It might help if we had full transparency on the subsidies provided, as that would inform better policy. I will agree that keeping rents low can help the taxpayer – or at least, preventing a property bubble from inflating rents is helpful. But the key here is not offering highly subsidised accommodation necessarily on a quota basis to a narrow portion of the population, but rather not having a property bubble, so we can have a rational property market.

            In economic terms, it is not correct to consider historic cost accounting when we have had an era of high inflation. The real return on social housing must take account of inflation. I don’t think the (re)investment record is particularly good:


            albeit that the real reason for this is the siphoning off of income into central coffers.

            Whether housing is a sound investment depends mainly on its durability (and secondly on avoiding investing during peak bubble conditions). A 1960s tower block is one example of a rather poor investment. Much of our recent building risks the same fate, being undesirable to live in: this applies to “affordable” housing and to much of the lower end newbuilds sold off to BTL while subsidised by taxpayers and savers. A now gentrified 1950s former council estate was a far better investment.

          • Matisse

            80% market rent is AFFORDABLE (sic, since it isn’t always affordable to low incomes) rent, not social. RSLs were forced to introduce affordable rents when the Government pulled most of the little subsidy they do give HAs, which is to build new properties, NOT to subsidise rents. And, to be fair, no resident ever got a ‘spare room subsidy’ – the government removed something that wasn’t there in the first place. Why do you consider that RSLs are subsidised, rather than PRS are charging premiums? A lot of ex-authority are now let at market rates, more than twice the cost at social rent. Perhaps its PRS we need to be tackling, not social rents who are picking up the pieces for people who cannot afford astronomical rents or house prices such as we get round here.

          • itdoesntaddup

            Perhaps you have failed to read my contributions to this thread. e.g.

            The only way to remove the most of the rent subsidies it to create a
            fungible rental market across all tenures (this is helped by the move to
            “full market rents” for those in HA/council properties on higher
            incomes), and to unwind the property bubble so the differential between
            private and public sector rents is restored to the much lower levels in
            real terms that we had pre-bubble.

            That would result in much lower BTL rents, and a much more efficient allocation of housing. The subsidies that remain in a lower rent environment should be tied to circumstances, not to ownership of the properties. In fact, it should result in some BTL rents on less desirable properties being lower than some HA and council rents.

            “Affordable” merely means less subsidised than “social”, translated from Newspeak. When you come to look at it in detail, you’ll find that many “social” rents have been increasing, while others remain unchanged from what they were when the tenancy was started perhaps 50 years ago. Of course in London there’s a tendency for these properties to be sublet in a black market that helps support illegal immigration, but also reflects a truer market value.

          • Pacificweather

            The subsidy was in the Housing Association Grant (HAG) that HAs used to build or buy and renovate their properties. Increasingly, they have replaced the lost HAG with mortgages, bonds and some now only provide housing out of the S106 requirement of private builders in which case the subsidy comes from the purchasers of private owned dwellings in the development.

      • colin wiles

        But Darlington is an outlier. Most building, and most demand, is in the Southeast where prices and costs are higher. I simply do not believe that HBF figure. Let them publish it and we can analyse it. Until then it has to be treated with scepticism.

        • RossClark

          I don’t think the people of Darlington would be pleased to hear you calling it an outlier. There are many more Darlingtons in the country than there are Chelseas

          • colin wiles

            I’ll wait to see the facts rather than responding to rhetoric. I didn’t mention Chelsea, I mentioned the southeast where most of the building is.

      • The Wiganer

        As a housebuilder £90k including land is a bit cheap. £60k construction costs, plus land and council levies is about as cheap as you can get. Land for less than £25k per plot would have something wrong with it.

        A decent 3-bed with driveway and reasonable garden is likely to cost around £90k plus land.

        Remember some housebuilders in poor areas are getting grants and interest free loans to build.

    • ChrisTavareIsMyIdol

      Maybe you’d like to apologise for your error Colin? Do you think £434k is a reasonable wage for someone working in the public sector?

      • colin wiles

        No I don’t and I didn’t mention that either But that also depends whether you think housing associations are public sector bodies. The CEO of Places for People would argue that his organisation is not.

        • Pacificweather

          Doubtless the employees of Places for People think their CEO is paid too much in comparison to their salaries given that they are in a not-for-profit sector that claims the Microsoft NFP discount.

    • The Wiganer

      Housing Associations combine the bad habits of state organisations with a lack of democratic oversight similar to the BBC. If the chief exec has the trustees in his/her pocket they can pretty much get away with anything.

      Without shareholders or voters to check their behaviour, the conduct of some of the bigger housing associations is questionable. Some pretty poor management goes unchallenged.

      However, forcing them to sell houses at below market value is wrong as it prevents them from building replacements with the proceeds.

  • colin wiles

    Really? Even Farage admits that we need to build 200,000 homes a year.

  • alexw

    Err no. The true villians of the property crisis are boomer nimby’s.

    The crisis could be made to disappear literally overnight if the free-market was let rip, so that people could build the homes they want where they want.

    But this doesn’t happen due to our insanely restrictive green belt and planning laws. So why do we keep them you may ask….. queue boomer nimby voters….. (see top rated precambrians post for a perfect example of such nimbyism).

    • itdoesntaddup

      No, building is not the solution: houses are long lived assets, which is why the net supply of homes is dominated by those vacated by people dying rather than by newbuilds. Last year mortgage funded BTL bought almost 200,000 homes, and first time buyers a further 315,000. In addition, there will have been new households replacing old ones in the rented sectors.

      The problem is that of a financial bubble, not a shortage of housing.

  • davidshort10

    What a lot of garbage. At the low end, the problem and an unavoidable one is migration from the EU and at the top end it is Russian and other money looking for a safe haven, given them by people like Mandelson. Why does the Spectator get involved with C4? Is Brillo Pad, the Spectator’s MD, hoping for an additional new job?

  • JJ

    These proposals are a typically political, act first and think about it afterwards set of changes. All they ever seem to want is change for the sake of change. Why can’t we have more stability? These changes aren’t necessary, and the Government is clearly clueless about their likely affect on Housing Associations. I suspect that it will block future development by Housing Associations over the next few years, primarily because of the risk of breaching existing loan covenants.

  • HMT

    Comparing Housing Associations, who largely rent homes, to private sector firms who focus on building homes is either incredibly disingenuous or incredibly stupid. Ross Clark should be ashamed.

    • Richety


    • Paul Walker

      Just for the record Jayne. How much are you paid for you executive board role? It is public money so don’t be shy.

  • Jed Keenan

    This story is entirely about development of new properties rather than the scandal of service standards provided to residents.

    • itdoesntaddup

      That’s a much more important topic. Of course, HA tenants do benefit from better security of tenure than private sector tenants, so that has to be taken into account. Private landlords vary between excellent and dire in terms of the service they offer. Competition helps prevent them from all becoming dire and pocketing the rent anyway. HAs need competition to drum up their standards.

      • Jed Keenan

        …Or effective governance. The two parts – development and service provision – are in direct conflict for time and interest. Why the two are conflated is a hangover from when they were social enterprises and now that they are fully corporate the high profile, big budget, big status, and high risk business of banging up apartment blocks squeezes out the humdrum, low budget, low status, thankless, low paid and high staff turnover task of neighbourhood management and community development. Until public service is separated out the priority will not be service users but reporters and policy makers. MPs casework is massively over represented by residents of housing associations which is the reason they are always contemplating greater regulation or even nationalisation.

  • colin wiles

    Here’s another antidote to this piece from Inside Housing magazine pointing out several of the factual errors. As for housing associations being the “true villains” of the property crisis. Really? Do you think anyone really believes that to be the case? Who on earth writes these hyperbolic headlines?

  • Sean L

    The causes of the housing shortage are immigration, single parents / the collapse of the tamily unit, and last but not least, another cultural factor, the idea that a house is an investment rather than a place to settle and make a home: people today routinely refer to “getting on the property ladder”. I read somewhere that the primary impetus behind this shift was Mrs Thatcher’s right to buy policy, which was doubtless well intended, like many of her reforms.

    But isn’t the basis of conservatism, properly understood, a sceptical attitude to reform, to schemes of improvement generally; that however well intended the reforms might be they may entail unintended consequences contrary to those intentions, where the situation is actually made worse?

    Some argue that ‘liberalising’ pubs and the legal sector also had deleterious consequences. Ditto the gambling sector, though incredible as it might seem, that reform was implemented by the party of the working man. Thus many if not most of the premises that previously housed pubs here in Tottenham are now either betting shops or private housing. Which crystallises all the causes, there being no shortage of immigrants in Tottenham either, whose mosques and madrassas must also be accommodated needless to add.

    • itdoesntaddup

      Despite immigration there is no housing shortage.


      The housing bubble is driven by the size of mortgage banks grant:


      which is why the news that the BoE are being invited to impose controls on BTL lending is perhaps the most important factor in the housing market: if BTL are restricted in borrowing, they won’t be able to buy so many properties,increasing the supply available to first time buyers, and lowering prices.

      • Sean L

        But surely the presence of millions of extra people must also be a major factor, notwithstanding what you say about BTL which I don’t doubt at all.

        • itdoesntaddup

          See the first chart. The actual provision of housing has kept up with the rising population. Moreover, immigrants are dominated by a) students and b) other mainly young, single people who are prepared to live in shared accommodation at high density to minimise costs (and maximise the income they send home), and c) larger families who also live at higher density, so their impact on housing has been much less than their numbers suggest. You should also bear in mind that absent immigration we would have seen a population fall (as in Germany), and an oversupply of homes as there would have been fewer new households. Take a look at the age structure of the population:


          • Sean L

            Mate immigrants are not dominated by students or by the young. No shortage of single parents among them either. And ‘immigrants’ doesn’t include the progeny of new arrivals from 20, 30, 40 years ago. There emphatically is a shortage of housing in London, which is why rents have risen so dramatically in recent years.

          • itdoesntaddup

            Oh yes they are. By age:


            By occupation:


            Students mainly stay on (legally or illegally):


            Without immigration we would not have had their progeny. The reason that rents in London have risen so much is that it has become a speculative bubble driven by foreign money.


          • Sean L

            Yes I understand that migrants, almost by definition, will tend to be young and single. Equally it stands to reason that after five decades most of them will neither be young nor single. Unless of course the number of arrivals in the past decade exceeds the cumulative total of the preceding four decades.

          • itdoesntaddup

            Your latter supposition is correct. Prior to 1990, net immigration was essentially zero as far back as 1975 (the earliest available consistent data). You have the data since that show when the bulk of immigration occurred. Migrationwatch observe:

            13.1. The British Nationality Act 1948 granted the subjects of the British Empire the right to live and work in the UK. Commonwealth citizens were not, therefore, subject to immigration control but the Home Office estimate is that the net intake from January 1955 to June 1962 was about 472,000.[57] From 1962 onwards, successively tighter immigration controls were placed on immigration from the Commonwealth. In the 1960s New Commonwealth citizens were admitted at the rate of about 75,000 per year. In practice the new immigration controls resulted in only a modest reduction in Commonwealth immigration. The average number of acceptances for settlement in the 1970s was 72,000 per year; in the 1980s and early 1990s it was about 54,000 per year. From 1998 onwards, numbers began to increase very substantially.[58] In 1998, net Commonwealth migration leapt to 82,000 and continued to grow before peaking at 156,000 in 2004 before beginning to decline. Some historians argue that the majority of early “New
            Commonwealth migrants” were, in fact, British settlers and colonial officials and their descendants returning from Britain’s former colonies.

          • Sean L

            Who said anything about the Commonwealth?

          • itdoesntaddup

            The discussion of the Commonwealth immigration in the post war years relates to the fact that it utterly dominates immigration in the 1950s-1970s. Nonetheless, it was small by recent standards.

          • itdoesntaddup

            Sean L: Mate immigrants are not dominated by students or by the young. No shortage of single parents among them either.

            So now, presented with the evidence, you’ve changed your mind. Well done.

          • Sean L

            Of course I will change my mind if the facts change. In this case I was referring to the total immigrant population and not the age of migrants at the precise point in time of their migration.

  • Abie Vee

    Gosh. So public good, private BAD! I thought as much.

    It’s not often you read that in the Speccie. There’s hope yet.

  • Jeffreyoore

    <❶❷❸.%@^@^@^!^!^!^!^.. ??????????+blogs+. < Read more info here='' ……..''

  • Sten vs Bren

    “bleating housing association chiefs”

    You bleat about them.

    But I agree that social housing should be provided by Government, local or national. As you point out, it is fairer and better value for money.

  • WarriorPrincess111111

    The whole housing scheme has been a scam from the beginning. ‘We need more houses for all the people in the country now’ – except there are almost two million houses on Right Move house market??
    A large percentage of the new houses have to go to housing associations by government agreement where they are rented out to those in need – in particular those in ill health. The houses are so badly built there are a record number of complaints from those who are renting – damp, no heating, poor plumbing etc.,and the housing associations are doing nothing to resolve the problems.
    The very fact that new houses are being built, and are being sold on the ‘Right to buy scheme (another scam) keeps the prices of houses high. In a natural situation, people would not be able to afford a house at today’s prices. Sales of houses would fall – forcing the cost of houses down to an affordable price that would be aligned to earnings. A similar occurrence as in Ireland, where house prices fell.
    In the South of England – the Green Belt land is fast disappearing. it will not be long before the whole of the UK is a concrete jungle!

  • Cynthiananderson

    ^^^^^Now Get It -ssppeectator

  • Terry Field

    I once observed to a housing association Chief Exec that he had twice as many staff as a private property management company that has a vastly larger and more complex estate. He dribbled from the mouth, stared at me and raved that I knew nothing of ‘ public sector ethos.’
    Oh yes I do, and I can confirm it is a mixture of greed, incompetence, political perversion and borderline insanity.

    • Bonkim

      I would second that.

  • ItsAlreadyTooLate

    The Taxpayers Alliance, a front for the Conservatve Party

  • Cosmic

    The most cost effective way to provide social or affordable housing is through local authorities. They receive no revenue subsidy. Their management (and salary) costs are much lower than housing associations (no municipal Head of Housing earns a six figure salary plus benefits). They are accountable thanks to elected councillors and being covered by Freedom of Information laws. They can borrow at cheaper rates. The only reason councils haven’t and can’t build is because since 1992 governments of all colours have stopped them from doing so. Instead, governments have handed public money and land to unaccountable and inefficient housing associations who have proven themselves not to be up to the task. Look back to the days of SuperMac to see what could – and should – be done.

  • Pacificweather

    HAs built the number of houses that the grant provided for said the article. Since the grant was cut they have had to mortgage their assets but they can’t get the full value because the government has a right to recover the grant if they are sold. So how was it ever going to be possible to build more. The article says they should build more homes for sale and shared ownership which is exactly what they are doing despite this not being their original primary purpose. The only accurate thing in the article is that the CEOs are paid to much, especially in comparison to the average wage of their employees.

  • Dominic Stockford

    1. Housing Associations in many London Boroughs find it impossible to build as there is pretty much nowhere the Council will allow them to build.
    2. In LBRuT the council prevented an aging and failed church building being pulled down to be replaced with affordable housing – because some jobsworth somewhere didn’t like the idea of a Victorian building coming down. Its now going to be posh dwellings instead – there’s a thing. The community loses, and its not the HA’s fault.
    3. Regardless of how HA’s may be performing selling off HA flats and houses simply results in less available housing for those in lower incomes who cannot afford anything else. Still, it’ll fill the streets with people 24/7 anyway, won’t it?

  • Tom Pain

    Dear Ross, were you off the day they did fact checking at journalist school?

  • Tom Pain

    In 2013 BTL landlords received £16Billion in tax relief….don’t have figures for earlier or later period, but they will be in the same sort of ball park. And I note that GO’s recent budget reduced the amount. But seriously, if you had £Billions to spend each year (oh 2015/16 will see private sector landlords receive more than £10Billion for the first time in Housing Benefit), on housing would you give it to a sector where 33% of homes fail the government’s fitness standard (Feb 2014 English Housing Survey), tenants get neither security of tenure nor affordable rents? I don’t think I would.
    The villain is in there somewhere.

  • MartinWoodhead

    The Large ones are tge worse of all worlds carry like they are commerical property magnates safe in the knowledge goverment will bail them out.
    Fortunatly a brighton council tenant we told tge council where to go when they tried to shove us into a housing association with dire warnings of no money for reapairs five years on new windows doors and kitchen.
    pity council werent left to get on with building council housing it works

  • Patrick Roy

    Great expose on the (bad) business of poverty.

  • Bonkim

    Useless bunch – not worth their fat salaries. Busy preparing all sorts of feeld good strategies and policies but not looking to increasing supply and reducing cost of housing.

  • goggyturk

    Like energy policy (a potential disaster 30 years in the making) this has been the fault of successive governments all the way back to the 1980s. Since that timespan involves Conservative governments, the author chooses to blame the housing associations instead.

  • Kim S

    I live in a house owned by Riverside Housing Association which is based in Liverpool, but which has properties all over the north of England. The rent has gone up 68% in the 10 years I have been living here. All houses have had their gas fires replaced by electric fan-heaters so that Riverside save money on annual gas service checks – never mind that the new fires are so costly to run that you never use them. I wrote to the chief executive (Carol Matthews, salary £172,000) about this but never received a reply.

  • pobinr

    We don’t have a housing crisis.
    We have an immigration crisis
    Meet the true villains of the housing crisis
    The traitors who demolished our soreignty & borders


    The UK population grew by 500,000 last year
    That’s aprox 250,000 more homes needed in one year
    There 50 x 40 = 2000 working hours a year for the building industry.
    2000 x 60 = 120,000 working minutes each year120,000/250,000
    = A new house needs to be built every 0.48 seconds in this country.
    Not to mention 100’s of schools & hospitals.
    Yet articles on overcrowding, rising rents & rising house pricess never mention immigration
    So now you see just how dumbed down, PC & or naive OUR media hacks are http://www.bbc.co.uk/news/uk-33266792

  • Disqus249b03

    There is no housing crisis. There is not even a housing shortage.

    There is an immigration crisis. There is a racial demographic crisis.

    We are being race replaced. We are told we need to pave over our country to build houses for the children of the endless third world hordes.

    There are at least 10 million and likely 15 million racial alien colonisers in our land, all of them here against our will, against our interests, and against our protests.

    If we were to send every last one away, as is perfectly practical, moral, and necessary for our survival, housing for our own sons and daughters would be plentiful and affordable.

  • uberwest

    Weren’t Housing Associations just set up to protect council housing stock from ‘Right to Buy’ anyway? Not to mention the Labour votes that go hand-in-hand with council housing.

  • MathMan

    A more relevant question to ask is, Why do we need all these new houses? The answer is because there are too many people in the country.

  • John Rudd

    This feature is right. I am a tenant in a Housing Association, they are overpaid overmanned and their services especially procurement is not fit for purpose.
    When I brought this feature to the attention of the Executive Director on a salary of over £100,000 he replied saying it was inaccurate, politically motivated and a complaint had been lodged with the Broadcasting Standards Authority, he also commented that his Group Network Housing had built 1000 houses, the Salary of the Groups CEO is over £300,000, that speeks volumes.

  • Ryan White

    the housing crisis could b slved i mpre peopl were encouraged to join the buildin trade and those that arent could be pursuadd to join the bilding trade can behlped tp find other means of tying to achieve more houses in society. Theyil l do this by cutting unemployment benefots and starting bew ways forward. They should lower the hosue prices so that people can actully fnd homes. The profit thing neds to be overlooked in this instance and the people need proper housing whcih is clealry mpre important

  • davidp24

    Why do you people keep quoting the PM salary as if it is in any way
    meaningful, every county council in the country has not just one but a plethora
    of directors paid more than the PM and they do not earn it either.

    The fact is that the Con Government is trying to eradicate housing
    associations, forcing a right to buy may seem laudable but where is the new
    stock? The idea that they can buy land at market rates and build new social
    housing is a insulting.

    The Con Government has got rid of the obligation of developers to build 20%
    “social” housing on all their developments; this was replaced by a
    requirement to build some “affordable” homes. Well the bedroom tax
    was based on average salary being around £23k but to afford one of these so
    called “affordable” homes you would need £40k cash and £40 annual
    salary. So affordable is a subjective term to the Con Government, affordable if
    you are an Old Etonian perhaps.

    The hard on the Con Government has to eradicate social homes (which are by the
    way the only truly affordable homes in the country) continues, lifetime
    tenancies are gone, so while the wealthy have the certainty of living in a home
    with tenure, everyone else must live in constant fear of eviction because of
    greedy landlords.

    Just where do they think these people will go?
    They will become homeless but oh I forgot, we had Conservative Minister
    Baroness Williams saying that homelessness is a lifestyle choice, right!

    Is this all supposed to help with austerity?

    No because it is the shortage of supply of housing that pushes rents up, it is
    called supply and demand, economics 101.

    Yet Housing Benefit is based on Local Housing Allowance, which itself is
    based on the lowest 30% of properties. So there is a direct relation between rents and public sector costs. I read about a freeze on social housing rents, yet saw three properties increase by 6.5% from April 1st. At this rate these one bed properties will increase from £480 to £605 over the same period the Government is freezing ESA.

    Of course most landlords want to rent for as much as they can get away with,
    many of them avoid rent reviews by simply issuing a Section 21 notice and
    kicking out the tenant along with their rights in just 2 months. (In France and New York you can’t evict people in Winter but in the UK it is fine anytime).

    Still Landlords have now lost tax benefits they had so guess what, they are
    going to increase rents to make up for it. The goal here seems to be to punish
    small landlords or get them to form companies and become corporate landlords. End result is the same, higher rents and higher public spending.

    Still if we are to be entirely honest we must consider that over 67% of public
    spending is on the elderly and “untouchable”, still I am sure that the Con
    Government has plans for them in due course.

    I am not sure what that will be but we saw the EXTRA 65,000 revealed in the DWP
    DEATH STATS that Cameron lied about when he told the House of Commons they did
    not exist (after the DWP had already confirmed they did exist but they wanted
    to “massage” the figures before releasing them”. Perhaps the Con Government has some kind of “soylent green” solution for the elderly?

    Even housing associations themselves say that Con Government are forcing them
    to increase rents:

    “Following changes to the way housing associations are funded by the Government,
    we now have to charge relatively high rents on some of our properties. These
    rents are known as ‘affordable rents’. Affordable rents are calculated at 80% of the full market
    rent and are generally higher than social rents.”


    So where will it end?

    The banks want to put up interest rates and change average mortgage terms to 50
    years so a family does not get to own a home in their working life but that of
    them and their children. Of course the
    house would be sold to pay for care home but that is another issue.

    There has been talk of the The Con Government wanting to bring back the
    workhouse and we have already seen that they want to be able to force people to
    work for free in Poundland.

    So with all the disenfranchised people the Con Government is creating how long
    will it be before we see a backlash? Not just riots but a wholesale revolt
    and of course we do not have the police or fire brigade to deal with that.

    Billionaire Nick Hanauer thinks it is only a matter of time…


    I despair at the Labour party leadership but perhaps that is what we need to
    restore some fair play and balance to the UK.