Tough times and trade-offs – Campbell Tickell guest blog

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3%, 5%, 7%, or as you were at CPI +1% – which could mean 12% rent increases for English social housing in 2023. Which is it to be?

Government insists it is an open consultation – but has made its position clear, that it is minded to implement a 5% cap on social housing rents. This would involve scrapping the final two years of the current CPI +1% settlement, and the cap is likely to run for two years. When the cap was last scrapped, in 2015, we were just two years into a 10 year settlement, when government opted to require a 1% per annum cash reduction for four years (which equated to around CPI -3%). So we’ve seen this before.

The difference this time is that the anticipated reduction is not about pursuing a more generalised policy of austerity in public spending, and keeping benefit bills down. This time it’s about recognising the disastrous effects on social housing residents of this year’s colossal hike in costs of living, in particular the effect on fuel bills. Bluntly, people need help.

The question is, what is the wider cost of that help, and are there unintended consequences? Who is to pay in order to keep rents relatively more affordable?

I discussed the position the other day with a senior executive of a substantial housing provider. The organisation had been modelling the potential effect of a 5% cap. They had established this would lead to a reduction of between a quarter and a third in their annual surplus.

Does this matter? Can’t housing providers wear it? For George Osborne’s 2015 four-year rent reduction, it was understood the Department had been consulting and modelling two options: a 1% per annum rent cut in cash terms, and a 2% cut. The conclusion of this was that housing providers could just about weather 1%, but if it went to 2%, that would kill new development stone dead.

This is the problem we face now. The RP sector may be generating several billion pounds of surplus a year. But that doesn’t make it money that is freely available. The surpluses are needed to fund major repairs and reinvestment programmes, and to enable new housing development. For some organisations, their loan covenants – critical to funding new-build schemes – require that they generate surpluses above certain levels on a continuing basis.

Carry through a 5% rent cap for two years, and what can we expect to see? A number of outcomes can be identified:

  • Planned maintenance programmes will be lengthened, and major works will be delayed;
  • Decarbonisation works will be put on hold – and we should remember it has been estimated that it will cost £104bn to achieve net zero across UK social housing by 2050 (if even that deadline is soon enough);
  • New development will fall significantly – and bear in mind that RPs typically provide one-fifth of new supply each year – at a time when homelessness, including street homelessness, is rising;
  • The picture will be especially stark for councils, which lack the reserves that RPs have to draw upon;
  • Many small RPs, especially supported housing providers, will be in danger of becoming unviable – while the number of larger RPs able to bale them out will diminish, leading to a risk of some RPs going bust.

This is not to argue that social housing residents, who are likely to face enormous problems getting by – the stark choice of ‘heat or eat’ – should be expected to wear 12% rent increases next year. It does mean government should look seriously at what funding can be made available to social landlords, to enable them to continue providing good quality homes and support, and develop the new homes the country needs

Campbell Tickell hosts a WhatsApp group of over 220 housing CEOs from across the UK and Ireland. The platform has been alive in recent weeks with contributions from senior leaders – facing that 5% cap – gravely concerned about their ability to access the funds to ensure their homes are safe and fireproof, continue to advance decarbonisation, continue to build to meet housing demand, and indeed continue to keep their organisations viable.

If government is serious about the health, safety and quality of the homes in which social housing residents live, the need to continue towards net zero and eradicate fuel poverty, and the need to develop new homes to meet demand and address homelessness, it has to act.

Different approaches are possible. It could be about grant support to enable social landlords to keep rents low while meeting their safety and new supply expectations – after all, the savings in benefits to the Treasury of lower rents would be considerably more than the combined savings to tenants. It could be via a ‘catch-up’ mechanism, allowing higher rent rises over a five or even 10 year period following the initial two year limitation. And indeed, as Paradigm Housing CEO Matthew Bailes has argued, it could make better sense to fund support via a windfall tax on energy companies than by what is in effect a tax on non-profit social landlords.

Most immediately for the housing sector, responses to the Department’s consultation are needed by Wednesday 12 October. The more informed the responses about the effects on individual organisations, the better.

Greg Campbell is a Partner at Campbell Tickell.

greg.campbell@campbelltickell.com

A 5 Point Plan to a ‘No Regrets’ Net Zero Retrofit Strategy – Sava guest blog

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Developing a Net Zero retrofit strategy without regret.

All straightforward in the world of sound-byte isn’t it. ‘No Regrets’, ‘Fabric First’, ‘Worst First’ and so on.

Then we have the reality of taking a critical view of our housing stock, often with a limited dataset and out-of-date information which is held in multiple locations with duplication and cloning thrown into the mix.

The social housing sector are committed to the notion of hitting a minimum EPC band C by 2030 and then to achieve Net Zero by 2050. This in itself can make a ‘No Regrets’ approach a difficult proposition because the measurement of an EPC band and of carbon impact are fundamentally different.

We need to think about the band C target as a milestone to be reached by 2030 as a part of the longer-term journey towards Net Zero. This will change the way we plan our improvement strategy.

In simple terms, design our retrofit improvement planning for Net Zero and work backwards. This gives us the visibility of where we want our homes to be and what they will look like and will better inform the decisions we make today around improvements.

An example might be that if we were designing a Net Zero home and looking to insulate the loft, we may decide upon installing 450mm of loft insulation, whereas if we were planning to get a property to an EPC band C we might be recommending 250mm of loft insulation. If we know that we will eventually need 450mm, then installing that measure prior to 2030 not only supports our band C targets but also saves future duplication of time, effort, and money further down the line.

Getting hold of the data to inform our decision making.

This is all much easier to plan if we have a quality assured data profile of our whole stock – which, in reality, most housing providers don’t currently hold. The best investment over the next 12 months and beyond is on data acquisition.

There are multiple sources from which we could source a sufficient dataset to return an energy rating and carbon score.

Whether housing providers conduct this work internally with data analysts or work with organisations who provide this expertise, it is time well spent to end up with 100% of stock providing an energy rating. This will allow us to ask questions of that dataset, such as ‘What does a retrofit plan look like for each of these homes and how much will it cost?’

This starts to build confidence in not only what our homes will need to look like but also informs our skills needs internally. If for instance, it looks like we are going to have 3,000 air source heat pumps installed across specific stock over the next 20 years, where are the engineering skills to support this? Do frontline staff need to have appreciation training on some of these technologies, ought we be starting to inform tenants on the future of housing and how heat pumps work? It’s all hugely valuable insight for how we map out the future shape of our organisations.

We are then able to do financial cross checking, such as what would the financial impact be over the next 20 years if I don’t even consider low temperature, low carbon technology for at least the next 10 years? Is this an achievable strategy? Once you start asking these questions of your energy analytics software and internal expertise you can then work towards a Net Zero improvement plan that you can stand by.

Even where we are applying for funding from the Social Housing Decarbonisation Fund and have specific heat demand targets to meet and particular property types to target, it still shouldn’t stop us making sure that we are considering a ‘No Regrets’ approach before we submit the bid. Knowing what we want the property to eventually look like will assist in a stronger bid application and will stand the property in better stead for its next phase of improvement.

A 5 Point Plan to a No Regrets Net Zero Retrofit Strategy

If you are yet to embark on the Net Zero journey, the 5-point-plan below is a good place to start:

  1. A dataset for 100% of your stock that returns an energy rating. It’s a tough job but it’s an essential investment. Whether this is an internal project, or you work with a specialist organisation like Sava, it should be the first piece of work you undertake.
  1. A single version of the truth. If you use an asset management system, work to integrate your newly cleansed dataset into your asset database. It means that every time you make any property improvement in the future, it will inform your energy data and will recalculate your energy rating accordingly.
  1. Net Zero is our target, band C is just part of the journey. Build an improvement strategy that visualises the future of your stock and work back towards an incremental improvement plan that is costed out, achievable and avoids the ‘regrets’ of duplicated effort.
  1. Invest in specialist analytics software. Invest in a powerful calculation engine that runs your improvement planning software and helps map out and inform your retrofit journey – such as Sava Intelligent Energy.
  1. Knowledge is power. Low carbon technology is inevitable. Speak to manufacturers, attend training sessions, consider having some of your team attend retrofit co-ordinator training. Start to think about how you help educate tenants. They will need to understand this new technology to ensure they do not fear it.

Here at Sava, we provide free technical webinars specifically designed to improve your knowledge of energy analysis and maximise the value you get from your property data. You can view our upcoming webinars here: https://sava.co.uk/software/technical-webinars/.

Please feel free to get in touch with us at technology@sava.co.uk to find out how we can help you to develop your Net Zero retrofit strategy through our software and consultancy solutions.

Locata guest blog – Turning the TAP on for greater temporary accommodation efficiency

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A screenshot of the TAP dashboard within the HPA2 system

Increasing numbers of councils have been signing up for Locata’s TA – Plus (TAP) which gives officers far greater options managing Temporary Accommodation.

TAP is a “bolt-on” to the HPA2 module (Locata’s homelessness system) and provides an expandable workflow platform for Tenancies and Properties that can be easily customised.

This means that a local authority that has purchased the bolt-on can configure their own management functions, such as compliance certification, within their own system.

TAP also provides HPA2 users with:

  • The ability to schedule credits and debits against an account at the required frequency e.g. daily, weekly
  • A Property Journal for storage of compliance information such as Gas Safety Certificate, EPCs and so on
  • The ability to create communications templates specifically for Properties and Tenancies, automatically populating with the relevant Property and Tenancy fields.

“We’ve found that TAP has helped us manage our temporary accommodation much more efficiently,” said Richard Fowler, Business Systems Officer at North Devon Council, which was one of the early adopters of the bolt-on.

“We like the dedicated workload dashboard and the fact that tasks for property and tenancy records are totally configurable,” he added. “It can also be used to record inspection outcomes”.

“We believe we now store TA information in the most relevant place and can record and better report on our void/tenancy inspections as well as monitoring repairs against property records.  And the repeatable tasks come into their own when setting up adhoc inspections and repairs.”

TAP was originally called “Enhanced TA”, but the name did not reflect the extra functionality it brings as a bolt-on (or add-on) to the HPA2 module.

Current users of TAP will be interested to note that we have recently created the ability to add both Client and Property elements into the Tenancy workflow.

This allows certain relevant information to be carried through from one tenancy to another.

To find out more about our HPA2 module and TAP please email us at enquiries@locata.org.uk

World-renowned artist officially opens Teesside autistic school

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The ‘Welcome to My World’ painting which was unveiled by Mackenzie Thorpe during the official opening of the Mackenzie Thorpe Centre.

Children and staff from a school for autistic children in Middlesbrough celebrated the official opening of the school recently to coincide with World Autism Acceptance Week.

 The Mackenzie Thorpe Centre is the North East Autism Society’s (NEAS) newest school at South Bank and provides care and support for up to 30 children aged 5 to 19.

The school opened its doors in September 2020 and welcomed its first cohort of students but due to Covid and lockdowns, NEAS, in partnership with Redcar Borough Council, decided to wait until restrictions eased before organising an official opening.

World-renowned artist Mackenzie Thorpe, who the school is named after and is also a proud patron of NEAS, officially opened the school in front of children, parents, staff and other special guests.

Mackenzie Thorpe, originally from Middlesbrough, is renowned for his art in galleries all over the world, unveiled a special piece commissioned especially for the opening entitled, ‘Welcome to My World’. The painting, which features the famous Transporter Bridge, will be displayed in the school and children also got involved by burying a time capsule in the school grounds which included face masks and hand sanitizer so those digging it up in years to come will learn about what it was like to live in 2022.

Lawyers from Ward Hadaway’s Built Environment Team facilitated a five-year lease for NEAS from Redcar Borough Council, who has also made a significant capital investment into the school.

The Mackenzie Thorpe Centre is the latest transaction Ward Hadaway has delivered for client NEAS. The completion follows the repurposing of Kiora Hall – a historic Edwardian Building on Ragpath Lane in Norton last year. This transaction included facilitating a 25-year lease with Stockton-on-Tees Borough Council.

Katy Milner, Managing Associate in Ward Hadaway’s Built Environment Team in Newcastle, said: “I was delighted to have been invited to attend the official opening of this wonderful new school and to meet the incredible children and staff and celebrate their achievements over the last twelve months.

“It was disappointing that Covid prevented the school from an official opening back in 2020, but having the inspiring and talented Mackenzie Thorpe to carry out the official honours, listening to his touching address and seeing the smiles on everybody’s faces made it all worthwhile.

“I am delighted that Ward Hadaway was able to play a big role in supporting NEAS to secure the lease on this building and help them achieve their vision. I wish them every success for the future and look forward to working with them on more exciting projects.”

John Phillipson, Chief Executive of NEAS, said: “In less than two years we have been able to open two schools on Teesside, which will go a long way in supporting families of autistic children and young people – although there is still more to be done to make education more accessible for neurodivergent children across the region.

“The official opening of the Mackenzie Thorpe Centre not only gave us a chance to celebrate our new school, but also to thank our partners, including Ward Hadaway, whose support and expertise is essential to the development and success of new services.”

Keeping homelessness officers up to speed with HPA2

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Locata’s homelessness system is now being used by more than 115 local authorities across the country.

The HPA2 system was launched in 2018 to help officers with their new duties under the Homelessness Reduction Act 2017.

The system was essentially an upgrade to Locata’s existing Homelessness Prevention and Advice software that had been built 10 years previously with the help and support of several local authorities.

One of the reasons so many homelessness teams use HPA2 is the speed and precision of updates to the system, often driven by new requirements from the Government.

For instance, in February we upgraded every HPA2 system with new functionality to help with the Rough Sleeper Initiative.

This update was free and allows each council to send live data to the Department for Levelling Up, Housing and Communities (D-LUHC) through the DELTA system about rough sleeping in their area.

It also means that HPA2 users can report, monitor and deliver effective casework on rough sleeping by using the pre-built tasks and questions in the system.

We have also recently rolled out a small set of new features to HPA2 to help homelessness officers capture information about Ukrainian nationals.

This is on top of a recent update to ensure good data gathering and integrity across cases where vulnerable people have support needs as well as a complete revision of all the 155 homelessness template letters in the system informed by changes in caselaw since 2018.

This ties into new work we are undertaking to tailor a series of training courses that will give advice and support to homelessness officers, designed to cover the homelessness process and any legal aspects of case management. Underpinning the courses will be a quiz on all aspects of the duties required of homelessness officers that will be easy to use and fun to engage with.

There is a series of videos showing how HPA2 works, if you would like to know more. Simply follow this link.

Alternatively, please contact us by email at this address enquiries@locata.org.uk

Homes England Guest Blog

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Remember that there are increasing opportunities for affordable housing through the remaining unallocated funding within the SOAHP – Shared Ownership Affordable Housing Programme. Partners are therefore encouraged to speak to Homes England Contract and Relationship Managers at the earliest possible opportunity to discuss project requirements and grant needs to be taken through continuous market engagement (CME).  It is also worth noting that the details of Social Rent and HRA headroom are still subject to ministerial sign off. Homes England will share updates with partners in the coming weeks and months.

Further to the SOAHP, Homes England has reopened bidding for the Department of Health – Care & Support Specialist Housing fund (CASSH) through continuous market engagement (CME).  Under CASSH, CME capital grants will be provided to support and accelerate the development of specialist affordable housing which meets the needs of older people and adults with disabilities or mental health problems. As this will be a continuation of the existing fund the funding requirements will remain unchanged from previous bid rounds, with a published prospectus already in place. Funding will be made available over the next three financial years to 2020/21. As with SOAHP, bidding is through IMS.  See: https://www.gov.uk/government/collections/care-and-support-specialised-housing-fund If you would like to know more then please speak to Homes England Contract and Relationship managers at the earliest possible opportunity.

In addition, Homes England is pleased to be soon launching the Community Housing Fund. The £163 million fund will soon be available to community-led groups across England to support delivery of new affordable homes up to 31st March 2020. Community-led housing groups will be able to bid for revenue funding to build capacity in their organisations and to assist them with the costs involved in the pre-development stage of projects. Local Authorities will also be able to bid for funds to support capacity-building activities for community-led groups in their areas and bid for capital funding for small-scale infrastructure projects, such as roundabouts or pumping stations, to unlock sites that the community can then develop for housing. A second phase of the fund is to be launched later this year by Homes England for capital funding to develop community-led affordable housing schemes.

Throughout the North, we are already supporting community led housing activity and we know that communities throughout the North East, Yorkshire and the Humber are mobilising behind this issue. We would like to work with partners to collectively support, resource and facilitate more forms of community led development. The Community Housing Fund is only just part of the picture, let us know if you would like to find out more about the support on offer for community led housing development from national and local organisations with funding for the establishment of organisations, revenue support for project development or peer to peer learning.

Across all programmes, Homes England is working to develop strategic partnerships to accelerate delivery in early years, looking to build the pipeline of schemes and sites using our flexibilities, like the land acquisition tranche, and to see a step change in affordable housing delivery through new ways of working and aligning investment and land opportunities. However, our priority is to build the programme now, taking advantage of the available funding and accelerating delivery this year and next. Talk to us about your sites so we can work together to help shape the proposal.

Whether you are a Local Authority wanting to support a new community organisation with their housing ambitions or a Housing Association working up a new scheme – Get in touch with us to talk about funding needs, tenure mix, revenue or capital support.

For more information email Victoria Keen.

Homes England’s Shared Ownership and Affordable Homes Programme

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The Shared Ownership and Affordable Homes Programme is open for bidding – funding is available for a range of tenures. We offer increased flexibility in 18/19 and beyond – using our land, working in collaboration and encouraging new entrants into the programme. Talk to your Homes England Contract Manger or email Victoria.Keen@homesengland.gov.uk for more details.

The sector now has certainty over rental income, increased funding to £9bn and reclassification – now we collectively need to perform!

Key messages for 18/19:

  • Recent changes mean that there is now so much potential for growth and opportunities for a range of Registered Providers (RPs) and SME Contractors;
  • The challenge is massive but we must grasp this opportunity and not fall at the first hurdle;
  • Continuous Market Engagement (CME) is still open and substantial funds are available – including the newly introduced acquisition tranche payment, which can help with cash flow (ask your Contract Manager for more details);
  • We have a new framework for increased delivery of affordable homes;
  • Look out for the launch of the £163 million Community Housing Fund – available to community-led groups (or with LAs and RPs, in support) across England to support delivery of new affordable homes up to 31st March 2020.

Guest blog: Victoria Keen