There is no denying that social and private rented housing increasingly overlap.
Indeed, the private rented sector (PRS) is now picking up many of the more commonly recognised social housing tenants who are unable to secure social homes, and housing associations are looking to market renting to supplement their traditional activities.
Each seeks to provide a social good, but there is a fundamental philosophical difference between them: the social sector exists primarily to meet a societal need; for the private sector, the social good emerges as a by-product of the quest for profit. These philosophies have led to different outlooks, approaches and regulatory frameworks.
If they were to merge, the two prominent questions to answer would be:
1. How would a merger work in practice?
2. Is it the right time to address the issue?
Before we can look at the ‘how’, we need to be sure that it’s a genuine issue and that it’s the right time to address it. We are in the midst of a change in housing in the UK akin to the shift during the 1960s to ‘80s. Attitudes towards owneroccupation, renting and supporting those who cannot fund their housing from their own resources are in flux.
Creating an artificial construct with so little understanding of where things are headed could leave us with more problems than when we started.
Better the private and social sectors work in partnership to meet the practical need for housing than waste time on abstruse conceptualising.
Simply sending housing associations into the market rented sector is not a magic solution to the housing crisis.
Having said that, offering private rented accommodation at market rates is something HAs should be looking at. We believe in mixed tenure communities, there is growing housing need and there are few other institutions in place to offer the scale of accommodation we require with a decent level of security of tenure. Some areas may also be able to generate large surpluses of revenue.
Overall though, we do not believe private rented accommodation at market rates is going to provide significant amounts of cross subsidy to build the new affordable homes we need.
The capital required to build a portfolio of property to rent will be considerable and it will be tough to put together an appropriate service offer quickly enough. A serious private rented presence would impact on HAs’ levels of debt and expose them to a degree of demand risk not faced before.
This is a form of risk associations are not used to and, though current data suggests nding tenants will never be a problem, our experience is that void levels vary significantly between areas. An effective way of building a portfolio quickly could be to enter into joint ventures with others, including institutional investors.
While HAs should explore their options, let’s not kid ourselves that direct or indirect support for market rented housing is a substitute for affordable housing.