What Changes have the Housing Associations of England had to Undertake for Organizations - Essay Example

?Donna Purcell Order #534217 10 May What Changes have the Housing Associations of England had to Undertake In Order to Remain Viable Organizations? First of all, Housing associations in the United Kingdom are independent not-for-profit entities that provide low-cost housing for people with a real need for housing. It’s also called “social housing.” Any surplus of monies obtained from trading is used to maintain the existing homes, and to help finance the purchase or rent of new ones. The associations have become the major providers of new homes for rent within the United Kingdom. Some associations provide shared ownership contracts, also, to provide services to people who cannot afford to buy their homes outright. Housing associations in England are funded and regulated by the Housing Corporation. Other governmental bodies perform the same service in Northern Ireland, Scotland and Whales. The Office of the Deputy Prime Minister sponsors the services provided as a non-Departmental Public Body. The Housing Corporation supports communities over the entire country of England by funding the supply and regulating the quality of affordable homes. Regulation by the Corporation makes is easier for those who have circumstances that make it difficult for them to meet their housing needs in the open market. This also includes homeless people, low-income families, and anyone who is in need of supported housing. These associations provide a large scope of housing. Some manage large estates for housing for families, while the smaller ones manage a group of houses for older people. These entities also provide special project housing for people with mental health or learning disabilities, substance abuse problems, homeless people, young people, ex-offenders, and women fleeing domestic violence. The housing associations day-to-day operations are supported by rent and service fees made by the tenants living on the properties. Some of the funding is provided on behalf of the tenants. Housing associations are operated as a commercial entity, but most do not require donations for their daily general activities. New Housing, however, is very different. Its support tends to require subsidies in order to be economically viable. Where the sources of subsidies come from depends on where the association is located The Housing and Regulations Act of 2008 created two bodies of support. One being the Home and Communities Agency that directly deals with funding and regenerated work. And second, the Tenant Services Authority, which provides responsibility for the regulations. Beginning in 2010 the TSA began regulating all providers of “social housing.” The associations of these entities are known as Registered Providers of the private, public, and for profit or not-for-profit status. In Northern Ireland the same procedure is handled by the Northern Ireland Housing Executive and in Scotland by the Scottish Government. However, in Whales, this process is handled by the Welsh Assembly Government. Housing associations are generally seen as private entities because they are neither owned nor operated by the state. This has been challenged by many legal rulings in the past few years. In 2004, a ruling by the British government did document housing associations as public bodies for the purpose of procurement. In 2008 the high court in the UK ruled that housing associations were public authorities, and could be subject to judicial review in some instances. The ruling stated.”permeated by state control and influence with a view of meeting the Government’s aims for affordable housing, and in which RSL, Registered Social Landlords, work side by side with, and can in a very real sense be said to take the place of, local authorities.” This ruling is very politically significant since the housing associations do not currently contribute to the United Kingdom’s public sector borrowing requirement. Although larger housing associations usually have paid staff to manage the association operations, a volunteer board of management is responsible for the work of the organization. Since the board is all voluntary, it might include residents, representatives from local government, community clubs, business people and politicians. An example of this is the Black Country Housing Group in the Midlands. They are made up of more than 30,000 volunteer board members who run housing associations across England. Housing associations first appeared in the ninetieth century as a growth stimulus, and volunteer organizations pushed the growth of the middle class as the industrial revolution began. They have gradually increased in importance over the last decade of the twentieth century due to changes brought on by Thatcher government. New rules were introduced that prevented subsidizing from local taxes and allowed Council tenants to buy their homes at large discount prices. Cost cutting initiatives in local government and housing benefit operations that were more generous to housing associations, have made it more beneficial to transfer housing stock to housing associations. These entities are often referred to as Local Housing Companies. In the 2000s’, a few larger associations formed regional clubs for the purpose of lobbying government bodies. The increasing demand for housing in the South East of England, has presented the growing challenge to drive down costs, improve efficiencies, and still offer the tenants improved and new services. In todays’ economic atmosphere, it’s a challenge all businesses face. Whether it’s private or public business; the goals are to maximize the resources and offer more services. Some risks were shifted from government to the housing associations during the 1980s creating a very different operating environment for associations now based on competition. England has suffered through quite a few very tough years for the housing market just as the United States. All property news has been negative up until 2011. Most regions had experienced major price decreases since the beginning of the credit crunch as well as the recession, but 2011 is seeing an improvement for the better. Housing prices have begun to rise again due to a lack of new housing stock, improved lending by banks, and escalating rents. Affordable rent product is designed to give housing associations greater freedom and allow them to maximize new social housing at a time when government subsidies are low. There is still a question of whether this scenario can provide 150,000 new homes over the next four years, and whether it can be productive and viable in all areas of England. Market rents are usually 20 percent higher than social rents. In an area like Middlesbrough, there is virtually no difference in the social and market rents. Therefore, this gives housing associations little incentive to boost their income by raising rents to 80 percent of market rates. This is all part of the government’s new policy to charge higher rents in new homes and some former social housing when re-rented. Some areas could be hit hard from the removal of housing market renewal funding. The main risk involves areas in which associations only invest in higher value markets. A recent survey of the National Housing Federation suggests affordable renting will mean most of the 150,000 homes to be built by 2015 will be built in London and the southeast. These areas will give the associations more room to exploit the wider difference between social and market rents. Matthew Gardiner, Chief executive of Trafford Housing Trust says “associations in the north can make the scheme work as well. A typical social rent in Trafford is 80 per week compared with 140 were it to equate to 80% of the market rate.” Nick Atkin of the Halton Housing trust, calculates that with the average social and affordable rent Runcorn and Widnes, his association needs to, “re-let eight existing homes at 80% of the market rate to fund just one new property.” Even then the fund is short 10,000 per home and would need to make up the difference with new funding or dip into reserves. Atkins also says he is comfortable charging more rents to new tenants, because he believes the standards of services that his association provides is comparable to the private sector. Some of the expected changes to be seen to accommodate affordable rents are (1) Most housing associations will increase their rents as a way of raising money for new homes. (2) Associations in the north, midland and south believe that higher rents are an option in the areas where they own stock. (3) England is likely to see fewer homes being built than in recent years. (4) Associations want to convert over half of re-rentals to affordable rentals, but may be forced to convert less. (5) Higher rents are justifiable in high-income groups if the services offered are good enough. (6) Some households could become trapped on housing benefit, as rents would be unaffordable if in the works. (7) There is always risk in associations, as affordable renting will require extra private borrowing. (8) Extensive changes to tenancy terms are also being discussed with local authorities. The housing group of Circle Anglia, which owns 61,500 homes in London, East Anglia and South East England, are dealing with the situation of differences between social and market rents. Some are markedly larger in some areas than others. “By charging affordable rents at 80% of market values in areas where Circle Anglia is the largest social landlord, it could influence the market and even bring down private rents.” Another option would be to charge 60% or 70% so there is a greater distinction in its properties and the private sector. It has to be beneficial to the community as a whole. A sudden decline of public housing was achieved by giving the council the opportunity to acquire their homes after two years of occupation at up to 60% for homes and 70% for apartments. This has lead to a loss of 1.5 million homes in Great Britain to the private sector. This right-to-buy policy has: First, given many families the opportunity to transfer into ownership. Second, it has lead to tenure on some estates and retained people within communities who might have otherwise moved out. This creates stable and balance within the communities. Third, it has caused some families to lose their homes to not being able to keep up payments. This has now eased; however, some are still losing their homes as a result of lenders’ taking possession of properties. Fourth, purchase has brought unexpected financial commitments. Some apartments are rented on 125-year leases. The councils retain the overall ownership and upkeep of the building. Some new homeowners have found it impossible to keep up the cost of maintaining their properties. Fifth, right-to-buy sales have diminished the number of homes for rent. Six, a negative to right-to-buy sales has been the repayment of debt by local authorities. Receipts from council house sales have provided large gains in excess of 30 billion. However, the downside has been the disposal of publicly owned assets at half their open-market value. The government has accepted the role of the newly created landlord bodies, and it is expected that transfers to these entities or local housing companies will accelerate in the years ahead. Another and most influential factor is the push to get more resident involvement in management. Tenant participation has been very minimal in past decades. Until the 1960s the slogan, “power to the people”, did not mean much in the housing business. But in recent decades there has been a major push to improve housing through associations from bottom-up decision making. Most of the people who reside in the United Kingdom have the largest part of their wealth tied up in their homes, as is in the United States. If values are rising, it means they save less and spend more. But, if prices are falling, to the point where mortgage debt is greater than the value of property, it can plunge the economy into recession. It is predicted that a trend for local authorities to transfer stock voluntarily to newly formed housing associations or local business housing will accelerate. This will allow associations to free themselves from restrictions on the amounts they can borrow and spend. It is noted that approximately 25 percent of the population are in need of subsidized housing, and the diversification of associations to deliver a wider array of services that fit best with local communities will continue. Entire Websites: Walker, Richard M.; Smith, Robert S. R.; “Regulatory and Organisational Responses to Restructured Housing Association Finance in England and Whales.” n.d. Web. 09 May 2011. http://usj,safepub.com/. Welcome to the Housing Associations, Web. 09 May 2011. < http://cisco.com/cisco/web/UK/.> The Housing Corporation, 12 July 2009. Web. 09 May 2011. North & South divide over affordable rent. Web. 09 May 2011. http://itsallmythought.com/. Housing Associations in the UK. 07 May 2011. Housing Association. Web 09 May 2011. http:// Best, Richard. Successes, Failures, and Prospects for Public Housing Policy in the United Kingdom. Joseph Rowntree Foundation: Housing Policy Debate – Vol. 7 Issue 3. Fannie Mae Foundation, (1996) Web. 09 May 2011. Read More