At the end of last year, the Chancellor gave his autumn statement, which will have a big impact on housing associations and registered providers. The main theme from the Chancellor was the creation of more house to tackle the growing crisis of home ownership in Britain. By doubling the housing budget, this is set out to be the most ambitious housing plan since the 1970’s. The chancellor outlined a number of key messages in the autumn statement including:
- Deliver 400,000 affordable housing starts by 2020-21
- 200,000 starter homes to be built that are to be sold at 20% discount, with £2.3 billion fund to support the delivery of up to 60,000 of these homes
- £200m is to be promised for 10,000 new homes in which tenants can live for five years at reduced rents while they save for a deposit, before they then have “first right” to buy the home.
- £4bn to help build 135,000 homes under the ‘help to buy: Shared Ownership’ scheme for households earning less than £80,000 (or £90,000 in London)
- 10,000 homes that will allow a tenant to save for a deposit while they rent.
- 50,000 affordable homes from existing commitments at least 8,000 specialist homes for older people and people with disabilities
- Extend the Right to Buy to Housing Association tenants, giving 1.3 million households the opportunity to become home owners.
- £2.3 billion in loans to help regenerate large council estates and invest in infrastructure needed for major housing developments
However, there was one key change that the government didn’t ‘shout’ about, that will probably have the biggest effect on Housing Associations-from April 2016 they need to cut social housing rents by 1% per year for the next four years to reduce the country’s housing benefit bill. According to the government, the change will mean a 12% reduction in rents by 2020/21. This reduction will require housing associations and local authorities to deliver efficiency savings.
The current rental formula allows housing associations to raise rents in like with the consumer prices index (CPI) plus 1%, and forms a very significant part of many housing associations investment profile. This formula was set out in 2013 and was meant to last for 10 years. A global 1% reduction in rent would reduce housing association income by around £130m.
The new formula outlined by the government, raises serious questions for housing associations surrounding cashflows, reconfiguring business plans, the ability to raise finance to meet existing commitments and future plans to build new homes. The rent reductions will directly reduce social landlord’s rental income from April 2016, and, therefore, reduce their financing and future investment in building new homes. Consequently, housing associations need to find way to cut costs, operate more effectively and implement new ways of working.
This is where Dynamics CRM can help. Dynamics CRM can help housing associations meet the growing challenges that they are facing, in light of the recent budget announcements and challenging economic climate. Dynamics CRM enables housing associations to get a 360 degree view of their customers, tenants and properties and reflects the complex relationships that exist when providing a wide range of services to a diverse customer base.
To find out how Esuasive can help housing associations transform their internal systems to meet these challenges, please contact us via: email firstname.lastname@example.org or call 01344 393 012.