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Article:

Development plans in a time of uncertainty - Regional focus

20 December 2019

Northern housing associations remain upbeat, despite some uncertainties

Hamid Ghafoor

When we issued our Social Housing Barometer 2019 in early October, we highlighted an encouraging finding. Despite some uncertainty about the economy, over half (55%) of all survey respondents were planning to develop more homes, while 37% remained committed to the same level of development. We found some regional differences, however. Housing associations operating solely in the North West or North East were more likely to report enhanced development plans than those focused on London and the South East.  

Strong development plans

We conducted this research in the summer (June and July). Four months later, it’s encouraging to find that development plans among Northern housing associations remain strong. Organisations are telling us they still have large development programmes in place. Although there is a slowdown in the property market in the South of the country, the market remains buoyant in the North and social housing providers see the opportunity to expand.

This continued optimism is despite a sense of uncertainty about the outcome of both Brexit and the new Conservative Government - there is some nervousness about their attitude to the social housing sector.

Political uncertainties

Under Theresa May, government policy was seen as shifting positively towards housing associations and their role in addressing the UK housing challenge. The views of the current Conservative government are less well understood. Housing associations are concerned about the potential extension of the right to buy, sensing perhaps a lack of understanding among some policymakers about how social housing works.

Despite these uncertainties, housing associations remain committed to their positive development targets. This isn’t to say no challenges are anticipated in trying to achieve these targets, with organisations often facing tough competition for development sites.

They also remain focused on the issue of health and safety. This is a key priority for all associations, seen as a high risk and attracting increased spending. Across the sector, there is still a lot more to do to ensure high health and safety standards are achieved and maintained.

The audit challenge

In a recent development, many housing associations are finding it increasingly challenging to find an appropriate auditor. Associations with listed debt appear to be experiencing particular difficulties due to their higher risk profile.

Such experiences reflect the pressures facing the audit market in general, which has been under intense scrutiny. In response, audit firms have been increasing their focus on audit quality and reviewing their service provision. High audit quality requires strong sector expertise and some firms are now reducing their sector coverage. Whether for this or other reasons, some audit firms have taken the decision to withdraw from social housing and this is being felt in reduced numbers of firms taking part in audit tenders.

Although BDO remains committed to auditing the social housing sector and providing services to housing associations, the changing marketplace is a concern. There are now fewer audit firms with the necessary specialist understanding of the social housing sector to deliver effective audits. Housing associations are therefore encouraged to plan well ahead of any audit tender process.

If you would like to discuss these or any other issues affecting the social housing sector, please get in touch.

READ MORE INSIGHTS ON THE SOCIAL HOUSING BAROMETER 2019