Social housing funding and regulation in England
Last updated 29/03/2010: any recent updates in this colour.
This page contains information about the following:
- Overview
- Tenant Services Authority (TSA)
- Homes and Communities Agency (HCA)
- Background
- Set up progress
- Consultation on principles of recovering social housing assistance
Overview
In 2007 the government initiated two reviews of social housing (Hills and Cave) as well as publishing a housing green paper. This led to the introduction of the Housing & Regeneration Act 2008, which received Royal Assent in July 2008, making provision for:
- setting up of a new Homes and Communities Agency (HCA) with a national role as the investment vehicle for affordable housing and regeneration; and
- establishment of a new regulator, the Tenant Services Authority (TSA), and a new regulatory framework which allows the scope to include both housing association and local authority owned stock.
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Tenant Services Authority (TSA)
An independent review of social housing regulation commissioned by government and led by Professional Martin Cave was published in June 2007. The Cave Review proposed a new system for the regulation of social housing that should, where possible, apply across all providers of social housing. CML provided evidence for the review and responded to the subsequent Department of Communities and Local Government (CLG) consultation paper.
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The new regulator, the TSA, was formally established by December 2008 but initially used existing, 1996 Act, powers to regulate the housing association sector. The chair is Anthony Mayer and Peter Marsh the new chief executive, with a board and senior team having been recruited in the latter part of 2008.
Milestones for the TSA after its launch in December 2008 included consulting on the development of new national standards and operating framework by the end of 2009. The CML responded to the consultation on the new regulatory framework in February 2010.
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The Cave Review of social housing regulation recommended a single regulator for both local authority, including Arms Length Management Organisations (ALMOs), and housing association sectors. This was accepted by the government and included within the Housing & Regeneration Act 2008 with a view to having cross domain regulation operational within two years of the establishment of the TSA. A review by Professor Ian Cole was published in September 2008 identifying the practical issues involved in a single regulatory framework. A CML summary is available for members. Spring 2010 was set as the target date for inclusion of local authorities in the system.
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As a result of a changed external environment for the sector with housing market and economic downturn and the first insolvency in the sector of Ujima Housing Association, the regulator, previously the Housing Corporation and now the Tenant Services Authority, has taken action to strengthen its focus on financial viability. Many of the larger housing associations have a business model based on cross subsidy from sales and had increased reliance on shared ownership in particular. The funding liquidity issues have affected both corporate funding to housing associations but also mortgage availability for shared ownership / equity.
The report into the Ujima insolvency case highlighted several areas where regulation needed to be updated and in particular powers for intervention and enforcement increased. The Housing & Regeneration Act 2008 sets out new powers and changes to the insolvency process as a result of the inquiry and feedback from CML and lenders. A summary of the review report and responses is available for members.
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The New Regulatory Framework for Social Housing in England
The TSA published their new regulatory framework on 16 March 2010. The relevant orders have been given to enact the new regulatory powers and domain regulation within the Housing & Regeneration 2008 from the 1 April 2010.
The CML on behalf of lenders welcomed the new regulatory framework and increased range of powers now available to the TSA. A key focus of the new regulatory regime is on the core elements of governance and viability and there is a recognition of the importance of robust independent regulation in sustaining the confidence of lenders and investors.
We continue to work closely with the TSA as they undertake their risk and assurance role in respect of the housing sector and particularly in relation to housing associations to ensure the sector is financially viable. Our focus will be on ensuring that the financial regulation work is adequately resourced within the TSA and that it looks at external and market risks as well as short term solvency and medium to long term viability of associations. Lenders particularly do not wish to see the wholesale dismantling of this new regulatory regime as proposed by during the pre election period by shadow Conservative spokesmen as this would undermine the availability and terms of future private investment in the social housing sector.
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Homes and Communities Agency (HCA)
As well as deciding upon a single regulator the government announced their intention to separate affordable housing investment from regulation and to bring it together with regeneration investment in a single 'super' agency. The HCA brings together the role of both English Partnerships and the Housing Corporation investment activity.
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The HCA worked towards the same timetable as the TSA and so was formally established by December 2008. Key appointments were made with Robert Napier as chair, Sir Bob Kerslake as chief executive and corporate and regional directors appointed from a range of organisations.
The new agency has taken on existing programmes such as the National Affordable Housing Programme (NAHP) and the decent homes programme as well as developing new tools and stimulating both supply and demand of the market. This has include a kickstart programme to work with private developers to try to maintain some momentum in the housing market during the recession and slow recovery. Also a private rented sector initiative to stimulate institutional investment in this sector.
The HCA has a role in bringing forward private sector funding and will work with the banking and financial sector as well as new investors to develop new public private finance models.
