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Reflections on the delivery of social housing
How do we invest in our existing housing stock and finance new homes when the funding model for affordable housing has been squeezed to its limit?
GROWTH, REGENERATION & DEVELOPMENT
Rosemary Farrar
Chief Finance Officer, Platform Housing Group
Rosemary Farrar
Chief Finance Officer, Platform Housing Group
Issue 78 | June 2025
All of us working in the not-for-profit social housing sector believe we are doing the right thing on a daily basis. Our shareholders do not demand a dividend and our success is gauged by social contribution. But how do we measure this? The importance of low-cost housing to the economy is vaguely accepted but it is neither adequately calculated nor properly understood.
The Victorian philanthropists understood the value of the social housing they built, much of which survives today. The associations set up in the 1960s to regenerate inner cities understood what they were delivering. Providing homes at an affordable cost drove them to innovate and take risks despite the political climate of the day.
“Dancing to a political tune”
Today, we are all struggling with political and economic pressures, but we are also facing the consequences of poor husbandry of our housing stock over many decades. We have allowed ourselves to be steered towards prioritising the development of new housing at the expense of our existing customers and we have been dancing to a political tune.
Our model, which has successfully harnessed private capital to produce charitable outcomes, is still relevant but has been stretched to the limit of its capacity. There has been, and still is, a fundamental lack of understanding by political thinkers about how this model works. Our housing still costs the same as the houses built by private developers, but our return is lower and is collected over the longer term. It is not paid out but reinvested in the quality of our homes and services.
“Our model, which has successfully harnessed private capital to produce charitable outcomes, is still relevant but has been stretched to the limit of its capacity.”
“Is the post-war stock of some of our communities assumed to be fit for another 80 years?”
A flawed model
If our returns dwindle to the level that we cannot invest adequately in our housing and our services, we spiral gradually downwards. As our margins have been eroded, we have invested less and less in our existing housing and the model becomes flawed. We have traded our long-term contribution for short-term aims.
How do we turn this around? We must mend our damaged model.
We cannot stop investing in our housing stock or stop improving and modernising the service to our customers. But additionally we must not stop building new homes for those who need them. The biggest risk to our long-term financial security lies in the uncertainty of our rental income growth. This year the increase in National Insurance Contributions (NIC) wiped 40% from the growth in sector turnover so that associations with no new housing stock found it near impossible to cover the increase in costs for the year.
Much of our existing housing stock needs considerable investment for the future and we did not envisage the life of some of our buildings to be stretched so far. We need to plan long term on a programmed basis and not be afraid of suggesting wholesale regeneration or even rebuild like the 1960s. Is the post-war stock of some of our communities assumed to be fit for another 80 years?
Funding innovations
The sector lacks the immediate capacity to fund this long-term programme and growth at the pace that is now needed after so many lean years. We need to look outside our present funding model towards sectors that need to invest long-term, such as pension companies.
We do not need to own our properties in the short or medium term in order to provide a service to our customers. We need to continue to do what we are good at – build, maintain and manage homes for our customers and ensure these homes revert to social ownership over the long term.
We need to rebuild the strength of our balance sheets so we can innovate and take risks again. Let’s put our thinking caps on and get around the table with owners of capital who want to work with us. And move forward.
