Beth Lawrence looks at the role Housing Associations often play in the transfer and privatisation of council housing, with some case studies highlighting the reality of these so-called not-for-profits.

Housing Associations (HAs) are not-for-profit organisations which own, let and manage rental housing and fulfil government requirements to be a Registered Social Landlord. Beyond this general definition, there is wide variation in the way HAs operate. Accommodation owned by HAs is known as ‘social housing’, which incorporates government owned council housing and other affordable housing, although the definition of affordable has been widely contested and varies between HAs. The Thatcher government changed housing rules to favour HAs over local authorities. Councils were no longer allowed to subsidise their housing from local taxes, which lead to many councils transferring their housing stock to HAs. This meant HAs increased in importance. In England, there are now around 1,500 HAs[1] providing roughly 2.5m homes. HAs in the UK have a combined annual turnover of £10bn.[2]

Legally and practically, HAs, also called Registered Social Landlords (RSLs) or Registered Providers (RPs), are in the private sector. They are increasingly run as private sector organisations, borrowing directly from banks and engaged in land speculation and 100% ‘for profit’ housing developments, managing stock as an asset to maximise returns.[3] The official status of HAs as ‘not for profit’, community-based organisations serves to disguise these facts.[4] HAs are lobbying to become private companies, which is not surprising given the activities of some. Home Group, one of the biggest HAs, with homes in nearly 150 local authority areas, is currently selling off nearly 5,000 tenants’ homes as part of a restructure.[5] Defend Council Housing (DCH) has campaigned against housing transfer, such as that carried out by Sunderland Housing Group, which demolished a large amount of good quality council built housing in order to create a housing 'market'.[6] Sunderland tenants voted to transfer housing stock to the Sunderland Housing Group (SHG), now known as Gentoo, in 2001. It was the biggest transfer of homes in Britain – 36,000 homes were sold off for less than £7,000 each.

Transfer Means Privatisation

Transfer means privatisation in law and in practice. DCH has produced a briefing about stock transfer.[4] They argue that the transfer of council housing to an HA means: the loss of secure tenancies, higher rents and charges, less democratic control of the housing service, increased homelessness, large pay rises for senior managers, big profits for the banks and more risk for tenants. Risk is increased, because the security of tenure of council housing is replaced by the new HA, which may get into financial trouble or may expand into a huge business empire with little regard for the needs of tenants who make up a tiny proportion of its stock. This business model means smaller HAs tend to become part of larger groups of HAs, with more pay for senior managers of course. Between 2002-2007, almost 500 HAs were involved in restructuring activity, such as mergers,[4] partly to be able to more effecitvely lobby the government. By 2007, the largest 20 housing association groups owned 29% of total association stock, with associations involved in stock transfer particularly active in this restructuring.[7] Only 32% of transfers since 1988 were set up as and still remain independent, stand-alone organisations.[7] The everyday reality of this is unpleasant, because when housing is transferred to another HA, the new HA is not legally bound by any of the promises made to tenants by the previous HA, which means any concessions won by tenants immediately become redundant.

According to the National Audit Office, privatisation costs £1,300 more per home to make improvements after transfer than it would cost if councils were given the money to do the work themselves. HAs are legally allowed to charge market rents, whereas council secure tenancies guarantee a legal right to reasonable rent, which means HA rents are higher (they were 12% higher in 2007 based on Housing Corporation figures).[4] Tenants of local councils elect their landlord and can vote them out, but this direct democratic relationship is lost with HAs; the role of tenants on the board of an HA is purely symbolic as they have no real power and are not even allowed to represent other tenants as they are bound by company law, which is the same for ALMOs (Arms Length Management Organisations). If this wasn't enough, research has found that homelessness is exacerbated by transfer, because access to social housing becomes even more restricted.[8]

Councils claim that transfer is ‘not privatisation’, because HAs cannot legally distribute profits to shareholders or investors, even though banks and consultants make huge profits out of stock transfer. However, this is changing as a result of HAs lobbying to become private companies. The Housing and Regeneration Act 2008 allowed profit-making companies to register as social landlords for the first time. The bill as originally drawn would have allowed existing social landlords to turn themselves into profit-making companies, but was amended after protests.[4] It's clear that the main aim of HAs and similar organisations, like ALMOs, is to benefit from increased land values and to achieve that they have to be able to get rid of their tenants, which means ending the security of tenure that council tenants have enjoyed for many years.

References
[1] www.ourproperty.co.uk/guides/housing_association-p1.html
[2] www.housing.org.uk/publications/find_a_publication/first-time_buyers_in_london_ne/what_is_a_housing_association.aspx
[3] Changing Boards, Emerging Tensions, Liz Cairncross, Oxford Brookes University, Spring 2004
[4] The case against transfer, 2008
www.defendcouncilhousing.org.uk/dch/resources/StockTransfer/DCHStockTransferbriefing.pdf
[5] www.defendcouncilhousing.org.uk/dch/resources/DCHNewspaperSept2011.pdf
[6] www.socialistworker.co.uk/art.php?id=13902
[7] Sector restructuring, Housing Corporation, June 2008
[8] Homelessness and Stock Transfer, Shelter Cymru, Sep 2005
[9] Inside Housing, 31/10/2008