Saturday, January 06, 2007

Housing Association plc?

Yesterday I was disappointed to see on my doormat the Inside Housing headline – “Landlord explores flotation”. Places for People - England’s largest housing association with 58000 homes - has discussed with the Housing Corporation to possibility of becoming a public limited company and floating on the stock market.

As Inside Housing notes, this would herald a fundamental change to the nature of housing associations. (Interestingly the possibility was not mentioned in the report on the Future Shape of the Sector Commission.)

While I have no objection to for-profit organizations owning and managing social housing and no objection to housing association using the stock exchange to raise new finance (17 housing association are considering the use of a Real Estate Investment Trust to finance market renting, key worker and similar accommodation) – I think flotation of a housing association is a bad move

I worry about this for two reasons:

1) The housing association movement was conceived as a not-for-profit movement –
and it generally works well as this.

2) If any housing association moves from the third sector to the private sector – it will give the claims of "privatization” made by the opponents of stock transfer credibility for the first time. (In fact, Defend Council Housing already use the musings of Places for People’s Chief Executive in 2002 on flotation for their own purposes.)

Lets hope the legal, regulatory and other complexities involved in flotation will kill this idea.


Griff Parry, Liverpool said...

This is indeed a grave development however, to be fair many housing associations have long lost site of their original purposeof providing affrodable social housing and in Liverpool particularly now trade as would any normal commercial property company concerned with maximising commercial returns and opportunities.

Add to that the vast advantages (over normal commerical companies) that Housing Associations have in being able to procure cheap land and free funding from local authorities and the Housing Corporation and you can soon see a whole whole new batch of triple AAA rated secure blue chip star performers are about to enter the FTSE.

Bob Deed said...

I think (and hope) that the issues that you refer to in relation to public support with land and funding will prevent the Housing Corporation's approval.

I am not familiar with the situation in Liverpool but I do accept that sometimes HAs confuse being business-like and being businesses. The social purpose can be forgotten in the drive for "growth", "units", etc.

Anonymous said...

I must admit I was a little surprised at this article in inside housing , as an independent board member I'm often reminding other board members (esp tenant) that we do need to be business-like in our affairs and the day to day running of the association, however I agree with Bob that this is not the same as being a profit driven business seeking to maximise returns to shareholders. Yes we do need to be business like and we need to consider the needs of our stakeholders - however these should not be individual investors whom we are aiming to please through growth in shareprice and dividends. However, one cannot argue that as a sector we need to consider the future funding of activity to meet demand.

Bob Deed said...
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Bob Deed said...
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Bob Deed said...

I was relieved to see Places for People's claim that it was all a bit misunderstanding.,,1986901,00.html

While this has been a propaganda coup for those who detest housing associations and stock transfers, hopefully last week’s Inside Housing Story will be a wake-up call and reminder of the importance of not-for-profit housing.