In this preview to his session at Board Members’ Conference, Neil Goulden, Chairman at Clarion, writes about opportunities developing from the organisation’s merger and the underlying mission driving Clarion through the emerging landscape.
2018 looks like it will be another significant year for social housing. Politicians have woken up to the housing crisis and realised that the challenge can only be resolved by building more homes.
Yet there is still a feeling within the Government that the answer to the crisis is subsidised home ownership, which is only part of the solution. Whilst many young people do still aspire to own their own homes, many will find it difficult to save for a deposit or sustain mortgage repayments. And in London – where house prices are around 14 times average earnings – that's hardly surprising. So we need solutions that go beyond home ownership alone.
Housing associations and council housing were created for precisely this reason. We are dedicated to providing housing for those who can’t afford the open market. However, it’s common knowledge that we're not providing enough, good quality, truly affordable housing.
This type of housing needs subsidy, but the vast majority of subsidy now supports market housing, such as Help to Buy and shared ownership, rather than those unable to buy. I believe diverting some of the public investment in Help to Buy is politically, economically and socially justified in order to provide a range of truly affordable housing for people on low incomes. Subsidies don't have to come in the form of cash: government guarantees, planning policy and access to state controlled land for social housing can be just as valuable.
We also need to look inwards for solutions, and this was the key driver behind the merger that created Clarion Housing Group in 2016. We now have the scale to invest in new technologies, reduce operating costs and gain greater (better priced) access to the capital markets. We have plans to sell up to 10,000 homes to smaller, local associations in areas where we have limited presence. This offers tenants the prospect of a local service and gives smaller associations the chance to grow. The money received by Clarion will by recycled to build more new, affordable homes.
We see further sector consolidation as inevitable. Scale is important – not as an ambition in itself – but as a route to better services for tenants, and more homes for those in need of affordable housing.
One year on from our merger, we are still a long way short of our own ambition to build around 5,000 new homes a year. However, the building blocks are coming into place and our pipeline already sits at 12,000 homes.
For me, the message is clear. There is a moral imperative to tackle the shortage of housing in Britain and a socially corrosive shortage of affordable, (social) rented housing, especially in areas of high demand and need. This can only be tackled by the Government, local authorities, house builders and housing associations working in partnership.
Housing, health, education and employment are the fundamental elements of a socially cohesive society. That is what is driving Clarion; we will never lose sight of our own social mission to provide housing for those who cannot access housing in the open market.