Housing is arguably an a-political area of governmental policy…everyone needs housing, after all. For housing associations, the upside of this is the plethora of short-term initiatives more often than not focused on house-building. In contrast, most would argue that there has not been a coherent housing strategy since the postwar Macmillan days, when there was an emphasis on both meeting chronic housing shortage and some regard for wider societal implications of ‘place’. An understanding of this sits at the heart of Coming Home, the report published in February by the Church of England’s Commission on Housing, Church and Community. Without a fundamental shift in the way we think about housing, the tendency to treat houses as financial assets rather than homes, there can be no resolution to the crisis.
In an attempt to grapple with this dilemma, the report sets out five values to which ‘good’ housing should adhere: sustainable, safe, stable, sociable and satisfying. Few in the sector would disagree with the centring of these values, and the argument that too often in the terminology and logic used when discussing housing policy lacks a sense of values or ethics. The definition of profit is narrow, typically financial and short-term. Unless house prices drop or wages rise, many remain locked in the private rental market, unable to afford home ownership. As no responsible government would deliberately seek a collapse in the housing wealth of c.60% of the population who are home owners, nor engineer a drastic uplift in wages across the board, much other policy feels like mere tinkering.
This report challenges us all to come up with solutions to this dilemma, yet it is truly commendable that the Commission does not shy away from its own role in forging a new approach to housing founded on a notion of value that is broad, long-term and encompasses all the ways in which a ‘good’ home produces social value. Rather than just thinking about the bottom line of profit margins, then, the Commission challenges us and itself to think of the myriad ways in which a good home helps an individual. It improves their physical and mental health, their social relationships with others and their community, it provides the bedrock of wellbeing that allows them to engage in work or other forms of labour. These things can be hard to quantify and often take years to unfold, but are core to the value which providing a home produces.
For the Commission, this shift is about sacrifice, which gives those five values meanings and applicability. For those not of faith, this sacrifice is akin to the ‘we’re all in this together’ spirit. The Covid pandemic has been a stark reminder of this truth, that in a crisis the maximisation of individual gain fails as a viable route to collective good. The report challenges landowners and investors to consider more than just short-term financial gain when making decisions on housing. No exception is made for the Church of England itself, which is encouraged to make use of the strategic land portfolio of its commissioners, comprising around 6,000 acres in total, in ways that go beyond simply maximising profit.
Instead, this land should be used to best support communities and provide truly affordable housing. For instance, selling land below market (‘hope’) value in order to help set up a new Community Land Trust which would use it to build quality homes tailored for local need. Community Land Trusts have for some time represented an innovative concept but, all too often, failed to take off through lacking the main ingredient: affordable land that is not priced off its maximum developable value. Many housing associations have also come up against the difficulties of procuring land in this market, by virtue of their typical desire to deliver mixed communities rather than sale price maximisation.
The Commission’s willingness to back up its call for a new approach with action has the potential to boost and make viable the community-led housing model. Were landowners to follow the Church’s lead and accept lower prices to facilitate truly affordable homes to be built as well as fulfil wider community needs in the places of greatest need, the grassroots energy which advocates for community-led housing could be channelled into tangible social impact.
Alternatively, a growing emphasis on stewardship could see landowners like the Church allow housing associations or CLTs to lease land for development, as stewards to ensure that the land is not simply lost to luxury housing out of reach to most. This model represents a platinum standard of patient capital, and the UK Stewardship initiative a standard for asset owners and managers who want to shift toward an emphasis on long-term, sustainable investment.
There can be no building back better or levelling up of Britain’s towns without addressing this core dilemma of housing need. Indeed, those of us who talk the talk on ESG, and who sincerely believe that private capital can and should ‘do the right thing’ in funding social impact, must be prepared to do our bit, in making our sacrifice.
I’ve been CEO of THFC, the largest mutual lender to the social housing sector, for nearly 20 years now. We have helped fund tens of thousands of homes, and yet each year we hear from our borrowers that it is harder and harder to build truly affordable homes in the places which most need them. It is easy to call for a paradigm shift, but to take action to make it happen takes guts. The Commission’s report is a challenge to all of us in the housing sector; will we join them and do our bit?
The Housing Finance Corporation (THFC) announced today the appointment of Arun Poobalasingam as Head of Relationship Management and Business Development..
THFC today priced a retained issuance from its 23-year THFC Funding No.3 bond today for Leeds and Yorkshire Housing Association,.