Operating Environment

Environmental Analysis – August 2015

Political parties


  • The first all Conservative Budget for almost 20 years delivered in July contained some significant changes for the sector, notably the 1% reduction in rents over the next 4 years; implementation of ‘Pay to Stay’; and confirmation that Right-to-Buy would be rolled out in some form; along with more detail of where the benefit cuts would fall.  
  • A recent article published in 'The Times', penned by David Cameron and George Osborne, reaffirmed the Government's vision for housing and reiterated its Right-to-Buy agenda. The article was robust in tone, effectively telling  the sector that it is either for or against the Government's agenda, without leaving much room for manoeuvre. The Conservative Party sees social housing not as an end in itself, but as a stepping stone towards homeownership – all tenures effectively being a route to ownership.
  • The Conservative Party Conference takes place from the 4th-7th October in Manchester



  • Voting is underway to elect the new Labour leader. Ballots close on 10th September with an announcement due on the 12th. Latest polls place Jeremy Corbyn ahead of the other contenders - Yvette Cooper, Andy Burnham, and Liz Kendall. Corbyn’s left-wing populism has hit a nerve with the young and those disenfranchised with politics. He has been accused by his critics of ‘Alice in Wonderland Politics’, taking the Labour party back to the early-1980s and into electoral oblivion. 
  • If successful the left-wing MP for Islington North is expected to be forthright in setting out how Labour would tackle the housing crisis, which is a key part of his vision for 2020. Corbyn’s  housing policies align with the ‘wish-list’ of almost anyone hit by the housing crisis: lift the housing revenue account cap to allow councils to build social housing;  longer tenancies; private landlord registration; rent regulation, with private rents linked to average local earnings. 


Liberal Democrats

  • Tim Farron, MP for Westmoreland & Lonsdale, and former President of the Liberal Democrats was elected as Leader of the party on 16th July 2015.


Government Departments


  • The Communities and Local Government Committee is holding an inquiry into the viability and sustainability of housing associations. This inquiry looks at the proposed extension of Right-to-Buy and how this and a number of other Government measures may impact on the ability of housing associations to build and develop. We have submitted evidence as part of this inquiry.  
  • The Government has launched a‘10 point plan for boosting productivity in rural areas’ which includes steps to making it easier to allocate land for new homes. This links with the earlier pledge to provide 200,000 ‘Starter Homes’  to be offered at 20% discount to first-time buyers by 2020.



  • The HCA’s latest quarterly survey shows the sector as a whole remains financially strong with access to sufficient finance. New finance continues to be raised through both capital markets and bank loans and the sector remains attractive to lenders. 
  • Its latest housing market bulletin  confirms national average house prices are increasing at a slower rate than this time last year, but nevertheless price rises remain strong. House building starts in England show a 14% decrease compared to the previous quarter, with a 6% decrease compared to the same quarter last year.


Sector Bodies


  • Terrie Alafat, Chief Executive of the Chartered Institute of Housing, said in response to the Summer Budget: “We support the government’s ambition of building more homes and helping people realise their aspirations of home ownership and work – but not at any price.”



  • The NHF is in talks with the Government to secure greater flexibility under the Right to Buy extension to housing associations. It is understood this could involve a plan under which associations pledge to build more low-cost homeownership properties in return for Right-to-Buy being adopted voluntarily.
  • In conjunction with the Centre for Economic and Social Inclusion, it has published a report called 'Worklessness, welfare and social housing' (read the executive summary or the full report), which discussed  the characteristics of residents, the barriers they face to accessing the labour market and the kinds of initiatives which work in supporting them. The report suggests a new partnership between Government and housing associations to support tenants in finding jobs.


Think Tanks and Research 

  • The G15 have published the second years findings from a three-year longitudinal study ‘Real London Lives’ being conducted with the Centre for Housing Policy at the University of York. One of the stark findings is that 16% of housing association residents in London were so financially stretched in 2014, they had used a foodbank, pawnbroker, payday loan company or rent-to-own shop during the last year.  
  • The Institute for Fiscal Studieshas published a report entitled ‘Living Standards, Poverty and Inequality in the UK: 2015’, which highlights that two- thirds of children in poverty live in working families.
  • ResPublica, in partnership with GallifordTry, Peabody, Places for People and Trowers & Hamlins, has set out a radical vision of double devolution to tackle the housing crisis. It argues that the only way to plug the shortage of affordable housing is through the creation of Local Place Partnerships – that devolve housing to people and places. It advocates that the HCA should transfer surplus public sector land directly to these Partnerships to ensure swift release and efficient use.
  • The International Longevity Centre UK has published research showing the benefits of Extra Care schemes. It demonstrates that this type of provision promotes greater independence and provides greater choice in planning for later life than, helps reduce social isolation, and improves quality of life. 
  • Data from the government’s English Housing Survey shows the private rented sector (PRS) continue to surge ahead of social housing. At the end of 2013/14 there were 4.4m households in PRS, compared to 3.9m in social housing.  
  • PWC call on Housing Associations, to reflect on their vision and purpose, and review how successfully they are delivering for their customers. In their talking Points publication they say the sector needs to harness the potential of digital, data, leadership, culture and innovation. Structural change - consolidation, acquisition, divestment and shared services will also be key for delivering a strong vision.
  •  Age UK has published a report looking at the impact of the Budget on the older population. This report indicates the Budget has done little to close the gap between the most affluent and poorest pensioners. It suggests that pensioners are missing out on around £3.9bn worth of benefits, with over a million in the 65+ age band still in employment.


Economy and Housing Market 

  • The UK's inflation rate turned positive in July, with the Consumer Prices Index measure rising to 0.1% from June's 0%.The OBR now expects GDP growth in 2015 to be down to 2.4 %, reflecting the weaker than-expected start to the year. 
  • The latest OBR Fiscal outlook published in July states that the Summer Budget loosened the squeeze on public services spending, this being financed by welfare cuts, net tax increases and three years of higher government borrowing. The Government has delayed the expected return to a budget surplus by a year to 2019-20, but is aiming for a slightly bigger surplus in the medium term. 
  • Unemployment totals have risen for the first time in two years according to the Office for National Statistics (ONS), which has reported 5.6% unemployment in the March to May period, compared to 5.5% reported in the last quarter. The ONS data shows that pay is picking up, with average weekly earnings (including bonuses) having risen  at an annual pace of 3.2% in the latest three-month period, the fastest rate in five years.
  • The author of Moodys, recent report "2015 Outlook Update - English Housing Associations: Sector Outlook Turns Negative Due to Adverse Policy Decisions said ".The cumulative impact of recent changes in Government policy have created a more difficult operating environment for housing associations. The sector's overall credit profile could deteriorate if housing associations are unable to maintain their current financial projections."
  • It is likely that the UK interest rates rise could be delayed until autumn 2016, according to City expectations, as market turmoil in China raises the prospect of historically low borrowing costs staying in place for longer than expected. The British Bankers Association (BBA) have said the number of people moving to fix their loans at low rates was at its highest level for four years. It followed Bank of England governor Mark Carney’s indication in mid-July that the Bank could raise interest rates early next year. 
  • UK house prices rose by 3.2% year-on-year in August, according to the latest survey from mortgage provider Nationwide. This is the weakest annual pace since June 2013, and marks a slight slowdown from July.


Welfare Reform

  • The Welfare Reform and Work Bill was introduced in the House of Commons on 9 July 2015. It has received its second reading and is currently being scrutinised by the Public Bill Committee. The NHF is preparing to submit evidence on behalf of the sector which will call for exemptions to the proposed reduction in social housing rents and will look to mitigate the severest impacts of a reduced benefit cap. 
  • A separate update has been provided for the Board which assesses the impact of proposals set out in this Bill.
  • Iain Duncan Smith has announced that the government is planning to make changes to the sickness benefit rules to encourage more people into work. Instead of classifying claimants as either fit or unfit for work, they should be supported to take up any work they can, even if it is just a few hours.
  • The number of people being evicted from rented homes has increased by around 50% since housing benefit cuts were introduced four years ago. Data from the Ministry of Justice show 10,361 households in England and Wales were repossessed between April and June this year – equivalent to more than 23,000 people.