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After L&Q’s forecast surplus cut HQN Chief Executive Alistair McIntosh, writing for Inside Housing, calls for housing associations to rethink their approach to cross-subsidy.
Isn’t it great that house prices are coming down in London? Will young folk get on the ladder?
Can we shut down the bank of mum and dad? Is it time to get out the bunting?
Well, that’s not quite how our housing associations see it.
L&Q says its net margin on sales has been slashed from 16% to 7%. That’s cracking news for anyone looking to buy. It’s a chink of light for our hard-working millennials, so why the glum faces?
Housing associations use the cash from sales to pay for social homes, that’s the only way to build them. You’ve got to rob the struggling Peter to help pay to house the even poorer Paul. So when the sales fall, the worst-off get shafted.
How did we get into this pickle? George Osborne cut the rents and held the grants down. Housing associations had to find a Plan B.
Getting money in by selling homes was seen as the way to plug the gap. That’s looking shaky now. You should get hold of the Evening Standard.
It’s advert after advert from housing associations trying to shift homes. Who’s the winner here? Take a step forward, Mr Osborne.
He edits the paper, so we are paying his wages.
There’s got to be a better way of doing things. And there is. You get a glimpse of it in the latest trading statement from Countryside Properties.
They’ve seen sales fall. What did they do? They bought a firm that builds affordable homes for associations and private rented homes for a government and local authority pension-backed fund. It’s going OK. Public money sure helps them along the way.
And there’s no shortage of this cash pile at all. Councils are spending billions of it on shops and offices and any MP who says yes to Theresa May’s deal gets a nice bonus for their area.
Housing should be first in the queue. Why? The boffins at Capital Economics have told Shelter to tell the government that social housing pays for itself. So, let’s get behind that report.
Andrew Neil is astonished that it hasn’t got more traction. We all need to push harder on this.
Let’s start by going back to higher grants. If our goal is to make housing more affordable, why are we complicit in driving up prices? I don’t get it.
It just antagonises the public, who by and large have no hope of buying these homes. And to make matters worse, the people who do buy the homes aren’t happy either. No one says what their satisfaction figures are in the adverts, do they? And there’s a reason for that.
The unhappy experience of Inside Housing’s Peter Apps when he bought is par for the course.
When you’re in a hole, stop digging.
And it’s about to get a lot worse. The pound is sinking against the dollar, that’s bringing the Americans over in droves looking for bargains.
Warren Buffett himself has set up an estate agency in the heart of the West End.
Soon you won’t just be bidding against other associations which have all gone shopping for bumper bonds, you will be up against rivals with cheap money. That’s when it gets interesting.
For the record, I quit the game after being outbid by cheap Japanese money for what is now the Landmark London hotel in Marylebone in the 1980s. So, what do I know?
Well, I’d push hard for grant and keep out of speculation.
You might lose money at some point – but worse, you’ll lose your friends and your kids will never move out.
By Alistair McIntosh, HQN Chief Exective.
Article first published by Inside Housing on 04.02.19.