Squaring the circle

More affordable rents, leading on decarbonisation, increasing the number of new homes, providing greater value for money, and firmer action on homelessness: meeting the expectations of government is getting harder. But help is at hand, says HQN Cymru Lead Associate Keith Edwards.

To coin a phrase, if you want something done, ask a busy sector. We’re the go-to partners for government because we’ve consistently been the can-do partners. 

Our track record speaks for itself. We hit targets for new affordable homes and help deliver much more for Wales besides: from improved health and wellbeing to community economic benefits. But have we become victims of our own success? 

It‘s a fair question if you consider that the asks of the sector seem to grow each year – not just in terms of delivering larger numbers (new homes, improvements etc) but also in the expanding list of priorities the Welsh Government expects us to deliver. 

Housing Minister Julie James, announcing the new five-year rent settlement in December, recognised that a number of priorities need to be reconciled: 

“Together with Welsh social landlords, we have ambitious plans to build much more social housing in Wales. This rent deal balances that ambition against the need to make sure ordinary people can afford to pay their rent.”

The sector’s response to the rent settlement and the draft Assembly budget has been broadly supportive. Community Housing Cymru’s Stuart Ropke recognised that government had “rightly prioritised solving the housing crisis” and welcomed the additional £133m proposed for social housing. 

However, Matt Dicks of the Chartered Institute of Housing, whilst welcoming the continuing commitment to partnership, flagged up concerns on delivering ambitious decarbonisation targets, stating that investment:

“Must clearly become a central features of future budget considerations. In short, this investment needs to be the start of a much bigger scaling up of the journey towards carbon-neutral housing across Wales.”

So, how do we square the circle and meet competing demands for resources? Help is at hand. 

Ian Parker, Housing Finance Network Lead Associate, and HQN Chief Executive Alistair Mcintosh are developing a new model that factors in current and emerging challenges and risks. It takes the successful Iron Grip model they both developed – widely used by Welsh associations – and considers a new complexity of factors including:

•    Potential UK economic shocks and mitigations
•    Good practice on spotting and mitigating risks at individual associations
•    Using modelling and other evidence to facilitate effective board discussions on stress testing
•    Common flaws in stress testing – such as optimism bias (the housing market always turns round), dangerous mitigations (chopping the maintenance spending as a balancing figure), and not getting the right data at the right time (curtailing your response time)
•    Advice on multivariate stress testing to examine financial and operational resilience
•    Scenario planning around the maximum rent uplift of CPI+1% for five years  
•    Identifying and articulating concerns if rent constraints impact on business plan or financial capability
•    Reconciling flexibilities with the imperative to set rents and service charges that are affordable for current and future tenants
•    Delivering on the expectation not to evict into homelessness 
•    Evidencing that tenants have been fully engaged and involved in setting policy and scrutinising performance
•    Making progress on decarbonisation of new and existing homes
•    Getting serious about value for money.

You can see the new model at first hand and consider how to apply it to your own organisation at our Squaring the Circle event, which will be taking place in Cardiff on Tuesday 4 February 2020. You can find out more and book your place here.