Legislative changes could bring new challenges for housing co-ops

The Confederation of Co-operative Housing (CCH) held its annual conference in Cardiff from 24-26 July, with delegates discussing the sector’s success in Wales, the need to promote the...

The Confederation of Co-operative Housing (CCH) held its annual conference in Cardiff from 24-26 July, with delegates discussing the sector’s success in Wales, the need to promote the movement’s strengths and the potential threat from welfare reforms and the Right to Buy scheme.

Legislative changes were a main concern at the Confederation of Co-operative Housing’s annual conference.

With potential changes to tax credits and other benefits, as well as the government’s intention to reduce the housing benefit bill, the co-operative housing sector might need to find new ways of providing value for money.

In England, all providers registered with the Homes and Communities Agency – including housing co-ops, housing associations and local authorities that own their own properties – are required to provide an annual value for money statement. This measure is aimed at encouraging housing associations to reduce their costs in order to have more money to build homes.

Nic Bliss of the Confederation of Co-operative Housing (CCH) told delegates they should be making a case for the sector.

“The value of work of volunteers is enormous,” he said. “We communicate better, there is very little anti-social behaviour in co-ops, we have community support networks.

“This all happens in co-ops and everybody takes it for granted – maybe we should be trying to identify these things to send a powerful message.”

Blase Lambert, chief officer at CCH, delivered a presentation on the existing regulatory environment for housing co-operatives.

He explained how, in 2013, the government had issued guidance for registered providers to increase rents by the Consumer Price Index, which measures inflation, plus 1% every year until 2023.

But following this year’s election, chancellor George Osborne announced in his July budget that registered providers, including housing co-operatives, would have to reduce rents by 1% every year for the next four years.

At the same time, registered providers, including co-operatives, will have to increase rent for social tenants earning more than £30,000 in the UK or £40,000 in London, resetting it to levels approaching the market rate.

According to the Office for Budget Responsibility these changes could result in housing associations constructing 14,000 fewer affordable homes by 2019-2020 than previously planned.

Mr Lambert thinks the proposal could have different impacts on housing co-ops.

“Every social landlord is going to have to look at the impact on business plans, so it’s impossible to say how this will affect all co-ops. It won’t be uniform – it will depend on the income distribution of tenants,” he said, adding that housing co-operatives might have to look at merging or find new cost-saving approaches to cope with this.

The 1% rent decrease will apply until 2020 when the next election is due to take place. “Beyond that there is no clarity so, instead of having certainty for 10 years, we have certainty for five years,” he added.

Conference delegates were also concerned about how the potential extension of the Right to Buy could affect housing co-operatives.

Mr Lambert said it was hard to predict the impact of the Right to Buy on housing co-ops until a draft of legislation was available.

“Depending on what the government actually does, it may or may not impact on housing co-operatives,” he said.

The Right to Acquire for housing associations would not apply to housing co-ops, which issue contractual tenancies, different from those offered by housing associations and councils.

“If the government introduces a much broader range of legislation to make all of us subject to Right to Buy, then this would affect co-ops,” he warned.

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