It is no secret that the environmental, social and governance (ESG) agenda will be one of the dominant for the built environment. And whilst the social housing sector has led the UK property industry in defining the ESG landscape, there is much registered providers will need to embrace in 2022. Winckworth Sherwood’s market-leading social housing team points to six things social housing providers will need to consider in the year ahead.
- Sustainable finance – affordable housing first – Rishi Sunak at COP26 set out his vision for the UK to be the first “net zero-aligned financial centre”. Financial institutions and investors will need to deploy capital in a way to help the UK meet its net-zero commitments says Partner and Head of Banking and Finance Louise Forrest. “There are natural synergies between affordable housing and sustainable finance, but upcoming regulations will need careful consideration to avoid discussions about greenwashing. All social housing providers, their funders and asset managers will soon be required by law to make ‘sustainability disclosures’ at some level. They will need to understand changes to legislation in 2022.”
- ESG – retrofitting and stock swaps – Retrofitting housing stock is likely to prove expensive and challenging for many housing associations fuelling a wave of stock rationalisation programmes, says Social Housing Partner Will Rutter. “Stock disposal and swap programmes have been largely driven by geographic considerations allowing housing associations to better manage homes, often as a result of mergers. That will undoubtedly continue in 2022. “However, housing associations are facing significant costs in meeting building safety requirements and the looming decarbonisation agenda. Housing associations will have homes that are just too expensive to adapt and that will drive further rationalisation in the new year and beyond.”
- Building safety – 2021 was another huge year for fi re and building safety, with a raft of primary and secondary legislation being enacted or proposed, the most recent being further changes to the Building Regulations, says Partner Charis Beverton. “Michael Gove, the Secretary of State for Levelling Up, Housing & Communities, has promised to look at the issue of building safety with ‘fresh eyes’ in 2022. Indications are that he intends to be much tougher on the construction parties deemed responsible for cladding and external wall defects.”
- Greater regulation of exempt accommodation – Greater and tighter regulation is needed to protect vulnerable tenants in 2022, says Partner Charlotte Cook. “Exempt accommodation is often used to house those most vulnerable in society and with few alternative options – rough sleepers, prison leavers and those troubled by substance abuse. As landlords provide care and support services, such accommodation can fall outside of the ‘normal’ housing benefit rules. This has seen this provision attract less scrupulous providers, often operating under long chains of leases or even rolling short-term leases. “Government should in 2022 take steps to recognise the enormous contribution the assisted living, the care sector and the staff it employs has made (and especially over the past two years). It is a sector struggling to recruit and retain staff and steps need to be taken to address this.”
- New for-profit entrants in 2022 – 2022 will see new for-profit social housing providers enter the market. They will, says Partner Charlie Proddow, be a welcomed addition offering new partnership opportunities. “We are expecting new for-profit entrants into the market backed by major investors and with more partnership agreements to follow. They facilitate new homes and greater access to affordable homes, opening up new revenue streams for traditional providers that, in turn, will enable them to develop and deliver new homes.”
- Regulator’s Rent Policy Statement – rent caps removed – The four-year policy requiring registered providers to cap rent for their tenants finally expired in March 2020 in the depths of the pandemic leaving RPs the ability to return to raising rents at CPI plus 1%. But will they take advantage, asks Ruby Giblin? “Registered providers need to decide if they raise the yearly rent to off set the rising costs of retrofitting and building safety work adding to the tenant’s cost of living crisis? “With a background of reduced housebuilding and fewer surplus sales due to the pandemic, social housing providers are finding less in the coffers. Tenants are also struggling with the removal of coronavirus financial assistance, less universal credit, increased energy bills and now an unexpected rise in inflation to 5.2% pa.”
This article originally appeared in Housing Association Magazine, Jan 2022