Most large housing associations now provide homes of all tenures and for all incomes, operating across the breadth of the housing market. Network Homes, for example, completed 945 homes in 2015/16, including 381 for social or affordable rent, 320 for shared ownership, 239 for outright market sale, and five for market rent.
Our development programme for the next few years is based on providing around a third of our new homes for low cost or sub-market rent, a third for shared ownership, and a third for outright market sale.
Housing associations were established often as charitable organisations, with social objectives, so building a lot of homes for sale might seem like a step that goes against our aims but in fact, there is no contradiction. In today’s continually shifting economic and political environment, the only way we can fulfil our social objectives is if we can create profits from sales to help subsidise the building of homes for social and affordable rent, during a time when funding is increasingly harder to come by.
In the 1980s housing associations got around 90% of their funding for new homes from the government in the form of grants. Over the years that’s gradually fallen, so that now we only receive about 15% of the costs of building a new affordable rent or shared ownership home in grant. The rest we have to cover either by borrowing from the banks or by taking it from our income, meaning the profits from our homes for sale are now vital to help cross-subsidise homes for rent.
In 2015/16 Network Homes made a net surplus of £103 million, by far the largest in our history. The majority of that came from selling far more homes in a single year than we ever have before – with the difference being that unlike a private housebuilder, we will reinvest every penny of that profit back into building more new homes or maintaining the more than 20,650 homes we own and manage in London and Hertfordshire. We also don’t pay dividends and nor is there any profit-share to executive or non-executive directors, meaning that we can focus solely on our goal of providing more homes for a large audience.
Five years ago, Network Homes’ surplus was £8 million. The fact that it is now more than 12 times as high shows how far we have come in successfully changing how we operate to take account of new government policies and changing economic circumstances.
Housing associations are now very different beasts from ten years ago. We have had to adapt, bring in new skills, become more efficient, and think in a different way whilst continually balancing social consciousness with commercial awareness – and whilst it hasn’t been easy at times, it’s incredibly rewarding to look back and see how far we have evolved.
Everyone needs a good home. It is the foundation for a good life, whatever your circumstances. As we say at Network Homes, “Good homes make everything possible.”