Improving the standard of service for tenants in England Peter Marsh Chief Executive Tenant Services Authority

PART ONE Why we are here and Our Regulatory Proposals

Rationale for the regulation of social housing Social housing tenants have limited ‘market’ power - the supply of affordable homes is constrained so tenants cant hand back their keys and move on. There has been substantial past public investment in social housing - the control of rents protects this investment The provision of social housing affects the wider qualify of life in communities An effective regulatory regime is important to private sector investors in social housing

What do we mean by co-regulation? Shifting the axis of power = a Long term collaborative journey TenantsLandlords TSA Delivering better services to tenants

Excellence through local standards pilots Local Standards Pilots Bristol Housing Partnership -Aids & Adaptation Hampshire Residents -Involvement & Empowerment Six Towns ALMO -Environmental Performance of Existing Homes Your Homes Newcastle - Tenant Choice & Customer Service

Overall satisfaction - RSL and LA

Management and routine maintenance per home costs - traditional RSLs

Statutory objectives Ten fundamental objectives Encourage a supply of good quality social housing Choice and protection for tenants Opportunity for tenants to be involved in management Efficient, effective and economic provision by landlords Social landlords are financially viable and well managed Encourage contribution to the broader well-being of localities Encourage investment in social housing Avoid imposition of unreasonable burden on public funds Guard against misuse of public funds Minimise burden and apply principles of good regulation

First 300 days where have we got to? Building a new organisation - board exec and staff teams Weathering the ‘perfect storm’ (sales, mark to market, impairment, refinancing etc) Building consensus around a co-regulatory framework Securing buy in to the extension of the TSA’s remit to local authorities Key research work: life chances, National Conversation, ETS, location, location, location

Building Blocks for Regulatory Framework

Ten strategic proposals to shape regulation 1.National standards – to achieve our objectives, reflect tenants concerns and government direction 2.Good governance is a universal principle 3.National standards should be clear, succinct, based on outcomes and avoid prescribing detailed processes. 4.Providers should agree with tenants local standards that are tailored to their reflect their needs and priorities. 5.Transparency - tenants, landlords and local authorities to be able to assess performance of landlords in their area. 6.Independent validation,benchmarking and annual reporting of performance

Ten strategic proposals to shape regulation 7.Focus our resources in 2010/11 on identifying and addressing the worst performing landlords 8.Where problems are identified the landlord will be offered an opportunity for speedy self – improvement. 9.Open up the market with registration criteria that encourages new entry, consistent with our objectives in the 2008 Act. 10. Review the framework after three years.

Proposals for national standards Proposed StandardParticular requirements 1.Tenant Involvement and Empowerment Involvement and Empowerment Customer Service and Choice (including in relation to Equalities and diversity, and Tenants with additional support needs) Complaints 2. Home Repairs and Maintenance Quality of Accommodation 3. Tenancy Agreement Allocations Rent Tenure 4. Neighbourhood and Community Anti-Social Behaviour Neighbourhood Management* Local Area Cooperation 5. Value for MoneyValue for Money 6. Governance and Financial Viability** Governance Financial Viability

Improvement / Enforcement Regular Self Assessment at Board/Councillor Level Tenant self regulation/ scrutiny Standards set expectations for outcomes. Encourage best practice. Peer support/review Benchmarking Encouraging comparative Information and useful Annual Reports. Publish regulatory judgements Requests for further information ‘Voluntary’ Undertaking Inquiry Extraordinary Audit Inspection Survey Enforcement Notice Appoint new officer* Fines & Compensation* Appoint Adviser# Management tender Management transfer Appoint a manager* Censure following inquiry# Direction to HCA Censure following inquiry# PROVIDER LED TSA LED …Enforcement…….Influence…. IMPROVEMENT… …Investigate…. Checks/Balances: Is it a failure against standards or mismanagement? Is it serious, recurrent, and what’s the speed of response? # Applies to Local Authorities only * Applies to RSLs only

PART TWO The impact of the Recession on Funding & Development Appetite

Shared Ownership voids have fallen

Appetite for Shared Ownership development has fallen

Cash received from first tranche sales is forecast to be much less

Providers are expecting General needs grant rate to be higher

The HA sector is still investing in its stock - £20bn in next five years

2008 & 2009 Bond Issues Issuer Value of Bonds Date Issued Credit Spread Gilts + Cost THFC£80mAug %5.96% Affinity Sutton £250mSept %5.98% Circle Anglia £275mOct %7.25% PfP£180mDec %6.92% Sanctuary£200mMar %6.64% THFC£191mJuly %6.35% Sovereign£175mSept %5.705% Total£1.351bn An Active Funding market during the recession Plus over £7bn has been raised from traditional lenders who retain a keen interest in investing in registered

PART THREE Economic Regulation- Rents and New Supply

Underlying profile of supply (no. by tenure) Private sector supply LA & RSL supply Source: Dataspring

HA rents – annual rent increases, 2002–03 to 2008–09 Source:

Source: Dataspring

England: HA rents and market tenures, 2002– 03 to 2007–08 * * NB. Different methodology used for OO cost calculation in 2007/08 Source: Dataspring

Target rent & private rent (£, on primary axis): 2007/08 (all properties; GN) NB: Target rents with service charge eligible for HB. Source: Dataspring

Rates of return for HA and private sectors (%): 1998/ /08 Source: Dataspring

Cross tenure affordability – Newcastle 2009Q2 2 bed flat House For buying assume 6% mortgage rate and 85% LTV (7% for Homebuy) Source: Dataspring

Affordability gap – North East For buying assume 6% mortgage rate and 85% LTV Source: Dataspring

2% LCHO owners Pyramid of ‘affordable housing demand’? 25% renters who can’t buy LQ 13% social renters working Assume all social rented households and priced out private renters form part of affordable housing demand Total = 6.4m households Excludes o/oc in need and those living with friends/parents which will be part of the housing waiting lists Average income shown for each ‘segment’ 10% PRS on housing benefit 47% social renters not in work 2% Homeless/temporary housing £8,800 £19,700 £24,300 £27,000 (LCHO) £7,600 Waiting list top up - to be quantified Source: Dataspring

Policy Options Plugging the Capital Investment Gap ‘Free’ the planning system? Incentivise through Council Tax? Re-classify municipal housing debt freeing Councils to build? Securitise future LCHO receipts? Rental adjustments for larger homes? Rental adjustments for new stock? Rental adjustments for all stock? Rental adjustments for new lets?

Ensure that actual or potential tenants of social housing have an appropriate degree of choice, and protection Notional units per % rent increase

New Supply: The Bigger Picture Size of properties Build costsLand Densification Tenure diversification Borrowing ability, rental and sales income from site and capacity in existing stock Incentivise LAs New SPVs Based on building not development Under supply of larger public housing Clarity in the product mixActive lending market