Political and financial uncertainty as well as Brexit dominated the national conversation in 2019. Below are the key trends registered providers of social housing will need to consider in 2020.

Increase in local authority housing development

Local authorities are doing a lot more to build housing than most people realise. According to UCL’s research, 13,000 new homes were built by local authorities in 2019, and this number is set to increase in 2020. The Stirling prize-winning Norwich estate is the tip of the iceberg: despite government cuts, local authorities are finding innovative ways to build housing.

However, this is partly because they have no choice as the 2017 Homelessness Reduction Act imposed a legal duty on all councils to prevent and relieve homelessness. Considering that half of all local authorities no longer own council housing (partly due to Large Scale Voluntary Transfers to housing associations), there is growing public expectation for local authorities to intervene.

Mainstream capital market funding

Capital markets funding is expected to grow significantly in 2020. As smaller RPs tap into this route there is a shift from bond issues towards private placements.It is easy to understand why private placements are so attractive to registered providers. First of all, there is no need to obtain a credit rating, which may be very time consuming. Secondly, private placements are not listed on any regulatory exchange, so they receive lighter regulatory treatment in the UK. Thirdly, housing association doesn’t need to have a huge financing requirement to enter a private placement.

Cladding

Cladding is an urgent and potentially extremely expensive that may well run beyond 2020 before resolution. Advice Notice 14, issued by the government, continues to have an impact on existing units and disposal of high rise units. Agreed buy the RICS form EWS1: External Wall Fire Review, may help to unblock the market. However, EWS1 completion requires housing associations to appoint a fire engineer to inspect external walls physically or via a desk top review. Should the report conclude that remedial works are required, it may be possible to recoup costs from the construction parties/designers of the external walls. If it is not possible, then the question is who then should bear the cost of remediation.

Climate Change

Climate change has been one of the major issues of 2019. Social housing providers will face increasing pressure in 2020 to decarbonise their homes with a move towards sustainability and energy efficiency. Social housing providers are already making great advances in developing environmentally friendly homes. However, they still face considerable costs to decarbonise existing stock. The calls will become louder and those RPs that do not respond will find themselves in a potentially uncomfortable position.