2018: a review of the year for the social housing sector

Suresh Lal, Partner and Head of our Social Housing Practice looks back at 2018 and discusses some of the key developments in the social housing sector and explains what they mean for the year ahead

In 2018, social housing stepped into the media spotlight, and for the most part, it was for all the right reasons.

Although well shy of the estimated £42bn required for building social homes, Theresa May’s £2bn funding pledge for new housing developments provided a small measure of long-term financial security and confirmed that the sector has an ally in no. 10 Downing Street. The announcement – made at the National Housing Federation (NHF) conference last September – delivered a much needed morale boost to associations across the sector and ensured that going forward, construction planning will become more feasible. However, whilst the outlook for the social housing sector looks that much more positive, the uncertainty of Brexit and the prospect of a challenge to Theresa May’s leadership may temper the good mood; only time will tell. 

The government’s financial pledge coincided with a year of financial strengthening. Throughout 2018 many social housing providers continued to develop their in-house finance functions, enabling them to more easily and effectively source funding. With the sector as a whole rising to a position of greater financial strength, we can expect more providers in 2019 to focus on improving IT systems and driving digital innovation. This will include digital housing management systems for better customer service, a growing use of data to offer personalised services and adaptive building systems for quicker design and construction.

2018 also marked the beginning of Homes England and further financial support for the sector. More than just a name change, the new delivery body announced a strategic partnerships project that will help associations with land assembly, financing and grants. As part of the initial wave of partnerships, eight associations will be sharing a pot of £590m with the aim of building more than 14,000 affordable homes by 2022. It should be noted however, that the uncertain nature of the building sector may pose challenges in the form of slow construction pipelines and a cooling private housebuilding market.

At the other end of the social housing spectrum, things started to look bright from a customer service perspective. A number of teams began to move to more innovative customer service models that focused on how they interact with the customer and importantly, give customer’s choice. Digital strategies will underpin this with more providers looking at the services they can transition online in order to offer more effective communication for their tenants. Providers are beginning to realise what the water industry realised too late – that the customer is not tied to them and they will need to invest in the services they provide their tenants in order to keep them.

The drive towards greater customer service is an ongoing trend reinforced by the government’s Social Housing Green Paper, published last August. Whilst much of the green paper fell a little flat (probably caused by the revolving door of politicians who worked on it), one phrase did strike home; ‘sharper teeth’ for the Regulator of Social Housing to ensure social homes are managed correctly and are of decent quality. Now acting as an independent body, the Regulator of Social Housing is expected to take a harsher line with social housing providers. It means that next year we will see more providers called to account and there will be an increasing demand for individuals with governance and compliance skills who can identify and address risk factors rapidly.

There was a notable movement of high-profile leaders throughout 2018. We have seen a raft of executives take the step up to the next level along with a host of commercial leaders entering the fray. 2019 is likely to play witness to more veteran chief executives leaving their posts, posing leadership challenges for providers as well as opportunities for those in the commercial sector who want to transition into social housing.

Looking ahead, Brexit poses an obvious void of uncertainty across the political and economic landscape that, depending on the outcome of the deal, may require providers to seek additional skills and capabilities. However, what is certain is that 2018 has seen foundations being laid for a strong future in the social housing sector. This opportunity for growth and development will bring with it the demand for a number of new skillsets.