Britain’s housing associations are making more profits than ever from social renting, while looking for alternative options to broaden their business base. Yet despite many of them being charitable organisations, they are gouging tenants with rents higher than they need be – and failing to build as many new homes as the marketplace needs.
In contrast, private sector renters are seeing rental growth pinned down, as struggling working tenants live in an unsubsidised world where pay rises are barely keeping pace with inflation. And private sector landlords generally have to pay tax on any profits they generate.
The actions of the housing associations are laid bare in a new report that suggests housing association chiefs need to reconsider their organisation’s mission; and recommends the regulator keeps a closer eye on profit levels within the sector.
“Housing association profits soared to a record £1.93bn last year, nearly ten times bigger than five years previously,” said Calum Mercer, one of the authors of A Better Deal for Nation Rent. “The excess profit has been made by housing associations raising rents above inflation, while costs, management, maintenance and debt service interest payments have been broadly flat in real terms.”
And report co-author Natalie Elphicke added: “Housing associations need to follow their guiding principles and not become bedazzled by the prospect of greater and greater profits.”
The report notes the following facts about housing associations:
many are charities and pay little tax on their earnings
profit margins on social housing average 26% and are set to rise to average 30% by 2018
between them they own 2.7 million homes
housing association profits have increased tenfold in five years
the largest 25 associations own 1.1 million homes between them, and are the size of FTSE250 companies
This site will carry more from this research in the near future, in the meantime the report, and its predecessor report Nation Rent, can be downloaded at: