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Social Housing Speed Read – Housing Associations to return to the private sector and new official figures are published

Last Wednesday, Housing Minister Alok Sharma signed the papers that will allow housing associations to be reclassified as private bodies and official figures show that the number of new homes built in England has increased by over 217,000 last year.

What’s new?

In 2015 the Office for National Statistics (ONS) moved housing associations from private to public organisations because of the level of Government control over the bodies, in particular powers over appointing board members and consenting to mergers and acquisitions. However, on Thursday the ONS released a statement confirming that housing associations have now been reclassified as private bodies. The statement said:

“ONS has concluded that registered providers of social housing in England are private, market producers and as such they will be reclassified to the private non-financial corporations sub-sector for the purpose of national accounts and other economic statistics”.

The ONS were waiting for the new deregulation measures to pass into law before the reclassification could officially happen; and the regulations came into force on 16 November.

The ONS previously declared in a letter to the Treasury that some of the recently implemented regulatory measures resulted in not enough Government (local and central) influence over the sector to enable it to stay a part of the public sector. This decision was based in particular on the Regulation of Social Housing (Influence of Local Authorities) (England) Regulations 2017. The ONS thought that, specifically, the presence of nomination agreements did not constitute public sector control.

The letter did however acknowledge that Eurostat (the European statistical agency) has the ability to review ONS classification decisions and could, if it sought fit, reach a different conclusion.

What does this mean?

Communities Secretary, Sajid Javid, announced on Thursday that the aim of the reclassification is to boost housebuilding in the sector.

Mr Javid also said that “freed from the shackles of public sector bureaucracy, associations will be able to concentrate on their core, crucial mission – building homes.”

The reclassification from public to private sector means that £63.5bn of housing association debt will come off the public balance sheets.

A Department for Communities and Local Government (DCLG) spokesperson said “this statistical matter…makes no difference to the way housing associations run themselves and imposes no new controls or rules”.

Also responding to the reclassification, David Orr, Chief Executive of the National Housing Federation, said “we strongly support the ONS’s decision today, endorsed by the Secretary of State […] this is welcome recognition of their position as independent social businesses with a shared social purpose of building a quality home that everyone can afford”.

Official figures

The number of new homes in England has risen 15% over the last 12 months with an increase of over 217,000 new homes built since last year.

During his speech on the housing market on Thursday morning Mr Javid welcomed the new figures alongside setting out the next steps to fix the broken housing market. He said that the figures are “clear evidence that this Government is turning things around with over 1.1 million homes delivered since 2010”.

There are, however, concerns that some local authorities are slow to make progress with some failing to develop a local plan setting out how and where they expect to meet their residents housing needs. 15 authorities in particular have been served notice from the Government that the formal process of intervention is being considered against them, as was set out in the housing white paper.

Those being considered for intervention will have until 31 January 2018 to explain the reasons for not providing a plan and reasons why the Government shouldn’t intervene.

If you have any questions on the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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