The finances and sustainability of the social housing sector

Housing, Communities and Local Government Committee Closed Inquiry
Opened: 28 Mar 2023 Closed: 28 May 2024 Parliament page
This inquiry seeks to examine the finances and sustainability of the social housing sector in England. In recent years the financial pressures for social landlords have increased as they face the demands of building new homes, retrofitting existing stock to improve energy efficiency, remediating stock with cladding and other building … Read more
21 Recommendations
13 Conclusions
1 Report
4 Oral sessions
7 Letters
4 Events
Activity timeline 18 events
7 Mar
2025
Report published
28 Nov
2024
Report published
8 May
2024
Report published
22 Jan
2024
Oral evidence
22 Jan
2024
Formal meeting (oral evidence session) · Room 16, Palace of Westminster
17 Jan
2024
Correspondence
17 Jan
2024
Correspondence
13 Dec
2023
Correspondence
8 Nov
2023
Correspondence
12 Sep
2023
Correspondence
12 Sep
2023
Correspondence
11 Sep
2023
Oral evidence
Oral evidence sessions 4 sessions
22 Jan 2024
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Oral Evidence
Bernadette Conroy · Regulator of Social Housing Jonathan Walters · Regulator of Social Housing Peter Denton · Homes England Shahi Islam · Homes England The Baroness Scott of Bybrook OBE · Department for Levelling Up, Housing and Communities
11 Sep 2023
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Oral Evidence
Dave Meseck · DMG Eco Felix Ejgel · S&P Global Ratings Gemma Bourne · Big Society Capital Neil Brown · Inclusion Group Simon Century · Legal and General Steve Collins · Rentplus-UK
19 Jun 2023
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Oral Evidence
Conrad Hall · Newham Council Councillor Pippa Heylings · Local Government Association Deborah Heenan · Populo Jamie Kellett · abrdn John Marr · UK Finance Kathryn Jones · Dudley Council Michael Scorer · Southwark Council Piers Williamson · The Housing Finance Corporation
12 Jun 2023
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Oral Evidence
Fiona Fletcher Smith · G15 James Prestwich · Chartered Institute of Housing Kate Henderson · National Housing Federation Kate Wareing · Soha Housing Paul Fiddaman · Karbon Homes Professor Tony Crook · University of Sheffield
Title HC No. Published Items Response
Sixth Report - The Finances and Sustainability of the Social Hou… HC 60 8 May 2024 34 Responded
Recommendations & Conclusions
34 results
1 Recommendation Accepted
Sixth Report - The Finances and Su…
Publish annual assessment of social housing capacity and targets to deliver 90,000 new homes.
The problem of a continuing chronic shortage of social housing that we identified in our 2020 Report, Building More Social Housing, remains. In line with the conclusions of our 2020 report, we conclude that the Government must support, regulate and … Read more
Government Response
The government agrees with the committee that providers face significant financial challenges and notes record investment in repairs and maintenance. It highlights its existing regulatory casework, where it has downgraded providers' governance judgements and worked with them to address failures in stock maintenance, without committing to the recommended annual social housing target or assessment.
Ministry of Housing, Communities and Local Government
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2 Conclusion Accepted
Sixth Report - The Finances and Su…
Financial pressures from costs, income, and Right to Buy challenge social housing stability.
The social housing sector as a whole remains relatively financially resilient. However, it does face the simultaneous financial pressures of higher costs and lower income. Despite the sector’s overall resilience this is a clear and direct challenge to individual social … Read more
Government Response
The government agrees on the importance of effective use of provider resources and outlines how existing Value for Money and new consumer standards, along with regulatory engagement, address this. It details how its value for money benchmarking tool and published governance judgements assess and contextualise provider performance.
Ministry of Housing, Communities and Local Government
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3 Recommendation Deferred
Sixth Report - The Finances and Su…
Deliver sufficient grant funding and urgently release next Social Housing Decarbonisation Fund tranches.
Making social housing more energy efficient is crucial for the country’s decarbonisation goals, but, of course, it is also a significant cost for social housing providers. Because energy efficiency improvements do not return savings to social housing providers or private … Read more
Government Response
The government's response discusses the regulator's standards concerning tenant engagement, fairness, and security of tenure during regeneration projects. It does not address the recommendation for increased grant funding for social housing decarbonisation or the urgent release of Social Housing Decarbonisation Fund tranches.
Ministry of Housing, Communities and Local Government
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4 Conclusion Deferred
Sixth Report - The Finances and Su…
Review the potential role of private equity investment in social housing decarbonisation.
Noting that the role of private investment in decarbonisation has so far been limited, we encourage the Government to review what role private investment might play in meeting net zero, noting the advice from witnesses that this could involve the … Read more
Government Response
The government's response discusses the importance of providers explaining regeneration projects to tenants and ensuring their views are considered, referencing existing governance standards and tenant satisfaction measures. It does not address the recommendation to review the role of private investment in social housing decarbonisation.
Ministry of Housing, Communities and Local Government
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5 Recommendation Deferred
Sixth Report - The Finances and Su…
Publish longer-term funding plans for social housing retrofitting and private investment beyond 2025.
We also reaffirm the conclusion of our Local Government and Net Zero report that the Government should set out its longer-term funding plans beyond 2025, and to encourage and outline the share of funding for retrofitting it anticipates will come … Read more
Government Response
The government agrees on the importance of understanding and scrutinising the for-profit social housing sector, outlining actions like recruiting specialist staff and undertaking a 2024-25 review of its knowledge. It does not, however, commit to setting out longer-term funding plans for retrofitting beyond 2025 or investigating new sources of private financing for this purpose.
Ministry of Housing, Communities and Local Government
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6 Conclusion Accepted
Sixth Report - The Finances and Su…
Necessary fire safety work imposes significant additional costs on social housing providers.
Necessary fire safety work has resulted in significant additional costs for social housing providers, as the Government has acknowledged in its written evidence.
Government Response
The government describes existing regulatory standards and inspections by the Regulator of Social Housing (RSH) that ensure social housing providers have appropriate expertise and financial management capabilities to handle complex issues, without committing to new action regarding additional fire safety costs.
Ministry of Housing, Communities and Local Government
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7 Conclusion Accepted
Sixth Report - The Finances and Su…
Provide social housing providers with equal access to building safety remediation funds.
The Government’s focus on holding social housing providers responsible for remediating building safety work is producing an unhelpful disparity between the private and social housing sectors. There is no justification for private sector landlords to be treated more favourably. We … Read more
Government Response
The government details how the Regulator of Social Housing (RSH) already monitors the financial health of providers and intervenes in cases of financial difficulty, stating it has sufficient powers. It does not commit to providing social housing providers with equal access to building safety remediation funds as private sector landlords.
Ministry of Housing, Communities and Local Government
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8 Recommendation
Sixth Report - The Finances and Su…
Increase Homes England's flexibility for housing providers replacing non-financially viable properties.
We welcome Homes England’s flexibility on additionality for regeneration funding where that has been possible. The Government must give greater weight to the positive benefits of regeneration so more funding can be made available for regeneration. Homes England should increase … Read more
Ministry of Housing, Communities and Local Government
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9 Recommendation Accepted
Sixth Report - The Finances and Su…
Encourage registered housing providers to deploy reserves for property remediation and regeneration.
The ultimate responsibility for ensuring that existing and future social housing is fit for habitation lies with the housing providers. Those housing providers facing the highest maintenance costs may not be the most financially resilient. Nonetheless, where registered housing providers … Read more
Government Response
The government agrees that providers must manage resources effectively and outlines the Regulator's existing processes for oversight. It states the Regulator ensures providers have plans in place for stock improvements, citing examples where governance judgments were downgraded due to maintenance failures.
Ministry of Housing, Communities and Local Government
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10 Recommendation Rejected
Sixth Report - The Finances and Su…
Insist regeneration projects fully account for and meet existing tenants' needs.
Regeneration should respect the experience of existing tenants, whose lives will be disrupted, as well as those who will benefit from the new or additional homes in the future. An additional challenge is presented when estates contain both social housing … Read more
Government Response
The government rejects setting detailed standards for providers' engagement in regeneration projects, citing the desirability of providers choosing their own service delivery and avoiding increased regulatory burden. However, it states that existing general consumer standards align with the committee's aspirations for tenant experience.
Ministry of Housing, Communities and Local Government
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11 Recommendation Accepted
Sixth Report - The Finances and Su…
Strengthen consumer standards to ensure providers act on tenants' regeneration views.
We welcome the Regulator’s efforts to ensure that regeneration projects are properly explained to tenants, and that tenants have had some opportunity to share their views. However, we believe the Regulator must go further to ensure registered providers not only … Read more
Government Response
The government agrees on the importance of providers listening and acting on tenant views in regeneration projects, stating that existing Governance and Financial Viability, and Transparency, Influence and Accountability Standards already set clear expectations for providers and are monitored during inspections.
Ministry of Housing, Communities and Local Government
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12 Conclusion
Sixth Report - The Finances and Su…
Government's unpredictable rent policy creates significant financial uncertainty for social housing sector.
The Government’s policy on social housing rent increases, and the rent settlement it puts in place to implement this, are the basis of the social housing sector’s finances. It is undoubtedly the case that uncertainty about future rental income makes … Read more
Ministry of Housing, Communities and Local Government
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13 Recommendation
Sixth Report - The Finances and Su…
Set next rent settlement for five years, link to inflation, and publish rent cap triggers.
Accordingly, the next rent settlement should be set for at least five years and should also be linked to inflation. As part of setting the rent settlement, the Government should publish a non-exhaustive list of the types of events that … Read more
Ministry of Housing, Communities and Local Government
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14 Conclusion Accepted
Sixth Report - The Finances and Su…
Require housing associations to consider rent increase impact on vulnerable tenants and use reserves.
We remain very concerned about the impact of rent increases on social housing tenants. These are some of the most financially vulnerable people in our society. We believe housing associations must bear this in mind when they are setting rent … Read more
Government Response
The government agrees on the importance of providers' effective use of resources and responsibility to tenants, stating that existing Value for Money and new consumer standards, along with regulatory engagement and benchmarking tools, already ensure landlords consider rent levels and reserves.
Ministry of Housing, Communities and Local Government
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15 Recommendation Accepted
Sixth Report - The Finances and Su…
Proactively assess registered providers' reserve use for governance, value for money, and tenant responsiveness.
Social housing providers should involve their tenants in discussions about rent levels. When rent rises are being considered providers should explain to residents why such rises may be necessary. The Regulator should proactively assess how registered providers use their reserves … Read more
Government Response
The government agrees that providers should involve tenants and that the Regulator should assess resource use, stating that existing Value for Money and new consumer standards already cover these aspects through regulatory engagement, published measures, and governance judgements.
Ministry of Housing, Communities and Local Government
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16 Conclusion
Sixth Report - The Finances and Su…
Social housing rent increases transfer costs onto central Government via DWP benefits.
A significant percentage of rent in the social housing sector is ultimately borne by the Department for Work and Pensions through benefits. As a result, rent increases could end up transferring costs onto central Government finances.
Ministry of Housing, Communities and Local Government
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17 Recommendation
Sixth Report - The Finances and Su…
Set out DWP's role in rent settlement discussions and expected impact on housing benefit costs.
The Government should set out in its response to this report what role the Department for Work and Pensions will have in future discussions about rent settlements. When a rent settlement is agreed, the Government should write to us to … Read more
Ministry of Housing, Communities and Local Government
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18 Conclusion Accepted
Sixth Report - The Finances and Su…
New for-profit financing models offer investment potential but require careful and effective regulation.
The for-profit financial models involved in social housing are evolving and can be more complicated than traditional financing models. However, we are optimistic that new financing models have some role to play in generating the investment that the sector as … Read more
Government Response
The government agrees on the importance of understanding and scrutinizing the for-profit sector, detailing how it has recruited expert staff, engages with advisors, conducts audits, and has a 2024-25 priority to review knowledge of for-profit providers, thereby addressing the need for careful regulation.
Ministry of Housing, Communities and Local Government
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19 Recommendation Accepted
Sixth Report - The Finances and Su…
Regulator must continuously improve understanding and scrutiny of evolving social housing financing models.
We are pleased that the Regulator has taken steps to ensure that it has the adequate skills and resources which are required for it to have an effective understanding and scrutiny of the new financing models emerging in the sector, … Read more
Government Response
The government accepts the need for continuous improvement, detailing current efforts in recruiting specialist staff, engaging advisors, and conducting internal audits, along with a planned 2024-25 review of knowledge and development for for-profit providers.
Ministry of Housing, Communities and Local Government
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20 Recommendation Accepted in Part
Sixth Report - The Finances and Su…
Conduct and publish biannual reviews of Regulator's scrutiny of social housing financing models.
Accordingly, we recommend that the Regulator must regularly conduct reviews of its own understanding of and ability to scrutinise new financing models in the social housing sector. These reviews must be published biannually in order to provide reassurance and transparently … Read more
Government Response
The government agrees with the importance of understanding and scrutinising the for-profit sector, stating it has a 2024-25 priority to review its current knowledge and that internal audit reports are published, but does not explicitly commit to biannual published reviews of its own understanding and ability as recommended.
Ministry of Housing, Communities and Local Government
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21 Recommendation Accepted
Sixth Report - The Finances and Su…
Ensure registered providers' boards and executives possess sufficient expertise in their financial models.
Furthermore, the Regulator must ensure that, as part of its governance ratings, it examines whether registered providers’ boards and executive teams have individuals with sufficient expertise in the financial models the provider is using. Registered providers must demonstrate that they … Read more
Government Response
The government welcomes the recognition of expertise importance, stating that its existing Governance and Financial Viability Standard and Code of Practice already set expectations for board capability and expertise, which are examined during regulatory inspections and inform governance gradings.
Ministry of Housing, Communities and Local Government
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22 Conclusion Acknowledged
Sixth Report - The Finances and Su…
Financial pressures lead to deeply concerning decline in new social housing construction.
It is deeply concerning that as a result of financial pressures on social housing providers less new social housing will be built. This will further exacerbate the chronic shortage of social housing and will place further unacceptable pressure on those … Read more
Government Response
The government acknowledges the committee's concerns about financial pressures on social housing providers and explains how increased expenditure on existing stock, coupled with rising costs, is impacting their capacity to invest in new housing supply.
Ministry of Housing, Communities and Local Government
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23 Recommendation
Sixth Report - The Finances and Su…
Invest significantly in direct Government grant to fund the building of new social homes.
The current low levels of direct Government grant available to housing associations to build new social homes has received justified criticism from housing associations for being inadequate. We reiterate the conclusion in our 2020 report that the Government must invest … Read more
Ministry of Housing, Communities and Local Government
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24 Recommendation
Sixth Report - The Finances and Su…
Assess impact of increased grant funding on social housing development and overall funding balance.
The Government should make an assessment of the extent to which a significant increase in grant funding for social housing development would allow the sector to build more homes and the overall balance of revenue and capital funding together with … Read more
Ministry of Housing, Communities and Local Government
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25 Recommendation
Sixth Report - The Finances and Su…
Calculate grant funding increase required for significant impact on new social housing provision.
The Government must also calculate the increase in grant funding for social housing that would begin to have a significant impact on the provision of more new homes.
Ministry of Housing, Communities and Local Government
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26 Recommendation
Sixth Report - The Finances and Su…
Set out assessment of new social homes built by for-profit providers and explain investor role.
Properly motivated and regulated private investors present a real opportunity to increase the building of social housing. The Government should set out its assessment of how many new social homes for-profit registered providers can be expected to build over the … Read more
Ministry of Housing, Communities and Local Government
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27 Conclusion
Sixth Report - The Finances and Su…
Assess adequacy of grant funding and private investment for social housing provision
The Government has failed to set out the rationale for the decision to focus the inadequate grant on developing affordable rent homes. There should be an early assessment of the adequacy of grant funding allocations within the remaining Affordable Homes … Read more
Ministry of Housing, Communities and Local Government
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28 Recommendation
Sixth Report - The Finances and Su…
Publish clear targets for net additions of social and affordable rent homes
The Government must start by providing a clear direction for the social housing sector: it should publish a target for how many social rent homes it intends to secure, and explain the reasoning behind it. The confusion and delay around … Read more
Ministry of Housing, Communities and Local Government
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29 Conclusion
Sixth Report - The Finances and Su…
Require greater flexibility for local authorities to use planning powers for social housing development
The Government and local authorities should more actively use their planning powers to ensure that the price of land does not inhibit the development of new social homes. We believe that land value capture should be part of the process … Read more
Ministry of Housing, Communities and Local Government
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30 Recommendation
Sixth Report - The Finances and Su…
Critically review Infrastructure Levy pilot results and consider improvements for social housing delivery
The Government should critically review the results of the Infrastructure Levy pilots and carefully consider suggestions for improvement, including a possible requirement to deliver a certain amount of the Levy as on-site social housing. This should include the possibility of … Read more
Ministry of Housing, Communities and Local Government
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31 Recommendation
Sixth Report - The Finances and Su…
Review possibility of cancelling local authorities' £8bn debt to fund social housing development
Reducing local authorities’ debt could be an effective way for some authorities to provide greater funding for building social housing. It may be possible to cancel some of the additional £8bn debt attributed to local authorities in 2012. We were … Read more
Ministry of Housing, Communities and Local Government
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32 Conclusion Acknowledged
Sixth Report - The Finances and Su…
Risk of individual housing association insolvencies threatens broader sector investment and stability
We recognise that the social housing sector is, as a whole, financially resilient. However there remains a very real possibility that individual housing associations may come close to insolvency. One housing association defaulting on its loans could have a knock-on … Read more
Government Response
The government acknowledges the committee's conclusion on the social housing sector's financial resilience, agreeing with the assessment of significant financial pressures and potential for individual insolvencies, and outlines ongoing engagement with providers and expectations for early warning of viability risks.
Ministry of Housing, Communities and Local Government
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33 Conclusion Acknowledged
Sixth Report - The Finances and Su…
Limited ability of Regulator of Social Housing to manage large housing provider insolvency
We are concerned that some of the largest housing associations may face more financial risk, because they have higher fire safety costs and they have been building more homes. At the same time, we are also concerned that the Regulator … Read more
Government Response
The government acknowledges the committee's concerns about financial risks facing large housing associations and confirms the sector faces significant pressures. It states it will continue to engage closely with providers demonstrating weak financial performance and expects early warnings of viability threats.
Ministry of Housing, Communities and Local Government
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34 Recommendation Rejected
Sixth Report - The Finances and Su…
Require Regulator to publish early intervention measures for financial problems in large housing associations
We are pleased that the Regulator is already engaging more regularly with larger housing associations. However, the Regulator must specifically set out what early measures it would be able to take and by when in the event that this engagement … Read more
Government Response
The government describes existing regulatory processes and powers for identifying and addressing financial risks in housing associations, but rejects the call to specifically set out early measures and timelines, stating it would fetter its discretion to react to specific situations.
Ministry of Housing, Communities and Local Government
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Government Response AI assessment · 20 of 21 classified
Accepted 11
Accepted in Part 1
Acknowledged 3
Deferred 3
Rejected 2
Total 21 recs + 13 conclusions
Correspondence 7 letters
17 Jan 2024 To committee Letter from Minister Rowley to the Chair dated 16 January 2024 concerning giving evidence on the finances and sustainability of the social housing sector inquiry
Parliament page
17 Jan 2024 To committee Letter from the Chair to the Housing Minister dated 15 January 2024 concerning giving evidence on the finances and sustainability of the social housing sector
Parliament page
13 Dec 2023 To committee Letter from the Chair to the Housing Minister dated 5 December 2023 concerning the finances and sustainability of the social housing sector
Parliament page
8 Nov 2023 To committee Letter from Rentplus concerning follow-up from the Committee’s session on 11 September on finances and sustainability of the social housing sector, dated 25 September 2023
Parliament page
12 Sep 2023 To committee Letter from National Housing Federation, G15, Karbon Homes and Soha Housing to the Chair dated 10 August 2023 concerning housing associations’ surpluses
Parliament page
12 Sep 2023 To committee Letter from Sage Homes to the Chair dated 24 July 2023 concerning finances of social housing
Parliament page
27 Jun 2023 To committee Letter from Rentplus to the Chair dated 21 June 2023 concerning the Rent to Buy model of home ownership
Parliament page