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Written evidence submitted by the Chartered Institute of Housing [RSH 037]
About CIH
The Chartered Institute of Housing (CIH) is the independent voice for housing and the home of professional standards. Our goal is simple – to provide housing professionals and their organisations with the advice, support, and knowledge they need to be brilliant. CIH is a registered charity and not-for-profit organisation. This means that the money we make is put back into the organisation and funds the activities we carry out to support the housing sector. We have a diverse membership of people who work in both the public and private sectors, in 20 countries on five continents across the world.
Introduction
The Chartered Institute of Housing (CIH) welcomes the opportunity to respond to the Select Committee’s inquiry on the regulation of social housing. We believe that everyone has the right to a decent, safe place to call home and that all renters should receive a fair, good quality service from their landlord.
Housing quality and regulation needs to be looked at in the round, not in tenure silos. Over the past few decades, we’ve seen the private rented sector (PRS) become home to more people who would in the past have expected to secure a social rented sector (SRS) home. Data from DWP’s Households below average income (HBAI) series show that the proportion of those living in poverty in the PRS has doubled in the last 20+ years – from 15% in 1997/98 to 30% in 2019/20 (HoC Library brief). Regulation has not kept pace with this and PRS tenants have a very different (generally poorer) experience to those in the SRS in terms of quality, stability, affordability and certainly regulation.
We need to look at regulation - in terms of finance, governance, and consumer protection - for the rented sector as a whole. Alongside this Government needs to consider its long-term investment in the SRS and show cross departmental leadership on issues which have the potential to work with or against each other.
We must look at professionalism of the housing sector alongside its regulation; housing professionals with the right behaviours, knowledge and skills will drive better outcomes for residents. As the professional body, we have introduced a set of professional standards, supported by a training framework, to set a benchmark for housing professionals and organisations in the sector. We believe this will help to drive up quality and support the culture change needed to accompany regulation.
How widespread and serious are the concerns about the quality of social housing?
Recent media coverage has highlighted concerns over quality. As the professional body for housing, we are shocked and saddened by these examples which cause huge personal distress to those affected.
It is clear there is work to do to address quality issues. The Housing Ombudsman report into damp and mould (2021) examined 410 complaints investigated about 142 landlords over a two-year period, with maladministration found in 56%, rising to 64% for complaint handling alone. Elements of the Ombudsman report echo what we found in CIH’s ‘it’s not okay – a guide to tackling stigma’ report; a strong theme emerged about the quality of homes, maintenance, and repairs, where tenants felt that the standard of work fell short of what should be expected.
When compared with the PRS, the quality of social housing scores better. The English Housing Survey estimates that in 2019-20, 12% of SRS homes did not meet the Decent Homes Standard, compared with 23% of PRS and 16% of owner-occupied homes. However, this is not a race to the bottom and our ambition must be that all housing meets the required standard and provides a quality home.
In general terms the SRS has demonstrated its commitment to improving quality. The Regulator of Social Housing’s (RSH) global accounts show private registered providers are investing in social housing stock: total spending on repairs and maintenance was £5.7bn in 2020, up from £5.4bn in 2019 and £5.2bn in 2018. The recently published (2020-21) accounts show that some major repair programmes were affected by the pandemic but expenditure on routine repairs was maintained over the year.
CIH’s work on professional standards is designed to help housing professionals improve quality as part of holistic asset management, supporting housing development that meets the needs of people now and in the future.
What is the impact on social housing providers’ resources, and their ability to maintain and improve their housing stock, of the need to remediate building safety risks and retrofit their homes to make them more energy efficient?
The scale of the task to remediate building safety risks and retrofit homes is huge. The RSH’s latest risk profile highlights that landlords are planning a 12% increase in investment in existing homes (latest 5-year forecasts) but inflationary pressures will arguably undermine much of the additional outputs secured by this increased investment.
On building safety, the scale of work needed to remediate ACM cladding linked to the Grenfell Tower fire is known and, in the social sector, underway or complete. However, a major problem for the sector is the work needed to address other safety concerns in high-rise and other developments. Individual social landlords have made or are making their own assessments, and, in the housing association part of the sector there have been some indications of the scale of work needed:
There appears to be no similar summary of the budget implications of building safety work for council housing, although the Local Government Association (LGA) has pointed out (except in the case of ACM cladding) social landlords are not eligible for government grants towards the work and, without financial support, “social landlords will be forced to divert funds from maintenance and repair and supply to cover remediation costs, meaning social housing tenants and those on the housing waiting list will pay for developers' mistakes.”
Sector-wide assessments of the costs of achieving zero carbon by Savills summarise the scale of the task. Analysis for the council housing sector puts the extra cost of achieving net zero carbon in 1.5m existing homes at almost £1 billion per year over a 30-year period, a considerable call on resources given that councils’ annual capital housing investment averages £5-6 billion per year in total. Parallel analysis for the NHF[1] showed that housing associations need to invest almost £36 billion to achieve EPC Band C by 2030 and replacement of all fossil-fuel boilers by 2050. Up to 2030, this implies spending of about £2.2 billion annually on top of associations’ current budget of about £1.5 billion on major repairs and planned maintenance.
Several funding sources are available, but criteria and bidding arrangements are different and thus confusing: Social Housing Decarbonisation Fund, Home Upgrade Grant, Local Authority Delivery scheme and (from April 2022) Energy Company Obligation. If they can access these schemes, landlords will have to cover a proportion of costs. The gaps might be partly filled through borrowing or other grant sources, or the cost could be eased by reducing or removing VAT on decarbonisation work, driving through economies of scale or allowing rents to be increased where work will reduce tenants’ fuel bills. Achieving overall net zero targets will require more significant long-term investment as a key part of the UK’s approach to tackling the climate emergency and delivering a zero-carbon future for all.
As with any other organisation, social housing providers must work within their budgets – costs cannot be passed on through rents (rent reduction is already impacting on investment). Without further government support there is a risk that delivery of the new Affordable Housing Programme 2021-26 targets will be undermined, as some big providers trim their new build programmes to concentrate resources on building safety and decarbonisation in existing stock.
Is the current regime for regulating social housing fit for purpose?
No, but we believe the new system set out in the Social Housing White Paper (SHWP) will help address this. Over the last decade there have been significant changes to the way social housing is regulated. The governance and financial viability standard sets out a collection of required outcomes and specific expectations which has given individual landlords freedom to work out their approach to meeting them. Overall, our members support the regulator’s focus on outcomes, with 71% (of Member Opinion Panel (MOP) respondents) agreeing that it minimises regulatory intervention and 68% that this approach should be retained in the future. Feedback from individual landlords about the way in which the regulator enforces the economic standards is generally positive.
The regulatory system has, however, led to some disparity within the sector. For example, while housing associations are expected to proactively demonstrate compliance with the regulator’s economic standards, local authorities are not. (The regulator can only exercise economic judgement over council housing in terms of the rent standard.) Housing association tenants have greater redress options than local authority tenants.
Under the current regime consumer protection is given less weight. While all social landlords are expected to adhere to regulatory standards covering tenant involvement and empowerment, the regulator is only able to intervene where there is a risk that tenants will experience ‘serious detriment’ as a result of non-compliance. In practice this is a very high bar, making regulatory interventions extremely rare. This is recognised by our members, with just 37% of MOP respondents agreeing with the ‘serious detriment’ test and just 21% agreeing with the reactive approach to consumer regulation.
The subject of regulation came up frequently during our ‘Rethinking social housing’ workshops (2018). Many participants raised regulation as a positive feature of social housing but felt that, for the reasons set out above, the current framework is not as strong as it could be. This view is supported by our members - only 44% of MOP respondents felt the current system was working well overall.
We welcome the expanded remit and approach of the Housing Ombudsman and future strengthening of the regulator’s consumer standards which should help address the issues above. It is essential that both have the capacity and sanctions framework needed to ensure effective compliance.
We welcome the Committee’s recent announcement to launch a separate inquiry on the issue of exempt accommodation which also needs looking at within this space.
As set out above, the greater emphasis on economic matters may arguably have led to the perception that providing good quality services and engaging with tenants is less important than good governance and financial viability.
Getting the balance right is difficult – a regulator of 3.9 million households cannot intervene on behalf of individual tenants. However, with the exception of HMOs where local authorities have a wide range of enforcement powers, social tenants who make a complaint are much more likely to have it properly investigated and dealt with than their private counterparts. (Individual property-based regulation, as it applies to private renters, is appropriate for a sector where most landlords have less than ten properties, but that model cannot work in a sector where most tenants rent from landlords with between 5,000 and 50,000 homes.)
The Housing Ombudsman is a better fit for individual complaints – especially where there is no evidence of systemic failure. Ombudsmen systems usually focus on process failures (mishandling of complaints, slow response times etc) and won’t get involved where complainant’s have another remedy – such as enforcement in the courts. This can be highly problematic especially for tenants on low incomes who cannot afford to risk legal fees. We therefore welcome the recent spotlight report by the Housing Ombudsman on damp and mould and the decision that commencement by the tenant of the pre-action protocol would not be considered to constitute legal proceedings.
The SHWP confirmed the regulator should continue to regulate using principles they apply in their economic regulation, and that their remit should remain focused on organisational issues, with individual complaints resolved by the Housing Ombudsman. CIH supports this. The proposals aim to establish a new consumer regulation function, within the regulator of social housing, that is proactive and holds all landlords to account for the services they provide. We welcome the SHWP’s commitment to legislate to ensure clear co-operation between the Housing Ombudsman and the RSH so that they can more effectively hold landlords responsible when things go wrong.
The SHWP is clear that landlords should expect to be regulated more pro-actively and robustly in the future. We welcome the commitment to raise standards, the focus on increased transparency and the desire to give tenants a real opportunity to shape and influence the decisions that impact on their lives. However, the sector is frustrated by the time lag between the release of the SHWP and the legislation process. Whilst there is plenty that providers can do in the meantime to get ready, there is a real risk of a loss of momentum due to delays. It is imperative that this is placed as a top priority for government to progress.
Joining up the regulatory and ombudsman operations makes sense - it is vital that tenants are clear who they should go to with complaints. Reform of the Housing Ombudsman is positive, and we welcome that measures have already been introduced to remove the ‘democratic filter’ and expand the Housing Ombudsman service and its powers.
The most important piece of the jigsaw of proactive consumer regulation is the standards framework. The existing standards are out of date, and we welcome that comprehensive consultation on refreshed standards is now underway. We also support the embedded focus on professionalism in the SHWP with specific reference to the behaviours and attitudes of people who work in the housing sector. As the professional body CIH has a key role to play here - we have developed standards to set a benchmark for housing professionals and organisations in the sector.
What changes, if any, should the Government make to the Decent Homes Standard?
The original Decent Homes Standard (DHS) has been successful in delivering much needed improvements to existing homes, following years of underinvestment. However, the standard was itself limited and has been in operation for over 20 years. Many social landlords set out to achieve more and welcome the government’s review; in a survey of CIH members in 2018, 94% respondents were in favour of a new DHS.
Any future standard should support a more strategic approach to investment. The original DHS in some cases drove compliance with the standard and a focus on replacement of major elements such as kitchens, rather than a more strategic approach or one that involved the input and priorities of tenants and residents. In addition, if a new DHS is to be the established standard for the same length of time as the existing one, it will need to provide a flexible framework that supports landlords and tenants to identify priorities to meet current and future requirements and expectations of our homes. For example: to address the drivers of wider environmental requirements (such as greater energy efficiency to meet the net zero carbon targets); support health, safety and social/economic wellbeing (such as digital technology to support home working and education, as emerged during the pandemic); to ensure affordability remains at the heart of how homes are developed and run; and to encourage ongoing development and refinement of new technologies.
If there is limited or no additional funding to implement a new DHS, it will be even more important that the standard is set to support landlords to look strategically at how they incorporate and align DHS work with other retrofit programmes to help to absorb the additional investment needed (as set out above).
In our response to DLUHC, CIH called for a new DHS that focused on outcomes that deliver homes and outdoor spaces that keep people: safe; secure; healthy; comfortable and at an affordable cost; and connected (socially and virtually). Landlords can then plan to deliver the outcomes of the standard flexibly across different geographies and housing types, in consultation with and agreement about priorities with their tenants and residents. This would also provide the opportunity to incorporate more personalised adjustments (for example adaptations within homes) and enable existing homes, communal areas and outdoor spaces to be improved in ways that support people’s health and wellbeing. Housing improved through a new DHS can contribute significantly to tackling the health inequalities that have been highlighted by the experience of people in lockdown, particularly when living in non-decent, poorly heated, insecure and overcrowded homes.
However, it should be noted that in some mixed estates there is greater difficulty in achieving a commonly agreed and maintained standard. This is particularly so in flats, where the freeholder is not the social housing provider. There is also a wider question regarding the interplay with Government’s regeneration and renewal policy.
Should the Decent Homes Standard be amended to include energy efficiency and other means of mitigating climate change, and if so, how?
The drive to incorporate increased energy efficiency measures was behind the strong support of CIH members for a new DHS when surveyed in 2018. 87% wanted this included, so the requirement for all social housing to reach EPC Band C by 2035 (and by 2030 in cases of fuel poverty) is welcome, and an important step in improving existing homes and tackling the decarbonisation challenge.
The new standard should also reflect expectations that systems will provide adequate and affordable heating throughout the property. CIH has called for more stretching, staged targets in relation to energy efficiency in social housing, along the lines of the Scottish government’s energy efficiency standard in social housing, which relate to the staged achievement of ‘net zero’ by 2050. Whilst many social landlords may aspire to go beyond any new DHS over its duration, others may be content to comply with the requirement - the new DHS should therefore be ambitious in the target but allow for a flexible and staged approach.
Affordability for tenants should also be part of how the outcomes from a new DHS should be measured. Recent research by CIH and Orbit revealed that one in four tenants surveyed had gone without heating to save money in the last 12 months and that over half spent more than 10% of their income on energy, double the UK household average. Given the continued pressure on household finances the overall costs of running homes must be factored into landlords’ asset management approaches and the support available for tenants. The approach of the Welsh Housing Quality Standard (WHQS) is useful here; an evaluation of the WHQS suggests future iterations should include milestones for meeting decarbonisation targets that ensure tenants are not worse off as a result but that comfort is improved, and rates of fuel poverty are reduced. The ease of use and affordability of measures for tenants is a key factor to ensure that households can heat their homes adequately, reducing the incidence of damp, mould etc, and supporting better health outcomes.
It is important to recognise the practical steps landlords can take are constrained by specific factors, for example: where the provider is not the freeholder of the land / block to install solutions such as ground source heat pumps. Consideration will also need to be given to the problems of implementing ‘whole house’ approaches in mixed blocks of tenants and leaseholders.
This is an area that warrants further consideration. In simple terms CIH believes that the regulatory system should be equitable, giving tenants confidence in housing quality, service, and redress irrespective of landlord. However, we need to work through the possible consequences of requiring all providers to register with the regulator which could force some out of the market due to the regulatory burden. It might be helpful to explore scope for a lighter touch regulatory model for smaller providers.
It is worth noting that most non-registered ‘social’ landlords have less than 2,000 homes and are subject to some form of "social" regulation, e.g., CQC.
December 2021
[1] Savills (2021) Decarbonising the housing association sector: Costs and funding options. London: NHF.