Social Housing Providers’ Billions in Surpluses as Record Number of Tenants Report Poor Conditions

The biggest private providers of social housing are registering billions of pounds in surpluses – despite record numbers of tenants reporting damp, mould and other disrepair in their homes, Byline Times can reveal. 

This newspaper examined the annual financial statements of the G15 – a group of the UK’s biggest housing associations – and found they registered an operating surplus of £1.8 billion in the last year.

Housing associations are private non-profits that run 63% of social housing in the UK – accommodation linked to local incomes in order to make it affordable for those on average incomes or using benefits. 

But the G15 housing associations in particular – including L&Q, Clarion, Peabody, MTVH and Notting Hill Genesis – have been the subject of constant scandals in the past two years over the poor quality of the homes they offer their often vulnerable tenants.

Campaigning groups Byline Times spoke to accused major housing associations of slashing support for maintaining their social housing stock, while funnelling increasing amounts of their money into private sector housing developments.

As part of its analysis, this newspaper found that the G15 companies held some £4.2 billion in private investment property, while leading housing associations have been accused of everything from lobbying the government to limit how easy it is for tenants to take them to court to systemically refusing to abide by court-mandated repairs.

To social housing experts, these private organisations are risking the future of the UK’s affordable housing provision. 

G15 told Byline Times that suggestion that the surpluses of its members “shows anything other than responsible financial management to help meet our core purpose as organisations is well wide of the mark”.

The UK has two types of affordable social housing: housing owned by councils; and affordable housing owned and operated by housing associations.

Most housing associations were founded during the 20th Century as charitable organisations trying to solve the issue of slum housing, eventually having their services made part of the government’s affordable housing support and, as a result, financed through government grants.

But that approach has fundamentally changed over the years, especially after the Conservatives took power in 2010 and introduced a “cross subsidisation” model that would force housing associations to interact more with the private sector. 

“The idea was to cut the government grants, in particular upfront grants for developing new social housing, which the government slashed by two-thirds,” Professor Stewart Smyth, an expert on the finances of public housing at Sheffield University Management School, said. 

“Then they expected the housing associations to fill that with debt, but also to go and build new properties and rent or sell them at full market rates. With the surplus you make, you cross subside your social rent provision.

“But I’ve not seen the work yet that has shown that this approach has worked. 

“Our expectation is, if you asked the housing associations to do more work in the wider market, then they will hold on to the surpluses to go and fund their next round of private development, and the social housing side of things get diminished.”

The dire state of UK housing – particularly at housing associations – came to the fore last year when a report found that the death of Rochdale toddler Awaab Ishak was caused by exposure to mould that his housing association landlord systemically failed to address.

In the months since, stories of the living conditions in certain housing associations have filled news reports and the tweets of housing activists like Kwajo Tweneboa. 

The Housing Ombudsman has seen complaints skyrocket 64% year-on-year to a record 26,771 in 2021/2022.

Liberal Democrat housing spokesperson Helen Morgan told Byline Times: “It is deeply concerning that housing associations are seeing these huge surpluses, which could have been invested in fixing mouldy and crumbling homes. The Government needs to step up action to tackle this scandal and ensure that tenants living in social housing have decent and safe homes.”

But housing associations are only playing a larger and larger role in running the UK’s social housing stock. While in 1979, just under half of all British people lived in council-run housing, that figure is now barely above 5%.

Part of that was thanks to well-covered programmes like ‘Right to Buy’ moving millions of council-owned homes into private hands. 

Less well-known, however, is the decades of ‘stock transfer’ from the 1980s onwards – the enforced movement of masses of council housing from management by local authorities to housing associations.  

To add to that, in the search for higher efficiency and the ability to more easily raise capital to finance private developments, the merging of different housing associations has increased in the past few years. 

In fact, even the G15 itself is now only comprised of 12 housing associations after multiple of its own members merged together, with one consultant warning in 2017 that we are heading towards a situation where 90% of social homes are owned by a handful of giant housing associations. 

That has left housing associations running a huge number of homes. Some, like Clarion, L&Q and Peabody, manage more than 100,000 properties themselves. This has left many allegedly unable to adequately respond to the needs of their social tenants, according to those Byline Times spoke to.

Housing managers at Peabody, for example, were found to run patches of up to 1,200 homes at a time, according to one investigation launched after multiple failures at the group allowed a resident’s dead body to lie undiscovered for nearly two years.

That scope has also meant that housing associations have less local presence in the communities they serve, according to Suzanne Muna of the Social Housing Action Campaign. 

“With the local neighbourhood officers and offices we used to have, people could go down and would have somebody to look them in the eye to talk about their issues,” she said. “It’s harder… [as a result] to refuse to do something about it. The excuses that housing associations gave is that it is much more efficient to do everything through this digital interface, but people just don’t get answers now.”

Her conclusions are potentially supported by Byline Times’ analysis of the accounts at the G15 housing associations, which found this collection of major housing associations make up just under half of the sector’s £4.4 billion overall surplus while only providing 27% of the housing run by housing associations. 

According to Smyth and Muna, all of this is made worse by a lack of any meaningful regulation. Social housing is supposed to be regulated by the Regulator of Social Housing and the Housing Ombudsman but they say investigations now are only triggered when complaints are brought to the regulators, rather than any proactive inspections taking place. 

That means, even at the best of times, that it is hard for the regulators to get a sense of wider problems at any housing associations, rather than just deal with individual cases.

Meanwhile, the punishments doled out are often small. Last year, the average amount of compensation the Housing Ombudsman ordered housing associations to pay tenants they had forced to live in often unliveable conditions, was roughly £280. 

For tenants who try to pursue court cases themselves, things aren’t much better. Massive cuts to the budgets and eligibility criteria for legal aid has meant the number of housing legal cases funded by the Legal Aid Agency fell by almost 40% between 2010 and 2020. 

Even if they get a lawyer, there could be a major delay before seeing their case get to court. One recent parliamentary report warned that courts were “struggling to process housing cases quickly enough”. 

If tenants manage to get to court and win, there’s no certainty that anything would happen, according to those Byline Times spoke to.

“We met with a housing solicitor who told us that nearly half of all his housing association cases were going back to court because the housing association had ignored the court order,” Muna said. “It’s cheaper just to keep paying the fine for contempt of court than it is to actually do the work.”

Leading housing associations have even lobbied to try to limit the amount they would have to pay tenants if courts found they had systematically failed to deal with disrepair in their homes. 

According to one report leaked to the Social Housing Action Campaign group – and seen by Byline Times – Riverside Housing (one of the biggest housing associations not a member of the G15) says it was setting up “a public affairs project working group with other RPs [‘registered providers’ – another term for housing associations]”.

The aim being to “develop an influencing strategy and tactical plan to identify what legislative and policy changes we might seek” to try and stop no-win no-fee disrepair lawyers from operating extensively in the social housing space. 

The problem is, according to Muna, that this would limit one of the few ways tenants living in homes riddled with damp and mould would be able to force housing associations to make repairs to their home. 

A spokesperson for Riverside said that it stood by the internal report commissioned by Riverside and seven other unnamed housing associations “which raised legitimate concerns about our customers’ experiences of the inappropriate tactics of some claims management companies”.

“Riverside continues to work collaboratively with local and national government, health and social care and other housing providers and contractors to develop and share technical knowledge, research, and best practice on tackling damp and mould,” they added.

In response to Byline Times’ findings,  G15 chair Geeta Nanda said that housing associations are collectively spending billions on repairs and maintenance each year and that the “surplus across the G15 has decreased in recent years”.

“The surplus that is reported as part of our financial results are not ‘rainy day’ funds that can simply be applied to cover costs elsewhere,” she added. “Banking rules require housing associations to demonstrate ongoing financial resilience in order to guarantee access to beneficial borrowing rates, which allow providers to continue to maintain existing homes and to build new affordable homes.

“Therefore, the suggestion that the surplus level of G15 members shows anything other than responsible financial management to help meet our core purpose as organisations, is well wide of the mark.”

She said G15 refuted the suggestion “that any organisation would not comply with any determination by the Housing Ombudsman or a court order”, going on to say that it was a “baseless allegation that shows a complete lack of understanding or knowledge of the work housing providers do”.

Nanda called for more investment in affordable house-building from the Government and stressed that the majority of investment property owned by housing associations were commercial premises built as part of their housing schemes.

For those critical of housing associations that Byline Times spoke to, the concern now is about the precedent this all sets for the future of the UK’s affordable housing. Housing associations already run almost twice as much social housing as local authorities and, without a widespread programme of council house-building, that role is only set to increase.

“Where London housing associations lead, everybody else kind of follows on behind in one form or another,” Smyth said. “The Government has chosen to make these subsidies for affordable housing disappear, but it could change this overnight, if they chose to.”