Inspired by Housing Technology’s ‘New Way of Working’ event at the BT Tower in June, I want to explore further what opportunities might be waiting to be discovered from looking at Europe and beyond.
I decided to do some research and analyse what our foreign partners are doing to tackle their particular social housing issues to see whether there were any lessons we could make use of in the UK.
Interestingly, there is a plethora of material about social housing policy, government initiatives, economic strategy and the history behind the development of social housing. My purpose in writing this article is not to offer a thesis on the development of social housing over the centuries, but I did conclude some startling findings.
Business definition and comparison
Let me start first by asking a question – what is Social Housing?
The reason for posing this simple question is that according to Scanlon & Whitehead (Social Housing in Europe, LSE 2007), no single formal definition of social housing was found in a number of the countries they studied. Definitions related to ownership – notably non-profit organisations and local authorities (e.g. the Netherlands and Sweden); who builds the properties (e.g. Austria and France); whether or not rents are below market levels (e.g. Ireland and England); the relevant funding and/or subsidy stream (e.g. France and Germany); and most importantly, in almost all of the nine countries included, the purpose for which the housing is provided. In some countries social housing is formally available to all households (e.g. Austria and Sweden) but in most it is actually directed at those who cannot serve their own housing needs (e.g. Netherlands and England).
Some fine examples of innovation in this sector are described further on but how do we assess their merit and suitability in a rational, structured way if we are not clear about what business we are in? Mature industries benefit from standards and benchmarks that allow them to compare performance not just on a domestic stage but internationally and even globally. Industries such as car making, electronics, printing, chemicals and petro-chemicals, aerospace and construction have established such mechanisms.
Now, arguably, these are manufacturing industries which lend themselves well to measurement and comparison. So, should social housing be regarded as a manufacturing industry, producing units for people to live in, or is it a service industry, providing a quality of life for people in need? Herein lies the dilemma because it is a bit of both. Very much like information technology, with servers, cables, power supplies and desktop devices versus the applications and data we work with in order to obtain meaningful information.
However, one thing is clear from looking at this topic with an international focus. The pressures on housing in general, and on social housing in particular, are intense wherever you look. The issues facing governments, local authorities, housing associations and associated bodies are universal. Despite the differing flavours of how social housing is organised, even as far away as North America, Australasia, the Far East and the former Soviet Union, affordability, polarisation and segregation are consistent challenges highlighting a recurring theme.
Affordability and the UK housing economy
With regard to affordability, who should pay for social housing and where should the money go? Here is a current economic picture of Britain (from UK Social Housing, Barclays Corporate Banking, Q2 2012).
There are currently 1.8 million households on the waiting list in Britain – an increase of 80 per cent in the last decade. In the Comprehensive Spending Review of 2010 the Housing budget was cut by more than 50 per cent to £4.4 billion. A startling outcome of this is shown by the fact that the average grant from the recent £1.8 billion Affordable Homes Programme is £22,000 per unit, down from £89,000 in London and £52,000 per unit in the rest of England in 2010. With the RPI rising, a flat-line economy and the move to charging tenants 80 per cent of market rents in the UK, the affordability gap is predicted to widen even further. Adding to the problems is the imposition of a cap of £26,000 on household benefits (under the Welfare Reform Act 2012), which will most likely result in an increase in arrears. So, where will the shortfall come from?
Examples of innovation abroad
The answer to this may be found in the increasing tendency towards public-private finance and the private sector. Germany is a prominent and successful example of a market-based approach to social housing, where the public sector has subsidised private firms to develop new social housing while getting them to take on responsibilities to enforce income limits and rent ceilings for a certain period (traditionally 40 years, but more recently reduced to 12-26 years).
Urban housing co-operatives have also been working successfully in Germany since the late 1800s, in which tenants buy shares in their building or block which are invested to earn interest. The interest is then used by tenant boards to provide community services, which promotes self-determination in a controlled way, making it an interesting example of how communities can be self-funded. Much debate in the Netherlands has centred recently on the issue of how surpluses should be handled. The not-for-profit motive in UK housing could perhaps be redefined more towards a means of creating sustainable communities, through this form of self-funding and increased private-sector participation.
To facilitate greater private-sector participation, several countries have relaxed planning restrictions and offered attractive deals on land, especially on brown-field sites. A little lobbying at central and local government levels on this might prove fruitful.
On the theme of communities, another major challenge is the promotion of inclusion to reduce the risk of polarisation and segregation of minorities. Denmark introduced a new law allowing housing associations to sell property in order to improve the social mix and Germany has adopted an approach of establishing a ‘socially integrative city’.
There are many more examples of innovative approaches to addressing these common social housing challenges, beyond the scope of this article. However, to conclude, with a positive view on areas of opportunity to further exploit, it was astonishing how little material was available on the innovations in information technology that no doubt exist.
Technology and innovation
Having worked on implementations, data migrations and business cases for a variety of housing systems, by far the most exciting area for development is in the integration of systems to create an enterprise-wide information management system, linked to a geographic information system, that will ultimately unlock the potential of all the housing, financial and operational data that all housing providers have in one form or another. The vision is that through the integration of these systems, and the intelligent presentation of data in geographic formats, great competitive advantage can be realised. This is an area that could lay the foundation for appropriate and effective bench-marking against which nations could compare themselves and thereby bring innovation and performance together into a more international arena for the first time.
Shane Sullivan is a housing technology consultant at Optimised Control.