Wednesday, Sep 22, 2010
Isn't this just another word for privatisation?
Press Association: Housing bodies 'should be mutuals'
Housing associations should be run as mutuals in a bid to unlock funds to enable them to build an extra 100,000 affordable homes a year, a think-tank said.
Policy Exchange said housing associations should turn away from raising money through debt and Government grants and instead offer shares to a range of groups, including institutional investors, as well as small shareholders and even tenants.
It said housing associations were sitting on assets worth at least £90 billion and had an annual turnover of more than £11 billion.
The group estimates that by switching to equity funding, housing associations could raise £30 billion to spend on building affordable homes, while still paying a dividend to investors.
Posted by drewster @ 11:34 PM (528 views) Add Comment
6 Comments
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1. Crunchy said...
Government shuns building Britain to the size they allowed it.
On your Jack Jones now son.
Leg it!
2. tenyearstogetmymoneyback said...
drewster wrote "Isn't this just another word for privatisation?"
I don't actually think it is. In fact I would question who actually owns these "non profit" organisations at the moment
and who they are accountable to. From what I have seen the problem with "non profit" organisations is that any excess
money gets spent on Flash company cars and executive bonuses.
3. drewster said...
10years,
I agree that currently there is too little accountability, leading to flash cars etc for execs. But I don't think selling them off would be good for society either.
On the flip side, this may be a great investment opportunity. By the time the govt gets round to selling the housing associations, the housing market will have crashed and the shares will be dirt cheap. It'll be like Gordon's gold sales.
4. hotairmail said...
Funnily enough I wrote about this idea some time ago. Building Societies' have moved far from their original purpose merely adding to the weight of money applied to existing properties contributing to pricing people out.
My idea was for the Housing Associations to become mutuals and actually be responsible for developing new property (not purchasing existing) if they wanted to expand. This way housing supply would expand and affordability would improve over time.
Lastly though, I saw them taking over from the spivvy private landlord, offering a professional service and improved tenants' rights. And this need not apply solely to 'affordable housing' either - the basic model should be the norm for the market catering for a range of pockets.
5. drewster said...
hotairmail,
Companies such as Grainger Plc already do that kind of work. They are the UK's largest stockmarket-listed residential landlord company; though with only 12,000 homes they are dwarfed by many housing associations. They offer a professional service and, partly because many of their tenancies pre-date the Assured Shorthold Tenancy system, they have better tenants' rights. Sadly their main business model today is selling off the properties instead of renting them continually.
As I understand it - and I'm not a professional tax adviser - the main obstacle to large-scale private landlords appears to be the tax system. If an investment company wants to buy a whole block of flats, Stamp Duty is payable on the whole block at the top rate (5%), even if individually each flat in the block would fall into the 1% or 0% thresholds.
The new REIT tax structure (Real Estate Investment Trust), which was only recently introduced in the UK, should also help create more large-scale landlords. The old tax system was skewed in favour of small-scale "spivvy" private landlords. Maybe in future we'll see Tesco homes for rent above their supermarkets.
6. Roberto said...
A mutual is not privatisation as we understand the term. That would be surely either floated on the stock exchange, where the entity would be run for profit due to the demands of faceless unknown investors, or to a "private" individual, who would likely look for the same.
Mutual is more in the co-operative tradition. It could be within either a socialist tradition or, interestingly, Cameron's Big Society er, idea. Whether it is aimed really at the co-operative tradition or a more hopeful but doubtful private benefactor would be the major question.