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Affordable Housing: why estate agents should take interest

publication date: Sep 28, 2009
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Affordable housingIt used to be so simple. There were privately owned houses and flats, privately rented houses and flats and there were council houses and flats. Estate agents helped buyers and sellers, letting agents helped landlords and tenants, councils built and maintained council properties and let them to those who needed them.

However, many of the council owned homes were sold to their tenants on the right-to-buy scheme introduced by the Thatcher Government in 1980 (see panel), By 2003 some 1.5 million council homes had been bought – severely decreasing the availability of housing for those in need. The councils had sold their property assets but did not build a similar number of homes to replace them.

Over the last thirty years the gap was filled by housing associations; new providers bringing new terminology and major changes to the property market, which has now spawned a whole new sector – Affordable Housing.

Property professionals tend to believe that this sector is separate from their market, but whether they are in sales, lettings, or property management, they are increasingly affected by the activities of these affordable housing providers as they become more commercially aware. There is also a government preference for mixed tenure developments which require a single site to provide new (for outright sale) homes, rented and the sometimes ambiguously named ‘affordable housing’.


There are a variety of providers of affordable housing such as local authorities, ALMOs (arms length management organisations), co-operatives and housing associations. Most are non-profit making, however, larger providers often have group structures and subsidiary entities providing development and housing products that can make profits which are then channelled back to support the whole operation.

A whole raft of commercial property companies, agents, developers, consultants and financiers are now involved in helping providers develop new housing ‘products’ eg Key Worker, Shared Ownership, Supported (eg elderly) Outright Sale and Market Rent. The overlap with estate agency business is growing and potentially lucrative, so perhaps it is time to see where your business fits in.


• On new developments; providers work with estate and lettings agents who sell and let properties for them
• Providers work with developers, management companies and facilities maintenance companies to refurbish and continually maintain housing developments
• Local Authorities, Developers and Providers will create Joint Venture companies to provide new housing (mixed tenure) estates


Since the Right-to-Buy scheme the property sector has seen many changes. Over the last decade there have been several key factors of change:
• The transfers of housing stock from local authorities into newly created housing providers that can access commercial lending for the essential investment required
• Rationalisation of the funding regime – the Housing Corporation streamlined its funding process and a raft of consolidation and mergers has ensued
• Current – the Housing Corporation, the industry regulator, has been replaced with the HCA ‘Homes and Communities Agency’ and the TSA ‘Tenant Services Authority’. A lighter touch regulatory regime – responding to tenant complaints and requiring providers to focus on customer service and satisfaction rather than policy compliance.
• Future – providers need to become more commercially aware. The funding regime is still under pressure and there will be less affordable housing grant, Section 106 and more organisations bidding to get a share of it.


Philip (left) says that in addition to facing the current and future challenges listed above many providers face several other issues:

“The range of activities they need to carry out are too diverse for many smaller and medium sized providers (property investment, development, refurbishment, management, tenant management, supported living and care programmes, rent collection and other finance, anti social behaviour, neighbourhood management, managing nominations agreements with local authorities etc.)

At the same time they do not have many of the skills and resources (including systems) to help them initiate the type of outsourcing, contractor management and partnership solutions that can help them deal with these problems.

“Larger providers have bought land and developed housing that they cannot sell and need to make write-downs on their balance sheets. Marketing and selling property is a good example of providers working in an area requiring expertise that they do not have.”


The creation of mixed tenure schemes and new affordable housing products is one thing, the technology to manage them is another – and it is a real issue. There are currently around ten suppliers of housing management systems, and according to a recent report by Tribal, the leading industry consultants, most are failing to meet the changing needs of their customers. Tribal have told us, “the choice of systems available to landlords are from a different era when landlords managed properties, whereas now the focus is on delivering services to people.’’ ** see note.

As new entrants struggle to sell software solutions within a restrictive procurement regime the housing providers are left waiting for the incumbent suppliers of housing management systems to deliver the web capabilities they require gradually over the next five years (most suppliers will rewrite their applications).

Philip and his team at Pex Software are working in partnership with BT to help housing providers to deal with some of the current and future issues mentioned above. He believes that, “The shift in focus to the tenant relationship (in response to the new regulatory regime of the Tenant Services Agency) will require providers to look again at the way they deliver services to their tenant customers. The way their remote and neighbourhood activities are carried out, service and call centres are operated and the organisation’s performance is managed and governed. Many will need to re-evaluate where they are investing their working capital as well as the image and relationship they have with their customers.”

Will there be more change? “I think that the adoption of more commercial operating practices will stimulate unpopular debates. Politicians will continue to debate hot issues such as lifetime tenures and means testing and bold chief executives will look to cut costs, reduce staffing levels, rationalise ICT provision and outsource whilst simultaneously looking at ways to generate income from service provision.”

And finally, “It seems that the biggest transformation programme is the one dealing with the primary purpose – that of providing more affordable housing. The HCA has received over 60 responses to its expression of interest from parties eager to contribute to the evolution of the new professional Private Rented Sector. Interestingly many applicants are from commercial operators keen to access social housing grants... perhaps this competition will in its self generate the new attitudes and agility demanded by the market place.


The property professional who does not see any connection to ‘Affordable Housing’ may be missing a very large trick. There are new developments to be sold and resold, homes to be let and managed. There are new housing providers to work with and new technologies to help provide the services required by them. The current downturn in the property sales market may have been caused by recession but many believe that the housing market will never be the same again. Choices of home tenure are affected by changing career patterns, (no longer one job for life, in one place) the desire to work overseas (many people never get over their gap year) and changes to personal status – single person homes are set to dramatically increase over the next decade.

Acknowledging change in housing is essential. So, as a property professional, ask yourself again – is Affordable Housing anything to do with you?

** Extracted from HOUSEMARK report by Tribal in May 2009 ‘Current use of systems and technology by Housing Associations’


Hornsey Road Apartments, Grainger plc’s new mixed tenure residential scheme in north Islington, has been acknowledged as London’s best selling scheme in an independent report by Molior. 108 of the available 120 homes have been reserved since the launch in March. The remaining apartments consist of 12 two and three bedroom apartments, sale prices for these remaining properties start at £295.000.

Built on the site of a former Victorian swimming baths, the scheme features 150 one two and three bedroom apartments spread across a high quality new build element and a grand and newly refurbished nineteenth century gatehouse. The development’s centrepiece is a 24 metre chimney surrounded by a fi ve storey glazed atrium and there are two landscaped squares, 35 underground parking spaces, CCTV security cameras and a porter.

Richard Shaw, Development Director at Grainger commented, “We are delighted that the sales success of Hornsey Road Apartments has been formally recognised in the latest Molior report. The outstanding success of this scheme proves that despite the current market, there are still purchasers out there looking to buy well specifi ed homes that are good value for money.”

Luke Mills of Savills, one of the agents for the development, commented, “This was the fi rst new development that Savills London launched in the past 12 months and we are absolutely delighted with the results. What we have seen here is a developer who understands what the market needs and has provided it: good sized, well specifi ed, well located and realistically priced apartments in a quality development.”

Hornsey Road Apartments have been built to a superior standard. Bedrooms are light, spacious and comfortable with carpets and wardrobes. Kitchens are stylish and functional, featuring Smeg appliances and reconstituted stone worktops. Contemporary bathrooms, oak flooring, and energy saving recessed lighting complete the look. The majority also have a balcony or some kind of terrace.

Grainger passed 58 apartments over to the Guinness Partnership, a housing association that is part of the Guinness Trust. Grainger adopted a dual approach to the development, meaning that properties were available for sale and to rent. Thirty three apartments have been made available for sale while twenty fi ve are now let out through its direct lettings arm, Graingerlets. Grainger plc is the country’s largest quoted residential property owner and manager with around 14,000 UK homes in its portfolio.

The company has made the most of its experience as a residential landlord by devising a strategy for the Hornsey Road Apartments that involves both the letting and sale of the apartments. This innovative approach to development means that Grainger plc retains an interest in the scheme and residents benefi t from the involvement of an experienced residential landlord.


Love her or loathe her, the disintegration of council housing started here, when Margaret Thatcher carried out her election promise to offer the Right to Buy to every council tenant. This is how the BBC announced it on 20 December 1979:

More than five million council house tenants in Britain will be given the right to buy their home under new government proposals.

The Housing Bill published today will give tenants who have lived in their home for up to three years a the right to buy – a revolution in housing in the UK 33 per cent discount on the market value of their home, increasing in stages up to 50 per cent for a tenancy of 20 years.

The Government believes the bill will transform the social structure of Britain for good. Michael Heseltine, Secretary of State for the Environment, said, “This bill lays the foundations for one of the most important social revolutions of this century.” But Shelter, the organisation for homeless people, has said the move will increase the number of homeless people and decrease the number of homes available to accommodate them.

Labour are vehemently opposed to the proposals believing the impact on the nation’s pocket will be huge. Roy Hattersley, Shadow Environment Spokesperson said: “We shall fight it very hard in the House of Commons and in the country.” As a further incentive to prospective buyers the Government will also offer tenants a 100 per cent mortgage from the local authority.

Those who cannot afford to buy their home immediately will be able to pay a £100 deposit and postpone the sale for two years at which time they will be able to purchase their home at today’s prices. If local authorities do not comply with the new legislation the Secretary of State will directly intervene in the sale.

Critics have accused the Government of being too generous to council house tenants but the Prime Minister, Margaret Thatcher and her government are sure the new policy will pave the way for a property-owning democracy and a more socially responsible population. Labour believe the cost to the public purse will be at least £5,000 per sale but the Conservatives maintain that central and local government will save millions through the reduction of subsidy to council house tenants.”

The Housing Act came into force on 3 October 1980. Many council tenants exercised their right-to-buy. By November 1982 the Government said more than 400,000 people had bought their council homes. The right-to-buy scheme was subsequently extended to tenants in leasehold properties.

The policy proved extremely popular and was seen as a major vote winner for Mrs Thatcher in 1979 and again in 1983. In 1985 Labour dropped its official opposition to the scheme. By 2003 it was estimated some 1.5 million council homes had been sold. However, the scheme contributed to a reduction in the number of available council homes and there is now a shortage of social housing across the UK.