Housing associations to be reclassified as private bodies.

[HelenaDove]

www.standard.co.uk/news/uk/government-to-outline-plans-to-make-housing-associations-private-to-wipe-state-debt-and-encourage-a3692346.html

to wipe debt and encourage building.

Oh yes and then they can also keep their properties in shit condition and charge what they want without regulation.

The debt has moved off the public sector balance sheet.

Is there a possibility now that rents will rise.

They will...I lived in a HA flat back in the UK (before I emigrated) and the way they carried out repairs was ridiculous. They sent FOUR men to make one low fence of about 8 feet long. These FOUR men took 2 days over the job.

In the meantime, my bath leaked and my walls were mouldy. They're pisstakers.

Is this anything other than an accounting trick for the government's finances?

The debts were private anyway until 2015. This just reverses that. It is nothing more than accounting

Can someone explain this to me, and how it affects different people, in simple terms please? Sorry.

It doesn't. The government classified their debt as public in 2015 to put it to their balance sheet. Now their returning it to whence it came. No effect on anyone really.

Ah, ok. Thank you.

Housing associations have always been private bodies. They have a number of areas of business, depending on the association, but traditionally they rent property and build property. This new build property is usually sold either outright or as shared ownership, and a (say 20-50%) portion will be more rented stock.

Housing associations haven't been able to build more houses for a variety of reasons, and this has contributed to the housing shortage over time as house associations provide a hugely amount of new homes in the U.K.

In 2015 HAs were reclassified as public bodies to follow accounting regulations -
www.publicfinance.co.uk/news/2015/10/housing-associations-classified-public-bodies

This has now been reversed, probably because it was stupid. They claim it will increase house building and there are reasons why it may, mainly because Moody's reduced HAs credit rating on the back of them being made public bodies.

It didn't affect HAs operations and still doesn't.

Yep, I think it's an accounting trick. HAs used to be classified with private companies, IIRC in all the stats that actually used HA data they were always sort of treated as an own category of debt (for example on the Bank of England mortgage lending stats, they're included in some of the series) so the only effect of this will be to that they won't be added in to the stats on public sector debt. The question is whether the change in regulation that's required to make them fit the ONS criteria for private business gives the government the opportunity to change other things about the way they run. And I wonder if it changes what happens if a HA goes bust? Does this change imply no government bailout?

It was always expected the government would bail them out, however for the last few years it has always assumed not after the government let cosmopolitan go bust. However they often negotiate mergers which generally work well (otherwise thousands more would've gone into liquidation!) credit agencies know this too and did downgrade the sector back in, I think, 2014 when cosmopolitan went under, to reflect the increased risk of no bail out.

If Housing Associations were private bodies in the past, what stopped them from building more homes?

It looks like one of the problems with housing in this country is that homes aren't built for people to live in any more, they aren't built to optimise space, they aren't built with quality materials etc. They are all built with the view that these "homes" are actually "investments", to make a profit from selling them and they are therefore built with that mindset to be small, use the cheapest materials etc and not think of the best design in order to make them a good liveable experience to the people who will actually live there. It is all about seeing property as assets so churning them out using minimum space, short ceilings and as cheaply as possible to maximize profits for a few. It's a shame (but not unsurprising) that even Housing Associations with their fat cat CEO's have also subscribed to this ideology.

Then you've misunderstood the whole business. The reason they struggle to build homes is partly land availability but often because they will usually aim to build a mix of outright sale and affordable homes. Because there is less profit in this they struggle to complete with the likes of say, barratt homes to buy land. Barratts can often afford to outbid them because they will make more profit on the land