| AM45074 |
| AMA RESEARCH Market Report : UK Housing Associations: November 2004 |
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Introduction
| AMA Research have published the 5th Edition of the "Housing Associations Market - UK 2004" report, which provides an inclusive review of the entire UK Social Housing Market, offering a comprehensive and informative perspective on the sector. |
| The report reviews market size, key trends and changing structure, focusing on the increasingly important role of Registered Social Landlords (Housing Associations), as well as covering financing issues and the influence of government initiatives. The effect of the changing sources of funding and recent initiatives on the Buying and Specification Processes for new build and refurbishment projects is analysed, with updated findings based upon a programme of primary research interviews. |
| Key areas include:- |
| UK Social Housing Market - Local Authority and Housing Association sectors - split by England, Wales, Northern Ireland and Scotland - Historical development, size, structure, growth, changing roles, political issues, identification of major landlords, market shares, future trends. |
| Local Authority / Housing Associations Finance, PPP and PFI Issues - Local Authority PPP & PFI processes/options (Arms Length Companies, LSVTs, PFI Pathfinder case studies). Public and private investment levels in Housing Assocations, largest private lenders, financing by type of association, future requirements / prospects. |
| Listing of Major RSLs in England, Scotland, Wales & Northern Ireland - Identifies associations responsible for over 70% of UK Housing Association stock, Number of schemes / homes to be built by leading RSLs 2004-2006 and £2 billion+ expenditure plans committed by government. |
| Housing Associations Specification / Purchasing Processes - Main specifiers, contractor specification, manufacturer specification, new build / RMI responsibility, key specification criteria, main purchasers, level of tenant participation, key trends and influences. |
| Future Prospects for UK Social Housing - Changing roles of Housing Associations and Local Authorities, stock transfer, public / private funding, other future prospects. |
| Key areas of coverage in the report include:- |
| REGISTERED SOCIAL LANDLORDS (Housing Associations) |
| Ownership structure, historical background, financing of landlords, key organisations and their role (Housing Corporation, National Housing Federation etc.), political, economic and social influences. |
| Accelerating market growth in Housing Association sector in 2003. RSLs now responsible for almost 2 million social housing units in 2004. 3700 separate development schemes are planned between 2004-2006 worth £2.6 billion and in excess of 50,000 new units to be built. |
| Size of market in terms of homes under management, fragmented market structure, types and sizes of dwellings, transfer of dwellings from Local Authorities, share of total housing market, growth trends, special needs. Top 120 in England by volume and share, accounting for over 75% of the market. |
| New build activity - influence of Registered Social Landlords in the new build market, share of new build market, volume of starts and completions, future trends and key influences, partnership activity. |
| Development expenditure plans for major RSLs 2004-2006. Number of new units to be built over next 2 years per organisation and number of large scale development schemes for over 70 of the leading associations. |
| Major Registered Social Landlords - identification of leading social landlords in England, Scotland, Wales and Northern Ireland. Volume and share of homes under management, trends within growth rates. |
| SPECIFICATION AND BUYING PROCESS |
| Specification process - key influencers on the process (external architects, consultants, contractors, tenants, RSL development team etc.), major criteria influencing the process (Price, Quality, Standards, Maintenance etc.), additional specification criteria. |
| Relative importance of specification criteria, overall specification ethos, role of contractors, recommended supplier lists, how to become a recommended supplier. |
| Influences of government initiatives on buying and specification processes. Increasing importance of tenant participation. |
| LOCAL AUTHORITY HOUSING |
| Historical background, changing role of councils in UK social housing, regulation and control. |
| Public expenditure levels for local authorities, stock transfers, PFI activity. |
| Overall UK market size by stock of dwellings, homes by region, historical stock of dwellings since 1981, mix of dwellings by type and age, approved bids for stock transfer in 2002/3, relevance of LA sector to social housing in the future. |
| New build activity - Share of new build market, volume of starts. |
| PFI / PPP ISSUES |
| Local authority PFI processes, stock transfers, Arms Length Companies, PFI schemes. |
| PFI Pathfinder case studies, N.E Derbyshire, Manchester, Reading, Islington, Newham, Camden. |
| Private financing for Housing Associations, source of private finance, major lenders, areas of significant expenditure at present etc. Requirements according to type of association. |
Executive Summary
| The UK social housing market has changed significantly since the development of housing associations two hundred years ago and the introduction of public finance for council house building in 1919. Social housing provision grew rapidly in the mid part of the 20th Century, although has subsequently declined in the latter part, influenced primarily by limited public sector finance and the loss of dwellings to tenants under 'Right to buy' schemes. Furthermore, there has been a significant shift in mix, with Housing Associations taking on a greater role in social housing provision and local authorities reducing their activity in the market. |
| The UK social housing market currently accounts for just under 20% of all UK housing stock. |
| The total number of properties in the social housing sector has declined by around 10% over the last decade from almost 5.7 million in 1993, to just over 5.0 million in 2003. During this period, the local authority sector has declined from 86% of the social housing sector to 64%, with the loss of 1.5 million dwellings. |
| In contrast, the role played by Registered Social Landlords (RSLs), or Housing Associations (HAs) has increased significantly over the same period to account for 36% of the UK social housing stock. The number of properties managed by RSLs has increased by 118% since 1993, driven in part by the transfer of LA stock to the RSL sector. In addition, Registered Social Landlords now have the primary responsibility of developing new homes within the social housing sector, adding almost 20,000 properties between 2002 and 2003, compared with less than 400 dwellings completed by Local Authorities. |
| The local authority sector has, for some years, suffered from a lack of public finance available for repairs, maintenance and new build, leading to a backlog of repairs estimated as high as £19 billion in value by 1997. This has led to a growing number of large scale voluntary stock transfers (LSVTs) from local authorities to RSLs. Since the first transfer in 1988, 145 authorities have transferred over 800,000 properties, with a current transfer rate of around 100,000 units per annum. If this trend continues, then combined with the effect of the transfer of responsibility for new build to RSLs, it is likely to produce a further substantial shift in mix, with RSLs potentially becoming the leading provider of social housing by the end of the decade. |
| Lack of available public sector finance has resulted in an increasing requirement for private finance, with over £30 billion so far committed in loans by private financiers, of which around £22 billion has been drawn. A significant proportion of this finance has been raised to fund LSVTs, with some £13.5 billion having been committed. The trend towards private finance is expected to continue, with a total forecast private finance requirement of almost £9 billion over the next four years. |
| In addition to LSVTs, the need for local authorities to improve their housing stock at reduced risk, has led to a trend towards Private Finance Initiative (PFI) schemes and the development of Arms Length Management Organisations (ALMOs). Whilst uptake of these schemes was initially slow, recent regulatory and legislative changes have enabled a growing number of authorities to use these alternative means of raising capital as they attempt to meet the Decent Homes target by 2010. |
| The trend towards LSVTs has produced a change in the structure of the RSL sector, with a significant increase in the number of newly established RSLs. Furthermore, the large number of dwellings involved in these transfers has resulted in increasing dominance of larger RSLs. This market concentration is likely to be exacerbated by the Housing Corporation's policy of investing in the best developing RSLs, allocating 80% of its resources between 2004 and 2006 to just 71 associations. |
| In terms of new build and specification issues, there are a wide range of influences from general performance indicators laid down by the governing body through various departments of the RSL to the contractor, who commonly plays a key role in both product specification and purchasing. A key trend in recent years however, has been the increasing role played by tenants, both as members of the RSL management and via regular review meetings or questionnaires. The government's 'Best Value' initiative has been effective in producing an emphasis on 'value for money' rather than price, with tenants and consultants playing a role in assessing product performance. |
List of Contents
| 1 | INTRODUCTION |
| 2 | EXECUTIVE SUMMARY |
| 3 | BACKGROUND TO THE UK SOCIAL HOUSING MARKET |
| 3.1 | DEFINITION OF UK SOCIAL HOUSING MARKET |
| 3.2 | LOCAL AUTHORITY HOUSING |
| 3.2.1 | Overview of Local Authority Housing |
| 3.3 | REGISTERED SOCIAL LANDLORDS |
| 3.3.1 | Overview of RSLs |
| 3.3.2 | Historical Background of RSLs |
| 3.4 | REGULATION AND CONTROL IN THE UK SOCIAL HOUSING MARKET |
| 3.4.1 | The Housing Corporation |
| 4 | THE UK SOCIAL HOUSING MARKET |
| 4.1 | DEFINITION |
| 4.2.1 | Overall UK Social Housing Market |
| 4.3 | LOCAL AUTHORITY HOUSING MARKET |
| 4.4 | REGISTERED SOCIAL LANDLORD HOUSING MARKET |
| 4.4.1 | English RSL Market |
| 4.4.2 | Welsh RSL Market |
| 4.4.3 | Scottish RSL Market |
| 4.4.4 | Northern Ireland RSL Market |
| 5 | PFI AND FINANCING IN THE UK SOCIAL HOUSING MARKET |
| 5.1 | PFI / PPP INTRODUCTION |
| 5.2 | LOCAL AUTHORITY HOUSING PFI PROCESSES |
| 5.2.1 | Large Scale Voluntary Stock Transfer |
| 5.2.2 | Arms Length Management Organisations (ALMOs) |
| 5.2.3 | Private Finance Initiative |
| 5.3 | FINANCING OF REGISTERED SOCIAL LANDLORDS |
| 5.3.1 | Private Financing Overview |
| 5.3.2 | Finance by Type of RSL |
| 5.3.3 | Major Private Lenders in the Social Housing Market |
| 6 | SPECIFICATION AND BUYING PROCESSES |
| 6.1 | THE SPECIFICATION PROCESS |
| 6.1.1 | The Main Specifiers |
| 6.1.2 | Contractor Specification |
| 6.1.3 | Manufacturer Specification |
| 6.2 | NEW BUILD AND RMI ACTIVITY RESPONSIBILITY |
| 6.3 | SPECIFICATION CRITERIA |
| 6.3.1 | Performance Standards |
| 6.3.2 | Cost of Maintenance |
| 6.3.4 | Quality |
| 6.3.5 | Appearance / Aesthetics |
| 6.3.6 | Other Criteria |
| 6.4 | PURCHASING PROCESSES |
| 6.5 | TENANT PARTICIPATION |
| 6.6 | TRENDS IN THE BUYING AND SPECIFICATION PROCESS |
| 7 | FUTURE PROSPECTS |
Tables and Charts
| CHART 1 | THE UK SOCIAL HOUSING MARKET - % DWELLING STOCK 1992-2003 BY TENURE |
| TABLE 2 | ALLOCATION OF RESOURCES UNDER THE SUSTAINABLE COMMUNITIES PLAN 2002-2006 £M |
| TABLE 3 | THE UK SOCIAL HOUSING MARKET - DWELLING STOCK 1992-2003 BY TENURE |
| TABLE 4 | ENGLISH HOUSING MARKET BY TENURE 1938-2003 |
| TABLE 5 | CENTRAL GOVERNMENT HOUSING CAPITAL PROVISION IN ENGLAND 1999/00 - 2003/04 (£M) |
| TABLE 6 | SALES AND TRANSFERS OF LOCAL AUTHORITY DWELLINGS 1993 - 2003 - NUMBER OF DWELLINGS |
| TABLE 7 | HOUSING COMPLETIONS BY RSLS 1994-2003 |
| TABLE 8 | PREFERRED PARTNERS - NEW DEVELOPMENT BUDGETS 2004-06 |
| CHART 9 | THE HOUSING MARKET IN SCOTLAND BY TENURE 2002 |
| TABLE 10 | APPROVED PROGRAMME OF HOUSING DEVELOPMENT AND IMPROVEMENT IN SCOTLAND 2002- 2004 |
| TABLE 11 | THE HOUSING MARKET IN WALES BY TENURE 1982-2002 |
| TABLE 12 | CENTRAL GOVERNMENT EXPENDITURE ON HOUSING IN WALES 2002/03 |
| TABLE 13 | NORTHERN IRELAND HOUSING MARKET 1993 - 2003 (000'S DWELLINGS) |
| TABLE 14 | NORTHERN IRELAND EXECUTIVE BUDGET - NIHE AND HOUSING ASSOCIATIONS 2003/04 - 2006/07 |
| TABLE 15 | LOCAL AUTHORITY HOUSING STOCK IN THE UK BY REGION 2002 |
| CHART 16 | ENGLISH LOCAL AUTHORITIES - NO. OF DWELLINGS 1985-2003 |
| TABLE 17 | PROVISION OF SOCIAL HOUSING IN ENGLAND BY LOCAL AUTHORITIES AND RSLS 1983-2003 |
| CHART 18 | ENGLISH LOCAL AUTHORITIES - NEW BUILD ACTIVITY 000'S 1989-2003 |
| CHART 19 | MIX OF LOCAL AUTHORITY DWELLINGS IN ENGLAND BY TYPE 2002 (%) |
| CHART 20 | MIX OF LOCAL AUTHORITY DWELLINGS IN ENGLAND BY NUMBER OF FLOORS IN THE BUILDING 2002 |
| CHART 21 | MIX OF LOCAL AUTHORITY DWELLINGS IN ENGLAND BY AGE 2003 (%) |
| TABLE 22 | NUMBER OF RSLS IN ENGLAND BY TYPE 2003 |
| TABLE 23 | DWELLING TYPE BY TENURE BY REGION 2002/03 |
| TABLE 24 | MAJOR RSLS IN ENGLAND WITH OVER 10,000 DWELLINGS (2003) |
| TABLE 25 | MAJOR RSLS IN ENGLAND 5,000+ DWELLINGS (2003) |
| TABLE 26 | MAJOR RSLS IN WALES 500+ DWELLINGS (2003) |
| TABLE 27 | MAJOR RSLS IN SCOTLAND 1,000+ DWELLINGS (2003) |
| TABLE 28 | MAJOR RSLS IN NORTHERN IRELAND 500+ DWELLINGS (2003) |
| TABLE 29 | ALLOCATION OF PFI CREDITS FOR EACH GOVERNMENT DEPARTMENT 1997 - 2005 |
| TABLE 30 | LARGE SCALE TRANSFERS 2002/03 - 2003/04 |
| TABLE 31 | STOCK TRANSFER BIDS 2002/03 |
| TABLE 32 | CAPITAL ALLOCATIONS AVAILABLE FOR NEW ALMOS 2004 - 2006 |
| TABLE 33 | SUCCESSFUL ALMO BIDS - AUTHORITY AND VALUE 2001 - 2003 |
| CHART 34 | TOTAL PRIVATE FINANCE RAISED BY TYPE OF RSL 1988-2003 |
| CHART 35 | TOTAL PRIVATE FINANCE RAISED BY SIZE OF RSL 2003 |
| CHART 36 | PRIVATE FINANCE RAISED BY TYPE OF LENDER FOR ALL RSLS 2002/03 |
| TABLE 37 | TOP 16 LENDERS TO RSLS 1988 - 2003 |
| TABLE 38 | LEAD INSTITUTIONS HAVING ARRANGED CAPITAL MARKETS ISSUES 1988-2003 |
| CHART 39 | THE PROPORTION OF RSLS OPERATING LISTS OF PREFERRED CONTRACTORS 2004 |
| CHART 40 | THE PROPORTION OF RSLS OPERATING LISTS OF PREFERRED MANUFACTURERS 2004 |
| TABLE 41 | RELATIVE IMPORTANCE OF SPECIFICATION CRITERIA |
| CHART 42 | MAIN PURCHASER OF MATERIALS FOR NEW BUILD |
| CHART 43 | PERCENTAGE OF RSLS WHERE TENANTS PLAY A SIGNIFICANT ROLE IN NEW BUILD AND REFURBISHMENT PROJECTS |
| TABLE 44 | LARGE SCALE TRANSFERS 1988-2001 |
Text © 2004 AMA Research
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