social housing governance

What governance challenges are social housing leaders facing in 2021?

From rent setting to staff salaries, social housing leaders will make their big annual decisions against a uniquely difficult backdrop in 2021. How will the coronavirus pandemic and Brexit, the White Paper and the new Code of Governance for England and Wales affect the way social housing boards approach their key governance challenges?

In our annual Health of the Sector survey, we asked 104 industry leaders about their plans for 2021. 

Here’s what they told us about rent increases, staff salaries, tackling fraud, and more.

Given that rents can be increased by up to CPI+1 per cent, what is your intention?

Given that rents can be increased by up to CPI+1 per cent, what is your intention?
Given that rents can be increased by up to CPI+1 per cent, what is your intention?

In April 2020, social housing landlords in England and Wales were allowed to raise rents for the first time in four years – by a maximum of CPI+1%. We expected, and found, that almost all respondents were planning to increase their rental income by the maximum amount.

In 2021, slightly fewer respondents  intend to increase rents by the full CPI+1%. Most are still planning a full increase knowing their residents, many of whom claim housing benefit, won’t be financially worse off as a result. 

But slightly more are intending to restrict rent rises this year. With more organisations having built up surpluses in 2020, it’s possible that more are answering a simple ‘no’ to the question, ‘Do we really need to maximise our rents this year?’

We’ve also seen a bigger trend for rent freezes and lower than planned rent increases in Scotland. The CPI+1% increase doesn’t apply there, but the continued focus of the Scottish Housing Regulator  on rent affordability as a key focus for the sector, coupled with the impact of the pandemic has resulted in governing bodies seeking to keep rents as low as they can during difficult times for tenants.

How has your governance structure changed to accommodate health and safety reporting and related customer concerns over the last two years?

No changes

No changes 

Operational Customer Safety

Operational Customer Safety Working Group (or equivalent)

Established customer safety

Established Customer Safety Committee (or equivalent) reporting direct to Board

Intending to change

Intending to change within the next 12 months

We know from our work with the sector that organisations are incredibly focused on tenant safety. They were quick to respond to the Grenfell Tower tragedy, and anticipated the Government’s response by putting the appropriate health and safety measures in place.

So, while it may appear that two thirds of respondents are doing nothing, this isn’t the reality. The reality is that most housing associations have already improved their governance, oversight and control framework and are now in a much stronger place than they were in 2017.

When we asked how they’ve responded to the Grenfell tragedy:

  • 87 per cent said they’ve increased their focus on compliance with legislation.
  • 64 per cent have carried out a risk survey of their housing stock condition.
  • 46 per cent have changed their risk management processes.
  • 40 per cent are spending significant amounts on repairs and improvements.

Is your board considering further changes to your pension scheme?

Is your board considering further changes to your pension scheme?
Is your board considering further changes to your pension scheme?

We’re pleased that slightly more boards will make further changes to their pension schemes in 2021. But the fact that two thirds won’t take any further action on pensions is worrying, given that the £1.5bn Social Housing Pension Scheme (SHPS) deficit shows little sign of improvement. 

Despite the 65 per cent who are planning no further changes:

  • 13 per cent expect to close defined benefit schemes to new members.
  • 12 per cent expect to increase employee contributions (but only 8 per cent will increase their employer contributions).
  • 16 per cent expect to transfer existing members to defined contribution schemes.
  • 12 per cent expect to leave SHPS (falling to just 3 per cent for SHAPS in Scotland).

As we noted in our 2020 report, it’s possible boards feel they’ve done all they can to solve the SHPS/SHAPS problem. But employer and employee contributions will need to increase by around 50 per cent to make up the shortfall in SHPS, so it’s interesting that only a third are planning to act.

How will your organisation’s salaries change in the next 12 months?

How will your organisation’s salaries change in the next 12 months? 

Throughout the recession and rent freeze years, social housing organisations continued to raise their staff salaries. Our 2021 survey shows that neither Brexit nor coronavirus pressures will change this.

However, we’ve seen a big shift in the level of increases planned. Whereas in 2020 three quarters of respondents planned to raise their salaries by two per cent, in 2021 most social housing organisations are planning smaller salary increases. 

Boards have got a difficult balancing act on their hands here.

On the one hand, the need to reward staff who’ve done a difficult job throughout the pandemic. On the other, restraint, in times of great difficulty for the national economy and the UK workforce over the last 12 months.

NHS staff won’t find out until May 2021 how much extra they’ll take home this year. How closely their increase aligns with the social housing sector’s anticipated one per cent rise may determine how well it’s received – particularly by frontline care home staff.

Have you suffered from a financial loss as a result of fraud in the last 12 months?

Have you suffered from a financial loss as a result of fraud in the last 12 months?

For at least the third year in a row, we’re a little stumped by the answers to our question on fraud. A quarter of respondents have been victims of fraud, but just seven per cent said they suffered a financial loss as result.

The figure for instances of fraud, one in four, feels consistent with our work in the sector. But the figure for financial loss, with 93 per cent saying they lost no money due to the fraud they experienced, is completely at odds with what we’ve seen.

The cyberattacks on Flagship, Red Kite, and the Chartered Institute of Housing are just some of the high-profile losses from fraud in the sector in the last year or so. And these are just the ones we know about.

The number of respondents who say they have been victims of fraud is in line with what we are seeing nationally but those suffering financial loss seems much lower. Currently, banks and insurers are being receptive to reimbursing loss, however it is not clear how much longer they will be supportive to victims of fraud. This emphasises the need to have well designed and operating controls in place.

Contact us for support and advice

Keith Ward 

Our social housing specialists can help you and your board decide how to tackle the big governance challenges facing your organisation

Contact Keith Ward, our Head of Social Housing, to discuss your challenges. 

Get more insight from our 2021 survey

Want to know more about how the social housing sector has fared over the last 12 months? Interested in what social housing organisations have got planned for the months ahead?

Read the next articles in this series for a snapshot of the health of the sector in 2021:

social housing organisations

How are social housing organisations adapting and changing in 2021?
How is the social housing sector embracing new technologies, methods of construction, and environmental concerns? Find out here.

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social housing plans

What social housing plans are coming up in 2021 and how will they be funded?
We reveal plans for social housing development programmes in 2021, and how organisations expect to fund them.

Read more