There has been speculation in the last few days that the charitable status of housing associations might be under threat. It would cost the sector a huge amount in additional tax if charitable status was lost. The issue has been bubbling under for a while, but the new debate has been triggered by a request from the Tenant Services Authority to the Charity Commission to express a view on the implications of the new (mis-named) Affordable Rent regime.
The Commission’s response is of course equivocal: it depends on the circumstances of each association, what their charitable objectives are, and how Affordable Rent fits in with their activities as a whole. The key sentences in their reply are these:
“Generally, where an association has a charitable purpose to relieve those in need by providing housing, then those who benefit must be poor and in housing need…….. Associations will be aware of whether, in practice, some affordable rent products have rents at a level that people in poverty cannot access, and where housing benefits are capped at a level below the rent.”
“In summary, in principle, charitable housing associations can provide an Affordable Rents product. However, the extent to which the product will be used to relieve poverty may determine whether it is able to satisfy the public benefit requirement and one aspect of this will be the extent to which housing benefit will cover the rental. Charitable associations operating in areas of high market rents will therefore need to look at this aspect in detail to see whether the affordable rents can provide a means of relieving poverty.”
From an ideological point of view, it is clear where the Government is headed. By dictating that there will be no new social rented housing built in future, only ‘Affordable Rent’ (ie up to 80% of market rents), and by requiring that a proportion of re-lets in developing associations are also let at ‘Affordable Rent’ levels, the government is signaling the transformation of housing associations from bodies dedicated to providing homes for the poorest in society to institutional private landlords of near-market homes.
Some people in the sector have also been asking for this problem to visit them. Many housing associations are brilliant at what they do and serve homeless and badly-housed people, their tenants and their communities very well, but some look and act less and less like charitable bodies as each year passes and give every impression of not liking poor people much let alone wanting to relieve their poverty.
Charitable status might be protected as long as it is possible for people on low incomes to access ‘Affordable Rent’ homes. That in turn will depend on the allocations policies followed and the continued availability of housing benefit. Some associations think they will not be able to let the new homes to people who could be defined as charitable beneficiaries; for schemes to be viable they will have to let the homes, or at least a significant proportion of them, to people who can afford the rent without the risk associated with needing housing benefit to support their payments. For the moment, the government says HB will be available for AR properties, but in high cost areas it is the operation of the overall benefits cap and the uprating by less than real inflation that will make it impossible for families on benefit to access these homes.
The loss of charitable status would be a blow, but, in the context of government housing policy, it is the bigger question ‘what are housing associations now for?’ that needs to be answered.