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Government weighs in to prevent ‘for-profit’ providers calling themselves ‘housing associations’
The government has intervened to prevent a new wave of for-profit registered providers using the name ‘housing association’, following an appeal from the National Housing Federation (NHF).
Greg Clark, secretary of state for business, energy and industrial strategy, wrote to the NHF this month after it called on him to weigh-in on a battle over whether for-profits should be allowed to use the moniker.
Recent months have seen a rapid expansion in for-profit providers, with Blackstone, the world’s largest property investor, making a surprise move into the sector in January when it bought 90% of Sage Housing.
That move preceded the UK’s largest institutional investor, L&G, launched its own provider in April, with vast property company British Land setting up its own provider last year.
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Housing associations are understood to be nervous that the new companies will outbid them on Section 106 deals and fear the rise of for-profit businesses in their space could damage their reputation.
In January, the NHF threatened Sage with legal action if it continued to call itself a housing association. The provider quickly backed down and renamed itself Sage Housing Ltd from ‘Sage Housing Association’.
In Mr Clark’s letter, he wrote that a housing association must be a non-profit organisation and said that in the specific case of Sage, “the regulations may not be working”.
He wrote: “In this case, Companies House gave approval based on Sage already being listed as a social housing provider as regulated by the Homes and Communities Agency [Homes England], rather than undertaking its normal checks to ensure that the company operated on a not-for-profit basis under its articles of association or other governance documents.”
Mr Clark said that he had contacted Companies House to get confirmation that it would prevent any future attempts by for-profit providers to register as housing associations.
David Orr, chief executive of the NHF, told Inside Housing: “This is an important and timely intervention. At the heart of our mission and purpose as a sector is that we do what we do for the benefit of the community, not to distribute profits to shareholders.
“Our heritage and reputation in the country is built on this understanding. It is right that we take action to defend and protect that reputation.”
A spokesperson for Sage said: “Sage was approached by the [NHF] regarding the use of the term ‘Sage Housing Association’ in April 2018. We provided a comprehensive response to their concerns at the time and acted decisively on their request.”
