See the big picture
I believe the sector is in a strong position to manage the challenges associated with investing in existing stock and delivering new development over the medium term. A transparent and future-focused approach is likely to be well-received by investors, credit agencies and regulators.
Head of Social Housing, Barclays Corporate Banking
Future-proofing existing stock
The new Government has made housing a broad priority for this parliament which has been welcomed. The outlined rent settlement will provide certainty to business plans in the sector as it continues to invest heavily in decarbonisation of stock. This remains a key focus, with 5-year plans now capturing the complete journey to 2030 EPC commitments, while longer term plans become more sophisticated in how to achieve carbon Net Zero.
Despite the challenges and costs associated with retrofitting, the sector has made steady progress towards modifying existing homes in line with the regulations, and these efforts will need to continue throughout 2025. Driven by both environmental goals and their responsibility to tenants, about three-quarters of social housing stock already meet 2030 EPC targets – well ahead of the private sector and local authorities.1,2
Of course, funding for these projects remains key, which is why, for example, we’ve recently announced our commitment to deliver £500m in partnership with the National Wealth Fund to help deliver the retrofitting of UK social housing.3
The sector is making progress on its journey to net zero but given the scale of the challenge organisations may want to advance their planning, providing a steadier delivery of decarbonisation between now and 2050.
Head of Social Housing, Barclays Corporate Banking
Many housing associations are, of course, still grappling with the issue of how to develop new homes in a capital-scarce environment, given that much of their capital and resources are being directed towards maintaining and upgrading existing stock. In the current environment it’s typical for housing associations to reduce or forfeit their new development plans in order to focus on ensuring that existing properties align with tenants’ requirements and new regulations.
But expanding the existing housing supply remains an essential social and political agenda item– with Labour’s pledge to build 1.5m new homes in an effort to solve the housing crisis4. Moving into 2025 Housing Associations will need to continue to weigh the balance of their financial capabilities and social agenda – to build or not to build?
Given the limited capital in the sector, we expect to see more Housing Associations look at Joint Venture structures with house builders and developers. Barclays have a strong track record of funding such Joint Ventures, where bringing in private capital and development finance enable Housing Associations to moderate their commitment while maximising delivery of new Social and Affordable housing.
Rising to the challenge
It’s no secret that, alongside the pressures to deliver more high-quality homes and improve existing stock, social housing organisations are likely to need to manage rising costs while responding to greater regulatory scrutiny and consumer expectations. To help them do this as effectively as possible and stay ahead of the competition, I think organisations will need to continue to invest in their teams’ skills and technology, such as interlinking their customer relationship management and asset management systems.
Managing these demands will continue to drive a need for efficiencies, whether via scale or geographic concentration. I expect to see more small organisations coming together or amalgamating with larger organisations. For those maintaining their independence, regional partnerships can increase relevance, drive economies and purchasing power.
The sector needs to do what it can to highlight the vital role of social housing and the progress it is making on decarbonisation in its messaging to government and the public, as well as engaging with tenants to demonstrate their commitment to quality, safety and meeting their needs.
To increase development opportunities, organisations may want to engage with lenders to explore borrowing options bringing together public and private capital, debt and grants to enable development.
Organisations should build realistic long-term plans for their journey to net zero based on data rather than assumptions. They can then identify any shortfalls in funding, preparing them to work with government or seek new sources of funding.
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1 https://www.gov.uk/government/statistics/english-housing-survey-2022-to-2023-energy/english-housing-survey-2022-to-2023-energy-report#:~:text=to%20these%20increases.-,Main%20findings,in%202012%20to%209%25%202022^
2 https://researchbriefings.files.parliament.uk/documents/CBP-9889/CBP-9889.pdf^
3 https://www.ukib.org.uk/news/national-wealth-fund-barclays-uk-corporate-bank-and-lloyds-banking-group-join-forces-unleash^
4 https://www.gov.uk/government/news/chancellor-to-unlock-housing-in-first-budget#:~:text=The%20Budget%20will%20deliver%20more,delivery%20of%201.5%20million%20homes.&text=A%20housing%20package%20announced%20today,for%20the%20Affordable%20Homes%20Programme^
Keeping fraud front of mind
Fraudsters are as active as ever across the Social Housing sector, impersonating our colleagues and attempting to defraud our clients. To help protect you and your business we have a wealth of resources available. You can view our quarterly fraud webinars and take a look at our other educational resources on our Fraud Protection Hub.
To discuss your business requirements and how Barclays can support you, contact us today.
