What is a Housing Association and how do they work?

What exactly is a housing association (HA)?

It’s not a simple question.

Housing Associations own and manage homes (rented or sold at a discount), aimed at people not served by the private market. Most HA homes go to people who are homeless or in great need, who are given priority by their local housing authority. In this sense they are similar to Council housing.

However Housing Associations are not the same as Councils.

Councils are statutory bodies. HAs are independent charities. Rented HA homes must be available permanently, securely, at submarket rents. In other words, despite their significant monetary (asset) value, homes cannot normally be sold off. As charities their resources must be safeguarded for people in need.

The Regulator of Social Housing, makes sure that HAs behave properly – particularly in terms of their finances and services to residents. Compared to Councils they have considerable freedoms. They are not controlled by politicians, instead having a board which is similar to a private company. The Board usually includes residents, senior staff and independent people with a range of skills to contribute. No-one can benefit personally (for example getting a home or contracts), and they must act in the interests of the organisation and its residents.

The government pays towards the creation or purchase of new affordable homes, but not nearly enough (about £ 85,000 towards building a £400,000 home). As a result HAs need to borrow money, or make money from their commercial activities, such as investments, providing market housing, shops or offices, for example, which is invested in providing more homes or services to residents.

Private house builders also provide a number of affordable homes every time they build new homes. But normally they sell these to HAs to own and manage. While HAs are not state controlled (like councils), neither are they fully commercial, like the private sector. They combine the best of both and can be seen as social enterprises, combining social impact with complementary commercial activities. They don´t have shareholders/investors like a private firm, and they don´t pay dividends. They sit, sometimes uneasily, between the state and private sectors.

Social enterprises have a dual purpose of generating social or environmental impact while also pursuing financial sustainability. In other words, they address social or environmental challenges – such as homelessness – while sustaining themselves economically. This is what makes HAs so special. Using minimal amounts of grant – just 10 per cent of the revenues of the average large Housing Association come from the government – most now generate their own resources to supplement the cost of producing sub-market priced homes.

There are about 1500 HAs in the UK. For more information see here.