Comment: Carolyn Lochhead

By Carolyn Lochhead, Director of Public Affairs and Communications, Scottish Federation of Housing Associations

The UK is facing an escalating cost-of-living crisis, and it’s people on the lowest incomes, many of whom will be social housing tenants, who are experiencing the worst of it. The Scottish Federation of Housing Associations (SFHA) and our members want to help people who are struggling, but this support must help those in need and not threaten the very structures that exist to protect them. On 6 October, the emergency Cost of Living (Protection of Tenants) (Scotland) Bill, which includes a rent freeze in the social and private housing sectors until 31 March 2023, with the possibility of extension, was passed by the Scottish Parliament. While the legislation doesn’t affect our members’ current rent period, it’s still having a destabilising effect – which probably comes as no surprise to readers working in social housing in England and Wales, where government rent control is already in place.

With rental income vital for securing private lending for building new homes, there’s concern over reduced lender appetite, and we’re already seeing members halting development plans. We’ve also learned of housing associations that are diverting resources away from decarbonisation programmes to focus on maintaining their existing homes, while others have been forced to cancel plans for kitchen and bathroom upgrades for the next several years due to their projected loss in income. Some members have also told us they will be forced to cut back on nonstatutory services, such as welfare rights advice, housing support and community-based programmes, which will not only make life harder for tenants but will also create greater pressure on already-stretched services such as Citizens Advice. These significant effects on both the quality and future provision of social housing aren’t balanced by any immediate, material benefit to most tenants, as between 60–70% are entitled to have their rents covered by welfare benefits. SFHA and our members worked incredibly hard, as the bill passed through parliament, to highlight to the Scottish Government and opposition parties why a rent freeze in the social housing sector is unnecessary and, indeed, likely to be counterproductive. While we didn’t want to see even a temporary rent freeze introduced, we were glad to hear MSPs of all parties acknowledging the vital work of our members and calling for a more proportionate approach going forward. SFHA will continue to make the case as to why this legislation must not continue after 31 March 2023. A rent freeze beyond this date would threaten our members’ ability to build, improve and maintain existing homes and deliver vital support services to tenants. In the months ahead, we’ll work constructively with the Scottish Government, and other stakeholders, so that Scotland doesn’t see the damaging longer-term consequences of a rent freeze in the social sector. We’re keen to find solutions that work for tenants, social landlords and the government.

By Simon Barker FCIOB, Commercial Director, United Living Property Services

Today’s cost of living crisis is also a cost of doing business crisis. Housebuilders as well as householders are feeling the crunch of inflation and looking for ways to cut costs, or at least keep them manageable. At United Living, we have a number of mitigation strategies in place. Many of these involve collaborating with our partners both up and down the supply chain. By working together, the industry as a whole can better cope with the pressures of inflation.

Given the weakness of the pound, and the knockon effects of Brexit, one sensible strategy is to write specifications with an emphasis on products and materials sourced in the UK. Wherever we can influence specification, then, we propose sourcing UK goods. We also encourage two-stage tendering, which involves us developing designs during a Pre-Construction Services Agreement phase. This helps keep costs predictable.

Another strategy is to align the period our bids remain open for with that of our supply chain. This means departing from how things are often done in our industry, where there is often an expectation that bids to clients will remain open for three or even six months. Given that our own supply chain partners are now generally limiting their fixed price period to 30 days, this exposes us to the risk that we will be expected to honour prices we can no longer afford. Most clients understand our reasons for limiting the period our bids remain open for acceptance, so we hope this will become recognised as standard good practice.

Meanwhile, our property services business sets great store by partnership contracting. This has at least three benefits when trying to mitigate the effects of inflation. The first is that contracting arrangements tend to be long-term, which means they come with annual price increase mechanisms linked to inflation. Secondly, they give our clients a stake in our continued operational efficiency and success. This means they are willing to share risks and work collaboratively to agree solutions to exceptional price increases and shortages.

Thirdly, long-term arrangements allow us to provide consistency, continuity and certainty to our supply chain. This in turn allows them to enter into longterm material supply arrangements with their own manufacturers, suppliers and merchants. Everyone benefits from the resulting longer-term fixed-price arrangements. A related strategy is the use of framework arrangements, which give our supply chain partners the confidence to enter longer-term arrangements with us and others, providing time and space to source better price deals.

Finally, at United Living we pride ourselves on being very reliable payers, which means our supply chain partners can offer us their best prices in the certain knowledge they will be paid fairly and on time.

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