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Social Housing Sector: COVID-19 Update

30 March 2020

The COVID-19 pandemic is disrupting the ability of Housing Associations (HAs) to deliver vital services, impacting the sector’s workforce, tenants and the development of new affordable homes.

HAs’ business continuity plans will be tested over the coming weeks and months as organisations respond to these challenges, whilst keeping vital services running to safeguard tenants and service users.

As highlighted by the Regulator of Social Housing, many organisations will have detailed business continuity plans in place. However, consideration should be given to developing a COVID-19 mitigation plan and assessing your organisation’s circumstances at an individual level, in order to mitigate the impact of increased rent arrears resulting from the Coronavirus pandemic.

A number of measures have been put in place to support social housing providers, employees and tenants during this period, as well as calls from industry bodies for further measures to be implemented.

Consideration for HAs

COVID-19 Plan

A concise and well thought out COVID-19 plan should be prepared, which succinctly summarises the challenges facing the organisation and highlights key strategic, financial and commercial/operational actions being taken by management to mitigate the impacts of the virus. The plans should include any financial reforecasting required as a result of COVID-19. Proactive communication and effective stakeholder management is key.

Response from industry bodies

National Housing Federation (NHF)

The NHF has outlined HAs’ key priorities, as well as vital asks of the Government, including:

  • Keeping vital services running, including care and support schemes to protect the most vulnerable and ease pressure on the NHS.
  • Ensuring that essential frontline staff providing care to elderly people or support services for people with complex needs in sheltered and supported housing settings are designated key workers.
  • Committing to helping meet the significant additional costs facing some supported housing providers as they strive to keep services running.
  • Providing grant funding to enable HAs to buy new or existing market homes and convert them to social rent for homeless families living in temporary accommodation.

Community Housing Cymru (CHC)

  • CHC is working alongside the Welsh Government to confirm how ongoing and future grant funding processes will be managed, calling for a relaxation of monitoring for certain grants such as the Housing Support Grant and removing the need for wet signatures on applications.
  • CHC is working with the Welsh Government to gain assurances on the availability of essential supplies for housing services and vulnerable people.
  • CHC is liaising other UK housing federations to influence statutory regulators towards a flexible approach to compliance, as significant numbers of homes cannot be accessed for testing or inspection due to the outbreak.

Federation of Master Builders (FMB)

  • Disruption to construction companies as a result of COVID-19 will likely impact the ability of HAs to meet housing development targets.
  • The FMB has recently written to the Government, calling for increased support to the construction industry, such as extending the £25,000 cash grant currently only provided to retail, hospitality and leisure companies to construction firms.

Support measures for Housing Associations, tenants and employees

Statutory Sick Pay (SSP)

  • The UK Government has said that it wants to ensure that organisations receive financial support where they incur SSP costs due to absences relating to Coronavirus and will therefore allow SSP to be recovered.
  • Employees that are eligible for SSP can now receive it from the first day of their illness, rather than from the fourth.
  • This will allow HAs to cover the cost of SSP for employees affected by Coronavirus, reducing the financial burden to them.
  • The extension of SSP will also provide some certainty to tenants who are affected by the virus.

Suspension of regulatory judgement reports

  • The publication of judgement reports, other than those due before the end of March, have been temporarily suspended.
  • The temporary suspension is also applied to routine regulatory oversight of assurance plans.
  • Case management and oversight will, however, continue for HAs where there are regulatory concerns.

Coronavirus Job Retention Scheme

  • All UK employers will be able to access support to continue paying part of their employees’ salary, if they would otherwise have been laid off during this crisis.
  • HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
  • The option exists for employers to ‘top-up’ the 80% subsidy, but it is not mandatory.

Changes to welfare benefits

  • The Universal Credit standard allowance will be increased by £1,000 per year over the next 12 months, starting from 6th April 2020. This equates to an additional £83 per month for claimants.
  • Working Tax Credits (WTC) will also be increased by £1,000 per year over the next 12 months, starting from 6th April 2020.

Tenant eviction protection

  • Tenants will now be provided with an extended notice period for possession, from two months to three.
  • The emergency regulation has however faced criticism, after the Government had previously announced there would be a ‘complete ban’ on evictions.

How Gambit can help

Gambit’s dedicated Social Housing and Debt Advisory team is in constant and direct contact with key industry bodies and funders to understand the latest guidance and support available. We are fully up to date with current best practice and all forms of financial and practical assistance being made available.

In terms of practical help, we can assist organisations with the following:

  • Preparation of COVID-19 plans which clearly set out the commercial and financial risks to the organisation and the mitigating actions taken.
  • Stress-testing various scenarios to identify funding gaps and a range of outcomes.
  • Available as a strategic sounding board at all times to board members to identify key commercial issues and sense check strategic responses.

If you would like to set up a call to discuss the challenges facing your organisation, understand the most appropriate funding options available and best practice in presenting your COVID-19 plan to your stakeholders, please contact a member of the team.

Jason Evans, Partner of Gambit Corporate Finance LLP and leads the Debt Advisory Team