L&Q Housing is a social housing landlord that rents out some 105,000 homes in Britain. The United Kingdom’s Housing Ombudsman, newly armed with the recently passed Social Housing Act, slapped L&Q Housing with a pathetically small, £143,000 fine. It is in fact the highest fine ever levied . . . and yet pathetically small.
So what is going on? Well, it most certainly is a pathetically small fine — it amounts to somewhere around a pound and a half for each L&Q home. Tiny when compared with L&Q’s financial surplus in 2022: £154,000,000. Some of that, theoretically at least, could be spent on tenant welfare.
L&Q, as a social housing landlord, is required to be a non-profit corporation. But in recent years, the government has cut back on funding for social housing, and loosened restrictions for Social Housing Providers and Associations (SHPAs). They have been encouraged to dabble (wholeheartedly!) in the free market. The objective is not to achieve profit for corporate shareholders, but to earn a surplus. The surplus is to be applied to the construction of new social housing. An article that explains some of this posted at S&P Global Market Intelligence: Understanding the Basics of Social Housing Providers and Associations (SHPAs)
The article states:
“Today, many providers are funded with a mix of private and public funds. Government money is provided to meet social housing needs under a robust system of regulations to ensure the funds are spent in an appropriate way. As private financing of the sector increases, funding structures become more complex . . .”
That “. . .robust system of regulations . . .” mentioned above would seem to be the Ombudsman’s pound-and-a-half compulsory apology from L&Q to each of its social housing tenants. If the L&Q story is any indication of conditions in the industry as a whole, ‘robust’ is not so far the right word. Read more in property118.com: One of Britain’s biggest social landlords hit with a £142,000 fine
While absorbing L&Q’s bad behaviour towards its tenants, you may develop an inkling of how SHPAs can become addicted to the heady drug of for-profit dealings in the free-market housing world.
For SHPAs, there can be an annual surplus but no profit. There can also be suitable (and hefty) salary rewards and perks for raising surplus revenue. While not exactly profit, the surplus in the non-profit sector can be modelled to provide the productivity rewards that are doled out to similarly ‘successful’ free-enterprise housing managers. In 2022, the salary of the Chief Executive of L&Q stood at £340,790.
Too bad so many social housing tenants are being left behind in this hybrid pursuit of for-profit dollars by non-profit agencies. Governments can of course put a stop to these practices, but their interests are not focussed on rental housing for people with very low incomes.
Instead, governments trumpet the virtues of home ownership.
In the UK, the major parties all share this focus that sustains and deepens a truly affordable housing crisis for vulnerable renters languishing on decades-long waiting lists. Similar disinterest shared by political parties in other countries also bodes poorly for social housing residents. Canada is one country where the major political parties march in lockstep towards an ownership rainbow as it sinks further and further below the horizon for more an more citizens.
