Social housing sector - the first cracks are appearing

[Frank Hovis]

I'm referring to Housing Associations which are usually debt funded.

With ultra low interest rates and guaranteed rent rises this sector, if not a licence to print money, has been one in which inefficiency and poor management has been allowed to be almost as successful as efficiency and good management.

With the return of interest rates and inflation to higher levels the cracks are beginning to show.

It's not yet a flood and it won't affect all of them but there are a lot of absolutely useless or imprudent associations out there and they will be found out one by one.

There has been the odd smaller one in problem, either through well meaning peple notknowing how to run a business or crooks making merry, but this is the first bigger one to begin to tumble.

Their business model relies upon building new houses and supporting those with debt of about the same length as a private mortgage, so 20 / 25 / 30 year time horizon when assessing a new build estate project for its ability to support the associated debt.

 

When however you can no longer cover even the current costs then you are dead in the water.  Here is the first.

 

RSH Narrative Regulatory Judgement

• Provider: Tower Hamlets Community Housing
• Regulatory code: L4260
• Publication date: 23 March 2023
• Governance grade: G3
• Viability grade: V3
• Reason for publication: Governance and viability downgrades
• Regulatory route: Stability Check and Reactive Engagement

 

THCH’s financial position is weak, and it is faced with a substantial programme of fire remediation work up to the end of 2025/26. THCH is finalising documentation for a covenant waiver from its funder as it failed to identify the full accounting implications of the Building Safety Act 2022 earlier in the financial year and made a poor decision surrounding budgeting for the recovery of costs. Waivers are also being sought for the subsequent financial years 2023-2026. Irrespective of securing the necessary covenant waivers, THCH’s business plan demonstrates that it is unable to meet the costs of its day-to-day operating activities and repairs liabilities from its rental income stream. There is no capacity for any future development. Finally, stock condition data, upon which forecast stock reinvestment provisions in the business plan are based, is out-dated and over reliant on cloning. Although this is now being addressed, we do not have assurance that the business plan’s cost provisions are based on prudent assumptions.

https://www.gov.uk/government/publications/regulatory-judgement-tower-hamlets-community-housing-limited--2/current-regulatory-judgement-tower-hamlets-community-housing-23-march-2023

 

It's gone.  The previous two who have gone have been swallowed by big HAs but who would want to take on this?

Dead in the water.  The local council will probably be given a big grant to take it in house.

 

The senior management team:

https://www.thch.org.uk/our-board

[Bobthebuilder]

In the era of cheap credit anyone's pet cat could run a successful property business. I would bet the four people pictured here couldn't run a corner shop let alone a multi million pound organisation.

Writings on the wall.

[spygirl]

Less a license to print money. 

More a license to employ fuckwits from the LA and 3rd sector.

 

[King Penda]

1 hour ago, Bobthebuilder said:

In the era of cheap credit anyone's pet cat could run a successful property business. I would bet the four people pictured here couldn't run a corner shop let alone a multi million pound organisation.

Writings on the wall.

They can now 

[spygirl]

An annoying fuckwit from up the road 'works' for the LHA.

And I use the term v loosely.

He was a social worker, working for a 3rd sector mongy charity 3rd sector thing. 

I never understood why they existed, just seemed to run newspaper bs about alchies, wimmin who had no work skills, furniture shop. Bizarre.

Anyhow, charity wank went under I.e LA stopped giving it money, so he started his new career at the LHA.

Genuinely clueless about what he did and really what he could do - fucking useless. Literally would fuck up taking the bins out.

Last time we spoke he was doing an MBA, to support his career in bizzyness.... at the local FE college.

[Kiwibobby]

One of the financial targets of my and the wife has been to get work from the councils in the area.  Their management are shite, and due to laziness once you are on the supplier lists you can pick up almost anything and have a crack at it.  I see it as getting back some of the rates they have rampaged off me over previous years.

 

note, we probably have produced higher quality work than 80% of their workers for the contracts she has got so far.  I know in one she was told to slow down the production of written material as the council employees were feeling pressured.

[Frank Hovis]

To note that I picked it up from this site, Inside Housing, and see that it has already dropped off the front page whilst the remaining stories are all puff pieces and decarbonisation grants.

The first clear sign of a major collapse happening in the sector sparked by a combination of higher borrowing rates, high inflation, and rent caps meaning that the income doesn't rise anywhere near the costs, a combination that will hit every association and not just Tower Hamlets, and the response is very much:

https://www.insidehousing.co.uk/

 

Edited March 25, 2023 by Frank Hovis

[JohnnyB]

On 25/03/2023 at 09:12, Frank Hovis said:

To note that I picked it up from this site, Inside Housing, and see that it has already dropped off the front page whilst the remaining stories are all puff pieces and decarbonisation grants.

The first clear sign of a major collapse happening in the sector sparked by a combination of higher borrowing rates, high inflation, and rent caps meaning that the income doesn't rise anywhere near the costs, a combination that will hit every association and not just Tower Hamlets, and the response is very much:

https://www.insidehousing.co.uk/

 

Great spot.

 

But could it be that the kicker here is the "fire remediation work" part of it? I can just imagine that finances have been based on expected margins, but then some surveyor walks past and writes up a £1m cladding replacement to cover his own arse.

[Frank Hovis]

1 hour ago, JohnnyB said:

Great spot.

 

But could it be that the kicker here is the "fire remediation work" part of it? I can just imagine that finances have been based on expected margins, but then some surveyor walks past and writes up a £1m cladding replacement to cover his own arse.

 

If they were otherwise running okay then they could easily add that to their debt as £1m.is going to have little effect upon the security and interest cover covenants to which their debts are presumably subject.

I will see if I can find their accounts as they sound like a disaster area, they weren't on Companies House because they aren't a standard company, probably a mutual or limited by guarantee.

 

Wow, what a terrible company, £'000

The gains are selling off housing stock (acquired cheaply from the council) to balance the books, pension actuarial changes can be ignored as these aren't a current cost.

Stripping down to the core drivers:

Operating surplus - interest payable (£'000):

• 2018        72
• 2019        61
• 2020       (945)
• 2021       (394)
• 2022      260

 

That's appalling.  These have been very good years for the sector as a whole and yet they have still lost money.

Their 2023 results will be eye opening.

They have had it IMO, their losses will spiral and the bank will call in its security unless someone takes them over and guarantees it.

 

https://www.thch.org.uk/download.cfm?doc=docm93jijm4n1906.pdf&ver=1939

Edited March 26, 2023 by Frank Hovis

[sarahbell]

Have they got a diverse board?

 

[Frank Hovis]

12 minutes ago, sarahbell said:

Have they got a diverse board?

 

 

Not especially given the location. 

In the public sector boards, including councillors in councils, are mainly nodding dogs turning up for the buffet.

All the actual power and influence is in the executive as shown above.

[Petatep]

Just now, Frank Hovis said:

 

Not especially given the location. 

In the public sector boards, including councillors in councils, are mainly nodding dogs turning up for the buffet.

All the actual power and influence is in the executive as shown above.

Or pigs turning up at the trough.

[spygirl]

Interestign how everythings connected .... esp with housing fkwits.

TOS had their own version of my thread - 

 

TOS - 

https://www.housepricecrash.co.uk/forum/index.php?/topic/248805-the-jet-setting-couple-who-have-bought-an-entire-village-in-wales-and-raised-rents-by-60-per-cent-as-locals-facing-eviction-launch-desperate-protests-to-stay-in-their-homes/#comments

Si1 put a link to jac o north, someone Ive stumbled across before. See Gavin Henderson thread.

Anyhow - 

Jaconorth had flagged the scumlors last year- 

https://jacothenorth.net/blog/a-property-empire/

He adds soem more detail.

Theres a whole smell of pikey-cannabis farm and property fuckwittery.

There was a post on LHA/social housiong,. whihc I strongly agree with.

hes doen a few posts on how LHA are expenading and just randowmly fillign up the newly create with poprety with sincle scum mums for way away -

https://jacothenorth.net/blog/anti-social-housing-and-other-rackets/

This is whats happeneding in rural palces everywhere.

He makes a comment of LHA goign nuts just to cinrease pay n benefits for mangemtn. Not lookign at lcoal needs, just ploweing on and flipping the cost onto benefit system.

This is happening in Whuitby too.

It geios like -

Yougn people are leaving. We need more social housing.

COuncil release land. LHA build.

Housign then allocated to sucmmers from outside as they get more points by being unemployable junkey with 10 kids, raterh than going to the poor local who has a job and 2 kids.

 

 

 

 

[spygirl]

The question many of you are now asking is – How does this woman qualify for social housing in Wales? So let’s examine some possibilities. (Here I am indebted to a couple of people who contacted me after I put out this tweet on Sunday.)

The article tells us that Kayleigh Parnham has lived in Kent all her life. This rules out her having local connections with any part of Wales. But it mentions her “friend” who made the move, so is she claiming kinship with this trailblazer and saying she needs to be near relatives?

Because this is a loophole often exploited.

This loophole also explains how a youngster who’s got into trouble is ‘adopted’ by Wales-based do-gooders and then, within months, his extended criminal family appears. And is immediately housed.

Cos there’s good money to be made.

Another scam, rife in coastal areas, is to move your family into a caravan – plenty available, especially in winter – claim “cramped living conditions”, etc, then tell the nice lady from Cwmscwt Housing Association that little Chardonnay is coughing all the time and you’ll soon be offered a nice big house.

Or, if that doesn’t appeal, then find anywhere to live, stick it out for six months and, bingo! – you qualify as ‘local’. Look you.

I even knew one guy, came down from Manchester, pitched a tent on Tywyn beach for himself, his wife, and their 5 kids. An absolute rogue. I used to go drinking with him. I even got talked into ferreting for rabbits one forgettable Sunday.

Hes right.

LA LHA and the stupid benefit system is fillign up the rual out of he way palces, where they really do need to few skilled workers aer getting filled up with Shazza 10 kids.

 

[spygirl]

And if that is the plan, then Wales does not need any more HMOs taking in the social rejects and misfits of north west England’s cities and towns, bringing with them the misery and the violence associated with the drugs trade.

[Frank Hovis]

On 25/03/2023 at 09:12, Frank Hovis said:

To note that I picked it up from this site, Inside Housing, and see that it has already dropped off the front page whilst the remaining stories are all puff pieces and decarbonisation grants.

The first clear sign of a major collapse happening in the sector sparked by a combination of higher borrowing rates, high inflation, and rent caps meaning that the income doesn't rise anywhere near the costs, a combination that will hit every association and not just Tower Hamlets, and the response is very much:

https://www.insidehousing.co.uk/

 

 

Quoting myself but look at today's headline issues: BLM, climate.  Just manage your houses efficiently and try not to go bust you silly sods.

 

[With a crooked smile]

On 24/03/2023 at 12:24, Frank Hovis said:

I'm referring to Housing Associations which are usually debt funded.

I'm not feeling that based on conversations I'm having with themas part of a public sector team that also sells into HAs and third sector. 

Local government is totally fucked and will pretty much buy the crappest product at the lowest price. Housing Associations while wanting value really committed to spending money on tech if the ROI is there. 

None of this is intended as a dig just trying to share what my experience is.

[Frank Hovis]

21 minutes ago, With a crooked smile said:

I'm not feeling that based on conversations I'm having with themas part of a public sector team that also sells into HAs and third sector. 

Local government is totally fucked and will pretty much buy the crappest product at the lowest price. Housing Associations while wanting value really committed to spending money on tech if the ROI is there. 

None of this is intended as a dig just trying to share what my experience is.

 

You have misinterpreted me there.

Any organisation which makes big capital investments, in this case new housing developments, is usually debt funded because the payback of those investments can be thirty or fotry years and as long as the NPV over those forty years of "rents - maintenace - interest" is positive then they make that investment and fund it with debt rather than equity because it makes sense to do so.

By "debt funded" I mean that that is their standard business model.

I am not implying that they are about to sink under a mountain of debt that they cannot repay.

[spygirl]

On 24/03/2023 at 19:35, Kiwibobby said:

One of the financial targets of my and the wife has been to get work from the councils in the area.  Their management are shite, and due to laziness once you are on the supplier lists you can pick up almost anything and have a crack at it.  I see it as getting back some of the rates they have rampaged off me over previous years.

 

note, we probably have produced higher quality work than 80% of their workers for the contracts she has got so far.  I know in one she was told to slow down the production of written material as the council employees were feeling pressured.

Stumbled on this whenI was looking for a suitable existing thread.

I have a friend who's stumbled into being the goto contractor for everything computers for 3 or 4 LAs.

Literally everything with a plug comes to him. Inc.  kettles toasters- there was an indpcident where he pointed out that it might not be a good idea to run 3 kettles and a toaster off the same socket.

Everything gets run by him. Eventually

Has noone shown an inkling of aptitude or ability. After all its just basic stuff, organising stuff with software.

Nope. All mouth breathers.

 

 

Edited August 12, 2023 by spygirl

[One percent]

On 24/03/2023 at 18:49, spygirl said:

An annoying fuckwit from up the road 'works' for the LHA.

And I use the term v loosely.

He was a social worker, working for a 3rd sector mongy charity 3rd sector thing. 

I never understood why they existed, just seemed to run newspaper bs about alchies, wimmin who had no work skills, furniture shop. Bizarre.

Anyhow, charity wank went under I.e LA stopped giving it money, so he started his new career at the LHA.

Genuinely clueless about what he did and really what he could do - fucking useless. Literally would fuck up taking the bins out.

Last time we spoke he was doing an MBA, to support his career in bizzyness.... at the local FE college.

Liar. No way was he doing a masters level course at an fe college, even if it was in fuckwittery. 

[spygirl]

2 hours ago, One percent said:

Liar. No way was he doing a masters level course at an fe college, even if it was in fuckwittery. 

Iirc it was Grimsby Insitute in its expansionary, bent phase.

 

[spygirl]

https://mba-courses.com/profile/grimsby_institute_of_further_and_higher_education

This may not theexact course but the gust is the same - FE does MBA, crappy new uni rubber stamps it.

[One percent]

8 minutes ago, spygirl said:

https://mba-courses.com/profile/grimsby_institute_of_further_and_higher_education

This may not theexact course but the gust is the same - FE does MBA, crappy new uni rubber stamps it.

Ah yes, grimsby, the centre of business and capital. 

[spygirl]

Just now, One percent said:

Ah yes, grimsby, the centre of business and capital. 

Centre of business excellence

Grimsby was an earlier adopter of education visa scams, which was shutdown quietly.

[One percent]

Just now, spygirl said:

Centre of business excellence

Grimsby was an earlier adopter of education visa scams, which was shutdown quietly.

There were absolutely loads.  Mostly private and operated by muzzers and other asians