Ethical disposal requires open and honest engagement with communities

The National Housing Federation’s (NHF) Code of Conduct for housing associations, while not explicitly referencing ethical disposal, clearly reflects the principles that characterise it. Key themes such as ‘acting in the best interest of residents’ and ‘behaving with integrity’ are outlined.

The NHF has also highlighted the importance of disposing of assets ethically by citing the value of communicating the rationale behind sales to residents, along with ‘explicit ethical disposal policies’ to help keep them front of mind in future.

While there are various avenues to explore, it is this open and honest engagement with communities that remains at the heart of ethical disposal, and that is vital for RPs to prioritise.

Despite offering a smoother road to achieving financial objectives, selling on the open market should be seen as a last resort for RPs.

Instead, they should aim to sell to other social landlords or charities first where possible, to remain in line with the sector’s social purpose.

They can also keep the community at the forefront of sales by directly marketing properties to those in need, such as to first-time buyers or low-income families in the area. 

Taking a selective approach to identifying properties to sell is also effective in disposing of assets ethically and is already gaining favour among some RPs.

This involves selecting properties that meet an internal set of criteria along with local planning objectives, which can then be sold to relevant organisations or local residents.

Collaborating with councils during this process can help RPs better understand the needs of the area and pick properties that will provide genuine value.

It’s important to note, however, that there is no one-size-fits-all approach when it comes to ethical disposal and every RP will face its own set of unique challenges.

RPs should certainly seek to sell properties to those in need, but the road to ethical disposal does not end there. Not all properties being sold will be suitable for first-time or local buyers, including ones that may require extensive repair.

In these instances, RPs could consider carrying out repairs themselves first to improve building standards, but it is important to recognise where this may not increase the value of the property enough to justify the cost.

Where properties are unsuitable to be sold to first-time buyers, or when it’s simply not financially viable to avoid open market sales, RPs can still be committed to prioritising community need.

Reinvesting proceeds and returns into new developments where possible can achieve this, helping to maintain the level of affordable housing stock in a local area and ensure that it remains accessible to those who need it.

This ethical use of capital receipts can also be practised by using funds to boost energy efficiency in existing buildings or to replace cladding for fire safety. 

Some RPs are exploring flipping tenure types across parts of their portfolios to allow them to apply ethical disposal to a wider range of properties.

This involves properties being privately rented out on a temporary basis before potential sale. While not yet widely tested, RPs that are struggling with financial returns could certainly consider this to maximise short-term value for suitable assets. 

By reviewing existing procedures, RPs can gauge to what extent their current practices prioritise communities during property sales, and how methods such as hyperlocal marketing of properties or reinvesting funds can be incorporated.

Having in place an established policy around ethical disposal can create a level of consistency across sales in line with NHF guidelines, but also provides clarity on alternative methods where preferred approaches of selling aren’t suitable.

While much more needs to be done to integrate ethical disposal across the social housing sector, RPs and landlords must first become educated about the process and familiar with the various routes available to them.

Keeping the community in mind at each stage of a property sale is the best option for RPs unsure of how to remain committed to ethical disposal. This will also ensure that they act in accordance with both NHF guidelines and the wider social purpose of the sector.

Natalie Owen and Emma Joy Smith, partners – social housing, Shakespeare Martineau