Navigation

Search

Geeta Nanda: ‘£3bn remediation figure is only going up’

Insight08 Jul 2021James Wilmore

Geeta Nanda talks James Wilmore through her priorities as new G15 chair, and why the building safety crisis is not going away

Photography: Julian Anderson

Sharelines

New G15 chair Geeta Nanda talks Social Housing through her priorities #SocialHousingFinance #UKhousing

When Geeta Nanda (above) took over as chair of the G15 last month she branded it a “critical” time. Talking through her agenda, it is clear this is not hyperbole. From dealing with the impact of the pandemic, to building safety, decarbonisation and the small matter of building affordable homes, even by the historical standards of the sector it is a head-spinning list.

And it is amplified for the G15, the group representing London’s biggest housing associations, which manages around 600,000 homes.

“We’ve got lots of headwinds coming our way as organisations,” says Ms Nanda, who is also chief executive of 58,000-home Metropolitan Thames Valley Housing.

So where to begin? Top of her list remains the post-Grenfell building safety crisis and its knock-on effects.

“It’s the biggest issue and unless we solve that we can’t really solve decarbonisation,” she tells Social Housing via a video conference call.

Earlier this year, Social Housing revealed that the G15 estimated that fire safety and remediation work would cost its members nearly £3bn over the next decade. This is expected to peak in 2022-23, with a spend that financial year of £354.7m. On the predicted £2.9bn overall spend, Ms Nanda admits: “That figure is only going to go up.”

As a group representing London’s 12 biggest social housing landlords (since its inception, mergers have seen the number of total standalone organisations dwindle), the impact of the post-Grenfell building safety crisis has been felt more keenly than anywhere else in the country. Ms Nanda is mindful that safety is the priority, but there is no ignoring the financial implications.

“It’s great when you hear developers saying they’re going to spend £20m on fire safety, but we’re paying for our renters and then there are leaseholders on top of that. We haven’t got anywhere to turn,” she says.

In May, the G15 wrote to housing secretary Robert Jenrick, arguing that the approach to fire risk assessments was proving “disproportionate”, leading to a proliferation of waking watches and “ruinous” costs for residents. “We have to have a more focused approach to risk prioritisation mitigation, and a solution for these poor customers,” says Ms Nanda.

Decarbonisation

While building safety remains the immediate priority, equally taxing is the issue of decarbonisation. “Everybody is grappling with what decarbonisation means,” she says. Until there are proven – and, vitally, affordable – solutions to address energy efficiency in homes, it’s a wait-and-see approach, suggests Ms Nanda. “These early years are very much around data collection, piloting and understanding more. What you don’t want to do is be jumping into solutions until you’ve worked out what the problem is and how to do it effectively. Everybody in the country is waiting to see what the alternative is to gas boilers.”

Heat pumps have been identified as a solution. The government has a target to install 600,000 heat pumps a year by 2028, while a ban on the installation of gas boilers in new builds is due in 2025.

But Ms Nanda, who has spent around 26 years in the sector, is yet to be convinced by heat pumps as a universal solution. “Heat pumps are fine if you have lots of land and room, but we have to look at the different kind of property types we have. The thing that we really have to think about is the overall affordability for our residents.

“If you were to replace your boiler tomorrow, would you go out and buy a heat pump? I wouldn’t.

"I don’t actually know what the best alternative is today. There’s a lot of pilots and we need to continue that before we land on what the answer is. What we don’t want is a big loss of social housing because the costs of decarbonisation are so great.”

The government has so far offered £50m through its Social Housing Decarbonisation Fund, with more funding expected later this year. Ms Nanda admits the money so far is “a drop in the ocean from where we need to be”.

Nevertheless, she says: “I would like us to spend it wisely.”

Combined with these twin headaches is the question of how G15 landlords build more homes. “If we look at the spend that is being put aside for fire safety, the biggest impact that has is on the development of new homes,” says Ms Nanda. This was brought into sharp focus in March this year when G15 member L&Q cut its annual housebuilding target by 70 per cent – indicating it would aim to build 3,000 homes a year as opposed to the previous target of 10,000. The G15 has crunched the numbers for the group and estimates that 58,000 fewer affordable homes could get built due to fire safety spending on existing properties. This is based on each additional new unit of affordable housing costing £50,000.

Ms Nanda says: “Everybody is reviewing their business plans and the capacity for development. We have covenants that we have to meet, headroom that we need.”

So how else to pay for new homes? As the sector becomes an increasingly attractive proposition for institutional investors, amid post-pandemic uncertainty over retail and other commercial assets, more social landlords are linking up with private capital. “I think everybody is open to conversations with investors,” says Ms Nanda. But there is a sense from her that it has to be on the right terms. “For years there has been a lot of discussion around a wall of money that wants to invest in residential. But we’ve yet to see those investors willing to take the development risk. It’s much more around the income stream that they’re interested in.”

She adds: “We saw that with the build-to-rent sector in the early days. Nobody wanted to take any risk.”

In numbers

£2.9bn

Estimated cost of fire safety and remediation work for G15

£354.7m

Estimated peak annual spend on work, in 2022-23

600,000

Number of heat pumps targeted by government by 2028

40

Number of MPs on ‘levelling up’ taskforce (none from London)

Would she like to see investors taking more development risk? “Yes. You need more people building homes. [There are] local authorities, housing associations, private developers and we’ve got build-to-rent, but we still can’t meet the number of homes that are required. So if there are investors coming in, if they take the risk, that’s another way of providing more homes.”

Ms Nanda thinks more models need to be established. “Who’s got the skills and who’s willing to take the risk? We need more models to develop to think about that risk sharing and then risk mitigation.”

New sector players

When it comes to other commercial elements entering the sector, Ms Nanda remains diplomatic. On the issue of for-profit registered providers (RPs), she says that since the National Housing Federation threatened legal action against Blackstone-backed Sage Housing in 2018 (the latter agreed to drop the term ‘housing association’ from its name), the issue has “moved forward”. She adds: “‘For-profit RP’ is part of the vocabulary and it’s clear they are for-profit.”

So is she comfortable with for-profit RPs? “They exist and it’s for the regulator to determine that the affordable housing is protected,” Ms Nanda replies. She adds: “We’re all comfortable that if there are more providers of affordable housing, we’ll get more affordable housing. It’s about how you protect the assets and ringfence all of that activity to make sure it stays within the sector.”

As the sector’s focus remains on affordable housing, the government continues to bang the drum for homeownership. But Ms Nanda is not perturbed by this. “We understand the commitment to ownership but it’s for us to argue to make sure that rented homes stay within that mix,” she says.

The shake-up to the planning system is also likely to cause headaches, not least the potential scrapping of the Section 106 system. “We provided affordable homes before Section 106 was around,” she says. But she adds: “Any change is a problem. While you’re going through change, it has an impact on the number of homes that are produced. So it’s making sure that affordable homes are still produced whatever the mechanism.”

“It’s not necessarily a geographical thing, it’s a poverty thing. We need to make sure that London gets its share to be able to deal with housing, education and health that comes from a good home”

Another government mantra is the idea of ‘levelling up’. While the government maintains it is about tackling inequality across the country, there is a concern that the North of England, where the Conservatives made gains in the last election, will get the lion’s share of funding. Of the MPs on a 40-strong ‘levelling-up’ taskforce, not one represents a London constituency.

Ms Nanda says: “It’s not necessarily a geographical thing, it’s a poverty thing. We need to make sure that London gets its share to be able to deal with housing, education and health that comes from a good home. It’s about making sure that wherever those pockets of inequality exist, that investment is there, so it’s not a North/South divide.”

It is this issue of inequality that Ms Nanda sees as being a driving force for the G15 post-pandemic. “There are headlines every day around growing inequalities and through the pandemic we’ve been responding and seeing the impact it’s had on our residents,” she says. “Creating a fair society is a real priority for us as organisations.”

This chimes with the government’s aims to give tenants a greater voice through the Social Housing White Paper.

However, recent high-profile cases of poor housing conditions – including an ITV investigation into homes at one of Clarion’s London estates (Clarion has apologised, noting cases on the Eastfields Estate where it had “fallen short of the standards” its residents have a right to expect) – have highlighted there is work to be done. Ms Nanda says: “We’re all committed to improving our services and making sure the quality of homes is improved. Making sure those residents’ voices are heard is important as well.”

She adds: “The reality is that conditions in the private sector can be worse than housing associations, but that doesn’t mean that as associations and local authorities we should have people living in poor conditions. Nobody wants that.”

Ms Nanda hopes at the end of her two-year reign, the increased focus on tenants will be among her legacies. She concludes: “I hope we are delivering on our key priorities, which include ensuring residents are not forgotten.”