Brexit and Welsh Housing

With the Brexit process having now started in earnest and a general election on the horizon, Steffan Evans takes a look at three of the challenges that will face housing associations in Wales as the Brexit process develops.

One of the debates that seems set to dominate British politics over the next two years is the question of where should the powers currently exercised by the EU be transferred to after Brexit. Should powers in areas such as agriculture and the environment return to Westminster, or to the devolved legislatures at Hollyrood, Stormont and Cardiff Bay? Whilst the EU has very limited powers that directly concern the work of housing associations, this debate is still likely to have an impact on the social housing sector in Wales.

This impact is likely to be twofold. On the one hand, whilst the EU does not exercise many powers that have a direct impact on the work of housing associations, it does hold power in areas that indirectly affect the Welsh housing sector. EU legislation in areas such as the environment, health and safety at the work place, and employment does affect the way Welsh housing associations operate on a day to day basis. A question that the Welsh housing sector must therefore grapple with is whether it wants to see these powers transferred to Westminster or to Cardiff Bay. On the other hand, if the National Assembly does gain significant further powers in areas such as agriculture, the Welsh housing sector could face greater competition when seeking legislative time and financial support in Wales. It would seem vital that the housing sector engages continually with the Welsh Government and individual AMs as the Brexit process proceeds.

A second challenge for the housing sector in Wales will be gaining access to the Welsh Government’s and the National Assembly’s limited resources during the Brexit process. With the general election, the Great Repeal Bill and the Brexit negotiations set to dominate the political landscape for the foreseeable future, it seems likely that the legislative time that may previously have been given to policy areas such as housing, will now be allocated to discussions on Brexit. Given that the resources of the civil service will also become increasingly stretched as they try and deal with Brexit, it appears imperative that the housing sector in Wales takes advantage of any opportunity to affect change when the opportunity arises. With the Welsh Government recently tabling legislation to abolish the right to buy in Wales, and with strong indications that further legislation will be forthcoming as the Welsh Government seeks to reverse the Office for National Statistics decision to reclassify Welsh housing associations as part of the public sector, the Welsh housing sector does appear to be presented with such opportunities. If it does not take advantage of these openings, it may be a long time before the sector has an opportunity to seek change again.

A final challenge that may confront the housing sector in Wales could materialise if the Welsh economy weakens. Any increase in inflation is likely to put pressure on tenants. This in turn could lead to an increase in rent arrears, a clear challenge for housing associations in Wales. A further threat that could emerge from this economic uncertainty is an increase in the price of borrowing. Given that many Welsh housing associations are currently operating very close to their gearing covenants, this could have a serious impact on the sector’s ability to borrow funds.

In addition to this, the loss of EU funds from some of the poorest Welsh communities could have a further impact on Welsh housing associations. If this money is not replaced by new funds from Westminster, the Welsh Government is likely to be faced with some very difficult decisions as to how it continues to invest in community regeneration. This presents both a challenge and an opportunity for Welsh housing associations. The Welsh Government may place pressure on organisations already working in such communities, such as housing associations, to take on some of these services. If this is not funded properly, this could stretch the financial resources of these associations, reducing their ability to deliver their core services.

Alternatively, this may provide housing associations with new opportunities to work within their communities, and to deliver improved services to their tenants and to society more broadly. It is therefore important that Welsh housing associations take stock of their position before these new opportunities and challenges emerge.