Belfast Telegraph

Plenty to worry about in Northern Ireland Housing Executive report


By John Simpson

The Northern Ireland Housing Executive annual report and accounts for the year to March 2017 make worrying reading. Chairman Professor Peter Roberts highlights the achievements and shows where the NIHE has delivered on its targets. His headlines included the efforts to maintain an estate of 86,000 homes and spending £107m on 23,000 homes in a programme of planned maintenance.

Weekly Business Digest Newsletter

This week's business news headlines, directly to your inbox every Tuesday.

The NIHE has a big impact on Stormont's finances. It made an in-year grant of £306m, up from £258m the year earlier - an increase of nearly 19%.

In addition, the NIHE administers the funds for Housing Benefit, offsetting the rents of a majority of tenants and other eligible claimants, costing a further £660m. This makes housing costs one of the largest commitments on the Stormont budget.

In a crude and simple average, each NIHE home, over and above the rent paid by tenants, costs taxpayers nearly £10,000 a year.

There are aspects of the NIHE report that make worrying reading. In writing this comment a declaration of indirect interest must be made. Monitoring the activities of a housing association gives this writer a direct interest in what the NIHE is doing.

The chairman recalls that a year ago he hoped the longer term future of the NIHE would be more clearly defined by now.

"Unfortunately, this did not happen and the resulting lack of clarity means we are unable to determine and implement sustainable funding arrangements to allow us to deliver our much needed stock investment programme," he reports.

The NIHE has had to resort to an annual plan instead of a four-year plan to manage the business.

Readers also learn that almost 26,000 tenants may be affected by the social sector size criteria (otherwise known as the 'bedroom tax') limiting entitlement to some aspects of housing benefit.

The NIHE no longer has funds to increase its housing stock. It relies on schemes to improve existing houses to maintain its 86,000 units and, although the accounting provisions give housing a 50-year depreciation life, many of its houses are already well over that 50-year limit.

The high overall cost of the NIHE calls for closer understanding of:

a. The absence of a formula to set rent increases,

b. The cost of housing benefit as an offset to rent,

c. The growing gap between rents and the cost of maintaining houses,

d. Large interest and capital charges on borrowed funds.

NIHE rents have been frozen for two consecutive years and, more recently, have been frozen for a third. It draws attention to the loss of around £12m each year which might otherwise have been used to make improvements to houses. This loss is described as creating a compounding effect, giving a cumulative loss to the rental baseline in the years ahead.

The growing squeeze on funding for planned maintenance gets special attention. An Asset Management Strategy, approved by the Stormont minister in 2016, assumed that funding would be improved.

However, the rent freeze and uncertainty about capital funding means that the 10 year investment plan needs to be reassessed, to the Housing Executive's regret.

One of the major long-term deficiencies in the Executive plans is that there is no performance plan to tackle the needs for large scale urban regeneration.

Then, as an unsolved problem, the Executive has long-term capital repayments at high interest rates still to repay. Last year, this funding bill reached £80m.

If there is a new political agreement to restore Stormont, there are many urgent issues to tackle. Housing must be high on the priorities list.

Belfast Telegraph