Rent rise a sideshow - Stormont must let NIHE borrow again

This crisis is a quarter of a century in the making.

Back in 2018 ‘The Detail’ published a leaked civil service letter stating that if there was not a new financial settlement for the NIHE by 2020, then plans would need to be put in place to de-invest half of its housing stock.

Further back, Lord Morrow told the Stormont Assembly in 2015 that without new finance, future Ministers will be managing the Housing Executive’s decline. The list goes on, including in reports by PwC (2011) and Savills (2009).

The root cause of the current financial issues lie in two decisions made in the mid-1990s, stopping the NIHE from building new homes and from borrowing to fund operations.

The reason behind both decisions was that if the NIHE borrowed it would count towards overall government debt, which was considered bad economically at the time.

However, as housing association borrowing did not count towards government debt, the argument ran that new build social housing funding to housing associations would generate more (maybe twice as many) homes.

So the NIHE was banned from building new homes and all that funding was handed over to housing associations.

We now know this policy to be fallacious. In 1995/96 the NIHE completed 1,360 new homes, after which time their completions dwindled to zero.

The housing association sector has only twice since 1996 been able to exceed that benchmark – in 2001/02 with 1,390 homes and in 2012/13 with 1,450 homes.

The Minister’s decision to increase the Housing Executive rents gives the impression of doing something but it is so small when compared to the need, as to be ineffectual.

The NIHE needs hundreds of millions over the next 30 years, that is not going to come from rent rises of less than £2 per week.

However, the Housing Executive has assets worth over £2.5 billion and has virtually paid off existing long-term loans.

In other words, there is plenty of capacity for borrowing and taking advantage of historically low interest rates.

This brings us back to the decision made over two decades and the ban on borrowing – this was a political decision and there is a growing consensus that it must be reversed.

In his 2015 statement Lord Morrow stated: “What I would rather see, and what borrowing can support, is the renaissance of the Housing Executive investing in stock”.

This was echoed last year by the new NIHE chairperson Peter Roberts.

And we know that when tenants are given a choice they prefer to stay with the Housing Executive than change to a housing association landlord, as the votes in 2017 and 2018, on the Grange, Ballyclare, and Ballee, Ballymena estates show.

So Minister Hargey now has an opportunity to reverse the wrong political decision made twenty-five years ago, keep the Housing Executive publicly accountable and funded, so that it can borrow and build again.