Transfers

Predictions. Everybody likes hearing them, but rather fewer like making them. Or rather, few people like making a prediction and getting it wrong. Anyone who has seen a 'dead cert' fall at the first fence or relied on a weather forecast on the eve of a long-awaited holiday or will vouch for that.

And nowhere is this more apparent than in the labyrinth world of social housing transfers. And with good reason.

Who would have thought, a few years ago, when transfers were running at little over 20,000 a year, that nearly 140,000 would be up for grabs in 1999/2000?

Or that this would happen two years after the landslide election of a Labour party traditionally committed to the virtues of council housing? Or that large urban Labour councils would be queuing up to offload 20,000 units at a time?

Certainly there is no lack of confidence about transfer among the leading lights of social housing. Housing Corporation deputy chief executive Simon Dow sees this year's record-breaking round as setting the pace for the next few years.

"There is no reason why it should not go on at 150,000 a year. But inevitably at this rate the resources of consultancies, advisors and funders will be tested," he says.

And leading lender NatWest, which has lent and arranged nearly £2 billion pounds to social housing, thinks another million units could go over the next decade.

Head of housing Clive Barnett says: "In theory, if the right structures are in place, [transfer] could go all the way. If you combine the best of PFI and transfer there is nothing that could not receive support and be dealt with."

He thinks the present rate of transfer will continue for several years, before tailing off as the appetite among lenders declines.

"I don't think the annual programme will increase much more - the capacity is really at the maximum," he says.

Advisors HACAS see "no reason why transfer is not sustainable at its present rate", according to director Julian Ashby.

So where would these projections take us? Although council housing is still very much the dominant force in social housing with some three million units, its numbers have been consistently declining for many years - 1.3 million units over the last eleven years.

On the other hand, registered social landlords have doubled their stock over the same period and hit the one million mark in 1998.

If the predictions on transfers are right, coupled with a housing association new-build programme of some 25,000 a year, we could see associations surpassing councils as the prime provider of social housing within seven years.

At that rate, council housing would soon drop below the two million mark, a figure housing associations would surpass in 2005. And the millionth transfer could be a reality within five years.

But before housing association chief executives begin cracking open the champagne and council housing directors scurry off to the 'situations vacant' pages, a number of potential obstacles need to be pointed out.

The first is of course, tenants. There seem to be very few councils now which are ideologically opposed to transfer. However, many which have expressed no interest such as Leeds or Norwich say it is their tenants who are implacably opposed and they will respect their wishes.

Secondly, it could prove unwise to dismiss the anti-transfer activist lobby as cranks. Over the past few years campaigns have stopped a number of high-profile transfers and in Cambridge earlier this year a transfer of some 9,000 units was voted down.

And many more 'yes' votes have scraped through on wafer-thin majorities. Now the campaigners have tasted blood they are redoubling their efforts.

Mark Weeks, spokesman for Defend Council Housing says: "A lot of people now realise that you can win, that you don't just have accept this - its not a foregone conclusion at all. The government have said we have a choice, well we are out there to influence that choice."

Lenders have their own reservations. Only last week the two biggest lenders NatWest and Halifax were warning against low returns and increasing risk (Housing Today issue 135).

And with transfer resting on an annual £2 billion injection of their money it is worth taking note when they say they are worried about taking on large numbers of low value stock in poor condition.

Their warnings on low value stock is backed up by transfer associations themselves. Simon Kimberley is chief executive of Birmingham-based Optima Community Association, the largest ever Estates Renewal Challenge Fund transfer.

He says: "Even with a very sizeable grant, making the transfer stack up financially is a complex and difficult business. I personally think the only way transfer is going to happen for big councils with low value stock in poor condition is with an ERCF-style mechanism for getting it improved." ERCF was, of course abandoned last year.

All these factors combine to suggest that although transfer has a bright future there will be limitations - it is just a question of where the boundaries lie.

And if a rump council housing sector were left after another decade, what would it look like? Where would it be and who would live there?

Chartered Institute of Housing policy manager David Fotheringham says that without radical measures a continued pattern of transfers could create a two-tiered system where all stock of any value is sucked out of the council sector, leaving local authorities with concentrated pockets of deprivation and residualisation.

Under such a system, housing associations could 'cherry pick' the 'better' more economically active tenants, leaving concentrations of black and minority ethnic, single parent families and disabled tenants ghettoised in worthless urban council stock.

"What you would expect is the kind of pattern of transfers happening at the moment. That would be a higher proportion of black and minority ethnic people in urban environments in poor conditions." he says.

But it might not be that bad. HACAS director Julian Ashby sees a diverse set of tenures and overlaps emerging, blurring the traditional boundaries between council and housing association ownership.

Innovative schemes based on PFI means a 'rump' council housing sector need not necessarily be a second-rate option, he says.

"There is no reason why a council operating with a housing revenue account surplus and the support of its tenants could not continue to provide a high quality housing service permanently," he says.

Nonetheless it is likely that other 'rump' council stock would include low value transfers voted down by tenants and poor quality transfers which couldn't find lenders.

Another unknown quantity is the role to be played by New Deal for Communities - will the government's housing and regeneration flagship act as a vehicle for transfer or council ownership?

In the end of course, all predictions should come with a proviso like personal finance products - past results are not necessarily a guide to the future. Any one of a myriad changes can happen over the course of a decade - ministers, policies, even governments come and go. The only thing we can really be sure about is that social housing will be radically different.