Three Reasons A Freemium Model Would Never Work In Housing

It’s been just over a fortnight now since I published a blog talking about the possibility of how a freemium model would work within the world of housing associations. Judging from the discussion it generated on my Twitter feed it would appear that the housing sector is perhaps not ready for an open and real discussion about how we might benefit from different business models. Sadly though, I think that unless the sector actively chooses this conversation then we will ultimately find ourselves losing control of the discussion and having innovation imposed upon us. An even scarier thought is that acquiescence might hasten the return of regulation, thus strangling our ability to innovate.

 

In short, the way I see a freemium model working is quite simple. Based on a similar principle to Dot Dot Dot’s approach we could use some of the homes that we currently have empty within our stock to provide a first step home for people who were unable to pay. These people might have been recently released from jail, they might be people with poor credit ratings, they might be homeless. They would be able to live in the property in return for their guardianship of it during maybe a six month initial period. Their occupation might even be tied to a level of community volunteering. However, they would live in the house rent free. After the initial period we could then look at them graduating to other homes within our stock, or onwards into the private market.

 

In discussions on this topic since I published the blog I’ve found three main objections to the freemium idea.

1) It would provoke community resistance

There’s no doubt that it’s a tough sell to the people who aren't getting free houses. How do you respond to people within the same community, aggrieved that someone in their midst is getting free rent? Is there perhaps a way to engineer an increase in supply of empty homes beyond a housing association's own void portfolio that could be used in this way so that they too could be offered the same deal? It would need to be in a property that had the basics but in November 2012, 710,000 empty homes were empty in England of which 259,000 were long-term empty (meaning they have been empty for more than six months).

 

2) People should be able to access more permanent housing solutions, not rely on temporary ones

Yes, they should, but they can't. And for the many currently excluded from permanent social or private rented housing this solution would be useful. These are the people who would struggle to either afford or arrange a conventional letting procedure. These are the people who are falling through the cracks currently – the idea of giving them a platform on which they could build, while developing a further stream of potential customers for us in the future has to be an attractive thought.

 

3) You can’t give houses away for free

There’s an argument that’s hard to disagree with - that organisations don’t generally do well by giving away their main product for free. That’s true and the freemium approach wouldn’t work for all the stock in a housing association’s portfolio. However, while we have a number of properties that remain empty, no matter what we do, they aren't generating an income. They can though be used in a way that reduces costs and which generates a non-financial return. Looked at in a social value way, the economics are not so mad.

 

Innovation around the use of empty homes has a long tradition within the sector - short-life housing was once officially recognised (and funded) through the Housing Corporation; but it's always been at the margin. Does the severity of the current housing shortage mean it now deserves its place within the mainstream?

This post was first published on Inside Housing

It's Cold, It's Christmas And It's Callous

Sometimes there are things you have to do that you know you are not going to enjoy. Like reading the latest DWP Impact Assessment for Universal Credit. I read it because I thought it might shed some light on the impact of Universal Credit - after all, the clue is in the title if you look closely enough. Now, with the wet towel unwrapped from around my head and the smelling salts fading into the atmosphere some light is dawning (literally as I write this).

The Assessment itself is a well crafted piece of work - in my quasi-civil service days at the start of my career I would have been proud to have written such a precise piece. Of course, it's not exactly flowing prose but the facts are set out clearly, as is the logic used to produce them. So far, so good. But, there are a number of "buts".

The biggest is that if the headline of more benefit take up, less fraud and more overall cost to the Treasury is true, how come it doesn't feel like that for many households? Some of the answer lies in how averages and totals mask some pretty dramatic cuts - within that headline of "good" news is buried the detail that 1.3 million households will see weekly income drop by more than £100. Some comes from the fact that only financial value is assessed with no attempt to "impact assess" in any social value sense.

Then there's the related fact that DWP appear to have written it from a "producer" perspective. What this policy means for the DWP and the Treasury can be discerned, but for individuals - no chance. It's a real shame that the scope of the Social Value Act doesn't impose a requirement that policy making - as well as contract making - should be subject to a wider test of social and not just economic measurement. How in 2012, with everything that has happened in recent years across the world, can we choose such a narrow definition of success or failure?

But for me the biggest failing of the Impact Assessment is its absence of humanity. As this policy plays out, we must ensure that the real impact is truthfully portrayed. Yes, there will be heartwarming cases where the benefit changes provide a motivation for self-improvement of the kind MPs expect to see. We should not be afraid to report those - they matter for the individuals and society as a whole. But we also need to report factually how for a family losing £300 from their weekly benefit their choices are now between food and heating, we need to show how respiratory illnesses have increased and how child nutrition has suffered.

These human stories will play out across the country in the years to come as the callousness of this policy - encouraging people into work that for many just doesn't exist - becomes apparent. Comms teams across #ukhousing have got a job to do next year.

My Review Of The Northern Housing Summit 2012

The Northern Housing Summit organised last week by the Northern Housing Consortium #NHCsummit on Twitter was a good do (there's a good Storify from the NHC events team which rounds up a lot of the coverage). Perhaps there was a little too much economic doom and gloom on the first day – but as most commentators don’t think that the Chancellor’s Autumn Statement today will give much cause for jubilation, perhaps those predicting 20 years of hardship have actually got it right. Still, amongst all that doom and gloom there were some bright spots.

A highlight for me was recognition for our ambitious apprentices project as the overall winner of the NHC’s Silver Screen competition, which this year focused on projects working with young people. I’m really proud that this excellent project (more information here) got the recognition it deserved, that the inspired Vicki Duncan got the credit for coming up with the idea and that we were able to take all seven of the fabulous apprentices we employed from the project to the awards dinner.

Among the other events, three really stood out for me. Louise Casey gave a thought-provoking interview about her work as ASB Czarina and she challenged the audience about why, as landlords, we didn’t do more with the few who cause such vile nuisance in the midst of local communities. The phrase “what we permit we promote” sprang to mind – something that at THT we have used regularly to guide the way we deal with staff inside the organisation. But does that extend to our dealings with tenants? My conclusion is that it doesn’t – with them we don’t always “tell it like it is” and make sure that tenants causing real trouble for their neighbours really do understand the urgent need to change their ways.

Also in an interview-style setting, Julia Unwin talked with understanding and compassion about the real statistics behind welfare reform and that how as housing providers we needed to get much closer to individual families in order to understand and help alleviate the challenges that they face. The sad fact is that we are far more likely to know the full details about the physical condition of the fabric of their home, than we do of the social fabric that binds the family that lives in it. How did we reach that stage – an understandable caution about collecting and using personal data and a regulatory regime that cared for process not outcome. Thankfully, the second no longer exists, and we need to do a lot to get over the first!

Finally, Sir David Henshaw was his usual provocative self, taking few prisoners in a wide-ranging review of attitudes in housing and public services. He didn’t see enough of housing organisations being led by their customers, he didn’t see enough innovation and he didn’t see enough engagement with other organisations across the public sector to make maximum use of our combined resources. Moderated with humour and including the NHC Summit equivalent of a pensioners tea-dance this was more thoughtful than that description might suggest – nonetheless, the message was unmistakeable.

When you have three people all telling you much the same thing – you are complacent about your customers – perhaps as a sector we need to listen very carefully to what they are saying. If welfare reform really does end up with rent being paid to tenants, suddenly, they could all become very price and service sensitive and being complacent about a customer who has to want to pay you your rent probably isn’t the most sensible strategy...