In recent years additional regulations which have been imposed upon Housing Associations have been substantial. In many cases these create a financial burden by way of the need to upgrade or alter property facilities. Despite this, MCH has maintained operating surpluses – albeit small ones – as social housing connotes low rents which
are themselves limited by regulation. Unlike many business operations, MCH cannot cover extra costs by raising its income.
The social housing industry is presently consolidating at a fast rate. The Housing Corporation still makes Social Housing Grants, but only deals with large associations. It is actively encouraging this consolidation, as it is easier to regulate a few large associations than a proliferation of small ones.
It has been forecast that, in ten years, there will only be ten large players in the field. It
is clear, therefore, that MCH, with only 174 units, is a very small fish in a large ocean and the expectation of further funding from the Housing Corporation is non-existent.
It is also clear that to expect substantial funding from the Craft is a non-starter as
the needs of the four great Masonic Charities have to be a first call on funds. The future of MCH as an independent housing association is not very encouraging.
Matters have been brought to a head recently by a condition survey on the real estate carried out by a national firm of chartered surveyors. This has thrown up substantial sums for major repairs being required over the next few years.
If these major repairs are not carried out, the present high standards of the properties will deteriorate to the disadvantage of the residents. The budgets for the next five years show an accumulated deficit which cannot be managed out of current income streams. It would be unwise to borrow out of this deficit, as the prospects of repaying overdrafts are not feasible.
A further immediate problem is that the chief executive and his assistant (the only two administrative staff employed) are due to retire shortly.
It is clear that the administrative burden
is too great for two people and the costs
of increasing the staff numbers cannot be afforded. It is also difficult to envisage the office of chief executive of an association forecasting operating deficits, and with no chances of attracting outside funding to develop, being an attractive one to a person of the calibre needed to effectively manage the association.
By good fortune, our position has come to the notice of W Bro Peter Reynolds,
who has extensive experience of housing associations. He was chairman of a substantial association which merged into
a much larger association. Peter Reynolds introduced us to a large housing association with some 15,000 units in its management.
It is professionally managed by a highly respected team and has achieved star ratings with both the Housing Corporation and with the Audit Commission.
Negotiations are proceeding most satisfactorily towards agreement to transfer the engagements of MCH to this larger association. It is agreed that the existing MCH schemes will continue to be badged
as MCH homes, and the local house committees will be encouraged to remain
in place and to provide the existing work
of making the lives of residents more enriched by Masonic input.
Throughout all these negotiations the welfare of the existing residents has been uppermost. This is the principle which the Housing Corporation would adopt in any situation where a housing association was entering into troubled waters. The Housing Corporation has complimented MCH on anticipating future difficulties well before they become a real headache.
The emotive issue we have to resolve
is that MCH would cease to be managed
by members of the Craft after 25 years
of successful operations. The business
issue we have to resolve is that MCH
does not have a satisfactory financial future, and at best will only stand still, but more likely will fall into debt and eventually
have to close.
I maintain that if there is to be any sadness about our schemes losing the control of Craft members, it would be far worse for that to be forced onto MCH by financial failure in due course. The Housing Corporation considers that a transfer
of engagements to our chosen larger association is a sensible course to take,
and it will ensure the future security
of our residents both present and future.
It should be noted that the assets of MCH are enshrined in an Industrial and Provident Society, meaning that no person or body has a beneficial interest in those assets.
No dividends can be paid, and on a closure of operations, all the assets have to be transferred to another Industrial and Provident Society having similar aims. Whilst MCH is presently managed by members of the Craft, Freemasonry can never derive any financial benefit from MCH.
I hope that this detailed explanation will be helpful to members of the Craft in understanding the pressing need for action, as to do nothing
is not an option.
Brian Smith is Chairman of the Masonic Charitable Housing
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