The Labour government, elected in July 2024, has pledged to build 1.5 million new homes over the parliament, with at least half of them being affordable and social rented homes. TIAA Ltd, the internal audit and business assurance specialist, welcomes the boost for the social housing sector, which has had difficulty accessing funding, has been undersupplied for decades and which plays a vital role in providing decent and affordable housing for millions of people.

In addition, TIAA Ltd sees Labour’s new housing targets and green agenda as an opportunity to renew the push to reduce social housing and Housing Associations’ carbon emissions through the adoption and retrofitting of smart technologies and circular economy practices.

Kevin Limn, CEO of TIAA Ltd, comments:

“We’re encouraged by the early steps announced by the new Labour government to help provide decent and affordable housing for millions of people in the UK. For too long, Housing Associations have faced difficulties in accessing funding, leading to an undersupply of social housing for the country’s most vulnerable.

“Housing Associations will play a vital part in meeting Labour’s target to build 1.5m over the next five years and help deliver broad benefits to the UK economy.

“Labour’s drive to build 1.5m new homes is an opportunity for the UK to reduce housing carbon emissions long into the future by ensuring new social housing has Net Zero targets in mind.

“In the face of growing pressures from the demands of new building activity, Housing Associations must ensure their systems and processes are reviewed and, where necessary, improved to meet the challenges and opportunities of a boom in new home construction. This includes staff training, thorough internal audit, and sustainability audits.”

Why the government needs Housing Associations

TIAA Ltd believes the government’s ambitious target will not be met without the active involvement and collaboration of Housing Associations. They have a proven track record of delivering high-quality homes, often in partnership with local authorities, private developers and other stakeholders. They also have a social mission to support their tenants and communities, and to contribute to wider social and environmental goals.

Housing Associations have the potential to increase their building capacity and to access new sources of funding and land under the Labour government. The government has promised to increase grant funding for affordable housing, to reform the planning system to make it easier and cheaper to build social housing, and to introduce new schemes such as the Social Housing Decarbonisation Fund, which aims to retrofit existing homes to make them more energy-efficient and reduce carbon emissions.

The wider economic impact of Housing Associations

By increasing their building activity, Housing Associations can also have a positive impact on the wider economy. According to recent research by Capital Economics, every £1 invested in social housing generates £2.84 in the economy, and every new social home creates further social and economic benefits. Housing Associations can also help to address the skills shortage in the construction sector, by providing training and apprenticeships for their staff and contractors. Moreover, by providing more affordable and quality homes, Housing Associations can help to reduce poverty, improve health and wellbeing, and support social mobility and inclusion.

The importance of robust internal audit processes

However, with greater opportunities come greater risks and challenges. Housing Associations will need to manage the increased complexity and uncertainty of their operating environment, and to ensure that they comply with the regulatory and contractual requirements of their funders and partners. They will also need to demonstrate their value for money, their social impact, and their contribution to the Net Zero targets set by the government.

This is where robust internal audit processes are essential. Internal audit is an independent and objective assurance function that evaluates and improves the effectiveness of an organisation’s governance, risk management, and internal control systems. Internal audit can help Housing Associations identify and mitigate the risks and challenges they face, improve their performance and efficiency, and provide assurance and confidence to their stakeholders.

Five Tips for Housing Associations to access schemes such as the Social Housing Decarbonisation Fund

One of the key schemes that Housing Associations can benefit from is the Social Housing Decarbonisation Fund. The fund provides £3.8 billion over five years to help social landlords to retrofit their existing homes to make them more energy-efficient and reduce carbon emissions. The fund aims to support the government’s target of reaching Net Zero by 2050, and to improve the quality and comfort of social housing.

To access the fund, Housing Associations will need to meet certain criteria and follow certain processes. Some of the tips for Housing Associations to maximise their chances of success are:

• Conduct a comprehensive energy audit of their housing stock, to identify the current energy performance and the potential for improvement.
• Develop a clear and realistic decarbonisation strategy, with measurable targets and milestones, and aligned with the government’s guidance and standards.
• Engage and consult with their tenants and staff, to ensure that they understand the benefits and implications of the retrofitting works, and to address any concerns or issues.
• Seek expert advice and support from external consultants and contractors, who have the relevant experience and expertise in delivering large-scale retrofitting projects.
• Monitor and evaluate the outcomes and impacts of the retrofitting works, using appropriate indicators and methods, and report on their progress and achievements to the funders and regulators.

How Housing Associations can play an integral part in meeting Net Zero targets

Besides accessing the Social Housing Decarbonisation Fund, Housing Associations can also play an integral part in meeting the Net Zero targets by adopting a holistic and strategic approach to decarbonisation. This means that they should not only focus on improving the energy efficiency of their homes, but also on reducing the carbon footprint of their operations, their supply chain, and their communities. Some of the actions that Housing Associations can take are:

• Implementing renewable energy sources, such as solar panels, heat pumps, or biomass boilers, to generate their own clean energy and reduce their reliance on fossil fuels.
• Introducing smart technologies, such as smart meters, thermostats, or lighting, to optimise their energy consumption and management, and to provide real-time data and feedback to their tenants and staff.
• Promoting low-carbon transport options, such as electric vehicles, car-sharing, or cycling, to reduce the emissions from their travel and commuting activities, and to provide incentives and facilities for their tenants and staff to use them.
• Encouraging circular economy practices, such as waste reduction, reuse, and recycling, to minimise the environmental impact of their materials and resources, and to create new revenue streams and social value.
• Engaging and educating their tenants and staff, to raise their awareness and understanding of the climate change challenge, and to inspire and empower them to take action and change their behaviour.

How TIAA Ltd can help the sector

At TIAA Ltd, we are committed to supporting the UK Social Housing sector with its audit and assurance needs. We have over 25 years of experience and expertise in providing internal audit and assurance services to the sector, and we work with over 100 Housing Associations across the UK. We understand the opportunities and challenges that the sector faces, and we tailor our services to meet the specific needs and objectives of each client.

We can help Housing Associations to access and benefit from the schemes and initiatives, such as the Social Housing Decarbonisation Fund, and to achieve their decarbonisation goals and targets. We can also help them to manage the risks and challenges that come with the increased building activity and complexity of their operating environment. We can provide assurance and confidence to their stakeholders, and help them to demonstrate their value for money, their social impact, and their contribution to the Net Zero agenda.