Peabody ‘pauses’ development commitments and looks to partnerships to build out pipeline
Peabody is reviewing its development commitments and considering whether partnerships could play a role in delivering its pipeline, as it focuses on core business amid the sector’s current challenges.
Ian McDermott (pictured centre) speaking at the Social Housing Annual Conference
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Peabody is looking to sell its non-core assets to fund its building safety works #UKhousing #SocialHousingFinanceSpeaking at the Social Housing Annual Conference on 1 December, Ian McDermott (pictured centre), chief executive of Peabody Group, gave a “taster” of the six-point business plan that has been agreed with the association’s board.
The 104,000-home group formed from the merger of Peabody and Catalyst on 1 April.
Mr McDermott said that as part of the new business plan, Peabody will be funding any remaining building safety works from the sale of non-core assets.
In a half-year trading update published last week, Peabody Group saw its surplus drop from £87m to £85m as it invested £65m in its existing homes, including £34m on building safety.
Mr McDermott said Peabody is also pausing and reviewing all of its development commitments, partly “to make sure that they reflect the new reality in terms of the appraisals”, but also to make sure that the housing association has got “breathing space”.
He said Peabody is “switching” its presumption that it has to build out its pipelines and is looking at alternative ways, perhaps through partnerships, to deliver new homes.
“We’ve got the opportunity on land that we own to build out about 20,000 homes, but we don’t have to do that ourselves,” Mr McDermott said.
“And I think it’s really important that we look at alternatives.”
Speaking at the same conference on an earlier session, Bernadette Conroy, chair of the Regulator of Social Housing, said that boards face a series of very difficult trade-offs in delivering their organisational objectives.
She said this is as they try to maintain financial viability, provide quality services and keep tenants safe.
Damp and mould response
Mr McDermott also referred to ongoing work by the landlord to assess damp and mould in its properties, as he and fellow panellists reflected on the sector’s response to the recent coroner’s report into the death of two-year-old Awaab Ishak at a property managed by Rochdale Boroughwide Housing (RBH).
Mr McDermott said that in 2020, Peabody established a dedicated team to look at damp and mould and find solutions.
“It’s something that we have been looking at for some time, that was predicated on a presumption of responsibility and the presumption that we were responsible for the issue of damp and mould,” he said.
He said that since then, Peabody has been assessing its stock, identifying where there have been problems and has set up a dedicated supply chain of specific contractors to deal with damp and mould.
Mr McDermott added that Peabody has been trawling through all of its records to identify where any key words have been identified around damp, mould, leaks or respiratory issues, and calling customers to ensure those issues have been resolved.
He said that Peabody is also looking at some technology in this space to monitor dampness levels remotely to be able to identify problems.
“One of the myths that I think we are helping to get rid of at the moment is this issue about ‘lifestyle’,” said Mr McDermott.
“Clearly, poverty and overcrowding are material factors in damp and mould, but the absolute presumption has to be that it’s our responsibility.”
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Mr McDermott said that when growing in size through mergers, Peabody had to reinvent its operating model and started using several managing directors, recognising that the housing association “can’t simply supersize what went before”.
He said that the housing sector is in a “defining moment” in the “crossroads” following the coroner’s report which found that Awaab passed away as a result of prolonged exposure to mould in his RBH-owned home.
RBH has previously apologised and has since appointed a new interim chief executive, Yvonne Arrowsmith, following the removal of its previous chief executive.
Mr McDermott said: “This is a really tricky position. And we need to make sure that we are earnest and in it for the long term, as we start to rebuild our business plans, as we start to reprioritise what it is we’re about. And that change does have to be systemic and permanent.
“And if it isn’t, we’ll be back here in five years’ time talking about the latest crisis, talking about what went wrong, and actually describing the latest defining moment.”
Bruce Moore (pictured right), chief executive of Housing 21, said that the sector has just carried on through those crossroads.
He said: “I’ve been in the sector for a long time that you always used to say we’re at a crossroads. But sometimes it feels like we’ve just carried on through those crossroads.
“And we haven’t paused, given way and really thought about or questioned what track we’re on or where we’re going.”
Mr Moore said that the sector’s biggest risk is an inherent comfort and confidence in the status quo, when it needs to respond and react to challenges.
He said: “We have a self-justification and a self-confirmatory bias in terms of what we do, and we don’t contemplate that actually we have to look hard at ourselves.
“So, I think we all have the ability to make mistakes, any organisation has the ability to get things wrong. I think what we have to do is think about how we respond and how we relearn, how we learn, and how we think about [how] we reset when those things occur.”
Sasha Deepwell (pictured left), chief executive of Irwell Valley Homes, said it was “an absolutely devastating moment” when details emerged about Awaab’s death.
She said that housing associations need to look at things “very deeply” and honestly when they make mistakes and put them right.
“Our response to that needs to be, in the words of the suffragettes, deeds, not words,” Ms Deepwell said.
“And I think it’s really important that we get the balance right, that there’s enough humility in this room and in the sector as a whole, for us to admit that we’re trying our very best to do a really great job and a very difficult job.
“But there are times when things go wrong. And when they do, we need to look at it very deeply, very honestly, and put things right.”
Speaking on a separate panel, Jonathan Cox, partner at Anthony Collins Solicitors, said that if a tenant’s solicitor tells them not to let the social housing provider in to fix damp and mould because of being worried it could affect claims, associations should seek an injunction to enter the property to tackle the issue.
The coroner concluded that in RBH’s case, the housing association allowed a legal disrepair process to get in the way of promptly tackling the mould.
Mr Cox said that it is in the “interests of tenants” that the “home is maintained”.
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