It's been a tough few years for everyone in the industry and we can expect a few more years yet where markets will continue to fail us.
The biggest challenge for most is to finance new affordable housing. Conventional bank funding is now difficult to secure, so we have worked with Aviva to bring pension funding into social housing. This is a first in British housing and we have secured an initial £45m to provide more than 1,000 homes.
Public funding has been severely reduced. Derwent Living entered a bid for 1,000 affordable rented homes at a very competitive £21,000 a unit – but we only received funding for over 130 over the next three years. We are a private organisation committed to our customers, so we will find ways to provide affordable housing without public money.
We will attempt to combine pension funding with income from our commercial activities to provide more affordable housing without grant from the government. Derwent has spent 15 years growing commercial activities for precisely this purpose. We currently have three secure sources of commercial funding: student accommodation, market rent and profit from our facilities management branch.
Already, 40% of our business comes through commercial ventures and we are making £1.6m a year from this alone. We intend to use this profit – along with other sources of funding - to try to start at least 200 additional affordable homes a year.
The second key challenge for us is to make sure we are efficient, which has been our focus over the last year. This drive to be lean is made more difficult because our rental income from social and affordable housing is under pressure. Tenants have more difficulty paying rent as unemployment rises, and we fear government welfare benefit reforms could lead to spiralling arrears.
And how do we deal with collapse of communities due to the recession and the knock on effect this is having on people's lives? We will continue to focus on delivering good affordable housing as an absolute priority and we will work with other groups and organisations to alleviate the worst effects of the recession. But we do not have the resources to fill gaps left by shrinking public provision.
Peter McCormack is chief executive of Derwent Living Housing Association
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