1. Third Sector Responses to a Changing Market and Policy Context: Housing Associations and Market Renting in the United Kingdom
Julie Clarke and Dr.Rachel Kirk
Northumbria University
Firstly to introduce ourselves – Julie Clarke and Rachel Kirk, we are based at Northumbria University in the NE of England and today we are presenting a brief overview of our paper looking at decision making processes around diversification ….particularly in relation to moving into market renting provision….. that are taking place in housing associations – an example of a third sector organisation experiencing radical changes in their operating environment in the U.K.

2. The Project
Regional responses to a changing context: Housing Associations and Market Renting in the North East and North West of England
The Report
Funded by Royal Institution of Chartered Surveyors Research Trust
Surveys and Interviews with senior officials of Housing Associations in the North of England
Extent and nature of market renting activity
Focus of this paper is the dynamics of strategic decision making
Our paper is based on research that we conducted along with colleagues and was part funded by the Royal Institution of Chartered Surveyors research trust.
The research involved an online scoping survey of housing associations operating in the northern regions of England which looked at the extent and nature of market renting activity amongst the ha respondents. This was followed up with a round table discussion with national and regional stakeholder representatives, and semi structured qualitative interviews with senior level housing assoc profs from 17 organisations.
In this paper we are focusing on the qualitative data in relation to the strategic decision making processes that were taking place in the organisations concerned ….exploring if, how and why, they were deciding to diversify, or further diversify, into the market rented sector.

3. Why this research; why now?
Convergence of factors shaping an agenda for housing associations to engage with market renting
Growth of private renting in a changing housing system
Radically altered operating environment of housing associations
Trends towards commercialisation and diversification
Evolving nature of Housing Associations as hybrid organisations (see Mullins 2015)
Social businesses
Housing Associations engagement with market renting epitomises the tensions apparent in practice and academic debate
Different dynamics operating outside London and the South East
HAs provide the majority of social housing in the U.K and have their origins either in charitable/ voluntary sector or the public sector. They have evolved throughout their history, reflecting the shifting role of the third sector generally. Today they are operating in a radically altered and rapidly changing context.
ThIs research took place as the most recent funding and welfare policy reforms were posing significant questions for housing associations. Financial pressures as a result of external environmental change were intensifying existing trends towards commercialisation and diversification, raising considerations about the direction and values of organisations.
Our research focused on a particular aspect of potential diversification i.e the provision of market renting properties amongst housing association landlords – an area of emerging activity that epitomises the context of strategic decision making facing the sector. A changing housing system with rising levels of market renting provides opportunities for HAs. Pressures to be more business like raises the possibility of cross subsidisation….something that existing research based in London and the South East had identified. This research crucially took place in the northern regions of England ….a different set of local housing markets.
Exploring insights into the processes of strategic decision making in this context adds to an existing debate about housing associations as hybrid organisations ….what is the balance between business and social objectives….how are HAs evolving in practice as social enterprises… how is this being shaped…are they reacting to external pressures or developing proactive internal responses.

4. Housing Associations and Strategic Decision Making
Local Market
Local policy
environment
Organisational culture and values
Business drivers
Utilising organisational experience
Local Market
External
and Internal Forces
Push and pull pressures (varying interpretation)
Interacting in different ways
Distinct approaches
National Policy Environment
This research considers decision making processes that have implications for the nature of the organisation and its role.
In terms of deciding whether to invest, the local market was at the core of that decision making process. However there were significant influencing forces both external and internal to the organisation.
Externally the following forces were identified by respondents:
They were operating in a national policy environment that on one hand was constraining their traditional activities through reductions in capital grant and restrictions on revenue raising; on the other hand it was creating opportunities for HAs to diversify away from what were perceived as core activities.
Local Policy environments were also an essential element of the strategic decision making process. Local Authorities, as part of their housing strategy, could be encouragers or facilitators of HAs investment in the local PRS. In other instances it was not part of their agenda.
Internally:
Organisational culture and values were seen as key to how the different HAs responded to potential opportunities. In a number of cases this reflected varying interpretations of the notion of social purpose, for example redefining housing need, For some a broader interpretation that reflected the inability of the local housing market to meet housing needs of households HAs had not previously provided for - such as working families.
In terms of business drivers organisational attitudes to risk also varied again reflecting different cultures and values amongst HAs. There were two fundamental business drivers for those that made the strategic decision to diversity into the PRS. These were the need to spread risk over a more diverse property portfolio given the restrictions on capital grant and revenue raising powers. There was also a recognition amongst respondents of the potential to cross subsidise their traditional social housing functions from their commercial activities.
Utilising organisational experience was another push factor for some. These HAs saw their traditional development and management role as being transferable into the PRS. For others there was a concern that the sector was very different and outside of their expertise.
The same factors interacted differently for different organisations and they could exert either push or pull forces. The outcome of which ultimately determined their interaction with the local housing market
Despite operating in the same national policy context our research identified the potential for distinctive approaches to strategic decision making. Diversity and complexity of individual Housing Associations was evident in what could be been perceived as a homogenous sector.

5. Approaches to Strategic Decision Making
Enthusiastic early adopters
Reactive pragmatists
Deliberators
Reluctant pragmatists
Illustrative of diversity in practice and non homogenous organisations
To illustrate some of this diversity we classified types of approaches that were evident among the respondents in our research
Enthusiastic early adopter were identified as having had strong drivers in place over a number of years, their enthusiastic commitment was evidenced in their business strategies, their proactive move into PRS was driven by mutually reinforcing cultural and business forces as well as a supportive local context and market. For these organisations pull factors were dominant
Amongst reactive pragmatists both push and pull factors were exerting influences. For these organisations the decision to become involved in private renting was a more recent development because of the nature and extent of external pressures. Often their commitment was on a small scale with a degree of uncertainty about long term commitment
Deliberators were aware of the national environment and the pressures exerted but unlike reactive pragmatists were still to make a firm strategic decision about their entry into the PRS
For reluctant pragmatists their approach was one of a response to the immediate environment post 2008 which saw a housing market collapse. Their decision to enter market renting was temporary and reflected a particular set of circumstances, for some it was their inability to sell properties that resulted in market renting, all be it temporarily, by default.

6. Summary A more complex picture than might initially be expected
Organisations engaging, or not, in different ways for different reasons
The evolving nature of hybrid social enterprises in the third sector was evidenced by some in the:
Reshaping of their culture and values
Redefinition of social purpose within a more commercial environment
Reinterpretation of their role in a changing market
To summarise, our research demonstrated a more complex picture than might initially be expected. It was clear that housing associations were engaging – or not engaging - with market renting in different ways for different reasons. The evolving nature of housing associations as hybrid social enterprises was evidenced by some organisations reshaping their culture and values, the redefinition of social purpose within a more commercial environment, and also reinterpretation of their organisations role in a changing housing market. A deeper understanding of how housing associations are interpreting and interacting with internal and external forces has potentially significant implications for how they continue to evolve in a constantly changing environment.

7. References
Chevin D (2013) Social hearted, commercially minded: a report on tomorrow’s Housing Associations, London: The Smith Institute
Clarke J, Grainger P, Hatcher C, Kirk R & Lilley S (2016) Regional responses to a changing context: Housing Associations and Market Renting in the North East and North West of England, London: RICS
Morrison N (2016) Institutional Logics and Organisational Hybridity: English Housing Associations Diversification into the Private Rented Sector, Housing Studies, DOI: /
Mullins D and Jones T (2015) From Contractors to the State to Protectors of Public Value? Relations Between Non-Profit Housing Hybrids and the State in England, Voluntary Sector Review 6,3: