This Way for Titanic Housing
By Tayo Aluko, April 2014
People walking along Lime Street might have noticed that the former station hotel (right) which has been student housing for many years has recently undergone a name change. The sign that used to announce ownership by Cosmopolitan Student Homes has been replaced by Sanctuary Students. The same has happened with Cosmopolitan Housing signs everywhere else. What happened? Well, Cosmopolitan Housing was taken over by Sanctuary Housing, the largest housing association in the country, last year. Actually, the correct word is rescued, because it very nearly went bust.
This is my understanding of what happened: It appears that Cosmo decided to expand into the student housing market around 2003. No government grant exists for this, so they borrowed heavily in the private sector, using their social housing stock (homes rented to the less affluent and more vulnerable) as security. The student homes operated at a loss almost from day one, but they remained confident enough to expand, merging with Chester and District Housing Association in 2011 (Cosmo’s Chief Exec retired with a golden handshake.) It soon became clear that the entire business was in difficulty, and in fact at the point of collapse, and that the only way out was for them to be taken over by a larger organisation. Riverside Housing tried, but saw things in the books that suggested it was too risky, and pulled out. Enter Sanctuary Housing, a Midlands-based association, who completed the takeover in March last year.
Since the sell-off of council housing in the 1980s and the progressive reduction of government subsidy to housing associations from then on, housing associations have been forced to borrow more and more on the open market to fund the provision of new homes. It may be that in that climate, Cosmo decided that the ever-expanding student housing market was a good one to enter, to provide good profits with which to subsidise their core activities (let’s give them the benefit of the doubt and not suggest ego or greed.) Without government grants, “the markets” were their source of funding.
It is now clear that Cosmo’s demise was the result of irresponsible and careless borrowing. Still, their board sanctioned it. The housing regulator (the Housing Corporation, later the Tenant Services Agency and now the Homes and Communities Agency) apparently didn’t see the disaster coming in time. That appears to be one of the reasons why the ratings agency Moody’s downgraded the credit rating of practically the entire social housing sector, noting that a “weak regulatory framework” existed, particularly citing the Cosmopolitan case as the main factor in their decision.
One would hope that Cosmo was a one-off. In fact, the housing regulator is quoted as saying just that. In these days of housing benefit cuts and with the bedroom tax apparently reducing the income of housing associations significantly, one might be excused for fearing that Cosmo might turn out to be the tip of a very large iceberg. And we all know what happened to the Titanic, which, after all, was registered in Cosmopolitan Liverpool.
Tayo Aluko is a Liverpool based actor and singer. He used to be an architect, and once designed a Cosmopolitan Housing scheme in Ormskirk.
Cosmopolitan: the true story. Inside Housing,
November 22, 2013 and other issues
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Comment left by Teresa Williamson Akpan on 6th May, 2014 at 21:27