Financialization and the third sector: Innovation in social housing bond markets

Abstract

The recent global financial crisis has seen investors turn away from real-estate bonds, given their role in distributing risk during the crisis. However, since 2009, a new type of real-estate bond market has grown in London, enabling social housing groups to issue bonds. This could be viewed as further evidence of the extension of financialization practices into new spaces, beyond those of traditional capital markets and associated intermediaries. In this paper, we examine how financialization has begun to permeate the third sector, reordering the priority of housing associations' values, displacing social value creation with the economic. We highlight how reduced state funding has led social housing providers to become more reliant on capital market intermediaries, and explore how locally orientated social housing associations have become embedded within wider financial networks. While policy makers have viewed financial markets as a panacea to fund social housing developments in an age of austerity, tensions have emerged, requiring localized social housing organizations to become more commercial in their activities, jeopardizing their ability to protect vulnerable communities through social value creation.

Demolishing the Present to Sell off the Future? The Emergence of ‘Financialized Municipal Entrepreneurialism’ in London

“…This pattern also holds for Aalbers and colleagues (2017) and Wainwright and Manville's () work on HAs. The prospects for financialization—engaging capital markets for development capital, and the expansion of financial products on balance sheets—grew as the ties between HAs and the state were loosened, and ‘reduced state funding … led social housing providers to become more reliant on capital market intermediaries’ (Wainwright and Manville, : 819). Aalbers () therefore links the incipient financialization of public/social housing to the withdrawal of state funding, on the one hand, and the abdication of state responsibility on the other; this retraction and mutation of the role of the state indirectly produces financialization in non‐state providers.…”

“…The specific quality of the housing in question in this article has revealed new dynamics that provide an important addition to the growing knowledge of the financialization of rental housing in North America and Europe. Whereas the work of Aalbers (), Wainwright and Manville (), Fields (; 2017) and Fields and Uffer () demonstrates the close interconnection of privatization and financialization—‘financialized privatization’—the case study presented here points to a more ambiguous form of partial‐privatization akin to state infrastructural financialization, giving the new affordable housing produced by HfL a Janus‐faced quality, functioning both as globally tradeable asset and decommodified home.…”

“…: 11). There has thus been a shift in how estates are viewed, from an optic of moral, social and public policy priorities, to a commercial, financial agenda focused on ‘“asset management”, valuations and risk modelling’ (Wainwright and Manville, : 823).…”

“…This pattern is echoed in Berlin, where public housing corporations were disposed of by the state and acquired by financializing agents who privilege only its exchange value (Fields and Uffer, 2016). This pattern also holds for Aalbers and colleagues (2017) and Wainwright and Manville's (2017) work on HAs. The prospects for financialization--engaging capital markets for development capital, and the expansion of financial products on balance sheets--grew as the ties between HAs and the state were loosened, and 'reduced state funding … led social housing providers to become more reliant on capital market intermediaries' (Wainwright and Manville, 2017: 819).…”

Embedding financialization: a policy review of the EnglishAffordable Homes Programme

“…Other housing studies have addressed the resistance that inancialization of housing has generated (Fields, 2015); predatory lending practices (Newman, 2009); the changing nature of housing association inance sources (Wainwright & Manville, 2017) and securitization of mortgages (Aalbers, 2008).…”