Who is affordable housing for?

Wide differences in approach to the future of social housing and of social housing providers were exposed in a Guardian Live online debate yesterday.

The debate, entitled ‘Who is affordable housing for?’ included a range of housing association representatives and other commentators. The first question that the title of the session begged was what is meant by the word ‘affordable’? Since the 2008 Act, affordable housing has come to mean anything that is sub-market. It has been applied by some authorities (notably the former administration in Hammersmith and Fulham) to include market homes for sale that have been discounted by a few percentage points. The master of spin, Grant Shapps, invented the phrase ‘affordable rent’ to describe his new programme of homes built with grant, but as he was cutting the grant by 60% they became anything but affordable in most cases. Most providers now count their output of homes using the word ‘affordable’ to include rented homes at up to 80% of the market rent, shared ownership which can only be afforded by people earning well above the average, and so on. This obscures the fact that very few of the homes now being produced are social rented available at traditional social rent levels and with security of tenure.

In the debate, several people argued that housing associations (and increasingly councils) have been pushed into being more commercial as capital grant has been removed, and that this move should be welcomed and embraced. I accept that, and have no problem with profit-making activities such as build for sale being undertaken in order to cross-subsidise new social rented homes. The problem is that over time the tail has started wagging the dog and it has an impact on the values and ethos of the organisation. Instead of being commercial to further the mission of the organisation – to provide genuinely affordable homes to people in housing need – the objective becomes development itself. In some cases, build anything anywhere as long as we grow. Associations start to see themselves and describe themselves as developers. I just do not see very many of them trying to squeeze every possible unit of social rented housing out of their developments.

The problem over the definition of ‘affordable’ housing is that it confuses the debate about who the homes are for. Some participants talked about the fact that the housing crisis has plunged many more people, higher up the income range, into housing need, and that agencies should therefore offer a wider range of products geared to meeting this wider variety of needs. Again, this is a matter of balance and emphasis and we have to make a judgement on whether we want to provide homes for people on minimum incomes or people on higher incomes who are struggling to buy. Ken Livingstone recognised the wider range of needs but took a strong line on the balance to be struck: of the affordable housing produced, the target would be to achieve 70% as social rent and 30% as ‘intermediate’ tenures such as shared ownership and sub-market renting. Normally the intermediate housing would be targeted in some way, for example towards key workers or towards people in the on or around average incomes. In a short period we have moved to a totally different policy position, where the proportion of affordable homes in development has been allowed to reduce and the share going to social rented homes is moving towards zero. The Mayor of London has even taken the possibility of requiring social rented out of the London Plan and has specifically excluded social renting from his funding regime.

Added to the mix were comments that social housing is a ‘damaged brand’ and that allocations policies cause ‘sink estates’ where the majority of tenants are ‘benefit dependent’. This was a charge laid at the door of council estates in previous decades but is it right now? First, virtually all developments are now mixed tenure, with social housing in a small minority, so it is hard to see how the ‘monotenure’ problem could arise. Secondly, allocations policies do not favour unemployed over employed people because they emphasise housing needs not income or status. Third, there is a confusion, deliberate or otherwise, between tenants who are unemployed (ie on Jobseekers allowance) and tenants who do not work – a category that includes elderly people, people with small children, people with severe disability of ill-health, and so on. Social housing is not a tenure of unemployment as it is often characterised. And fourth, rents for new homes are so high that most low paid people in work require benefits to be able to pay the rent. This is the fastest growing group of people receiving housing benefit. If the aim is to have more people on estates not receiving benefits then rents should come down not go up.

A final theme I would pick up from the debate is the desire of a number of housing associations to have more control and more flexibility in what they do – who they offer homes to and how much they charge. In my view it is broadly right for the local authority to set priorities for allocations in an area, but within a national code which specifies the factors to be taken into account – like giving reasonable preference to homelessness. I don’t think councils should have carte blanche (for some reason the Tory administration in Hammersmith always comes to mind as an example) to decide who gets housed, and, because they are not the elected strategic body, the argument is even weaker for housing associations to be able to adopt their own policies. On rents, there have been lots of criticisms of the ‘target rents’ policy, but it had the benefit of being consistent and certain and it reduced many of the anomalies in the system from the previous regimes. It must be wrong for a tenant to move into a property at an ‘affordable rent’ and find they are paying twice as much as the social rented tenant next door.

Previous thoughts on the role of housing associations can be found here

And my wider views on the importance of social rented housing can be found here.

The debate can be found here and the Guardian Housing network will publish a summary later in the week.

 

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Housing and welfare policy – still pale and stale

Does that fact that both Eric Pickles and Iain Duncan Smith are still in the same cabinet seats mean that David Cameron thinks they are doing a good job? Two prime candidates for the chop this week seem to have successfully defied their critics. What does this say about housing and welfare policy?

If the prime role of the DWP was seen as delivering welfare reform and that of the DCLG was to deliver more housing and more effective local government, then clearly both IDS and Eric have failed miserably. Welfare reform is being haltingly rolled out, it’s beset by administrative problems and its talisman project, universal credit, looks like a disaster that has been prevented only by the continuing delays in its implementation. To coincide with the reshuffle, the DWP brought out the first round of research into the impact of the bedroom tax, showing that only 4.5% of those affected had actually moved to smaller properties, yet this was one of the main stated aims of the policy. Almost at the same time, the Institute of Fiscal Studies reported that changes to the local housing allowance have had no impact on curbing private sector rents, another policy objective: instead they’ve simply hit claimants’ pockets.

Unlike DWP, Eric’s department seems to have gone in for remarkably little independent scrutiny. Perhaps it’s just as well. As the just-departed housing minister struggled in the recent Commons housing debate to claim that housebuilding is increasing, he was assailed by evidence to the contrary. Reports which foresee the end of local government as we know it, such as this recent one from the LGA, go ignored.

However, I suspect we’re judging both men by the wrong yardsticks. In considering IDS’s survival, Jules Birch suggests it’s an example of ‘wet-bed syndrome’. For an explanation, he directs the reader to the Stumbling and Mumbling blog, which uses IDS as an example of why idiots succeed. However, my eye was caught by one of the comments at the end of the blog. It suggests the most likely reason that IDS remains in post because he is, in Cameron’s eyes, actually a success. Perhaps his brief was ‘to knacker the benefits system so that claimants increasingly give up, while shovelling large amounts of public money to favoured suppliers’, and in so doing demonstrate ‘the incompetence of the state in managing services’. If that was really the brief, the commentator points out, he’s done startlingly well.

Similarly, if Pickles was sent to DCLG to preside over the biggest cuts in any government department, and start the process of marginalising both social housing and local government, depriving them of resources and winding them down, he seems to be halfway there.

Perhaps though, both mens’ success factors are even more subtle than that. IDS seems to believe he’s successfully pursuing a completely new strategy of welfare reform that will replace a ‘broken system’. This enables him to look genuinely baffled when anyone suggests that he might, instead, be simply destroying the one we already have. Pickles’ talent is the opposite one: while local government cries out for a strategy for how it can reconfigure so as to operate with only a slim proportion of its present income, Pickles busies himself with the issues that really bother him, like the continued production of free council newsletters. Has there ever been a local government minister who has turned such a deaf ear to the concerns of local government? Aren’t both secretaries of state, in their different ways, brilliant at putting up smokescreens to hide the destruction they’re carrying out?

Among the serious consequences of their activities is one that’s overlooked by most of the media. It’s been said often enough in the past that the two departments (responsible for welfare and housing) are dealing with two aspects of the same policy area: you can’t separate benefits policy from policy on rents, allocations, regulation of landlords or a whole host of housing issues. To state the obvious, if you cut benefits, tenants get into arrears and landlords’ income falls; similarly if housing policies lead to higher rents then this pushes up the benefits bill. One of the big consequences of both departments’ apparent indifference to the real effects of their policies is the widening gap between them on these key areas of overlap.

For example, the bedroom tax (sorry, the ‘removal of the spare room subsidy’) had four objectives: save money, improve work incentives, encourage mobility (i.e. get people to move around more) in the social sector and make better use of the housing stock. The last two are housing objectives, but were the DWP’s colleagues in DCLG asked about them? It goes without saying that DWP didn’t listen to warnings from the sector itself that moves on the required scale would be impossible. There were also warnings about the impact on landlords’ earnings, and lo and behold the research shows that arrears were up 16% in the months after the tax started.

Over at DCLG the policy to impose Affordable Rents is also being rolled out, with 40,000 homes let at the higher rents last year that would previously have been let at social rents. Given that the proportion of the new tenants dependent on benefits is exactly the same as for social lettings, 80% of the cost of the new policy is being passed straight back to DWP.

So the bedroom tax cuts social landlords’ income and saves DWP money, while Affordable Rent increases landlords’ income and costs DWP money. Not to worry: IDS thinks the evidence shows that the bedroom tax has made a ‘promising start’ while Eric… continues to fret about fortnightly bin collections.

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Regeneration or Gentrification?

How to improve housing conditions in an area whilst keeping the cost of living there within the reach of people on low incomes has been a key issue in housing for as long as I can remember, and especially in London. In the 1970s I was involved in campaigns to protect low-cost housing against gentrification in Paddington and then more widely. At that time a lot of social housing was being built (Tory Westminster alone was producing nearly 1,000 homes a year, mostly on former railway land), so the gentrification process was restricted to the private sector.

In the 1960s people like Rachman made huge fortunes by removing established tenants and packing houses with immigrants who could not get housing elsewhere, profiting from overcrowding. As market conditions changed, in the 1970s the practice of ‘winkling’ became common. Speculative landlords still bought run-down inner city property and shifted established tenants out, but now they were more likely to convert the houses for a newer richer group who could afford higher rents or to buy.

In Islington the campaign against the notorious estate agent Prebble became the focus of regular demonstrations outside their offices in Upper Street – and heavy-handed police action it also has to be said. There were long campaigns to save traditional local communities across Inner London, including Barnsbury, Covent Garden and Pimlico. In some boroughs, councils and progressive housing associations intervened by buying out landlords, rehousing the tenants and improving the properties for future social tenants.

Thatcher ended council municipalisation programmes after 1979 but this was also followed by a major shift in emphasis amongst housing associations from the purchase and refurbishment of street properties towards new build. In turn this was followed by the deregulation of the private rented sector, leaving us with an unfettered market that has been busily gentrifying the capital as shortage has grown and values have risen. We have seen the gradual transformation of many of London’s traditional working class communities into much more affluent and expensive neighbourhoods. The process is well known but, with a growing number of hotspots and the advent of the global super-rich, it is now spreading well into outer London. By restricting the ability of people on low incomes to live in more affluent areas, the welfare reforms are probably the final nail in the coffin of these historic communities.

The ability of poorer people to stay in affluent neighbourhoods has become more and more dependent on the availability of social housing in those areas, a big and hugely valuable legacy of generations of housing policy in inner London. In the 1980s the focus rightly turned to look at the quality of the many estates built between the wars and after WW2. Well-intentioned ‘estate regeneration’ schemes started in an era when the supply of social rented homes was sufficient to enable extensive ‘decanting’ to take place, and tenants were normally promised the right to local rehousing in a new or refurbished home at social rents. A succession of Government schemes brought estate improvements which benefitted existing residents.

The phenomenal rise in property prices in London brought attention to inner London estates because they sit on extremely valuable acres in good locations. If only their latent value could be released, whole areas could be transformed and new neighbourhoods created. In the most valuable places, like along the river, new ‘quarters’ could be created and profits could be used to build new social housing elsewhere. Government, national and local, realised that regeneration could be done with little or no subsidy as long as sufficient private homes for sale could be included. As public borrowing remained constrained, private borrowing by developers, including housing associations, became the natural model.

The politics of housing through this era meant that council housing had few friends. The new generation of Tories were mainly hostile and council housing was not quite a New Labour thing. Developers obviously wanted as much private housing as possible and many housing associations were transitioning away from social housing provision towards mixed tenure development with social housing a smaller and smaller proportion. The perceived wisdom was that council estates, even in otherwise rich parts of London, were drab ‘monotenure’ concrete monstrosities dominated by unemployment and criminality. It was obviously much better if they were replaced by bright new developments of ‘mixed tenure’ homes.

Of course some of the estates were shockingly built and many were also badly managed, but even so it has been rare for tenants to call for redevelopment rather than refurbishment. The normal call is for the community to be preserved, for refurbishment to take place and for better management and maintenance to be put in place.

Despite the appearance of being high density, many estates use land inefficiently. Spare land and rising values meant that opportunities for adding to the stock (or densification) began to open up, sufficient to finance and facilitate a wholesale regeneration or redevelopment. The finance tail was finally wagging the housing strategy dog. The bigger the scale, the grander the vision, the greater the planners’ desire to sweep away nasty council estates and replace them with ‘mixed communities’, the less influence residents seemed to have. Big estate regeneration schemes in London involved the loss of tens of thousands of social rented homes that were replaced by more housing, but much less social housing. Regenerated estates contributed little to meeting the needs of the waiting list, often they were a net drain. In a borough like Brent, which has had four or five major estate regeneration schemes, the wider implications for supply have been felt for many years.

In recent years some Labour boroughs have insisted on the complete reprovision of the social rented housing involved in the scheme, but this has rarely been achieved. Despite often good intentions, rising costs during a scheme tend to create pressures to increase the number of homes for sale and to reduce the amount available for social rent. More recent, the obscenity of unaffordable ‘affordable rent’ has added another layer of confusion as promises focus on badly defined ‘affordable homes’ rather than social rented homes. Some developers think that the social housing element will depress private sale values and will do anything to wriggle out. And on top of it all, we now have a London Mayor who actively intervenes to promote ‘regeneration’ that has next to no social rented provision and who uses his powers to block or prevent Labour boroughs who wish to ensure a fair share of social renting in redevelopments.

Last week the Homes and Communities Agency and the Mayor launched the bidding process for the latest miniscule housing pot, this time it is the £150m fund for estate regeneration schemes to start in 2015/16. Some of the reasons for regenerating estates given in the prospectus sound ok: they include estates that were built at quite low densities that do not always use land well. And I would support the prospectus’s statement that ‘The best regeneration projects actively involve residents so that the new homes and area are re-developed to meet local needs, provide well-designed and high quality new homes and reflect a sense of community identity.’ However in practice it is hard to believe that this is what most estate regenerations are about.

The rules around the new scheme help explain why ‘regeneration’ has moved away from the aim of serving the interests of existing residents and people in housing need towards a corrupted vision of what a mixed London neighbourhood should look like. Despite all the talk about how poor these estates are, the Government money is delivered as loans not as subsidy. The Government’s investment must be returned, schemes must ‘work with the grain of the market’, and total public funding will be required to be less that 50% of the total project costs. It says ‘Funding will only be delivered to private sector partners’ and the delivery body must not be classifiable as a public sector body.

It is a good thing therefore that the London Assembly’s Housing Committee has launched an investigation into the ‘Demolition and Refurbishment of London’s Social Housing Estates’. I hope their work will focus on the loss of genuinely affordable housing through so-called regeneration over the past few years and look for improvements in future. I also hope that Labour London boroughs will take a stronger line - protecting existing communities and delivering social housing must be the top priorities.

Developers are eyeing up estates across the capital in the currently febrile property market. Council estates have been the bulwark against gentrification since the 1970s. They are the largest remaining pool of genuinely affordable homes and must be protected. London Tenants Federation have estimated that more than one-third of new social rented homes built in London from 2007 to 2013 were just replacements for others that were demolished.

The first evidence session for the Assembly investigation comprised mainly tenants’ groups (and including the often forgotten leaseholders) from around the capital and makes interesting viewing – it can be found here .

LTF is to be congratulated for the work they have done in this field. They have issued advice to tenants facing regeneration and redevelopment proposals – which can be found here.

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False and dangerous myths?

Why would Inside Housing want to attack the idea of councils having more borrowing power to build new homes? After all it runs campaigns like Grant Britain Homes that call for more investment in affordable housing. Yet it’s just labelled the demands for greater borrowing freedom a False and dangerous myth. The opinion column accompanies a piece of research which used Freedom of Information requests to find out how councils were using their current borrowing ‘headroom’. The data show that councils like Wigan and Kirklees had £45 million of unallocated borrowing power and that many others had not yet borrowed up to the maximum of the ‘caps’ set by government when self-financing began in April 2012.

There seem to be no problems with the data (although individual councils might have issues with how they’ve been reported). The problem is that a story about how the early stages of self-financing for councils are working out has been turned into an opportunity to try to rubbish the case for changing the borrowing rules.

The argument seems to hinge on the fact that ‘most of the £2.9 billion of investment already available is untapped’. That’s to say, in February, just 22 months after self-financing began, councils hadn’t yet borrowed to the maximum they will be allowed to borrow (if nothing changes) for the next 30 years. Well, that’s hardly surprising, is it? Even those many councils who are bursting to build new homes are hardly likely to have got new developments on site in less than two years. The fact that there was an upsurge in council starts in the first quarter of this year is probably still down to earlier grants made available by the HCA, rather than councils’ expanded programmes after self-financing began.

While it’s true that a number of councils don’t yet have firm plans to build, that’s not surprising either. Demand and needs will be different across the country: in some cases demand may be limited, in others investment in the existing stock is the priority, and others may have used up their available supplies of land. Undoubtedly, too, there is a degree of caution in the face of welfare reform and spending cuts that have hit other council services. But neither the purpose of a change in borrowing rules nor the forecasts of possible outcomes depended on all councils using their full borrowing headroom, much less within such a short time.

Strangely, in another article by the same journalist Keith Cooper, this time for the Spectator, with the provocative title Why Owen Jones is wrong on housing, he points out (correctly) that around half of councils have less than £10 million borrowing headroom. The ignorant reader might think this is a lot of money, but of course – even if all spent on new build – it would barely amount to 100 new homes over the course of 30 years, quite apart from finance needed to improve the existing stock. Perhaps inadvertently, he adds to the case that Red Brick and others have long been making, that the borrowing caps are far too restrictive. His other results confirm that, in addition, they are arbitrary in their effects, with some councils having no spare borrowing capacity at all and a large number only having enough for the investment they need to make in their own stock.

But the problem about the Inside Housing (and Spectator) pieces isn’t the detail – it’s the overall message that the need for more borrowing power is a ‘myth’ and those calling for it are ‘misguided’. In a robust response, Tom Copley, Labour spokesperson at the GLA, pointed out that even Cooper’s figures show that six out of ten councils badly want to build more homes, and many are held back by the borrowing caps. Keith Cooper and Inside Housing are to be praised for their detailed research on this and other issues about local authority housing finance, but they should be much more careful how they present their findings. Those who are opposed to building more council houses or who doubt local government’s ability to spend wisely will be only too quick to make use of alarmist articles like those that appeared last week.

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80,000 children in temporary accommodation

The homelessness ‘safety net’ suffered another blow last week when Westminster Council decided to prevent homeless households from bidding for social housing for 12 months after the Council accepts it has a duty towards them. The Council plans to discharge its duty in most cases by identifying private rented accommodation for them.

Housing now receives quite a lot of media coverage but very little is devoted to homelessness. Last week there was a short Panorama programme and a few media outlets picked up on the latest increase in the number of households in temporary accommodation. But this is an era when it seems even ‘Cathy Come Home’ would leave the country unmoved.

It seems that homelessness has become part of the ‘scrounger’ narrative that rules the media so completely. Anyone seeking state help is fair game (unless you are a pensioner or a member of the royal family). The cynicism that has been deliberately engendered prevents almost any rational debate about serious issues like unemployment, disability and housing. Homeless people are contrasted with hardworking ‘aspirational’ people who want to become home owners and deserve help to get on the first steps of the home ownership ladder. No serious coverage is given to the fact that the huge commitment of subsidies, tax reliefs and guarantees to private property ownership dwarfs the trickle of grant into social housing and the costs of meeting the needs of homeless people.

There has been a complete turnabout in attitudes towards homeless people and in homelessness policy over the last decade. The high point of the 2002 Homelessness Act – when it looked as if Government had finally put together a package of strategies, policies and duties that would tackle the roots of the problem – seems a long time ago. By then the Labour Government had some achievements to its name: rough sleeping was being brought down, the long term use of bed and breakfast accommodation for families was being ended, the number of new homeless households presenting to local authorities was falling, and councils were to be required to take a long term strategic approach. The failure of affordable housing supply has caused a step-by-step transition away from a liberal and progressive policy.

Labour’s apparently well-meaning policies – setting a clear commitment to halve the numbers in temporary accommodation and introducing a more sophisticated ‘housing options’ approach to homelessness assessment – provided the cover for the introduction of a multitude of damaging ‘gatekeeping’ practices. However, the most important shift in policy has been the Coalition’s decision to allow councils to discharge their duty by securing a private letting for the household, removing the right to wait for a social home. Taken over a decade, all the changes mean that homeless households now face many more barriers to the process of presenting as homeless, and achieving a social rented tenancy is becoming much more rare.

Gatekeeping is the reason why the number of applications under the homelessness legislation has plateaued despite all the factors that would normally lead to an increase being present. You wouldn’t bother queuing at the bread shop if there was a big sign saying there was no bread.

It is a sign of the growing desperation many people face that the number of households in temporary accommodation continues to rise despite the increasing harshness of the system and the fact that many more people are found accommodation away from their home area. At the end of March, 58,520 households were in temporary accommodation. Of these, 12,430 were in TA in another local authority area, an increase of 36% from the previous year. 93% of these were from London, an increase of 40% in a single year. The number staying in TA for more than 2 years has also increased from 9% to 11% in one year. Between them, the 58,520 households contained 80,560 children or expected children.

The fastest rising reason for homelessness is the end of a private tenancy, now responsible for 27% of homelessness – up 14% in a single year.

The fact that 80,000 children are living in temporary accommodation, many of them away from their home area, should be seen as a national disgrace. It should be dominating domestic news. When Michael Gove says ‘nothing should be too good for the children of this country’ he apparently can’t mean the children of homeless families.

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SHOUT campaign for social housing off to a great start

The SHOUT campaign (social housing under threat) got off to a great start with a successful launch event in Parliament last night. Speakers from the Labour, Conservative, Liberal Democrat and Green parties spoke in support of the importance of social rented housing as a major part of solving the housing crisis.

Speakers included John Healey MP, the former Housing Minister who wrote an article in the Guardian calling for such a campaign, the Conservative leader of South Holland District Council Cllr Gary Porter, who is also a vice chair of the Local Government Association, LibDem MP John Leech, Green Leader Natalie Bennett, current Labour spokesperson Emma Reynolds MP, and cross-bench Peer Lord Victor Adebowale. Speaking for the campaign steering group were Alison Inman, Tom Murtha, Camelia Borg and Colin Wiles.

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Above: Gary Porter, John Healey, Natalie Bennett

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Above: Victor Adebowale, Emma Reynolds, Colin Wiles, Tom Murtha

Several other Parliamentarians attended including MPs Karen Buck, Andrew Slaughter, Alastair Burt, Clive Betts, Andrew Love, Stephen Timms, Chris Williamson, Clive Efford, and the chair of the NHF Lord Matthew Taylor.

There was considerable cross–Party support for the SHOUT Manifesto. Although not everyone agreed with everything – with political differences most notable around the right to buy – there was a strong consensus in support of building more homes for social rent and in favour of the case for moving back from ‘benefits to bricks’. In an interesting contribution, Gary Porter called for all the political parties to put the removal of council borrowing for housebuilding from the public borrowing requirement in their manifestoes.

The 20 page Manifesto sets out the case for social rented housing as a central part of the solution to the housing crisis. It sets out SHOUT’s case, made in detailed evidence to the Lyons Commission, for 100,000 new social rented homes to be built a year, funded through raising the restrictions on council borrowing, increasing social housing grant, and making more robust demands on housing developers. It calls for RTB sales to be genuinely replaced with ‘like for like’ new homes and for rents to be continue to be based on an affordability formula like the ‘target rents’ regime. It criticises the ‘affordable rent’ regime and calls on providers to refuse to sign up to it as it currently stands.

A central plank of the Manifesto is the call for an end to stigmatising misrepresentations and demonisation of social tenants.

The SHOUT Manifesto can be found in full here . Yesterday’s blog by campaign organiser Colin Wiles can be found here. Another fascinating blog by Jules Birch on the background to the launch of SHOUT can be found here.

As Jules writes:

‘Here’s hoping today’s launch of the SHOUT manifesto can be the start of a new era for social housing.’

 

SHOUT on Facebook: https://www.facebook.com/pages/SHOUT-The-Campaign-for-Social-Housing/584137758345466?fref=ts

SHOUT on Twitter: @4socialhousing

 

 

 

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The slow demise of social rented housing

The latest affordable housing figures show that numbers of new social rented homes have fallen by half. The year before, they’d fallen by more than half. So whereas for the three years up to 2011/12 we were producing around 34,000 new homes for social renting each year, now it’s less than 8,000.

It’s not as if this is a temporary lull. From 2015, there’ll be virtually no social rented output funded by the Homes and Communities Agency, so although local authorities will continue to build and let at social rents from their own resources, we can expect a further sharp fall in output. Furthermore, any recycled receipts from right to buy sales can only be used to build homes at higher, Affordable Rents (not social rents).

Despite these obstacles, councils recently said that they want to produce half their new build for letting at social rents, and that overall local authority output will rise to about 5,000 new units per year. But even if it does, it looks like total production of homes at social rents will fall by a further 50% and perhaps more.

This matters, because (as Red Brick readers know only too well) Affordable Rents are getting very close to market levels. The picture is shown in this year’s UK Housing Review. Affordable Rents for new build properties run at nearly 80% outside London and at 69% in London (but go up to 80% in some Boroughs). Overall, in 2012/13 there were some 27,000 lettings by associations at Affordable Rents, and on average the ‘premium’ on social rents is a startling 55%.

Even more important than the statistics on new build are those on the overall stock of housing let at social rents. Nick Raynsford MP has been doing some digging on this issue, but what this has mainly revealed is that the data are incomplete and confusing. Accurate and comparable data only seem to be available for the two years 2011/12 and 2012/13. These show that councils had a net loss of 11,769 social rented units in the year ending April 2013, while housing associations lost 3,278. By that date, associations owned almost 40,000 homes let at Affordable Rents and councils owned just over 1,000. We know that the current Affordable Homes Programme (that ends in March next year) is based on converting about 75,000 existing homes to Affordable Rents over the life of the programme: this undoubtedly explains some of the loss of social rented stock even though the AHP had (in April 2013) still two years to run.

The loss of around 15,000 social rented homes in one year may seem a small amount – given that the total social housing stock was still 4.2 million. But it’s the beginning of a worrying trend, given that almost all new build effort is going into producing homes that are more expensive than social rented ones (whether for rent or sale), and the existing stock is being eaten away by conversions, demolitions and sales (including, of course, the accelerating right to buy). With right to buy sales now running at 11,000 per year and rising, it’s a safe bet that the net loss of social rented homes in the year to April 2014 will turn out to be much greater than the year before, and that by April 2015 the loss will be bigger still.

Postscript (25 June 2014): Although the statistics are far from clear, a different calculation of the loss of social rented homes in the housing association stock in the year to April 2013 suggests a bigger figure than is shown in my original post. Using the stock losses and gains reported in section 5 of the HCA’s Statistical Data Return 2012/13, and deducting stock now let at Affordable Rents (section 3), the loss would be 23,025. Added to the fall in council housing numbers noted above, the total loss of social rented stock in the year ending April 2013 rises to almost 35,000, or about 20,000 more than in my original calculation.

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Lazy, facile, and correct

Well, if Mr Jamie Ratcliff, a £100,000 a year housing official at the Greater London Authority, is right, Red Brick is ‘lazy’ and ‘facile’ in our opposition to the ‘Affordable Rent’ programme. Fortunately we are not alone, being joined by an increasing number of commentators, housing officials and people who work for organisations that deliver the scheme.

At the risk of sounding defensive, let’s look at the ‘lazy’ and ‘facile’ charges. Along with other bloggers and writers, we have done dozens of posts on Red Brick about ‘Affordable Rent’. We described the antecedents of the policy before the 2010 Election, when people within housing and within the Tory Party argued for less security of tenure and higher rents. We drew attention to and criticised various think tank reports setting out an agenda for the end of social housing.

After the Election, we pointed out that there was nothing in the Tory manifesto, the Lib Dem manifesto or the Coalition agreement which set out the ‘Affordable Rent’ policy for democratic scrutiny. We noted that the policy had come through the ‘back channels’ of the Tory Party rather than being debated publicly, and noted that it was incubated by the 60% cut in housing investment in the first spending review. We have banged on about it ever since. And, Mr Ratcliff, we are also guilty of calling it ‘unaffordable rent’. Sorry to be so trite.

Facile is another charge that doesn’t really stick. We have looked in detail at the problems the programme causes for providers as well as tenants. We have looked at the rent levels and their implications for housing benefit and work disincentives. And we have criticised the fact that the funding of the programme is dependent on the sale of existing properties and the ‘conversion’ of a proportion (what proportion?) of existing social rented homes to ‘Affordable Rent’ levels when they become vacant.

One of the barriers to being unfacile, if there is such a word, has been the complete secrecy with which the HCA and Mr Ratcliff’s employers, the GLA, have managed the programme. It took Freedom of Information requests to get the most basic of information about the programme, the contracts being let, the number of homes involved, and the rent levels. Information is still very scarce and I cannot remember a housing programme that has produced so little monitoring information about rent levels, size of units, distribution of units, and so on. What have they got to hide?

Secrecy has meant that it has taken some time for people to become aware of what is going on and for opposition to build. But building is what it is doing. More people are arguing that providers should boycott the whole scheme and force the Government and Boris Johnson into a rethink.

Alex Marsh wrote an interesting blog last week evidencing the fact that arguments for a change of gear in housing are growing louder and that a stronger case is being made for the sector to come out fighting.

One such example is that next week sees the launch of the campaign for social rented housing, SHOUT, which aims to be an all-party group making the case for more social rented housing, not less. The group has already put in strong evidence to the Lyons Inquiry and will hopefully have a big influence on the future debate. SHOUT can be followed on Twitter @4socialhousing

No doubt people like Mr Ratcliff will say that the SHOUT campaign is also lazy and facile because it too denounces the ‘Affordable Rent’ regime in strong terms. But then again, I suppose it is possible to be lazy, facile …. and correct.

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What are housing associations for? (part 4)

I have been taken to task (gently and politely) on the Guardian website by Brendan Sarsfield, the chief executive of Family Mosaic and current chair of the G15 group of large housing associations, for my blog criticising housing associations for their role in the ‘Affordable Rent’ programme and, more broadly, for losing touch with their mission to house people in the greatest housing need and the homeless.

To recap, my piece supported comments made by Tony Stacey, the chair of the Placeshapers group of housing associations, who protested about housing associations ‘walking into acquiesence’ with the Government’s (unaffordable) ‘Affordable Rent’ regime – ‘the wretched thing’ as Tony called it.

I went further and argued that the industry had more to explain away than a naïve acceptance of the Government’s agenda; some leading lights were ‘complicit’ in the development of the policy in the first place. Market-related rents, reduced security and greater ‘conditionality’ on tenancies is exactly what some key people in the sector have argued for. For years they have been walking away from social rented housing, let on the basis of need, on secure terms and with affordable rents, preferring to provide more diverse products for a wider range of customers. They have stigmatised tenants by associating social renting with the ‘dependency culture’ and justify themselves by claiming to be on the side of ‘aspirant’ people who want to become home owners. In my view they have, in the process, lost touch with their mission to assist those in greatest need and the homeless. Some associations have become obsessed with building for its own sake, badging themselves as developers or regeneration agencies.

Brendan argues that successive Governments have reduced funding for social housing since the 1970s, which I fully accept, but there is a difference between stretching the financial model by reducing subsidy and ending it. He says that associations accepted the ‘AR’ model because it was that or nothing. When it was introduced it was common for people to say that AR was ‘the only game in town’ but the product is hopelessly unaffordable in high rent areas and the associated requirements to sell property and to ‘convert’ a share of existing social rented homes to ‘Affordable Rents’ on re-letting are extremely damaging. The Government (and the London Mayor) were (and are) desperate to keep up the number of ‘affordable’ homes being delivered; a principled refusal by the sector would have forced concessions.

Some associations were reluctant participants and have done the minimum they think they could get away. But others (and indeed some councils) were dead keen and more than happy to deliver this product.

I accept what Brendan says that associations like his have tried to minimise the impact of AR on residents, but that is not universal. He argues that, if associations had gone as commercial as I claimed, they would have charged the full rent and not built any social housing at all. The point is, some have charged the full rent and some have virtually ended building for social rent. Brendan believes they made ‘sensible, practical decisions driven by our longstanding social values’. It is the case that in London the average rent is 65-70% of market – but some of the contracts have rents at 80%. Not much mitigation there.

Brendan’s piece and my blog both suffer from the difficulty of trying to generalise about housing associations and their motivations when they are very diverse – and very secretive. Looking at a selection of their websites to find information about their development programmes, it is impossible to get any worthwhile evidence. They tend to have boastful pieces about how many homes they are producing in total, and PR pictures of individual schemes, but they never say how many of each tenure they are producing (market sale, shared ownership, AR, social rent). None of the ones I looked at even admitted that they are ‘converting’ social rented homes to ‘Affordable Rent’, nor do they provide much information about their market sales. Given that the programme information produced by the funders HCA and GLA is also very poor, it is hard for any commentator to compare associations’ strategies and performance. Too often they hide behind commercial confidentiality when in fact it is concealment and a lack of transparency and accountability.

But the thrust of my blog was that the AR abomination is precisely what some in the housing industry have argued for in the past. They have got what they wished for. Read for example, Kate Davies’ (CE of Notting Hill) Chairman’s (sic) introduction to the report of the committee she chaired, the ‘Housing and Dependency Working Group’ of Iain Duncan Smith’s think tank the Centre for Social Justice. The name of the group almost says it all, but her conclusion is: ‘social housing is not a desirable destination; private ownership is preferable to state provided solutions’. She and David Cowans of Places for People were also key advisers to the Localis think tank’s report on social housing which, I have argued before, became the road map for the Coalition Government’s housing policy.

I am on the record many times for supporting the provision of ‘intermediate housing’ and did some of the work that led to this being enshrined in Ken Livingstone’s London Plan. I have also supported associations building for sale to provide surpluses that can be used as cross-subsidy. But somewhere along the line, and in some places, the tail has started wagging the dog. Association must have, at their heart, a burning desire to meet the needs of the homeless and badly housed and not just to be big developers. The response to AR shows a dangerous drift towards the latter.

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What hopes for the Elphicke Review?

Will the government eventually respond to the Elphicke Review by boosting housebuilding by local councils?

While Red Brick has understandably concentrated on Labour’s Lyons Review, in the past week submissions closed for the more limited review being carried out for the government by Natalie Elphicke, due to report later this year. It’s limited because it focuses only on local authorities (both as housebuilders and as facilitators of housebuilding) and doesn’t go much wider. But more especially its remit specifically excludes any options that would involve more borrowing or changing the borrowing rules. So, can it achieve anything?

One of the few bright spots in recent housebuilding statistics was the number of new starts by councils in the first quarter of this year (1,090). Described by Eric Pickles as part of a ‘resurgence’ in housebuilding, he claimed the overall level of new starts was due to Help to Buy and higher council starts were down to increased right to buy receipts. More realistically, while it would be encouraging if council output were now to start to increase significantly, there are a number of reasons for being cautious. The first is that this is only one quarter’s figure. Second, we have the fact that the new Affordable Homes Programme virtually excludes social rented schemes, whereas councils want to build around half their new output for letting at social rents (according to research last year by ARCH). And third, as pointed out by Red Brick before, while right to buy receipts are increasing they are nowhere near allowing full replacement of properties sold.

One test of the rigor of the Elphicke Review will be whether it examines the claims about reinvestment of right to buy receipts and makes any proposals to change the current rules. It’s highly likely that several submissions will mention this issue, as it’s high on the list of local authority concerns. In relation to new build, another common worry is that, unless the so-called ‘cost floor’ rules are strengthened, councils could find themselves having to sell newly built houses through the RTB in 15 years time and in the process make a significant loss. Some councils are thought to be hesitant about building within the HRA for just that reason, preferring deals which allow them nominations to houses built without being subject to the risk of falling foul of right to buy in future.

Another test will be whether, even though it can’t recommend changes in the borrowing rules, Elphicke does at least review the evidence for what relaxed rules could achieve and the scope for minor changes. After all, the government itself has offered minor concessions in the scheme it announced in the Autumn Statement which might release an extra £300 million of borrowing.

The Elphicke Review will only have credibility with local authorities if it avoids the blame game and the temptation to recommend further sales of the family silver. It’s right for Elphicke to look at ways in which councils can raise their game in encouraging development, but if it criticises poor performers it should also be clear that councils only carry a small part of the responsibility for the failure to build enough houses. It should look critically at the changes to the planning system which Pickles has imposed, including the ending of regional housing targets, rather than simply repeating and endorsing his endless criticism of recalcitrant councils. Its remit doesn’t extend to the role of developers themselves, but it can at least point to some of the endemic problems that see their share prices and profits going up while their output only increases with painful sluggishness.

Above all, Elphicke should point out that is deeply cynical of government to criticise local planning authorities for not planning for sufficient housing when it lacks an adequate housing strategy itself. The one the coalition published in November 2011, Laying the Foundations, was little more than a ragbag of recycled policies, not a strategy with targets and the means to achieve them.

Curiously, insofar as Laying the Foundations mentioned a figure of how many houses we need to build, it used the DCLG’s then official projections of increases in numbers of households, by 232,000 households per year to 2033. This would exceed Labour’s 200,000 target, and be within spitting distance of the 250,000 per year target often mentioned as being required. The problem is that private housebuilders have, since 1980, only built an average of 125,000 dwellings annually and on only four occasions did they exceed 150,000. Even if we suppose their output might be pushed up to 160,000, this still leaves a lot to be built by social landlords and clearly won’t be achieved with anything like current funding arrangements which struggle to deliver over 50,000 homes.

Elphicke should say that a step change in output can only be achieved with a clear plan, that sets targets and plausible means of achieving them, allocates responsibilities and finance, gets buy-in from the different parts of the industry and is properly monitored. This goes against the grain of how the coalition conducts housing policy, but unless and until someone does it the “deep, deep structural problems” that Mark Carney says afflict the British housing market will remain unsolved.

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