More lazy sterotypes

There are few things that irritate me more (although Boris Johnson and Iain Duncan Smith irritate me the most) than lazy stereotypes about council housing estates and council tenants. Sadly, an article this morning in the Guardian by Rhiannon Lucy Cosslett  has got me going.

If I was to write a spoof article about what was wrong with council housing, it would have two elements: the scrounging anti-social occupants and the ‘brutalist’ architecture of post-war estates.

In the section on brutalist architecture I would bring the following sterotypes into play: some of the settings in the film Clockwork Orange, the iconic Trellick Tower in west London (unfortunately the Red Road flats in Glasgow are no more), and I would quote the awful writings of Dominic Sandbrook. More recently the film High Rise could get a mention. I would pull in key phrases, things to do with broken lifts, the smell of urine, and fear of dark corners. The word dystopian would have to appear.

Cosslett ticks all of these boxes in one short piece.

Like the demonization associated with scroungers, the image most people carry of council estates is strong. You just have to look at the estates that appear occasionally on EastEnders to see what I mean about stereotyping (despite the fact that all the real thugs and crooks are owner occupiers in the Square, step forward Phil Mitchell). The conventional wisdom about council housing is extremely damaging to the case for a progressive housing policy. This helps achieve the political objective of making council housing sound and appear unappealing. Council housing has failed, hasn’t it? Time for a free market solution.

The real story is different and I would recommend anyone seeking the truth and a genuinely balanced assessment to follow the extraordinary website of @municipaldreams here. Properly researched histories of estates around the country, warts and all – but a positive picture overall.

I have worked on many council estates over the years. Some have had real problems, usually due to appallingly bad building standards (by construction companies that were never held to account), child occupation densities that were too high, poor amenities in and around them, and atrociously bad housing management done on a shoestring. And some of the estates with the worst problems I encountered comprised houses not ‘high rise blocks’.

But overall my experience of being brought up on a council estate (in Newcastle) and of working on many since has been extremely positive. The homes are generally of a very high standard with generous space and amenities. There are often strong communities – with a lot of mutual support groups – which often only become apparent when demolition plans come along. Best of all, these homes have helped transform the lives of millions of people. The reform of housing management that took place in the 1990s and 2000s, and the rise of tenant involvement, had a very positive impact. And – until 2010 – gradual improvements in pay and in both in-work and out-of-work benefits, especially for the elderly and disabled, reduced poverty. Many of the worst problems have been tackled through better management and social investment, the removal of some of the most badly constructed blocks, and the physical modernisation brought about under Labour’s decent homes programme.

Look around the housing market and see how much people are willing to pay to buy ex-council homes, including high rise. Prices between half a million and a million pounds are not uncommon in London now.

If the Guardian wants to provide decent coverage of the history and quality of social housing, I would propose giving Municipal Dreams a regular column.

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Council housing’s brief Spring

There are not many words of praise for former housing minister Grant Shapps in the pages of Red Brick. But in comparison with current minister Brandon Lewis, the tenure of the coalition’s first housing supremo now almost looks progressive and enlightened. We don’t know if Lewis regards his Housing and Planning Act, just given Royal Assent, as his crowning achievement, but he must know that if his colleague Shapps offered the prospect of a new Spring for council housing, the Act will ensure that it quickly turns into a chilly Autumn.

Shapps’ achievement was to ensure that the deal under which council housing became self-financing, started by Labour minister John Healey, actually came to fruition only two years after the coalition took power. Admittedly the deal wasn’t as good as Healey’s would have been, but many were surprised that it was done at all and Shapps brought reluctant Tory councils into line, making them all restructure their debts on the same day in April 2012. The majority of councils took on new debt, a minority had debt paid off, and all were left with at least the potential to keep up their investment in their existing stock. A succession of reports, invariably discussed in Red Brick, began to explore the possibility of a very significant increase in the output of new council houses. Grant Shapps claimed that he’d made ‘a reform intended to endure for the long-term’.

It’s now obvious however that the undermining of the deal, though now severe and probably terminal, actually began under Shapps’ stewardship; it continued when Messrs Prisk and Hopkins briefly became his successors. It was Shapps that ‘reinvigorated’ the right to buy, raising discounts and reducing qualifying periods from the very date of the self-financing settlement itself. Sales accelerated, although in themselves they would only have damaged, not sunk, the settlement. But two other policy changes began which were to gather pace after the Tories won the 2015 election. The first, the following summer, was the ditching of the rents policy which underpinned self-financing and ensured councils’ ability to pay off the higher levels of debt that most of them now had. The second was welfare reform, with measures like the bedroom tax causing turmoil as tenants tried to downsize and others like the benefits cap making it difficult for tenants to avoid getting into arrears. Instead of increasing, council rental incomes started to look very uncertain.

When Brandon Lewis was reappointed in May 2015 almost his first act was to agree to the Treasury tightening rents policy still further, by requiring councils to make cuts of 1% each year for four years. He’d already agreed (presumably) to the Tory manifesto commitment to launch the right to buy for housing association tenants, with the deposits financed by forcing councils to sell off their better housing stock. When the Housing and Planning Bill came out last October, the two measures that were most damaging to the April 2012 settlement were already in it: the extended right to buy and the pay-to-stay scheme to penalise slightly better-off tenants and encourage more of them to opt for right to buy. Extra measures, such as the ending of properly secure tenancies, would be added later and while they didn’t further undermine the financial settlement they certainly added to the damage being done to council housing’s attractiveness as a tenure.

Then, unexpectedly, there was the announcement that housing associations were likely to be treated as public bodies for accounting purposes. Suddenly the government, which had been indulging in a campaign against associations, was forced into giving them more freedoms and widening the gap (which in April 2012 had been narrowed) between their status and that of council housing. It has to be said that the NHF then had no qualms about accepting a deal over right to buy which both had distinctly better terms than council housing’s right to buy and ensured that any financial penalty fell on the council sector, not on associations.

In these circumstances it’s hardly surprising that councils have retrenched. Soon after the Bill came out I spoke to a housing director of one of the largest authorities who was starting to look at the implications of the coming legislation combined with the rents freeze. He said they would try to buy time by using their reserves, but if policies continued as they were within two years they would be making severe cuts: and this is a council which badly wants to build large numbers of new homes. Already the evidence is that councils are borrowing less money, rather than more. This has started to be reflected in new build starts. In 2014, councils started building eight times as many new homes as they did in the final year of Labour’s last term of office. But by 2015 the number of starts, which should have been increasing year-on-year if the settlement was leading to a sustained increase in new output, had actually fallen by one-third. It now looks as if we might be passing through the (very modest) recent peak of council house-building.

The prospects for the financial health of council housing by the time of the next election look very bleak indeed. John Healey hoped to base his promised commitment to build 100,000 new social rented homes on several years of increasing capacity in the council sector, the experience of housing associations that were still building homes to let at social rents, and a planning system that could still be used to ensure that developers contribute to affordable housing supply. None of these conditions will now apply by 2020. A future Labour promise to build large numbers of genuinely affordable homes will be even more challenging to carry out than it would have been in 2015.

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‘Balance’ – the new watchword for housing and investment policy

One of the constant refrains on Red Brick over the years has been the need to direct Government funding as far as possible towards increasing housing supply, which will help cool prices. We have argued that it is counterproductive to provide a) an ever-increasing amount of public money towards helping people to pay for homes that are too expensive and b) (even worse) heavy subsidies for demand that are likely to lead to an increase in prices.

My colleague Monimbo reported recently on figures compiled for the UK Housing Review which showed how the Government’s housing plans are now distorted massively towards supporting the private market and away from building affordable homes. The Review estimated that market support packages now total £43 billion whereas affordable investment totals only £18 billion. Investment in affordable renting has been cut back to zero if you exclude commitments from the last Parliament.

The Chartered Institute of Housing (CIH) projects that the current combination of policies will result in a loss of 350,000 social rented homes by 2020, a fall of 9 per cent from 2012. The ending of direct investment in social rented homes, and now even in unaffordable ‘affordable rent’ homes, means that ‘section 106’ deals are the last significant source of social rented homes. This source has been reducing and will shortly be virtually removed as ‘starter homes’ get priority. That means any future social rented homes will rely on housing providers’ internal funding, and there isn’t much interest in doing that.

So far, so disastrous. But deep in the financial pages over the past thirty years there has been another concern about the impact that an over-reliance on home ownership within housing policy has on the wider economy. Subsidy over decades and a lack of building has brought about huge price inflation, as we are all aware. This week, Kate Allen, writing in the Financial Times (paywall), discussed a study by the NIESR (who produce an excellent periodic housing market commentary, see here) which argued that rising house prices have been driving down long-term saving rates. In short, people who buy their own home tend to save for their old age at a lower rate, putting their funds into paying their mortgages and growing their personal housing wealth. One outcome is that their pension income is 15% less on average, another is that there is less funding available to pension funds to invest in more productive sectors. The research suggests that policies that prioritise home ownership could have negative effects for other parts of the economy.

The Government’s rather desperate attempts to promote home ownership come under particular scrutiny. Allen quotes Angus Armstrong, NIESR’s director of macroeconomics, saying: “The more you tax incentivise [home ownership], all you are doing is whacking the price up and the more you do that, the more money it is taking away from other parts of the economy. I am not against home ownership but I am against the subsidies we keep pouring into it.

The implication of the research is that the UK needs a less skewed and more balanced approach to saving and investment which supports the productive economy rather than static wealth creation. Red Brick has often argued that we also need a balanced housing policy, one that aims deliberately to provide homes across the income distribution in a variety of tenures, rather than the ideological pursuit of a single tenure to the benefit of  narrow income and demographic groups. It seems that ‘balance’ might be the new watchword.

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Turning away ‘Homeless Jesus’ is an appropriate metaphor

Some unusual events make a point in a pertinent but roundabout way. Westminster Council has turned away a ‘Homeless Jesus’ in the form of a life-size bronze sculpture of Jesus sleeping on a park bench by Canadian artist Timothy Schmalz, which was planned to be placed in front of Methodist Central Hall. With a characteristic sense of propriety and priority, Westminster say it “would fail to maintain or improve (preserve or enhance) the character or appearance of the Westminster Abbey and Parliament Square conservation area”. As a metaphor for what is happening to homeless people generally, this could be the most apt since the ‘bicycling baronet’ Sir George Young (allegedly) complained about stepping over homeless people coming out of the opera.

Of course the housing crisis in London is largely about the failure of supply over 3 decades. But there is also a specific crisis at the sharpest end of the general housing shortage. Homelessness appears out of control, with numbers in all categories rising rapidly and costs escalating. Councils and homelessness organisations are increasingly frantic, yet virtually all the housing programmes in the capital have had their focus switched callously from providing rented homes targeted at vulnerable people or people on low incomes to shoring up home ownership and increasing the chances of first time buyers. No new build of social rented homes combined with the forced sale of rented housing association and council homes will guarantee that supply in the form of new lettings will fall rapidly. The only questions are how rapidly and how disastrous will the impact be?

If (I hope when) Sadiq Khan becomes mayor of London the focus will change and people in desperate housing need will get a look in again. The mayor used to have a big role in homelessness, targeting part of the investment programme towards alleviating homelessness and taking a strong role in the provision of housing and other services to those who were homeless on the streets or living in hostels. Over the past few years the rights of homeless people have been downgraded – both by legislative changes under the Tories and by increased ‘gatekeeping’ by councils of all colours. Some councils, like Islington, have done everything in their power to keep up the supply of social rented homes; others, like Westminster, have failed over decades to take opportunities to get more social housing in the borough, and yet expect the rest of London to share their current burden.

Landlords have made the most of the lack of focus of the current mayor, exploiting competition for temporary accommodation between councils to push up rates, increasingly insisting on nightly lets that maximise their income. Some boroughs have been fighting back, starting to co-ordinate their activities to set maximum rates they will pay. A powerful new mayor will be in a good position to ratchet up these activities and push the councils to do far more. In particular, the mayor should ensure that the Notify system – where boroughs inform each other of cross-border movement so, for example, children can remain linked in to care services – is rigorously enforced.

There is at least some fresh thinking going on about homelessness. The House of Commons Select Committee on Communities and Local Government is in the middle of a wide-ranging homelessness inquiry which seems to be getting to the real issues – the evidence submitted is well worth reading. This week an expert panel convened by Crisis published its recommendations following its independent review of the homelessness legislation, proposing a new legislative framework with a stronger duty on local authorities to help prevent homelessness and to act in advance of a crisis, close to the model adopted in Wales. There is a lot in this to debate and this is a highly recommended and suitably technical report, but I am cautious because ‘prevention’ has too often become ‘gatekeeping’ in practice as homelessness has been de-prioritised by Government, councils, and housing providers. I am made even more wary by reports that the Government is considering imposing a new legal duty on councils to prevent homelessness. More duties and fewer homes to put people in seems like the kind of localism this Government believes in.

The following are recommended reading on homelessness.

Official ‘Statutory Homelessness’ statisticslatest bulletin

Rough sleeping statistics: the number of rough sleepers increased by 27% in London and 31% in the rest of England in one year up to autumn 2015. Latest bulletin

The Homeless Monitor – the fifth annual monitor published by Crisis records all the trends and forecasts in England.  Written by a very expert team of Suzanne Fitzpatrick, Hal Pawson, Glen Bramley, Steve Wilcox and Beth Watts.

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Grand plans but tenants just an afterthought (and worse)

Big is beautiful – and more efficient. That’s the mantra that seems to be driving the housing association world at the moment. Egged on by the Government in the shape of the increasingly desperate Housing Minister Brandon Lewis, we have had some huge merger announcements in the recent past: Genesis and Thames Valley, Circle and Affinity Sutton, and now the biggest of them all with L&Q, Hyde, and East Thames joining forces to form a body with 135,000 homes.

The claims for the benefits of the merger are grand, under the headline ‘Stronger Together‘ (which I’ve seen somewhere else recently). There are planned savings of £50 million a year (through combining back office functions and IT, refinancing and better procurement deals) as well as a target of building 100,000 homes over a decade, making it the fourth biggest housebuilder in the country (the top 3 all being private companies). We do not know how much work has been done to test these estimates; achieving savings on this scale is easy on paper and a lot harder in practice. Small organisations can be as efficient as big ones; reorganisations eat up huge resources (ask the NHS) and frequently lead to managers taking their eyes off the ball. Managerial hubris is common in mergers;  empire buiding which is not soundly based frequently fails.

But if the savings are there to be made, and the new organisation can deliver more homes that the existing three, why did this announcement still make me feel uncomfortable?

First, the organisation does not yet have a name but we do know who the top dogs are to be. The three existing chief executives become the top managers in the new organisation, with David Montague of L&Q taking the CEO role. He’s always struck me as being exceptionally good at the job (more than I say about some other HA CEOs), which gives me more confidence that the claims for the new organisation will be delivered, and he normally has interesting things to say about housing policy. So this isn’t personal. But it makes me scratchy when the top jobs are stitched up before an announcement on the principle of the merger is made.

This applies not only at employee level but also at Board level. The ‘Chair Designate’ is L&Q’s existing chair, Aubrey Adams, a former chief executive of global estate agent Savills and a non-executive director of British Land.  The Deputy will be Mark Sebba, the current chair of Hyde, a former chief executive of a luxury tailors as well as being involved in investment banking.

It all feels nice and cosy, but it also makes it look more like an L&Q takeover.

My second misgiving is about the social purpose of the new organisation. The PR tries to make it feel good. David Montague says: “Our plans will allow us to tackle the housing crisis head on, driving greater efficiency, building more homes, creating beautiful new places and sustainable, independent communities. At the heart of our united mission will be the continued provision of affordable homes for those in need.

Yet the new building programme, with the target of 100,000 over ten years, will comprise 25,000 new homes for first time buyers, 25,000 new homes for (unaffordable) ‘affordable rent’, with the remaining 50,000 new homes for market rent and sale. There is not one word about aiming to build any at all for social rent, and so claims that they intend to help low income families sound just a little hollow. It looks like another step on the road to losing the sector’s social purpose, and it is nothing short of outrageous to claim that ‘Half of these new homes will be for people on lower incomes’. They will not be, and I do hope Sadiq Khan will take them to task when he becomes mayor.

Thirdly, where are the tenants? They scarcely get a mention in the merger announcement although there are some vague promises about consultation on the detail. Yet the strength of the mergees is based on the rents that tenants have paid in the past and these organisations belong to them as much as anyone else.

Tenants do get a mention in an article by the Deputy CEO-designate published on the same day as the merger announcement. It got my hackles up. With so many things that she could have written about, Elaine Bailey, formerly a senior executive at Serco, ‘set out a vision for the new giant organisation’ by saying she would tackle the ‘dependency culture’.

In a piece entitled ‘Knuckle Down’ she says: “We have been responsible and are partly to blame for the dependency culture we have created”. Her particular beef is that tenants do not take enough ‘personal responsibility in respecting their homes and making an effort to help themselves’. This is stereotyping and condescension rolled into one, turning tenants’ most common complaint – the quality of the repairs service they pay for through their rent – on its head. You would think that the new Deputy CEO-designate would emphasise how the merger provides a great opportunity to review and improve services and offer tenants better value for money. By choosing to use Iain Duncan Smith’s favourite phrase, yet another £200K a year boss looks down her nose at people who are struggling to get by. I bet they even keep coal in the bath.

Dependency Culture: By choosing to use Iain Duncan Smith’s favourite phrase, yet another £200K a year boss looks down her nose at people who are struggling to get by. I bet they even keep coal in the bath.

We are left to speculate about the name of the new organisation. LH & Q? Jekyll and Hyde? Perhaps just ‘Big’. Suggestions in the comments box below please!

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Child poverty won’t be reduced by ending the attack on pensioner poverty

I rarely disagree with anything that comes from the Joseph Rowntree Foundation. Their work over the years on housing, regeneration and poverty has been second to none. But this week they surprised me by publishing a ‘Memo for the new Secretary of State for Work and Pensions’ on ‘five things he can do to reduce poverty’.

Four of the five things are hard to disagree with. They are to:

  • Reboot Universal Credit – reverse cuts to the Work Allowance.
  • Support Living Rents – peg social rents to earnings levels.
  • Focus on creating better jobs not just more jobs.
  • Reshape welfare to work programmes – so they are geared to helping people increase their earnings as well as get a job.

My objection comes to their point about pensions:

  • Revisit the pension triple lock – because child poverty will continue to rise while pensioner poverty continues to fall, the Chancellor ‘needs to make sure that resources are used fairly and efficiently, so that no generation is locked into poverty’.

This seems to me to pander to a narrative which says that there is some kind of inter-generational battle going on, under which older people have feather-bedded themselves with valuable houses and extremely generous pensions that no future generation will ever receive, and that this has been at the expense of younger people and children. Whatever the generality of the position retired people find themselves in, it does not apply to pensioners who are still in or close to poverty. The battle for resources is between rich pensioners, who have tax-relief driven large pensions, and poor pensioners, not between pensioners as a whole and later generations.

JRF defines poverty as ‘when a person’s resources are not enough to meet their basic needs’. So why would they support a policy which implies de-prioritising the attack on pensioner poverty in order to release resources to reduce child poverty? I simply do not think these things are linked. Removal of the triple lock (state pensions rising linked to incomes, prices or 2.5%, whichever is the higher) might lead to a saving but do they really believe that Osborne would apply this saving to helping poor children? No way.

The decline in pensioner poverty is indeed a success story, declining from over 40% in the 1980s to around 12% now. But 12% is still scandalously high. Much of the achievement came under the Labour Government but it has continued since 2010 – no doubt as a result of the power of the ‘grey vote’. Over the same period since the 1980s, child poverty has remained stubbornly high at around 30%, although the Tories like to play definitional games with the figures. The biggest losers in this period have been working-age adults without children, with the proportion living in poverty rising over the same period from 12% to touching 20%. It should never be forgotten in a society that believes that everyone on benefits is a scrounger that half the people in poverty live in a working household.

Pensioners did well under Labour, not just in basic pension but also in new additional benefits. Labour did not gain much from this politically: all anyone remembers is Gordon Brown’s disastrous award of a 75p increase at a time when inflation was very low (therefore anything that was index-linked would also increase by a small amount). The Tories, with characteristic bravura when they have a policy that benefits people who might vote for them, have reaped a large political dividend from the triple lock.

But my main point is that it is simply wrong to pit one group in poverty against another. Slowing the reduction in pensioner poverty does not mean one penny extra for children, Osborne would just give it to some other grouping that he hopes might be seduced into voting Tory.

Despite the triple lock and the protection of other benefits like bus passes, pensioners have not been immune from austerity. Far from it. Pension entitlement dates have been pushed back and back, women in their fifties now will retire at 66 when their expectation a decade ago was that they would retire at 60. In addition, two of the most important services for older people are in crisis. The care system is facing collapse, and most older people cannot afford to pay for it. Most require some care and some require a lot of care. The triple lock does not enable a pensioner to leave their home if they have mobility problems or to leave hospital if their home environment is not adequate to their needs. Supported housing is also in disarray, with Government changes to funding threatening to cut off future supply. Previous changes to the ‘supporting people’ regime have already undermined the very popular sheltered housing model which enabled many poorer pensioners to continue to live in their own homes with on-site support.

Austerity must never be used to pit the interests of one group of poor people against another. If there is an issue to be addressed, it is whether richer pensioners should be taxed on the universal benefits they receive and have their higher rate tax reliefs removed. Recent work has shown that better-off people generally get more out of the tax relief and benefits system than poorer people. That is where the distribution challenge lies, not in setting up an artificial inter-generational conflict which simply does not exist.

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The Rent Trap: exactly how do we get out of it?

rent trap cover

Steve Hilditch reads and enjoys a new book on the private rented sector, but thinks the ‘what should we do about it’? question remains to be answered.

 

What to do about private rents has been a perennial debate over many years. There are several issues that have to be addressed.

First, there is now huge evidence that extremely high rents are a fundamental cause of poverty, especially in London and other high demand areas, as shown by the recent London Fairness Commission report. Even for those who are better off, many now pay half, sometimes well over half, of their income to their landlord. It has a major impact on their standard of living and the reward they receive from working.

Secondly, because there is major shortage of social housing, many more people on low incomes, families with children, and vulnerable people are living in the sector and need (even with IDS-inspired cuts) increasing amounts of housing benefit to be able to afford somewhere to live. This is unproductive public spending which does not create an asset, except for the landlord, or any long term social benefit.

Thirdly, the growth of private landlordism has been fuelled by demographic change, easy buy to let mortgages, and the dearth of options in low cost home ownership and social renting. For a decade private renting has produced a much better return than other forms of investment, and a double return at that – a good yield on money invested and seemingly guaranteed capital growth at the same time. No wonder it has come to be seen as an alternative pension scheme. But it is often forgotten that the finances of many landlords, especially those with big mortgages, are vulnerable to economic and tax changes and especially to a change in interest rates should it come.

Fourthly, there is the question of what to do about a market that has many dysfunctional features and especially the often poor behaviour of the intermediaries between landlords and tenants, the letting agents. Many do a good job, but others make money by encouraging rapid tenant turnover and by charging exorbitant fees.

Fifthly, it remains largely an amateur industry in which many landlords do not know their statutory responsibilities, and some who know their responsibilities breach them daily. Value for money does not feature highly amongst the comments made about the sector.

One of my concerns is that the whole debate has become confused by a lack of definition of what is meant by ‘rent control’. Many people are now in favour but they are often talking about very different ideas. If rents are not set by the (highly imperfect) market, what should they be linked to? Incomes? Costs? Inflation? Property values? Every option is problematic in its own way. Some advocate the setting of all rents by a Government body, others using the same term have in fact being arguing for some form of ‘rent calming’ or ‘rent increase control’, on a model similar to that advocated by Labour and the Greens before the General Election or as recently agreed by the Scottish parliament. 

These issues, and others, deserve proper debate but that is a rare commodity amongst the accusations and counter-accusations about bad landlords and bad tenants and the pervasive view that ‘private markets work’. An excellent new book on ‘The Rent Trap’, (purchase here ) written by Samir Jeraj and Rosie Walker for the Left Book Club,  published by Pluto Press, is a well-researched and well-written attempt to provide the evidence on which the debate can be based. The authors take us through the history of private renting and the various attempts to regulate rents, managing to separate fact from fiction about the legislative regimes we have experienced over the last 100 years. They provide a wealth of material about what happens in other countries and how other societies manage to have a more mature market with sensible regulation: longer tenancies, greater security, and more moderate rents. Private renting in the UK is part and parcel of the culture of short-termism and making a quick buck that is the UK’s problem. Other countries tend to look at investment for the long term.

There is also an excellent infographic based on the book, which is worth a look.

Good features of the book are the effective use of case examples to illustrate points and the inclusion of extensive comments from interviews with both landlords and tenants. I like the way they consider the point that ultimately private renting is a moral question as well as an economic question: is private landlordism just an honest investment in bricks and mortar or a mechanism to ‘trap and tap’ people with no choice. Why have we allowed so much public (landlord tax relief and housing benefit) as well as private money to be spent on a system designed to make profit by exploiting the most basic need, for a home, when there are far cheaper and better alternatives available? Social renting is an obvious alternative and the growth in private renting highlights the disastrous failure of Governments to deliver that which they say they hold most dear, the aspiration of home ownership.

Ultimately, the authors say, it is the growing gulf in housing wealth between the haves and have nots that is creating increasing discomfort and unease, even amongst landlords. The degree of disquiet, amplified by increasingly loud campaigns, holds out the prospect of a movement for change. But, they say, it will take a brave politician to bring that change about because it runs counter to the prevailing narrative on the efficacy of private markets.

The book is a good and thought-provoking read, more enjoyable than most housing policy texts, packed with helpful information and interesting perspectives. But I felt it had the final chapter missing. It is sub-titled ‘The Rent Trap: how we fell into it and how we get out of it’ but I don’t really think it achieved the latter. It alludes to what should be done, it indicates a direction, it says what is wrong, but it doesn’t set out a plan for examination. This matters because it is vital that we try to understand what further interventions might do to the sector and whether seemingly good policies might have unplanned and damaging consequences.

Here are a few of the questions that need to be answered:

  1. Rents are too high, but they reflect the high value of property in our housing shortage. By how much do we want them to come down and how quickly?
  2. If effective rent control led to a flight from the market by landlords, does the assumption that the resulting fall in property prices would be good for first time buyers hold up? How would we avoid a repeat of the negative equity disaster of the 1990s?
  3. If landlords removed tenants in even larger numbers than they do now, what would happen to the homeless people that would result?
  4. What precise form should rent control take? On what factors should rents be based? Should there be a formula calculation with a range of elements, and what should they be? Or should it really be a rent increase modification policy designed to dampen inflation?
  5. It’s fair enough to say rents are unaffordable but how exactly should they relate to incomes?
  6. Even in the best scenario, private landlords will be with us for many decades to come. What level of profit is it fair for a landlord to make?
  7. How should Government support the sector? What should be the tax and tax relief regime? What should we do about housing benefit, what is the right course to drive between providing HB to enable tenants to pay market rents and having policies that help deflate the market?
  8. Some politicians have already been brave enough to propose policies to start to tackle the sector. At the 2015 General Election Labour and the Greens both went for a rent dampening mechanism. Would these policies have helped? And what should we make of the recent legislative effort in Scotland?

There will be a discussion opportunity with the authors at an event in May.  Details on Eventbrite.

 

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Government support for the private market is more than double its spending on affordable homes

Inside Housing's 'subsidy sandwich' for starter homes

Inside Housing’s ‘subsidy sandwich’ for starter homes

The new UK Housing Review 2016 puts together figures you won’t find anywhere else: the government’s investment plans for housing and how they split between supporting the private market and building affordable homes. They show that the different market-support packages like Help to Buy and starter homes now total £43 billion, whereas affordable investment totals only £18 billion. The CIH concludes that, as a result, investment in affordable renting ‘will fall to its lowest levels since the Second World War’.

Red Brick has already picked holes in the Chancellor’s ‘long-term economic plan’. Insofar as he has one, it seems to be unravelling before our eyes. But if at last he’s being criticised for robbing the poor to pay the rich, the criticism hasn’t yet affected his housing plans, where the shift away from affordable renting towards helping builders and would-be home owners becomes more marked each time one of his ‘long-term plans’ is scrapped and another put in its place. As the UK Housing Review reveals, whereas the current Affordable Homes Programme, that began last April and extends to 2018, was originally to have invested £2.9 billion, this has now been cut back to just £1.8 billion. The promises made in the 2013 Spending Review (another one of Osborne’s ‘long-term plans’) have been ditched, and what’s left of the programme is confined to schemes already committed by the HCA and GLA. The rest of the money has been scooped into the Chancellor’s pot for supporting home ownership (unless Boris Johnson succeeds in his apparent bid to keep some of it for ‘affordable’ renting).

One effect of past policies has, of course, been a remarkable shift towards homes let at so-called Affordable Rents. By April last year there were 123,264 of them, almost five per cent of housing association stock, of which less than a third were newly built and the rest were conversions or acquisitions. This has inevitably produced a big shift away from building homes to let at social rents. The result is that while in England there were 4,063,000 social rented homes in 2012, by 2015 this had dropped to 3,967,000, a fall of two per cent. CIH projects that by 2020 the loss will have reached 350,000, a nine per cent fall since 2012. This will be a result of further conversions, right to buy sales, demolitions (due to be ramped up if estate regeneration plans come to fruition) and sales of ‘high-value’ stock. Of course, the scale of some of these changes can, as yet, only be guessed at, and the figures will be refined as more details are revealed.

The odd thing is that, if Affordable Rent was a key part of an earlier ‘long-term plan’, it’s now been ditched. With the curtailing of the current Affordable Homes Programme, there is likely to be a drastic fall in output of sub-market rented homes over the next couple of years: Affordable Rent is due to follow social rent into the housing policy dustbin. The main replacement policy is, of course, the promotion of starter homes. The image of the ‘subsidy sandwich’ provided by Inside Housing earlier this month nicely captures how various layers of government money are being put together to construct this huge stimulus to developers and to house prices, all justified by labelling £450,000 starter homes as ‘affordable’. As Nicky Gavron commented recently, the Tories have made ‘affordable housing’ a meaningless term.

Unfortunately, the effects are not just rhetorical: starter homes and shared ownership properties can be substituted by developers for social and Affordable Rent dwellings when negotiating ‘section 106’ agreements as part of planning permissions. It so happens that section 106 is one of the last remaining sources of funding for new homes at social rents: even that source is now to be cut off. Although 2,410 social rented homes were started on site in 2014/15, it’s likely that starts in the year now ending will be lower and in the next year lower still. Soon, any production of homes let at social rent will depend on social landlords’ own funding – which is just being reduced as a result of the one per cent cut in rents that starts next month. If Osborne stays in charge, it seems his latest ‘long-term plan’ is not only to stop providing sub-market rented homes, but to get rid of those we still have as quickly as possible. As the UK Housing Review’s analysis and projections show, a dramatic shift in housing policy is about to begin.

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More shattered dreams

By Councillor Marc Francis

Marc has been one of the Labour councillors for Bow East ward in Tower Hamlets for the past ten years, serving as the borough’s Lead Member for Housing & Development between 2008 and 2010.

marc francis

Three years ago I wrote a piece for Red Brick about how one of London’s big G15 housing associations, One Housing Group, had betrayed the promises made to tenants on four Isle of Dogs estates transferred from Tower Hamlets Council, and dissolved their local resident-led subsidiary, Island Homes – ending any meaningful local accountability.  Last year, it was revealed that One Housing Group had drawn up “Project Stone” – secret plans to demolish most of the existing 2,000 homes on these riverside estates and replace them with up to 10,000 new flats, only a fraction of which would be genuinely affordable.

When I wrote that piece I already had fears another of the G15, Circle Housing Group, had similar plans for its subsidiary, Old Ford Housing Association.  Old Ford was born in the late-1990s out of the Housing Action Trust in Bow, and in its early years, it was one of the best housing associations in Tower Hamlets.  Technically, it was a subsidiary of Circle 33 Housing Trust, but had wide-ranging autonomy.  With residents at the heart of decision-making, it had transformed three of the borough’s most neglected estates into fantastic neighbourhoods.

As a result, Tower Hamlets Council felt confident in backing the transfer of four more Bow estates in 2005.  However, Defend Council Housing set its sights on persuading tenants on these “Parkside” estates to vote against the transfer, and the ballot was only won by the narrowest of margins.  It was then challenged vigorously in the courts and the transfer only finally went ahead nearly two years later.  As a local councillor, I was determined to ensure Old Ford delivered on the promises it had made, and so I started attending its Board meetings as an observer.  Later I joined the Board.

What I didn’t clock at the time of the transfer was that, just as Toynbee Housing had merged with Community to form One Housing Group, at the time the Isle of Dogs estates were being transferred, so Circle 33 had merged with Anglia Housing while the long drawn-out decision to transfer the Parkside estates was being made.  To be fair, the potential merger is mentioned in the “Offer Document”.  But there was no objective analysis about what that merger might mean or extra safeguards.  It was simply assumed Circle Housing Group would take the same approach as Circle 33’s Directors had done – allowing Old Ford to continue as a community-based housing association

That very quickly turned out to be wildly optimistic assumption.  And over the past eight years, Old Ford’s Board has been engaged in a constant rear-guard action as Circle has sought to take more and more of Old Ford’s powers to itself.  Many battles were eventually lost, but some were won.

In 2013, this centralising agenda forced Old Ford to drop its pretty good repairs contract with Mears and bring in Kier instead.  No longer would Old Ford determine the contract and manage it.  Circle would do all that.  And its own Management Board had responsibility for overseeing it.  The contract was an absolute disaster right from the outset.  Kier were hopeless.  But if anything, Circle’s own team were even worse.  Old Ford’s Board rang alarm bells about the appalling service for more than a year, without Circle taking the action necessary to fix it.  Eventually, the Homes & Communities Agency regulator investigated and found widespread evidence of “serious detriment” to tenants.  As a result, it downgraded Circle’s governance-rating to G3 – one step up from the dustbin.

Circle was required to draw up an action plan to improve its governance.  Almost inevitably, Circle chose to identify its current group structure as the problem.  Despite the fact that the regulator had not cast any doubt upon the effectiveness of the Board of either Old Ford or Circle 33 (whose residents experienced similar problems), Circle plans now to dissolve all its subsidiaries into a single centralised housing association.  It is also lining up a merger with another G15 player to “create the biggest housing association in Europe”, while laying off hundreds of staff and moving others either to its swanky new St Pancras HQ or a call centre in Kent.

Meanwhile in Bow, half the promised Parkside estate improvements remain outstanding three years after the date they were supposed to be completed, and many of our constituents have been left without heating and hot water for weeks on end because Circle still can’t properly manage its gas repairs contract.  (In a nice touch, Old Ford residents are themselves having to cover the thousands of pounds being shelled out in compensation payments to those who struggle through the formal complaint’s process, as well as the extra cost of the premium rates being charged by Circle’s interim responsive repairs contractor.)

We still have a two or three good housing associations in Tower Hamlets – organisations that prioritise delivering an efficient, sympathetic and value for money service to existing residents first and think about development opportunities second.  But this experience with One Housing Group and now Circle, as well as evidence of the poor quality service provided by other members of the G15 to tenants in Bow, has shaken my faith in the housing association movement to its core.  There is no way I would support a stock transfer again.  The truth is that the central concerns raised by Defend Council Housing have in these instances been proved to be absolutely right.

That, of course, is scant consolation to Parkside estate residents.  Councillors in Tower Hamlets that got our residents into this mess, must now do everything we can to help get them out of it.  Fortunately, back in 1998 wise heads insisted on a clause in Old Ford’s founding articles giving it the power to leave Circle 33 if it wanted to.  We don’t imagine this Old Ford-exit will be easy.  But with the right support or partnership, it is possible.  And at a packed public meeting over the weekend we kicked off a campaign to persuade the regulator to allow Old Ford’s Board to properly explore this option without fear of their being removed by Circle, and for residents to be given the final say.

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Local coverage of the public meeting

Three years ago, both the regulator and Housing Minister turned a blind eye to One Housing Group’s betrayal on the Isle of Dogs.  We are determined to ensure that they don’t let Circle do the same with Old Ford.

 

Marc Francis

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Harold Wilson – a housing hero.

Today is the centenary of the birth of Harold Wilson, winner of four General Elections  and Prime Minister for eight years in the 1960s and 1970s.

So why would we celebrate Harold Wilson on a housing blog?

The answer is simple: as PM in the 1960s he achieved the best housebuilding figures in the last century. The chart below doesn’t lie. And as the second chart below shows, he achieved that rare double: hitting a peak in both public and private housebuilding at the same time. The outcome – over 400,000 new homes in one year – is enough to make the modern housing enthusiast’s eyes water.

Housing was a big deal in Wilson’s 1964 and 1966 administrations.  The 1964 Manifesto was replete with housing proposals. Development land would be publicly owned and profits retained by the community. Interest rates for housing borrowers would be subsidised and councils would be able to make 100% mortgages available. The Rent Acts would be repealed, old houses would be modernised, and if landlords failed to do so they would be purchased by the council. The 1966 Manifesto set the target of 500,000 houses a year – sadly ‘only’ 400,000 was attained.

It was not just about housebuilding: the Government was committed to encouraging home ownership, and introduced the Option Mortgage Scheme to enable low income households to benefit from the tax relief policy that benefitted other home owners. There was a new departure in terms of area improvement of older housing: the introduction of General Improvement Areas. One policy that I would see as an error in the subsequent highly inflationary era is that an attempt was made to stimulate the housebuilding industry by exempting house owners from capital gains tax.

Harold Wilson Speech to party Conference 1965 

We had promised to repeal the Tory Rent Act, to provide new machinery for fixing fair rents, and to give Government and all others who required them, the powers they needed to fight the evils of Rachmanism. That Bill is through the Commons despite Tory obstruc­tion. It is in the Lords – within a week of Parliament meeting again, we intend it to become law.

It was on the Bill to restore security of tenure, and it was on the Rent Bill that our new Members, not I imagine to their surprise, saw the full virulence of Tory Opposition tactics when the Tories were fighting for something near and dear to them, the rights of landlords and property interests.

By 1974, when two elections were won in a year, the economic prospects were much reduced. The February Manifesto however repeated the radical approach to housing:  promising to repeal the Tory Housing Finance Act (which had led to rent strikes), to control rents and introduce protection from eviction for furnished private tenants, to start the ‘municipalisation’ of private renting, and to significantly increase subsidies to all housebuilding.

At the time I was working with tenants in Paddington, and I recall the short minority administration in 1974 for being remarkably radical: it felt that the Government was really taking the issue seriously. For example in that one year it increased subsidy for council housebuilding by £350million – curiously the same cash figure suggested this week – more than forty years later – by the Kerslake Commission on housing in London (how small our ambitions are these days!). It also introduced a rent freeze and created Housing Action Areas – thereby keeping me busy for the following few years!

The Manifesto for the October 1974 election contained the commitment to give security of tenure to council tenants – a huge advance but not actually enacted until after Labour went out of office in 1979 when the Tories found that a stronger definition of a council tenancy was a helpful platform for the introduction of the right to buy. It also repeated the promise to introduce land reform, essentially the ‘nationalisation’ of development land, and this time it was enacted, in 1976 along with the Development Land Tax legislation,  but critically, by the time it was on the statute books it was much watered down and we had entered the more austere late 70s economic climate, and it was never really implemented.

Wilson’s resignation in 1975 came before the 1976 ‘IMF crisis’ which put many progressive policies, including housing, into reverse. I see 1976 and not the usual 1979 as the watershed year in the UK when sound progress on most fronts was no longer to be achieved.

Of course Wilson should not get all of the credit for the good things or all the brickbats for the bad – there were a succession of Ministers who did the detail. But he set a tone for Government, he oversaw radical commitments in manifestoes and he worked diligently to deliver them. Both the commitments and the delivery put our current politics to shame.

Wilson died in 1995 suffering from both cancer and Alzheimer’s disease. He was the iconic figure for me growing up and developing an interest in Labour politics and housing – indeed I joined the Labour Party in response to his defeat by Heath in 1970, which was a devastating blow.

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