One article does not wipe the slate clean

Having attended Owen Jones excellent lecture on ‘optimism’ over the holiday, I had resolved to view 2017 with more positivity, looking at what is possible in the future rather than what has gone wrong in the past. Sadly, the feeling didn’t last long. I read an article by Kate Davies (the chief executive of Notting Hill Housing Trust for more than a decade) in Inside Housing. On the surface there was little to complain about, mostly I agree with the content. It explains the benefits of social housing, low rents and security, and complains about the lack of grant for new homes. It sets out the serious implications of the shortage of social housing, a common enough theme on Red Brick.

But context is everything. My annoyance at the piece stemmed from knowing Kate’s role, as I see it, in undermining the cause of social housing over the past decade, in two ways. First, she has led an organisation which deliberately decided not to provide as many social rented homes as it could have done – amounting to thousands of homes over the period which could have been used to house people in housing need. Secondly, she was a leading light in the campaigns and lobbying that seriously challenged the existence of social housing as we had known it, policies that were taken up directly by the Coalition and now the Tory Government. In her article, she makes no acknowledgement of her previous views and takes no responsibility for their impact.

Of course, she was not alone. There were many others in UK housing who went down similar paths. People fell over each other to disparage the social housing ‘offer’and to stereotype its occupants. It is the combination of failing to deliver as much social housing as possible, failing to defend genuinely affordable housing from attack, and failing to contradict the media’s demonisation of tenants, that has led me to be so critical of leading figures and institutions, especially in the housing association world. Homeless and badly housed people have been the victims of their loss of commitment and weakness of vision.

I was on the Board of Notting Hill Housing Trust for six years, from 2002-2008, having served on area committees before that and having had connections with the Trust since 1972. It is an organisation that really matters in west London and has transformed thousands of lives. Along with Kate and many others I worked hard, with some success, to improve the performance of a once great organisation that had hit the doldrums. With regard to housing development I am a pragmatist: I supported Notting Hill’s role in promoting shared ownership, and have had a long-held interest in providing homes in the ‘intermediate’ sector as well as for those most in need. As a Board member I supported tentative moves into highly profitable private development because it could be used to cross-subsidise an increase in social rented homes. It was a time when grant for social housing was substantial and the Brown Government had increased the budget considerably.

But the Trust came to be dominated by a philosophy which saw social renting as something to be disparaged, a ‘dead end’ and a route into ‘dependency’, and which also placed home ownership on a pedestal called ‘aspiration’. Provision of social rented homes was downgraded in priority, there were moves into making tenancies conditional (eg on seeking work), whilst more and more effort went into shared ownership and private development. There were skirmishes at the Board over individual schemes where the proposed balance between social rent and shared ownership was weighted in favour of the latter even though the finances of the scheme seemed to allow for more social renting in the mix.

It came to a head in early 2008 when a new 5 year development programme was put before the Board. It was fully costed, certified by the Director of Finance as a credible and viable plan, and it reflected in full the policy of the then mayor, Ken Livingstone, that development should be 50% affordable (35% social rent and 15% intermediate). Having drafted Ken’s housing strategy, I was delighted that NHHT planned to follow the lead. But the proposal was withdrawn by the chief executive and a different strategy was brought to the next Board. The amount of shared ownership was significantly increased and the share of social rent significantly decreased. After a long and difficult Board meeting, where I was an isolated advocate for the first strategy, the revision was passed (as I recall) by 8 votes to 1. The mix in the programme was proposed to shift from (social rent: intermediate) 70:30 to 40:60, much more extreme than even the policy of the incoming mayor Boris Johnson (although still much better than now).

I resigned. In my (July 2008) letter to the Chair, a clever businessman who helped improve the Trust in many other ways, I commented:

I cannot support the Board’s decision to approve the strategic plan proposed by the Corporate Management Team and the underlying attitudes it reflects. The basic premise of the growth strategy is that NHHT should make ‘shed loads of money’ from private development, which can then be applied to meeting housing needs.  But this argument falls if CMT and the Board then decide to provide many fewer social rented homes than could be provided within reasonable business parameters.  Real choices were available in deciding the strategy – and the final decision reflects serious differences of principle.  In short terms, I feel that NHHT is fixated with promoting home ownership and has insufficient commitment to meeting housing need.

Any reasonable analysis of housing need in London shows that the highest priority is for more social rented homes.  Of course other objectives come into play, and I have consistently supported mixed development and intermediate housing options .………  Compared to the first version of the corporate strategy in March (which was also recommended by CMT), the revised strategy would produce 1,500 fewer homes for social rent over 5 years. 

Externally, Kate was often heavily involved in policy development and lobbying. Amongst other things, she was a key advisor to the extremely influential Localis review (Principles for Social Housing Reform) on which Red Brick has commented many times (for example here). She chaired the ‘Housing and Dependency Working Group’ for Duncan Smith’s (misnamed) Centre for Social Justice producing a report – using NHHT resources – on housing poverty in 2008, where she repeated her call for an end to security of tenure and criticised social housing for providing ‘low cost living for life funded from the public purse’.

Of course Kate is fully entitled to hold her own views and to pursue them as she wishes. In many ways she is very good at her job. But the antagonism to social renting affected both what NHHT was doing and what it was saying to Government as a prominent housing provider. For example, in 2006 I managed to get the Board to agree not to submit draft evidence to the John Hills review on the future of social housing because it supported tax relief for first time buyers (without evidence) and because it called for the ending of security of tenure for social tenants and higher rents. My view was that the proposed evidence stigmatised tenants: social housing was described as ‘subsidised’ whilst shared ownership was not; tenants were seen as second-class citizens who needed ‘a springboard back into society’; social housing was a ‘dead end’ where lives ‘stagnate’. Home ownership was seen as the miracle cure for social ills.

It has become fashionable once again for leaders in UK housing to describe in graphic terms the rise in homelessness and the appalling degree of housing need in our country. But the industry has an awful lot to feel ashamed about and failing to defend social rented housing is top of the list. People should be held to account for what they did when the money was available, what they have advocated for as individuals in public debate, and, crucially, how they used the platform and resources provided by their organisations to promote their views. One article does not wipe the slate clean.

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Trump will be bad for housing too

A foreclosed home in Las Vegas. Photo: Max Whittaker for The New York Times.

A foreclosed home in Las Vegas. Photo: Max Whittaker for The New York Times.

If social housing provision in the United States is already highly marginalised and directed towards the very poor, it’s due to get worse under the next president as budgets are hacked back. And the appointment of the new secretary for housing could be the worst news of all.

Social housing in the US caters for barely one per cent of households, and is disproportionately occupied by the very poor, with one-third earning less than $10,000 per year. Nearly half of tenants are black, even though black people make up only 19 per cent of the population overall. But the Housing and Urban Development department, HUD, has a budget of $47 billion overall, because its housing voucher programme assists millions more poor households in the private rented sector. With the focus of its spending so strongly on the poorest and on black communities, it’s easy to see it as a potential target for Trump’s budget cuts.

Traditionally HUD has been a low-key cabinet post awarded to a competent administrator (the incumbent is Julian Castro, a Clinton supporter and former city mayor). Even previous Republican presidents usually put it in safe hands. But Trump has appointed the uniquely unqualified Ben Carson to be the new secretary, a man whom even his friends describe as having ‘no government experience’ or ability to run a federal agency. However, Carson does have one characteristic that may have suggested to Trump that he was right for the post: he’s black, and originally from a poor background. Perhaps because of this he was initially thought to be the only pick for the HUD position who had actually lived in a public housing scheme (it later turned out he hadn’t).

What he does have, apart from his ‘gifted hands’ as a highly competent brain surgeon, is a strong commitment to small government that means he’s hardly likely to fight for the bigger budget that HUD badly needs. At present, almost all new rented housing is created for middle-income earners and above. Despite being a person of colour, Carson’s on record as opposing Obama’s attempts to get HUD to put more social housing in wealthier neighbourhoods and to challenge discriminatory practices that the agency has tolerated. Obama, according to Carson, is guilty not just of social engineering but of failed socialism. In the UK we would call it trying to create mixed communities. In the US the principles are enshrined in the Fair Housing Act, and it would be an extraordinary irony if it were a black housing secretary that had to be taken to court for failing to observe this particular law, because of his belief that poor people must continue to live in poor areas.

Indeed, Carson’s priorities, if he follows them when he takes up the HUD post later this month, could hardly be more misplaced. Federal housing policy has in key respects been a disaster for the poor and for minorities in particular. The failed, state-backed mortgage giant Fannie Mae was guilty of leaving many poor households destitute as a result of the crisis in and collapse of the ‘sub-prime’ mortgage market in which it had had a major role. Empty homes that have been foreclosed (repossessed) are often mismanaged (see photo), especially those located in poor areas, making it more likely that the former owners are still in debt and unable to obtain new credit. Homelessness has surged: more than half a million people are living on the streets, in their cars or in official shelters. Several cities, such as San Francisco and St Louis, seem to have decided to launch a war on the homeless rather than on homelessness. At the same time, social housing is far too small a sector to cater for the millions in need who are, of course, now much less likely to ever become home owners. New housing policies, like those which Bill de Blasio is pushing in New York, are needed across the United States.

The incoming housing secretary, however, believes that ‘poverty is really more of a choice than anything else’. Oh, and he doesn’t believe in evolution either, or that abortion should be permitted in any circumstances, and he thinks that gun control in pre-war Germany may have fostered the rise of Hitler and produced the holocaust. He was also the would-be presidential candidate with an unusual theory about the origin of the pyramids, leading one person to tweet that ‘it’s amazing how one can be a neurosurgeon and a dimwit at the same time’. Welcome to the Department of Housing and Urban Development, Ben Carson.

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The war on local government

What’s more depressing, the government’s current war on local government or the lack of a sufficiently outraged response to it? Or rather, why is the outrage being directed just where the government wants – at local authorities – rather than at Theresa May, Phillip Hammond and their refusal to do anything about the precipitous crisis created by their predecessors?

Authorities like Walsall are being pilloried for threatening to close art galleries and libraries: writer Philip Hensher tweeted ‘…if you want to live among intelligent people … move out of Walsall.’ But as Graham Chapman, Labour deputy leader at Nottingham has pointed out, the real philistine is the government, which has cut Walsall’s spending power per head by £543 since 2011. Urban councils in the north and Midlands have been worst hit by the cuts, then when the government has offered compensation they’ve missed out on that too. Cuts in council funding have also tended to coincide with the areas worst affected by welfare funding cuts, as Christina Beatty and Steve Fothergill have consistently shown. There can hardly have been a clearer enactment of the biblical prediction that ‘whoever does not have, even what he has will be taken away’.

Housing is showing several instances of the critical reduction or disappearance of services, with councils being lined up as the culprits. In the run up to Christmas, the annual concern about rough sleeping numbers is being turned on councils, with Birmingham blamed by the local press for the £10 million cut it’s making to homelessness services. While housing minister Gavin Barwell has admirably accepted that homelessness is a ‘moral stain’, he sticks to the coalition government’s propaganda that it is ‘protecting’ or ‘increasing’ funding to tackle it, when it is doing nothing of the sort. Yes, there are some protected pockets of funding, but these are insignificant when most services to tackle homelessness are financed by councils’ general funds and support for these will, according to the IFS, have been cut by 79% by 2019/20 compared with 2010/11. Birmingham, like everywhere else, is facing horrendous choices in making its budget for 2017/18, as its chief executive has explained this month. It is not surprising that, while there has been a cautious welcome for the new homelessness prevention duty likely to be imposed on councils, there is also widespread concern about expectations being raised that can only be dashed. As Steve has already pointed out in Red Brick, the biggest step to prevent homelessness would be for the government to recognise the devastating impact of its own policies, notably those resulting from welfare ‘reform’.

Red Brick has complained before that government housing policy often has more illusion than substance, but perhaps Sajid Javid isn’t one of our readers as he’s now at it again. This time it’s in relation to the crisis in social care, where in an apparent response to Jeremy Corbyn’s cornering of Theresa May on the issue, Javid has announced more funding. Except of course that he hasn’t: the ‘extra’ is to be found by cutting the New Homes Bonus, which is not just money that councils would have got anyway, but to crown it all was taken away from them in the first place! Councils will also be allowed to raise more in council tax, which has become a very regressive source of tax income and is due to become even more so as government funding for rebates is further reduced. And again, it’s councils in the poorer parts of the country that will be worst hit and where better social care is even more urgently needed. Javid is having to make the best fist he can of the Chancellor’s failure to even mention social care in last month’s Autumn Statement, because there is, in truth, simply no more money being made available. But he can count on May’s backing to blame the problem on ‘underperforming’ councils.

There is a similar story about councils’ local planning duties in relation to housing development, where the government continues to threaten action against ‘underperforming’ councils through its Neighbourhood Planning Bill. But even builders have been forced to agree that the main problems councils have in meeting their housing targets are lack of resources and insufficient planning staff, said to affect nine out of every ten local authorities.

Council housing was, of course, supposed to be protected from these cuts because (to its credit) the coalition government implemented Labour’s deal to make the service self-financing and allow councils to decide their own rents and keep the proceeds. Councils collectively took on £13 billion of extra debt to pay for this, and began to keep their side of the bargain by upping their investment programmes. But as Red Brick has reported several times, most recently in July, the previous Chancellor reneged on his promises and instead began to use council housing as a sort of milch cow for the Exchequer. Admittedly, Javid and Barwell have now stepped back from introducing ‘pay-to-stay’ rents and have delayed the horrendous policy of forcing councils to sell higher-value stock, but the cuts in council rents are still in place and have completely undermined investment plans by taking £2.6 billion out of councils’ housing revenue accounts.

The background to the war on local government is described in historical detail by Tom Crewe in the latest edition of the London Review of Books. It is a salutary reminder of all that we have had and what we are now losing. As Crewe points out, austerity is about far more than closing art galleries and libraries (lamentable though those cuts are). It is about services which are among the basic underpinnings of civilised life: as he puts it, government ‘…has wrecked the ability of elected local authorities to provide and administer many of the features and functions of the state as we understand them… . Councils today are caught in a web of obligations, helpless to fulfil them without outside help, and at the mercy of a government that might choose not to provide it.’

While devolution to places like Greater Manchester provides some respite, it can’t make up for the cumulative effect of what will be a decade of relentless cuts and it offers yet another chance for central government to pass the buck. Sajid Javid must be delighted about the cognoscenti having a go at Walsall council, because as Tom Crewe says ‘we fret and fume about this council here, that service there, while the whole system is sliding off a cliff’.

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Winning Elections and the Leaseholder Vote

By Dermot McKibbin

The 1997 Labour Election manifesto described the leasehold housing tenure as not worthy of the 20th century. The leasehold form of ownership is feudal in nature.  You pay for a lease and when the lease expires, you revert to a mere tenant unless your lease is extended. It is a wasting asset. If you break the terms of your lease, or fail to pay your ground rent,  the freeholder can apply to court for forfeiture of your lease.

Former commonwealth countries such as America and Australia have a communal form of ownership to deal with flats in blocks. Scotland has abolished ground rent.

The 2002 Commonhold and Leasehold Reform Act sought to replace the leasehold tenure with a system of Commonhold. The freeholder interest would be replaced by a Commonhold system of ownership whereby all flat dwellers owned a share of the freehold. The residents could decide how to run the building themselves instead of the freeholder.

Unfortunately the Commonhold system failed. It was only voluntary for new build schemes. For existing leaseholders they would have to obtain the agreement of all other leaseholders in their block to transfer to the Commonhold system. This proved impossible to achieve.

Since the Act became law there has been a large increase in the number of applications to the first tier property tribunal to determine the lawfulness of service charges. The number of applications to the property tribunal has gone up by 400% in 10 years. Unfortunately these  tribunals are now too legalistic. Freeholders have deep pockets to pay lawyers who run rings round the average leaseholder.

In August 2014 the Coalition  Government published an important technical study into how many leaseholders there were in England. This showed that the number of dwellings owned by leaseholders was 4.1 million. This was much higher than the previous figure of 2.5 millions leaseholder households.

Whether Labour likes it or not the number of housing association  leaseholders is likely to increase. Indeed over 40 % of all newly built properties in England are leasehold. In London the comparable figure is over 60%.

The English Housing Survey 2013-14 revealed  7.4 million households who owned outright, 6.9 million households who had a mortgage, 4.9 million private rented households and 3.9 million households who rented either from a local authority or a housing association. Labour cannot ignore the votes of owner-occupied households.

Apart from the Labour commissioned Redfern Review into the decline of home-ownership, there has been little debate within the Party about the housing problems of the dominant tenure such as mortgage repossessions, how to deal with disrepair problems or the fact that under universal credit unemployed home owners will have to wait 9 months before they receive any state help to pay their mortgage.

There has been research into the amount of unlawful service charges  or detriment that exists in the leasehold housing market.  A 2011 Which survey estimated the annual detriment to be £700 million. This was based on the number of leaseholders being 1.8 million leaseholders.

In December 2014 the Competition and Markets Authority published a much criticised study of the residential property market.  No mention was made of the strict forfeiture rules or of the Law Commission’s proposals to abolish these rules. The  supreme court decision that seriously undermined the legal rules about how a freeholder consults with leaseholders was not mentioned. There was no review into how successful the 2002 Act had been.

The report did cautiously estimate that the  annual detriment could range  between £34 million and £98 million a year. It is likely that the actual figure is considerably higher.

The study concluded that there was little need for statutory regulation. Most problems could be resolved by voluntary measures. Unsurprisingly the Tories endorsed this approach.

The Guardian has recently exposed how volume builders such as Taylor Wimpey are making money out of the building  and selling of leasehold houses. The freehold is sold to developers who have the right to increase the ground rent by 200% every 10 years. This makes the property virtually unsellable.

This practice has been condemned by John Healey MP the Shadow Housing spokesperson. Unfortunately there is no evidence that the Party as a whole is aware of the need for leasehold reform. Labour cannot afford to ignore the plight of the growing number of leaseholders.

Many freeholders such as the Duke of Westminster have close links to the Conservative Party. Labour needs to develop a clear position on leasehold reform and to expose the links between freeholders and their political allies if they wish to win the political support of leaseholders at the next election.

Dermot Mckibbin is a retired housing lawyer who until recently worked for Greenwich Housing Rights. He is interested in leasehold reform.

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One (stifled) cheer for the Autumn Statement

It is hard to imagine a housebuilding policy that could be more extreme than the position reached by David Cameron and George Osborne last year. Having virtually ended new programmes of social rented homes, in favour of the so-called ‘affordable rent’ programme, they went one step further and pulled the plug on AR in favour of total reliance on subsidised home ownership products. The Government was only going to offer help to those who already had incomes that brought them within touching distance of home ownership. The rest could go hang.

Theresa May and Philip Hammond have rowed back from this position a little way. Quite how far is still unclear. The headline extra money that Hammond announced in the Autumn Statement sounds less impressive when you realise it covers a five year programme from 2016-2021. They will spend in half a decade what some might think is a reasonable programme for a single year.

It is good news that there will be more money for grant for new homes. The penny has dropped that a policy based on subsidising and supporting demand for home ownership is bound to fail in the medium term because the subsidy will feed into price increases unless there is a corresponding increase in supply, thereby defeating the original purpose. Subsidising supply is a much better thing to do. More grant will enable a bigger share of each development to be ‘affordable’ and, depending on the policies of the funder and the delivery body, should also ensure that some of the programme is for social rent. More grant makes negotiating s106 planning gain agreements easier.

It is also good news that there will be more money available for infrastructure to support housebuilding. Inadequate infrastructure has been a big barrier to many developments. However, there is still a lot to play for in operational terms to make the money work hard. Public funding of more infrastructure should mean more development is viable, producing more homes and more affordable homes, but, if not managed well, it could just feed into developer profits by reducing their costs. There is also a risk that it becomes another way of paying for roads. Programme management and effective negotiation will be key to getting the best possible social return.

It is also good news that the Government is now willing to see the grant that is available go into a wider range of forms of tenure – although the Treasury documents only talk about ‘affordable rent’ (ie rents at up to 80% of market rents) despite the Government’s talk of having policies that work for everybody. The extra money does not yet mean there will be  a new stream of social rented homes.

Strategic funding bodies – the London Mayor and the Homes and Communities Agency in the rest of England – will be encouraged to help people who fall into Theresa May’s  definition of ‘Just About Managing’, whatever that is. But a genuinely inclusive policy would also be aimed at those who are ‘Just About Sinking’. At this point a slightly less regressive housing investment policy comes face to face with a regressive benefits policy. Despite a small amount of amelioration, the impact of the new benefit cap and the general squeeze on benefits has not yet been felt. There are dire expectations that these changes, matched with a growing lack of access to private renting for people on benefits, will lead to a surge in homelessness over the next period. Measured against such need, the extra money begins to look very modest indeed.

The news has been well received in London, which will get the lion’s share of the new cash for investment. Sadiq Khan and his housing deputy mayor, James Murray, have played blinders so far, getting the balance right between shouting from the rooftops about London’s needs, winning the argument that housing is the biggest barrier to economic growth in the capital, negotiating stealthily with Ministers who are more open-minded than their predecessors, convincing them that they can help deliver Government priorities as well as promoting their own. Khan is now in a strong position: he controls the funding pot, can set the terms of trade, and is refining the planning requirements. Housing associations and developers are already beginning to go with the grain of his policies, just as they did with Ken Livingstone, and, miserably, just as they did with Boris Johnson. I think the new administration is genuinely committed to getting a social rent programme moving again. The extra cash oils all the wheels of their policy.

Outside London the response of the HCA to the new flexibility is harder to predict, and I have yet to see a response from them. In some places new combined authorities and, next year, the Metro mayors will have a much bigger say in what happens. Elected authorities should seek movement away from the priorities set out in the current Shared Ownership and Affordable Homes programme 2016-2021 – which was described by the HCA itself as ‘a decisive shift towards support for home ownership’. As the HCA is due to announce initial allocations under the programme shortly, effective intervention from local areas is needed now.

Together with decisions like dropping ‘pay to stay’, the deferment at least of forced sales of council high value homes, and action on letting agents’ fees, Gavin Barwell has made a strong departure from the policies of Cameron and Osborne. Yet the Office for Budget Responsibility raises doubt that the balance of new policies will increase housebuilding, predicting a reduction not an increase in housing association output.

So, should we welcome the new direction in policy? Well, that’s a big word. My feeling is that it is rather like going 10 rounds with Anthony Joshua. You would welcome the fact that he has stopped hitting you so hard. You also know that the pain is going to endure, but there is genuine relief that things might be less bad than they could have been.

It’s a victory for all those who have campaigned against the extremes of Government policy, but I can only give it one (stifled) cheer.

The response of SHOUT the campaign for social housing can be found here.

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Thinking it through

The latest housebuilding figures, and especially the disastrously low figures for affordable homes and the virtual disappearance of new homes for social rent, have refocused attention on housebuilding.

In the run up to the Autumn Statement there has been some speculation that there will be a new Government housing initiative. Whether this will just be another doomed attempt to rejuvenate home ownership or something likely to be more effective, we will just have to wait and see.

One indicator that housebuilding really has risen high up the political agenda is the number of reports being issued by think tanks and others of all political persuasions. Thinking about and making recommendations about housing is in overdrive, and it is hard to keep up. So I thought I’d draw attention to a few reports I’ve looked at recently. (My apologies to those I have missed).

The Respublica think tank reported on ways in which the Government could finance the huge number of homes that the country needs. Its report, Going to Scale, proposes setting up a long-term National Housing Fund which would deliver 75,000 homes a year ‘and get the housing market to work for the many’ by dealing with the ‘fundamental problems of number, pace and scale’. The NHF would be a fully returnable £100 billion investment over 10 years with Government acting as a guaranteed buyer of new homes built by housing associations and small and medium sized builders, building up their capacity at the same time and reducing dependence on a few volume housebuilders. The report is critical of schemes to help people buy homes if there is insufficient action on the supply side to ensure the availability of new homes on the market. The homes would be let to economically active tenants who aspire to buy at a later date. Homes could be subsidised and targeted to specific groups such as key public sector workers. The scale would mean low borrowing costs and give builders the confidence to develop many more sites and faster. The report however has nothing to offer those on lower incomes who will never be able to buy.

An even more surprising report comes from Localis, much panned in these pages over the years for their sadly influential report calling for the end of social housing. Power Behind the Home makes the case for devolution as the key to building more homes, giving local authorities greater flexibility around finance and land. Their theory is that there isn’t one housing market in crisis but ‘hundreds in need of correction’, with each area needing a different prescription. After consulting key local government stakeholders, the report says that a better national housing strategy is still needed but it should set the political direction and be permissive in nature. For local authorities, the report proposes the lifting of the HRA debt cap, the setting up of combined authorities’ housing companies, the full retention of right to buy receipts locally and restrictions on the letting out of RTB properties, the levying of council tax on empty development sites, and ‘powers to freeze land values where there is a mayoral development corporation.

Also on the theme of devolution, the IPPR North think tank’s new report also calls for radical new powers to be devolved to new regional city mayors. Closer to Home sets out the challenges faced by the new metro mayors due to be elected in 2017, also using the argument that there is not one housing market, but many. It says the approach to devolution has been piecemeal and partial so far, with greater central control due to the National Planning Framework, Homes and Communities Agency conditions and prescriptive policies like Starter Homes and Right to Buy. In some areas it believes mayors should be able to determine issues such as building on green belts, the local retention of stamp duty receipts, and the release of public sector land, receive direct capital grant funding in return for raised housing targets, and have greater control over planning frameworks to co-ordinate housing and infrastructure.

Over towards the Labour Party, the report of the Redfern Review, commissioned by Labour’s Shadow Housing Minister John Healey MP, looks in detail at the reasons for the decline in home ownership over the past decade. The report says that home ownership has dropped from 71% to 64% since 2003 but for people aged 25-34 it has dropped from 59% to 37% – a huge drop. It accepts that house price growth is one contributor to this decline but not the biggest – which it says is the decline in access to mortgages (due to static or falling incomes as well as credit restrictions) especially since the financial crisis. It concludes that additional housing supply alone is unlikely to shift the homeownership rate in the near future because of the rate of household formation. Politically, the report calls for a long-term cross party non-partisan approach to housing that focuses on all tenures to create a fair market for all, with the establishment of an independent Housing Commission to own the national strategy. ‘What is needed is decades of consistent supply improvements, in both quantum and particularly location….  Longer term thinking and cross-party co-operation is needed so developers can safely invest in larger projects and in infrastructure.’

A new report from the Centre for Regional Economic and Social Research at Sheffield Hallam University by Tom Archer and Ian Cole takes a more critical look at the volume housebuilders. Profits before Volume points out that their performance over the last few years has seen a sharp increase in their level of profits and a much more modest increase in their output. Reasonably they point out that the business model applied by these developers over the past few years has escaped much scrutiny compared to the endless analysis of the faults of the planning system and other factors. These firms guard against volatility by controlling the release of land from their landbanks, which strengthens their negotiating position on individual sites. Consolidation in the sector has reduced the number of small and medium sized companies, putting the big companies in an even stronger position. Their strategies are understandable in that they are still working through the implications of the 2008 crash and especially by rewarding shareholders who were deprived of dividends then. Their conclusion is that these large builders are likely to continue to fail increase output to help supply meet demand.

I suspect that the sensible conclusion looking at all of these reports and others is that there is no single silver bullet but a wide range of new policies and funding are needed to make a difference. The common thread through all of the reports is the need for long-term thinking and the need to create long-term confidence that development will be supported in a variety of ways.

housing-supply-neal-hudson

However, given that the worst housing performance since 2010 has been the number of genuinely affordable homes (see chart sourced from Neal Hudson @resi_analyst on Twitter) I would also like a much stronger focus on the policies that will deliver decent homes to people on the lowest incomes who will depend on rented homes for as far ahead as anyone can see. In a month which has seen a resurgence in interest in the rising crisis of homelessness, the policies we need are not just those that will build more homes generally but those that will build homes which are genuinely affordable to everyone on the income distribution.

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The Redfern Review into the decline of home ownership

BY Dermot Mckibbin, Beckenham CLP*

This review was commissioned by the John Healey MP Shadow Secretary of State for Housing though is independent of the Labour Party. Peter Redfern, the Chief  Executive for Taylor Wimpey chaired the review. (click here Redfern Review for more details)

The review reflects John Healey’s  determination to put widening the opportunities for home ownership at the heart of Labour’s approach to housing. It is a signifiant development in the Labour Party’s housing policy for a tenure group that it is often ignored by the Left.

The review takes the view that the fall of home-ownership in England from 71% to 60% frustrates the legitimate desire of most people to own their own home. There have been too many short term initiatives in housing policy. Solutions seeking to improve home ownership without considering the impact on other tenures will be unsuccessful.

The reason for this decline are  several. Real house prices rose by 151% from the end of 1996 to the end of 2006, while real earnings have risen only about a quarter as much as that. The growth of buy to let mortgages and the global economic crisis have also contributed.

The review does not adequately address whether subsidising demand for house buyers is inflationary. Page 15 claims their studies show that 1% increase in the number of dwellings would reduce house prices by 1%. However on page 49 the review concedes that a 1% increase in housing stock lowers housing prices by 1.8%. This inconsistency is not adequately explained.

Student loans and tuition fees have hindered young people from saving enough to pay for a deposit. The number of 25-34 year olds living at home with their parents has increased by 1 million between 1997 to 2015. No consideration is given as to how this group would benefit from rent controls in the private rented sector.

The solution is decades of consistent improved supply. This can only on be achieved by a political consensus between all major political parties. The Help to Buy Equity Loan Scheme even though it is inflationary needs to be retained and better targeted especially towards young people. Under this scheme the Government lends buyers  up to 20% of the cost of a newly built home. Buyers only need a 5% cash deposit and a 75% mortgage to make up the rest. This scheme is very beneficial for builders.

The right to buy ‘one for one’ replacement policy should be extended so that all council homes sold should be replaced and not just some. Housing  policy making would be improved by the setting up of an independent Housing Commission similar to the Infrastructure Commission.

The review concedes that Help to Buy: Equity Loan will inflate house prices to the extent that it does not create incremental supply. According to a 2016  government evaluation study, this means that for every 100 homes built through the support of these equity loans, 57 would have been built anyway. The evaluation study and not the review itself mentions that this scheme is funded to the tune of £9.7 billion until 2020 and is expected to cover up to 194,000 new home buyers. The review does not question whether this  amount of public subsidy is fair.

Ideas to support existing home owners to remain in their homes were apparently outside the scope of the review.  These are:

  • Unemployed home owners only receive state help with their housing costs for 12 months.
  • Giving low income home owners greater help to improve their properties.
  • Greater legal rights when lenders take possession proceedings against home owners.

No mention is made about the problems faced by leaseholders as covered by the Guardian in a series of articles recently. Taylor Wimpey and others have been criticised  for their policy of building leasehold houses and then selling on the freehold. The lease contained a clause that doubled the ground rent every 10 years. According to the owners their house is now unsaleable.

Research by the Coalition Government has found out that there are more leaseholders than previously thought in England and Wales. The figure is up from 2 million to over 4 million. London alone has two thirds of all leaseholders in England and Wales. Over 60% of all newly built properties are flats. Any proposals to improve the  rate of home ownership needs to address this widely ignored research.

The Redfern Review will hopefully start a much needed debate within the Labour Party about owner occupation and the leasehold housing market. There needs to be much a much wider debate about whether the Help to buy: Equity Loan scheme represents value for money.

 

*Dermot Mckibbin is a retired housing lawyer who until recently worked for Greenwich Housing Rights. He is interested in leasehold reform.

 

 

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Still ‘500 miles’ from home, today it is 50 years since Cathy

The film Cathy Come Home, directed by Ken Loach and written by Jeremy Sandford, can be seen in full here. It is highly recommended if you have never seen it. The credits track was ‘500 miles from my home’ by Sonny & Cher, hence the title of this piece.

I would also like to draw attention to another blog remembering Cathy, by Tom Murtha on Inside Housing, which can be found here. Inside Housing has launched a campaign to mark this week’s 50th anniversary of the landmark film – campaign logo below and more information here.  It is also carrying an interview with the Director on his feelings about what has happened since he made Cathy. (IH’s Cathy anniversary stories are free to read and not behind the paywall).

Much to their credit, a group of housing associations has also been organising ‘Homes for Cathy’ events and activities around the anniversary. Many associations were founded at this time as concern for the homeless grew, one being Shepherds Bush HA, who held an anniversary event this week.

More links and reflections can be found by using the hashtags #CathyComeHome and #Cathyat50

Below are my thoughts.

50 years ago today the BBC screened ‘Cathy Come Home’ as one of its series of Wednesday Plays.

I remember it as if it was yesterday. I was 16 and I have more memories of 1966 than of any other year of my childhood or youth – the World Cup, ‘O’ Levels, Aberfan, the escalation in Vietnam, the first General Election I paid attention to, the Moors murder trial, the Rhodesia crisis, Revolver by the Beatles (Dylan’s Blonde on Blonde was also released but I wasn’t aware of it at the time). And Cathy……..

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I have seen the film dozens of times (it was a regular feature when I used to give talks while working for Shelter in the 1980s) but it is hard to explain the impact the first showing had. Years later it was voted the ‘best single television drama’ and ‘the UK’s most influential TV programme of all time’. Twelve million people watched it that first night, about a quarter of the population. No-one had ever seen anything like it, it was so realistic. And genuinely shocking. It felt like everyone had watched that Wednesday Play, and everyone talked about it the next day. No single TV programme could have that kind of impact today, with hundreds of channels and many other distractions.

My Dad was a plasterer, in work nearly all the time, my Mam a part-time cleaner, and we could hardly be described as well off. We lived in a council house – a Bevan house – on the large Montagu estate near what was then the northern city boundary of Newcastle. The house was of an amazingly high standard, front and back gardens that were my Dad’s pride and joy, and at the top of the road the Kenton Bar was the last building before open countryside stretching all the way to Cheviot. It could be tough but it was a great place to grow up. Until I saw the film it was unimaginable to me that people like Cathy could exist or that stories like hers were possible. All she ever needed was the one thing we had – an affordable council house, a secure and comfortable base on which to build a life.

There was little public consciousness of homelessness prior to the film, and the revelation that homelessness could lead to children being taken away from their family was shocking. It is so shaming that the number of homeless people is vastly bigger now. Ken Loach’s latest film, ‘I, Daniel Blake’, is also having a serious impact and shows how little some things have changed. Its theme has echoes of Cathy. The circumstances are different, but the core story is the same: a decline from a contented and stable life into poverty, caused by ill health (Daniel’s heart attack and Reg’s accident at work), the experience of state institutions that punish rather than support, ending in destitution and total break-down.

I met Ken Loach when I worked at Shelter in the 1980s, I think introduced by Des Wilson, the founding Shelter Director. I tried to interest him in doing another film on housing and showed him around the sights of Paddington, the dozens of bed and brekfast hotels housing homeless families in Bayswater, the huge and squalid multi-occupation terraces of Sutherland Avenue and the rapidly deteriorating Mozart Estate, then only 10 years old but already neglected by Westminster Council. He didn’t bite but proved to be both charming and quite hostile to the very idea of soggy liberal housing charities (something that made more sense as his own political position became better known). There ended my career as the second Jeremy Sandford.

50 years since Cathy means that the 50th anniversary of Shelter is imminent. The two were widely assumed to be linked but in fact it was just a remarkable coincidence that Shelter was launched a few days after the film was shown. It still gave Shelter huge impetus. Now a large organisation providing vital advice services, it seems to have lost some of its campaigning edge and punches below its weight in terms of influencing public attitudes and Government policy.

Cathy was the start of my political awakening, an event in my teens only matched by reading Robert Tressell’s ‘The Ragged-Trousered Philanthropists’ and being exposed to ‘ideas’ at University that converted my working class chip into a vague leftish philosophy. I have suffered periods of optimism since – 1974 especially, and 1997. But the 50th anniversary of Cathy, the resurgence of homelessness matched by the apparent indifference of much of UK Housing, Labour’s divisions and ineffectuality, all in the context of a global resurgence in nationalism and intolerance, make me feel that I have been deluded for fifty years in thinking that, as day follows night, each generation will do better than the last.

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What happens when a homelessness reduction Bill meets a homelessness increase policy?

A surprising degree of consensus has broken out in support of the Homelessness Reduction Bill, a private members Bill due to be debated in the House of Commons tomorrow (Friday), with backing now being given by both the Government and by the Opposition as well as the Local Government Association (whose members will have to implement it) and the charitable homelessness sector, primarily Crisis, which is in enthusiastic support. The Bill will need to get the backing of 100 MPs in a division tomorrow to be able to pass the first substantive stage and then go into Committee for more detailed scrutiny.

The version of the Bill to be debated tomorrow (it has already been amended from the original version after negotiations with the LGA and scrutiny by the CLG Select Committee) can be found on the House of Commons Library site here and the Library has also done an exceptional (as usual) Briefing Paper for those interested in the detail, which can be found here.  There is a summary and a full briefing, covering not only the Bill but the current legislative framework and the various measures of homelessness. You can also sign up to regular Library bulletins on the Bill if it progresses to further Parliamentary stages. The scrutiny report by the CLG Select Committee is also of interest and can be found here. All of this background activity suggests that there is an expectation that the Bill might go the distance.

The Bill seeks to bring into English practice something similar to the system developed in Wales which is widely deemed to have been successful in reducing homelessness by providing early intervention and support and proper advice and assistance to all homeless people not just those deemed to be in priority need. Bob Blackman MP, the Tory sponsor, has said he wants the English system to do more to prevent homelessness in addition to being a safety net (one with large holes these days I have to say). He believes councils do not engage early enough when people are threatened with homelessness, especially from a private tenancy, single people are often turned away without advice, and there is too much variation in council practice.

Of course any improvement in the provision of services and enhancement of the rights of people threatened with homelessness is to be welcomed. My purpose here is to make a few more general comments.

First, the system introduced in Wales was carefully developed after detailed research and in close consultation between the Welsh Government and local councils – a method they call coproduction – and it has been regarded as being a success in its first year of operation, providing advice to a wider range of people and preventing homelessness actually occurring for many. Sensibly, there is close monitoring of the outcomes so the Welsh Government is in a good position to assess progress. Given the budget cuts imposed on Wales it is an outstanding piece of cooperative governance. However, the pressures in Wales, great through they are, are not as overwhelming as those in some parts of England and especially in London. It is good news that the LGA has considered the Bill in detail before agreeing to support it with a few amendments, but it will still be hard for some councils to respond in the way intended.

Secondly, there are doubts about some of the detailed content of the Bill which should be borne in mind if it goes into Committee. Those interested in the legal detail – how the Bill might operate and its impact on the existing legislation – are advised to follow Giles Peaker’s contributions on the Nearly Legal blog. After consideration, Giles also supports the Bill’s second reading, saying: ‘Overall, taken as a whole, the Bill is a positive step and my view is that second reading should be strongly supported. But there are some serious issues and drafting points that need to be addressed in committee and subsequent stages.’

Third, my cautionary tale. I was closely involved with Shelter during the implementation of the 2002 Homelessness Act. This introduced mandatory homelessness reviews and each council was obliged to put in place a homelessness strategy. There were positive changes to the priority need categories. In parallel, Government adopted a target to reduce the number of households in temporary accommodation by half (which was achieved a few years later). It all seemed so positive. Sadly the emphasis in strategies on the prevention of homelessness, combined with strong Government moves towards meeting the TA target, had some perverse outcomes. In particular, the desire to increase prevention led to the introduction of ‘housing options’ services which too often spilled over into stronger gatekeeping, as we have reported on Red Brick before. Use of TA came down (until the Tories took over in 2010) but it seemed this was often at the expense of homeless people who were turned away rather than an improvement. Similarly, councils have been under an advice and assistance duty in relation to single homeless people before, but with only limited results.

Fourth, the title ‘Homelessness Reduction’ is a total misnomer and gives a false flavour of what is happening in the housing world. Councils, especially in the highest demand areas, are struggling to find even temporary accommodation at present and the supply of genuinely affordable permanent accommodation will continue to fall as a result of Government policy. Councils have faced massive cuts to budgets and most have struggled to maintain any kind of advice service. The impact of many of the social security changes, especially the new benefit cap, has yet to be felt and there is likely to be a significant rise in homelessness as a result.

Homelessness can only sensibly be seen in the wider context of housing supply and poverty. None of the relevant policies and none of the indicators are going in the right direction. I hope this Bill will provide more support for individuals facing the trauma of threatened homelessness and will help many of them to postpone homelessness or obtain other accommodation: if it does, it is worth supporting just for that. But let no-one be in any doubt that homelessness is going to get worse not better. Cathy will not be coming home any time soon.

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Let’s get our gentrification story even straighter

Dave Hill is an award-winning (and deservedly so) commentator on London and I’ve never had much cause to take issue with him. But on the issue of regeneration/gentrification (they are not the same but let that pass for now) he takes a line that is a deliberate challenge to the developing orthodoxy. As someone who can’t avoid the charge of being a metropolitan leftie – although I’m not sure it’s an insult – it is important to take his commentary seriously.

Dave’s latest blog for the Guardian – Let’s get our gentrification story straight – sets out his argument. I would summarise it as this:

Gentrification is now getting blamed for destroying London’s soul. Pejoratively, it characterises demographic change as colonisation by the rich and the pushing out of the working class. Reaction to it has created a political battlefield across the capital. There are genuine anxieties but the analysis of it is not as solid or righteous as it seems. It has been going on for decades. It is the product of (Inner) London’s revitalisation after the era of decline and falling population. Ordinary people have always migrated to the suburbs and continue to do so. Growth and the failure to meet housing demand cause competition for space. Yet there are still high levels of social housing in the most gentrified boroughs, like Islington. Poverty rates are still high. There are also benefits: like middle class pressure for better schools. It is not a simple battle between communities and gentrifiers. Urban neighbourhoods are constantly changing. He quotes the Centre for Cities who say it is a ‘myth that creative incomers are to blame’ and the true root of the problem is ‘poor city management’. Dave concludes by saying we need a constructive practical flexible political response ‘that helps to shape urban change to best and most equitable effect’.

I hope I’ve done his argument justice in one paragraph. But the point of this is that I absolutely agree with the last two sentences – I would also agree it is the product of revitalisation – but I would get there through a different logic. Location and city growth theory would predict that something like this would happen in a free market. A rich centre, spreading outwards, surrounded by a poorer ring with more affluent suburbs beyond. Over the last thirty years, London’s poorer ring has moved out organically. It appears to me that parts of what used to be Outer London now resemble what Inner London used to be like. Market responses are leading to large family houses being divided up into a lot of small (and profitable) flats and sharing of existing accommodation (sometimes to the point of overcrowding) is becoming more common. When I first moved to north Paddington in the 1970s the area was a mix of private renting and cheap home ownership, housing mainly working class English, Irish and West Indian families. Physical conditions were pretty awful. This population has now gone – I assume by moving out to Harlesden,  Willesden, Cricklewood and beyond – it is now a cosmopolitan area where houses have been converted to flats occupied mainly by professional people of all nationalities, but with private renting winning the battle against home ownership over the last decade. It has not yet reached the point of neighbouring Notting Hill or Queens Park where even middle class professionals can’t compete.

So a growing city produces organic but often predictable market change. It is the outcome of millions of individual decisions, most of them quite rational given the circumstances of the individuals concerned. But there is another factor: it is not a free market for space, it is a regulated market. Government, national and local, sets a framework of planning policy, housing regulation, subsidy and tax. To do so, it must have objectives in mind. Ken Livingstone’s objectives as mayor were totally different from Boris Johnson’s. Market-driven change can be facilitated through laissez-faire policies or channelled through policies designed to protect good features of London (like, I would argue, mixed communities) and to provide housing to those who cannot compete in the market (through, for example, social housing).

Two of the most important public policies that have affected London concern Government attitudes to tenure. First, the deregulation of private renting and the encouragement of ‘buy to let’ which has become such a big force in London, to the point where it is displacing home ownership. And secondly, the failure to provide enough additional homes of all kinds but especially those designed to meet the needs of people on lower incomes, now compounded by active policies to reduce the number of social rented homes.

These were political choices: other choices were available, the outcome could have been very different, and the City could have been shaped to better preserve the rich tapestry of mixed communities which most people see as one of London’s greatest attributes.

In the 1970s and 1980s the struggle against ‘gentrification’ focused on private landlords and estate agents who were ‘winkling’ tenants out (infamously, Prebbles in Islington which led to a bitter campaign). Now, there are big issues in the private sector like the impact of the housing benefit caps, and rents that are generally unaffordable, but most areas of predominantly private housing in Inner London have already seen transformative change.

Most of the protests that are taking place concern plans to redevelop existing council estates which find themselves sitting on very valuable land which could be more intensively and profitably used, but often at the expense of the existing residents. It’s hard without researching each development to be precise about the rights and wrongs, but the London Assembly Housing Committee last year looked at 50 council estates that had been ‘regenerated’ in the previous decade, bringing some transparency to the debate for the first time. In total, some 67,000 homes had been proposed to replace 34,000 but there was huge tenure shift. The increase was largely in market homes with some ‘intermediate’ but there was a large loss of homes for social rent – down from 30,000 to 22,000.

These regeneration schemes were having clear redistributional impacts. The 8,000+ lost social rent dwellings alone could have provided homes for one in six of the households forced to live in temporary accommodation in London (often a long way outside London) in 2015 – not an answer to the housing crisis but a damn good start. The Committee made a number of important recommendations, many of which will form the basis of the revamped policy on regeneration being adopted by Sadiq Khan.

So, City Government has failed. The policy framework facilitated rapid organic market change that benefited some people at the expense of others and produced outcomes that simultaneously enriched London life (revitalisation) and impoverished it (loss of traditional mixed communities and homes for people on lower incomes). So I agree with Dave – it needs a constructive flexible response to shape these changes. But we need to have clear objectives. It’s not about blaming incomers, it’s about adopting public policies that protect the poorest from paying the price.

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