Thirty-odd years ago in Haringey we had a great scheme for helping elderly home owners manage their affairs. If it was their wish, the council would buy their family home at market value and, in exchange for a specified discount on the price, we would provide them with a home in a sheltered housing scheme or similar.
The scheme benefitted everyone. The council now owned an asset it could invest in and rent to a family, giving up a unit for which there was less (although still substantial) demand. The home owner was released from the burden of managing and maintaining a large house, often on a fixed income, and got a rented home with the support of a warden as well as a significant capital sum they could invest. The policy tackled both under-occupation and overcrowding.
The scheme was, of course, brought to a halt when Meryl Streep became Prime Minister in 1979. For ideological reasons the Tory government stopped ‘municipalisation’ and all the benefits of the scheme were lost. Elderly home owners were deprived of the opportunity to become residents of sheltered housing, which many of them aspired to do.
I suppose I should be pleased that Grant Shapps has started to reinvent the wheel to encourage older people to ‘downsize’ in a voluntary and non-coercive way. It contrasts sharply with Government’s bullying bedroom tax for social tenants who under-occupy.
Unfortunately the ideological objection to municipal ownership remains in his new scheme. In what passes as a Government announcement these days, Shapps told the Daily Telegraph that, instead of selling their home to the council, the elderly home owner would move into suitable rented or sheltered housing (which regrettably is in decline following changes in the Supporting People regime) and the council will lease their property, taking responsibility for maintaining and letting the property at ‘affordable rates’ (which I presume means well above social rent levels).
Based on an existing pilot scheme in Redbridge, the council would pay the costs of moving, renovations and financial advice. The former homeowners would receive the rental income and retain ownership of the home for their estate. As the council does not own the home, it will be willing to take on management and maintenance costs but will not want to invest in the property for the long term.
One issue is that it remains unclear whether Shapps intends that the rent received by the former owner would be net of management and maintenance costs; this would seem obvious but the (Lib Dem) Deputy leader of Redbridge Council wrote on ConservativeHome that “The home owner retains ownership of their home which is leased to the council to provide us with additional social housing. The owner receives all of the rent as income, as well as free property management.” ‘All of the rent’ seems to me to be not the right thing to do, and undermines the viability of the scheme.
Another issue to be resolved is the tenancy terms on which the new tenant of the family home occupies it, and what happens to them if the owner dies and the home is part of their estate. I assume the tenant will only be given a fixed term tenancy but they should have some reasonable guarantee of their security and period of notice.
Subject to seeing such details of how a national scheme might work, this looks like a reasonable step forward. It’s just a pity that an entire generation of home owners wishing to downsize, and an entire generation of families wishing to rent a home, have been denied the opportunity because of Thatcher’s ideological purity.