To those that don’t already do so, ignoring the Secretary of State over the next six months while he’s making even more trouble than usual for councils might make good sense. His latest mischievous missive to local authorities tells them that by next April they have to publish the value of their council housing stock. Those that comply by then will provide convenient ammunition for Pickles when he’s in full election mode.
How does he justify it? Of course he’s not going to admit to being a troublemaker, so he claims he wants to ‘allow local communities to hold their councils to account’. To help them do this he’s forcing councils to publicise a completely meaningless figure – the open market value of their houses with no sitting tenants in them. It’s not hard to imagine headlines such as ‘Subsidised council tenants in Birmingham live in homes worth up to £500,000’. In fact, the clue to how the data will be used is already given by one of the headlines in the government’s own press release: ‘Multi-million pound properties’. Pickles thinks there is plenty of equity in ‘expensive empty properties’, the sole evidence for which seems to be the £3 million house sold off by Southwark more than a year ago.
He adds another little twist. Selling these expensive empty properties could reduce England’s staggering total of 635,000 empty homes, he claims. Except of course that even if councils sold off every empty house (and presumably stopped any tenants ever moving), it turns out there’d still be 608,000 empties, as practically all of them are in the private sector. No matter, it helps to spin a myth that empty property is local government’s fault.
With the apparent exception of the Secretary of State, most people know that if you own a house there are two ways to tap into its asset value. One is to sell it, which of course means you’ve lost the house. The other is to borrow against the asset value, which means you keep the house as well as get whatever else it is you want. Eric won’t approve of this idea though, as it would mean giving councils more borrowing freedom and he’d lose an opportunity to force them to sell even more council houses than he’s making them do already through right to buy.
We’re used to him ignoring what councils tell him about his proposals so it’s no surprise that he’s done it again. In this case, councils complained they could lead to misinformed debates about the real cost of their social housing stock rather than increase transparency. He’s going to address the complaint by putting a footnote to the figures explaining the differences between ‘existing use value as social housing’, and ‘open market value’. That should do the trick.
What the figures will show, of course, is that estates in central London are worth a fortune, and it will give further encouragement to councils to realise their value, regardless of tenants’ views. Red Brick has already tracked the story of the West Kensington and Gibbs Green estates in Hammersmith & Fulham, where an intention to sell by the previous Tory council is proving difficult to unravel now the borough has changed hands. It can only be a matter of time until Britain sees examples like one provided by a Red Brick reader in Australia. The New South Wales government has a highly contentious policy of flogging off its most valuable housing: it’s planning to sell 300 tenanted properties close to the central Sydney harbour front worth about $500 million. In theory, three new flats could be built in outer Sydney for every one sold at Millers Point, but the government has pointedly made no commitment to do so. Perhaps I should have hesitated though before using such an outrageous example, it will probably reappear soon in one of Mr Pickles’ press releases.