Don’t hold your breath, Theresa May tells homeless

A Parliamentary Question on homelessness today from Labour MP Siobhain McDonagh either caught the Prime Minister unbriefed or showed how totally complacent she is about the growing numbers of people being left without a home.

McDonagh’s question (view here) came from the Corbyn mould, being based on the experience of a constituent. She asked:

Last week, through no fault of her own, Amy and her young daughter became homeless. After months of looking for a flat, she finally went to Merton Council, who told her they could only offer temporary accommodation in Birmingham, 140 miles away from her job, from her daughter’s school, and from the friends and family that make it possible for her to be a working single mum. Can I ask the Prime minister, in one of the richest cities in the world, where Russian oligarchs and Chinese banks own scores of properties and leave them empty, how can it be right that a London-born, working family like Amy have not a room to live’.

And Theresa May replied

Well the issue obviously of housing in the London borough of Merton is one that the Honourable Lady and I worked on many years ago when we were on the Housing Committee together, and I recognise that she has raised a concern for her particular constituent. Obviously I won’t comment on the individual case, but what I will say is that what’s important is that overall the government is dealing with the issue of homelessness, we are ensuring that we are building more homes, we are giving more support to people to get into their own homes, but this is something that will take time as we ensure that those properties are available and as we ensure that we maintain the record that we have of providing housing support across all types of housing in this country.’

So Amy will have to wait. Given that she probably needs an affordable rather than a market home, she will have to wait a long time. Given that she probably needs a rented home, May’s ‘more support’ doesn’t apply to her. And as for the government’s record of ‘providing housing support across all types of housing’, it must have slipped her mind that most government support now goes to propping up the housing market while renters are subject to ever growing list of caps, freezes and exclusions.

The answer is doubly disappointing because this week there has been something of a focus on homelessness. The second overview of housing exclusion in Europe by FEANTSA – which was well reviewed by Dawn Foster for the Guardian Housing Network – showed how homelessness is rising and reaching a crisis point across Europe – except Finland, where new approaches are being tried – especially in big cities. The UK features badly, being near the bottom of the European rankings. This should be ringing alarm bells everywhere, but especially in countries like ours that are doing particularly badly.

Meanwhile,  the latest Housing Monitor from Crisis and the Joseph Rowntree Foundation reported that councils were finding it increasingly difficult to find accommodation in the private rented sector for a wide range of homeless people, from single people to large families, and that the roll out of Universal Credit and the next round of benefit cuts would make matters worse. It quotes one south of England council respondent as saying: “LHA (Local Housing Allowance) is staggeringly out of step with actual market rents, to the extent that there are virtually no properties… let at LHA rates. Coupled with landlords’ increasing reluctance to accept people on benefits, and unwillingness to offer anything beyond an initial 6 month AST (Assured Shorthold Tenancy), it is now all but impossible to place people into the private sector.

McDonagh tweeted that Theresa May’s response was ‘completely inadequate’. Given that Theresa May should also be aware that the Homelessness Reduction Bill (a worthy piece of legislation which will be overwhelmed by the reality of rising numbers as soon as it reaches the Statute Book) is due its Third Reading in the House of Lords tomorrow and will receive Royal Assent shortly, the phrase ‘completely inadequate’ is about as mild a term as she could have chosen.

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Hammond’s not for turning

From the Evening Standard

We normally look in vain for more housing investment in a Tory Budget, and this one had no surprises. Hammond ignored housing and in so doing merely confirmed what we already knew: he’d already made an almost imperceptible shift away from subsidising the private market towards more ‘affordable’ housing in his Autumn Statement last year. That was enough. Housing’s got what it’s going to get for the next four years, in addition to putting up with further, deeply damaging welfare cuts and reductions in rental income.

Along with the Budget, this week saw publication of the UK Housing Review, celebrating 25 years since it was first created as the Housing Finance Review by the Joseph Rowntree Foundation, and edited by Steve Wilcox ever since. One of its many virtues is that it painstakingly documents what the government spends on housing and enables us to get some perspective on what is currently happening.

This is a task made much more difficult since George Osborne was chancellor, as he bequeathed a bewildering array of initiatives, almost all to bolster the private market, and many spearheaded by the Treasury rather than DCLG. The new edition of the UK Housing Review has a necessarily huge table which is the only place where you can see these in full (go to the Review’s website, and look for the 2017 commentary chapters, table 2.4.1).

Comparison is not straightforward as different initiatives span different timescales, but the broad picture is that 84% of the money that the government is spending in this parliament on grants, loans or guarantees will prop up the private market via infrastructure, cheap loans to builders, support for first-time buyers, starter homes and other measures. The remainder consists of the conventional programmes aimed at affordable housing, but even these include substantial amounts for shared ownership and rent to buy, while leaving nothing for new building to let at social rents. Hammond’s earlier Autumn Statement did indeed shift the proportion going to affordable housing, from a measly 14% to a hardly more impressive 16%. But that still leaves a colossal £43 billion to be spent on schemes such as Help to Buy, ISAs for first-time buyers, starter homes and all the rest.

Even this doesn’t cover all the government’s incentives for home ownership, as it only takes in capital investment. To this we have to add right to buy discounts, what remains of the home renovation grant programme, income support for mortgage interest, and a range of tax incentives also documented in the Review. Despite this, as we saw in last week’s latest English Housing Survey, the proportion of households who are owner-occupiers is stubbornly resistant to government incentives to increase it.

And as we also saw last week, when the government has spare cash, affordable housing investment has a lower priority than making very modest contributions to reducing national debt. John Healey’s PQ showed that over £800 million of the receipts received via right to buy since it was ‘reinvigorated’ in April 2012 have gone to the Treasury. He calculates that this could have financed over 12,500 homes if councils had been allowed to keep the cash. I calculate that its contribution to reducing the national debt is roughly 0.05%.

This picture not only stands in contrast to Labour government housing investment programmes, but even to the coalition government at the time when it published its equivalent to the housing white paper in 2011. Laying the Foundations may have been lacking as the strategic document it claimed to be, but at least at that time government spending was more balanced. The coalition was still spending the bulk of Labour’s National Affordable Housing Programme, which together with the coalition’s first Affordable Homes Programme totalled some £4.7 billion. Initiatives to promote home ownership and stimulate the market, such as FirstBuy, came to a modest £2.7 billion. This means that, before Help to Buy and a load of other expensive stimulants to the private sector, almost two-thirds of government investment was going towards affordable housing, including of course still quite a significant proportion of homes for social rent. If Hammond had switched priorities in his Budget to those that applied just six years ago, he would have unleashed a bonanza of £32 billion of affordable housing investment, without spending an extra penny. Dream on.

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The mother of all monopolies

Even with the most knowledgeable of housing audiences, eyes tend to glaze over whenever the issue of land is raised. To most it is just a huge expense and a barrier to building more homes. Not many people understand how the land market in the UK operates and how it impacts not only the housing market but also the wider economy. I studied the ‘economics of location’ as part of my degree but I still put this issue in the box marked ‘too difficult’ or ‘might try to understand that one day’.

Fortunately, more housing people are looking at the issue these days and there is some hope that an effective land policy might emerge as a result. Last week I reviewed Duncan Bowie’s new book, which has a lot to say about land and planning for housing, and this week another highly relevant new book is published  by Zed Books called ‘Rethinking the economics of land and housing’ (also available on Amazon and Kindle) by Josh Ryan-Collins, Toby Lloyd and Laurie Macfarlane with the New Economics Foundation.

It’s good to know from some of the early reviews that the book is highly accessible given the dryness of the subject (mine hasn’t arrived yet – I decided it wasn’t the sort of thing I’d want to read electronically) but Toby Lloyd has written an excellent taster for the Guardian.

Toby starts by recounting the many housing policies that have failed to meet the promise of solving the housing shortage and traces their failure back to our inability to address the role of land in the economy.

Land is obviously important for housebuilding, but the land problem goes much deeper than our housing shortage. It lies right at the heart of many of the economic problems we face today. Financial instability, mounting inequality, debt overhangs and the puzzle of stagnant productivity are all direct results of our failure to properly account for and manage land in the modern economy.

He traces the history of land ownership and the role it has played in impoverishing people as any additional value that they managed to create from the land was quickly absorbed by rising rents. He looks at the various attempts to justify private land ownership as the driving force transferred from agriculture to housing and notes the importance of partial public ownership in maintaining land supply. He traces the development of boom and bust in housing and the importance of financial deregulation in creating the over-investment in residential property that we suffer from today.

Lloyd argues that land is inherently scarce and its control inherently political: the normal rules of supply and demand are inoperable and the market is inevitably both dysfunctional and volatile. We therefore have ‘to break the positive feedback cycle between the financial system, land values and the wider economy, and to capture more of the unearned windfalls private landowners currently pocket at the expense of society at large.’ That can only come through financial regulation, tax reform and more direct intervention.

Lloyd ends with the famous description by Winston Churchill of land ownership as ‘the mother of all monopolies’. Churchill’s speech – delivered in 1909 – is one of the great reads,  hugely ahead of its time and still relevant today.

Churchill (1909) complained of the ‘enrichment which comes to the landlord who happens to own a plot of land on the outskirts or at the centre of one of our great cities, who watches the busy population around him making the city larger, richer, more convenient, more famous every day, and all the while sits still and does nothing.

Enrichment without service’ is still a primary feature of land ownership. More than a century after Churchill’s prescient analysis, the time has come for all of us to get to grips with the issue, and this book will help us do it.

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A basic right of citizenship

This week saw the 40th anniversary of the death of Anthony Crosland. He served as a Cabinet Minister in the 1960s and 1970s Labour Governments, including as Foreign Secretary (dying in Office in 1977), President of the Board of Trade, Environment Secretary, and Education Secretary, where he made great strides towards comprehensive education.

Normally regarded as a Gaitskellite revisionist, Crosland’s famous book The Future of Socialism, published in 1956, had a great influence on me when I read it in the 1970s. His central contention was that socialism should be about ‘ends’ not ‘means’; it should not be equated simply with the ownership of the means of production but should be judged by its contribution to ending poverty and improving the lives and prospects of ordinary people through the provision of the high quality public services across the board. His beliefs were put into practice as Education Secretary through his determination to replace Grammar Schools with a system of properly funded local Comprehensives, and as Environment Secretary in the 1974 minority Labour Government when he pursued a progressive housing policy.

Crosland also wrote a seminal Fabian pamphlet in 1971 called ‘Towards a Labour Housing Policy.’ (Herbert Morrison Memorial Lecture, Fabian Tract 410, available in the LSE Digital Library). This pamphlet was hugely influential at the time but it also has many resonances today.

Writing more than a year into the Heath Government, Crosland reflected on the 1964-70 Labour Government’s record – a huge building programme achieved, with increased subsidies that ‘helped keep council rents at reasonable levels’; increased help for new home owners through the Option Mortgage scheme and 100% mortgages, taking home ownership above 50% for the first time; increased help through improvement grants and the 1969 Act’s general improvement area programme; greater security of tenure and fair rents for private tenants under the 1965 Rent Act.

Yet, he argued, these achievements did not mean that Labour had solved the housing problem: far from it, major changes were needed to future housing policy. He referenced homelessness, overcrowding and insecurity; the too-slow action on slum clearance (despite also saying that ‘we have had too much of the bulldozer’); housing subsidies that ‘did not reach down to the poorest families’; and inequity between tenures: home owners received indiscriminate tax relief, council rents were a muddle with inconsistent practice around the country, there was little help with rent for private tenants, and furnished tenants remained outside the Rent Acts.

He started his assessment of future policy needs by stating the duty of government: to make sure needs are met and to tackle poverty and squalor.

‘It must be possible – indeed it is in our view a basic right of citizenship – for every household…. to have a minimum civilised standard of dwelling adequate for a decent comfortable and private household life.’

He then sets the need for government action against the failings of the free market:

‘(Our objectives) will not be met by the free play of market forces. A free market is wholly irrelevant to the most urgent problem, since the homeless and the over crowded are generally poor people who could not conceivably afford the market price of decent housing.’

So we cannot have a market solution to the housing problem. Some part of the building programme must be public: some part of the housing stock must be leased or owned at less than the economic cost: and the government must bear a final responsibility for the overall housing situation.’

So what did he advocate? Here are some of his practical policy proposals:

  • A third force between councils and owner occupation and a less marginal role for housing associations;
  • A strategic role for councils as well as their traditional role of building and managing homes, together with stronger metropolitan and regional planning for new homes;
  • Stronger default powers when councils fail to deliver homes;
  • A reorganisation of finance so that the most hard-pressed areas receive the greatest aid;
  • Greater involvement of community and neighbourhood organisations in the design of urban renewal;
  • Bring housing together with other aspects of urban poverty and deprivation.
  • Resist the Heath government’s plans to increase council rents: Labour should end the relationship between public rents and private rents – ‘there is no analogy here’; low rents essential to keep the pressure off the rebates system, otherwise the rebate scheme will have to cover even those on average earnings; Tory rents will lead to council housing making a profit and subsidising the Exchequer.
  • Welcome the extension of rebates to private tenants, but there should be strict regulations over the fixing of rents and the state of repair. Furnished tenants, excluded from the Tory proposal, should be fully included.
  • Tackle the unfair and indiscriminate subsidy to home owners through mortgage interest tax relief.

It was a strong programme then, and Crosland later went some way towards delivering it during his time as Secretary of State for the Environment. Extraodinarily, it has many echoes now 45 years later. And the fundamentals on which his policy platform was based – government subsidy to ensure many more homes are built, housing costs that were affordable without means testing, linking housing to other policy areas like social services, the economy and the physical environment, and the principle of equitable treatment between tenures – stand the test of time.

As a supposed revisionist in the 1960s and 1970s Crosland would probably be denounced as a leftie now, such is the distance that the political centre has moved in the meantime. But his practical and fair policy proposals, with just a little updating, were sufficiently prescient to guide us now.

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Radical solutions to the housing supply crisis – or just common sense?

Duncan Bowie displays his encyclopaedic knowledge of planning and housing in his excellent new book ‘Radical Solutions to the Housing Supply Crisis’, much of which is derived from the work of the ‘Highbury Group’ of planning academics and practitioners that he convenes.

bowie-radical

Bowie takes a long view of the housing supply crisis, looking back at the inadequate policies of governments of both persuasions over several decades. He sees ‘ideological continuities’ in policy since the 1970s but reserves his particular ire for the current Government’s policies as contained in the 2016 Housing and Planning Act. He criticises all governments for giving over-riding priority to the promotion of home ownership at the expense of a broader and deeper housing strategy. Even in its own terms the fixation with home ownership has failed over the last dozen years, as home ownership has declined, but this has brought about little apparent change in thinking. He criticises the long term switch from subsidising bricks and mortar (investment) to personal subsidies (housing benefit) and, even worse, to self-defeating subsidies designed to stimulate demand for home ownership. He criticises government approaches to the planning system for making private capital more powerful and the public sector weaker and more reactive, and argues that ‘localism’ cannot deliver social justice. He traces the growing abuse of the term ‘affordable’, which has been taken to Orwellian levels in last week’s White Paper (“War is peace. Freedom is slavery. Ignorance is strength. Unaffordable is affordable” he might have said.)

Bowie’s book is an interesting read from the start, full of policy scrutiny, but the book comes alive when he moves on to make a passionate case for a wholly new strategy. Based on a set of principles derived from the historical analysis, he makes the case for a much larger number of new homes but he puts the strongest emphasis on homes being genuinely affordable. The first action of a new government should be to switch subsidies from market or slightly sub- market provision to social rented homes at ‘target’ rents. In the long term, over a period of thirty years, funding should be switched gradually from personal subsidies to investment subsidies, providing housing that is genuinely affordable. Instead of counting anything which is in the slightest sub-market, as the White Paper does, Bowie reverts to the definition contained in the first (Livingstone) London Plan that housing costs should not exceed 30% of the net household income of the lowest quartile households. However, his central case is for a new spatial planning system with a National Spatial Plan and effective structures at regional, city region and local levels, with significantly stronger requirements for collaboration between authorities – effectively allowing a ‘right to grow’. He argues for a much clearer relationship between local plans and neighbourhood plans, avoiding the latter becoming a mechanism by which wealthy residential populations protect themselves from development that might benefit disadvantaged people. He also makes the case for councils taking an equity stake in larger new developments, looking to benefit from long term capital appreciation rather than initial levies.

As you would expect, Bowie does not duck the question of land. He supports the Lyons Commission proposal that there should be a cap on the value that can be gained by a landowner, for example when agricultural land is rezoned for housing, with the land coming into public ownership where necessary (eg if it remains unused). Published planning policies and conditions should aim to minimise land price inflation based on ‘hope’ value. Viability assessments, where needed, should be fully transparent, and he argues that taking development taxes (whatever system is used) at the point that the increased value is realised rather than when schemes are started would help developers to bring forward more schemes. Public land should be released for housing on the basis of meeting defined public objectives rather than just being put up for market sale, and councils should have far more flexible powers to undertake prudential borrowing for their own developments. Property taxes generally, he argues, need urgent reform, especially the hugely out-of-date council tax valuation system. Stamp duty hits households when they are at their most extended and there is a much stronger case for a tax on capital gain on disposal, starting at a high threshold to avoid penalising people on the margins of home ownership. Reforms to other taxes that impact on property, like inheritance tax, are also considered.

The current chronic lack of housing provision has been four decades in the making and will take many years to put right. Bowie’s central case is that wholesale radical reform is essential which will bring about an integrated approach between housing, planning, land, taxation and social security. It will be possible to argue about the nuances of every point, but it is rare to see such a clear programme of action proposed in one slim volume (and there isn’t space in a short review to mention many important points).

The book could be called ‘common sense solutions’ rather than ‘radical solutions’ because  almost everyone knows that these issues must be tackled at some point. But can they become a winning programme for a future Labour Government? Proposals like applying capital gains tax to first homes would meet a hysterical reaction even if there are clear offsets like abolishing stamp duty. Council tax reform has been avoided by every party for the last thirty years due to fear of adverse reaction (even if gainers and losers cancel each other out). The housing supply problem will not be solved by a cautious approach, but our political and media culture induces panic unless proposals are carefully worked out and presented convincingly and with enough conviction to overcome the inevitable reactionary storm. After Lyons, and with contributions like this one, Labour now has an excellent stock of possible policies to put together into a strategy. The earlier that task is undertaken the more time there will be to convince the public. A bold approach to housing could be key to turning Labour’s fortunes.

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Housing white paper: Government reinvents the wheel

Here are some initial reactions to the White Paper published today, having also listened to Sajid Javid’s statement at lunchtime. 

square-wheel

Almost every news programme and every newspaper has previewed the Housing White Paper, published today, in excitable terms, building expectations that something dramatic was about to happen. It seems they all believed the spin that the Government was to take radical and bold action to ‘fix the broken housing market’. Housing Minister Gavin Barwell in particular has been talking a good game over the weekend, and nearly sounded convincing.

But in the event the 100+ page White Paper is a huge disappointment, a damp squib, a fuss about nothing. It reinvents the idea that local authorities should undertake standardised housing needs assessments, pinches but waters down some private rented sector proposals made by Ed Miliband at the 2015 General Election and promises a huge number of consultations on future changes (mainly to detailed planning regulations) – well, they’ve only been in for 7 years, it’s too much to hope they know what they’re doing by now.

Most of the rest of it is the same old words, spoken by Housing Ministers back to the venerable Grant Shapps, but in a slightly different order: simplify planning, make more land available, release public land, strong protection for green belt, stronger voice for communities, better use of land, providing infrastructure, tackling skills shortages, more small builders, custom building, more institutional investors, making renting fairer, it goes on and on.

The Government is reinventing a square wheel. It didn’t work the first time and it won’t work now.

The White Paper is mainly about housebuilding, and a bit about private renting. It has next to nothing to say about making housing genuinely affordable. It continues the failed policy of pouring money into supporting demand for home ownership whilst allocating a pittance to new genuinely affordable supply. It has nothing to say about the horrific implications of welfare reform or the relationship between housing affordability and the benefits system.

Social rented housing make a single appearance in the White Paper, but only in the section on plans to ‘redefine’ affordable housing.

Continuing the current debasement of the language, affordable housing is to be defined as including many things that are not affordable at all.

Affordable housing will be defined as including:

  • Social rented housing (determined by guideline target rents)
  • Affordable Rented housing (let to the same eligible people as social rented but with rents at no more than 80% of local market rents)
  • Starter homes (to be restricted to those with maximum household incomes of £80K, £90K in London)
  • Discounted market sales housing (discount of at least 20% from market value)
  • Affordable private rent housing (at least 20% below market rent)
  • Intermediate housing (sale or rent at costs above social rent but below market).
The complete absence of any proposals to re-establish a major programme of building of social rented homes at genuinely affordable rents is the central failure of the White Paper. It might get boring to repeat this so often but as George Orwell said:

We have now sunk to a depth at which restatement of the obvious is the first duty of intelligent men.

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Asylum seekers’ accommodation: something for US to be ashamed about

In a week when there was a lot to be ashamed about, and especially the supine performance of the Prime Minister during and following her visit to Trump, today’s report of the Home Office Select Committee on the accommodation provided to asylum seekers should make us reflect on our own moral worth as a country. As we rightly rail against the inhumanity of Trump’s refugee ban, here at home we are guilty of treating victims of torture and others who have been ripped from their homelands by war and oppression with our own version of merciless cruelty.

People seeking asylum in the UK are eligible for Home Office support if they can prove they are destitute. They may be entitled to receive £36.95 a week – which means they could afford tea for one at the Ritz, but only once a fortnight – and accommodation. Accommodation is provided through six regional COMPASS contracts (Commercial and Operational Managers Procuring Asylum Support Services). The contracts were won by Serco, G4S and Clearsprings Group. They procure their accommodation through sub-contractors and private landlords. The contractors reported to the Select Committee that they were losing money heavily on the contracts, and the Government is seeking further major cuts in the overall budget.

The Immigration and Asylum Act 1999 sets out three circumstances under which asylum seekers are entitled to accommodation:

  • while the Home Office is considering whether an individual is eligible for support (Section 98 of the Act)

  • while the Home Office is assessing the application (Section 95), and
  • when the application for asylum has been refused but the applicant has yet to leave the country (Section 4).

(quotes and chart from from Select Committee report)

The vast majority of people are housed under Section 95 and the number of people accommodated on this basis has almost doubled over the lifetime of the COMPASS contracts (see Figure 1 from Select Committee report).

No’ people provided with dispersed accommodation under S 95, by quarterasylum-claims

The combination of the policy to disperse asylum seekers around the regions, the reducing Government budget, the rising numbers, and the losses faced by the companies, make it inevitable that the poorest accommodation in the cheapest areas will be procured. Genuine dispersal is also limited by local authority interest: in G4S’s areas, only 27 out of 135  authorities have agreed to accept asylum accommodation. G4S described the unwillingness of councils as ‘entrenched’. The outcome is that serious pressures are being faced by councils in poorer areas who have agreed to participate – as ‘clustering’ is leading to high demand for local services. It is yet another example of Government passing costs down without funding to local areas. Although many more councils have been willing to take Syrian refugees (so far the numbers are small, and its a better funded system), the Select Committee calls the wider system ‘unfair’ with many councils taking no asylum seeker at all.

The Select Committee details many of the problems in the process but focusses on the frequently poor standards. A significant number remain in temporary accommodation for months before becoming ‘settled’: these are often hotels where residents have inadequate amenities and space and find it extremely difficult to access suitable food and health and education services.

The evidence we have received suggests that some of the premises used by Providers as temporary accommodation are substandard and unfit to house anyone, let alone people who are vulnerable.

‘Dispersal accommodation’ into which asylum seekers are settled is meant to meet strict inspection standards and should meet the decent homes standard and be fit for purpose. However the Select Committee received evidence that people were being placed in accommodation that was unfit for human habitation with bad maintenance, well beyond a few isolated cases. Common problems identified included infestations of mice rats and bedbugs, dirty premises, and inadequate furnishings. One case of a known asbestos risk was also reported, but many of the dwellings were thought to have an adverse health impact.

It is clear that in too many cases Providers are placing people in accommodation that is substandard, poorly maintained and, at times, unsafe. Some of this accommodation is a disgrace and it is shameful that some very vulnerable people have been placed in such conditions. Urgent action must be taken by the Home Office and Providers to deal with this issue.

Single adults, often vulnerable, frequently have to share bedrooms, often with people they do not know from different countries or religions.

The system of allocating properties strikes us as chaotic.

If asylum seekers end up in a small proportion of authority areas, it cannot properly be called a dispersal system. Birmingham, Bolton. Cardiff, Glasgow, Liverpool, and Rochdale all have over 1,000, whilst wealthier places like Windsor and Maidenhead (containing Theresa May’s seat), Surrey South West (Jeremy Hunt), Epson and Ewell (Chris Grayling), and many others, have zero.

The number of asylum seekers in each area resembles an inverse list of the wealthiest areas in the UK. So perhaps we shouldn’t be too smug in our moral superiority in relation to Trump: just as the richest nation on earth is keeping out refugees, so are the richest towns in Britain.  

 

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Leasehold reform back on the political agenda

By Dermot Mckibbin

Just before Christmas Conservative MP Peter Bottomley and Labour MP Jim Fitzpatrick, the two joint chairs of the all-Parliamentary Group on Leasehold and Commonhold reform, secured a rare debate in the House of Commons on leasehold reform. (see also the House of Commons Library briefing for the debate).

The Government Housing Minister, Gavin Barwell MP told Parliament that he felt concerned about the difficulties that leaseholders were facing and that he would come back to the Commons in 2017 with reform proposals.  It is rumoured that the forthcoming Housing White Paper will contain further details. The Shadow Minister Ruth Cadbury MP announced that Labour would end the practice of excessive ground rents for leasehold houses and favoured the introduction of the Commonhold tenure as well as other reforms.

It is now clear that there is a political auction between the 2 major political parties in Westminster as to who can offer the best housing policies for leaseholders. Research by the coalition Government found that there are more than 4.1 million leasehold dwellings in England.  This figure is significantly higher than the previous estimate of between 2 and 2.5 million.

The Leasehold Knowledge Partnership Group (LKP ), who service the all-party group, estimate that there were around 5.37 million leasehold properties in England and Wales at the end of 2013.  43% of all new build registrations in England and Wales in 2016 were leasehold. There are too many votes at stake here for any political party to ignore the housing needs of leaseholders.

The problems of leasehold houses featured high in the debate. Both the Guardian and the Telegraph are united in their coverage of this issue. In the debate the Government Minister quoted LKP figures that 6,000 leasehold houses were built last year. Some of these properties have no estate management services and exist only to provide an income stream for the developer. The ground rent is sold off separately by the developer; often the leaseholder does not know about the sale. Some house purchasers who have  often been advised by a solicitor appointed by the builder find out that the ground rent can double every 10 years. This has the effect of making the house unsellable. This is an issue in the North West.

The consumer magazine Which estimated in 2012 that the amount of unlawful service charges was £700 million. Jim Fitzpatrick MP believes that the current figure could be £1.4 billion. Several MP’s referred to a national survey carried by the Leasehold Advisory Service in which 53% of leaseholders surveyed regretted buying a leasehold property. This is a high rate of dissatisfaction.

Several MP’s referred to the fact that the first tier property tribunal is no longer an informal dispute resolution scheme. Leaseholders who apply to the tribunal for a determination about unreasonable service charges are likely to face a barrister employed to defend the interests of the freeholder. Under the terms of their lease many private sector leaseholders can find themselves liable to pay the legal costs of the freeholder even if they have been successful at the property tribunal.

Peter Bottomley MP referred to a private leaseholder who was liable to pay the legal costs of his freeholder after a successful application to the tribunal. He refused to pay these costs. The freeholder applied to court for forfeiture of his lease as they were entitled to do. Had this application been successful the freeholder would have been entitled to all of the equity in his property even though the debt was comparatively small. Successive governments have ignored the Law Commission’s proposals to abolish forfeiture which is a nuclear weapon in favour of freeholders.

Insurance is a major issue for private sector leaseholders. The financial conduct authority has found that freeholders are able to pocket commissions of 40%.There  has been little interest by the Serious Fraud office and others in tackling cartels operated by at least one freeholder.

Unlike England and Wales, most English speaking countries no longer use the leasehold tenure system. The Commonhold and Leasehold Reform Act 2002 sought to introduce a system of Commonhold whereby the legal ownership would be held jointly by all leaseholders. Residents could decide for themselves how to manage their properties.

Unfortunately there are very few examples of the Commonhold tenure. The Act failed to make it compulsory for newly built properties. For existing properties all leaseholders in the property had to agree to convert to commonhold. This proved impossible to achieve. Under the commonhold system there is a strong potential for many leasehold problems to disappear as all the joint owners will have a strong incentive to manage their property as efficiently and fairly as possible.

The Conservatives are too close to the building lobby and the interests of property to be in favour of any large scale reform of the leasehold housing market. Their record since 2010 on leasehold reform speaks for itself. There is a now an opportunity for Labour to win the votes of leaseholders. More thought needs to be given to raising this issue within the Labour Party as leasehold housing issues are seldom discussed within the party itself.

Dermot Mckibbin is a member of Beckenham CLP. He is a retired housing lawyer.

 

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The Government sets a trap

As the Homelessness Reduction Bill completes its Committee stage – lengthy for a private members’ Bill because it has complex provisions that have been frequently amended during the discussions – suspicions are rising about the Government’s motivation in supporting the legislation. The fear is that it is setting a trap for local government to divert blame from Government when homelessness continues to rise, as it surely will.

The Government has always said it would ‘fully fund’ councils to enable them to deliver the significant additional services that will be needed to genuinely achieve the Bill’s aims of preventing more homelessness, as has been accomplished in Wales through similar legislation. This week it announced a headline figure of an extra £48 million additional funding. But the Minister’s (Marcus Jones) statement   makes it clear that this sum covers the 3 years of the spending review period, and amounts to £35m in 20170-18, £12m in 2018-19 and ZERO in 2019-20. He claimed that ‘offsetting savings’ will make sure there are no costs thereafter. Decisions have not yet been taken about the distribution of these funds between councils to reflect their differing needs of different councils, but it represents an average per council of less than £150,000 over 3 years.

The Association of Housing Advice Services called the funding allocation ‘desultory’. Based on data from five representative London councils, AHAS followed the findings of the earlier legislation in Wales and applied them to London, and estimated conservatively that the total cost to London alone would be more than £160 million. Their full analysis can be found here.

AHAS also make it clear that the rate of successful outcomes achieved in Wales is very unlikely to be repeated in London, where the pressures are significantly greater and ‘solutions’ to homelessness much more difficult to achieve. The most significant extra cost will be for additional temporary accommodation. According to Inside Housing, individual London boroughs have also been making assessments of cost that are significantly higher than the Government has allowed for – £2.4m in Lewisham, £2.6m in Ealing. In most cases, the extra funding from Government will be little more than a partial offset to the service cuts already made.

The Conservative chair of the Local Government Association, Lord Gary Porter, has called for a full review of the costs after the initial two year period because the initial costings are based on assumptions that are difficult to predict. The LGA has warned that homeless placements in temporary accommodation have already risen by 40% in the last four years and homelessness services face a funding gap of £192m by the end of the decade.

As previously discussed on Red Brick, the core of the problem is that Wales’ success in homelessness prevention is unlikely to be replicated in the more high pressure areas of England, and especially London, in the context of wholly inadequate affordable housing supply policies and benefit cuts. We are grateful for small mercies: anything that improves the services provided to homeless people and which helps some of them avoid homelessness is to be welcomed. But, rather like the management of beds in the NHS, the simple reality is that the use of temporary accommodation is rising rapidly because there is nowhere for people to move to.

‘Solutions’ to homelessness are becoming harder to find. Most homeless people simply cannot afford to buy on any scheme, many find it impossible to stay in or to find employment as they go through the experience of homelessness, access to the private rented sector is becoming harder and more expensive each year, benefit caps are pushing the PRS out of reach of many more people, and the social housing stock is in free fall – this week the Chartered Institute of Housing estimated that almost 250,000 social rented homes will be sold or converted to other tenures by 2020, intensifying the problem each and every year. Any notion that the Bill’s provisions will pay for themselves after two years is totally fanciful.

Any notion that the Bill’s provisions will pay for themselves after two years is totally fanciful.

Concern about what the Government is up to was raised this week by a letter from Government to councils setting out its assumptions. As reported in Inside Housing, they are expecting a 30% reduction in homelessness acceptances by the third year of the Bill’s implementation.

I agree with the LGA and others that it is almost impossible to make predictions of what will happen due to the Bill, but I confidently forecast that there will not be a 30% reduction in acceptances, rather the opposite, unless councils’ actual response to the Bill is to become more severe at gatekeeping – as happened after the 2002 Act – and ‘advice’ becomes ‘diversion’ and ‘blocking’. Ministers have threatened to ‘intervene’ if councils do not deliver and send in staff where councils do not follow its requirements, proving yet again that empty vessels make most noise.

I also predict that in 3 years’ time, when the numbers have grown yet further, Government will be happily passing the buck onto councils. They were on board to the legislation, they will say, and we fully funded them to implement it. It is not central Government to blame, it is councils, and mainly Labour ones at that.

This does not in my view mean that we should ditch support for the Bill. Instead, it is vital to highlight the true costs of implementation and to make it clear that central Government is selling local government short by a long way. Councils must up their demand for Government to adopt policies that will lead to a dramatic increase in the supply of social housing – the only real long term solution to the homelessness crisis. Locally, it is important to campaign for proper implementation – some homelessness is preventable and of course it should be prevented wherever possible.

It is good that councils will have duties towards a wider range of people, many of whom have been neglected before. But the fact that many councils could do more should not obscure the fact that most are struggling to find genuine solutions to homelessness as the housing crisis for people on low incomes intensifies.

Inside Housing magazine has had excellent coverage of the passage of the Bill  and they have produced this excellent summary of its provisions, reproduced here for the benefit of readers.

AT A GLANCE: THE HOMELESSNESS REDUCTION BILL

The bill is made up of 12 measures:

  1. A change to the meaning of “homeless” and “threatened with homelessness”. Each household that has received an eviction notice is to be treated as homeless from the date on which the notice expires, and the period at which a person is threatened with homelessness is changed from 28 to 56 days.
  2. All homeless people have access to free advice and information.
  3. Local authorities are required to carry out an assessment of what led to each applicant’s homelessness, and set out steps to remedy this in an agreed written plan.
  4. Local authorities are required to help to secure accommodation for all eligible households who are threatened with homelessness, and at an earlier stage.
  5. Local authorities are required to provide those who find themselves homeless with support for a further period of 56 days to help to secure accommodation.
  6. Local authorities are able to take action to help to secure accommodation under the new duties to help homeless households.
  7. Households in priority need who refuse to co-operate with prevention and/or relief activity will be offered a minimum of a six month private rented sector tenancy. They will not progress to the main homelessness duty. Households not in priority need who refuse to co-operate would be provided with advice and information only.
  8. All young people leaving care will be deemed to have a local connection in the area of the local authority that is responsible for providing them with leaving care services under the Children Act 1989.
  9. Applications are provided with the right to request a review in relation to the prevention and relief duties.
  10. The bill introduces a duty on specified local agencies to refer those either homeless or at risk of being homeless to local authority housing teams.
  11. The secretary of state has a power to produce a statutory code of practice to raise the standards of homelessness support services across the country.
  12. A local housing authority must satisfy itself that specific requirements are in place where it secures accommodation for vulnerable households in the private rented sector
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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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