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The Crisis of Employment and Pay: A housing association’s perspective

Introduction

The last year has heralded massive changes to the way we live and work. Millions of those in work have seen huge changes in the way they do their jobs, learning how to reduce Covid risks in the workplace, or carry out their job from home via video calls and remote working. Millions of others, however, have been out of work throughout this time – creating a growing gap with the new skills required in the workplace. Some jobs are starting to come back, but how many? In what areas? And will people whose jobs don’t return be able to find work in new areas?

Peabody Index background and findings

As a London-based housing association with over 150,000 social housing residents, Peabody has long been interested in helping our residents into stable employment with a living wage. Our Peabody Index reports track employment among our residents, comparing them with broader measures in London and throughout the UK, publishing updates throughout the pandemic.  

Job vacancies in London are recovering, but they are sill 14% below pre-pandemic levels, compared with vacancies back to normal levels (or higher) in the rest of the country. Unemployment is still growing faster in London, with a 4.9% increase between December 2020 and March 2021 compared with 3.8% in the rest of the country.

Falling incomes have caused a rising rate of people are in high levels of debt.  Worryingly, many are taking out bad loans just so they can buy essentials like groceries and toiletries. Young people and ethnic minorities appear worse affected.

The future is uncertain for those in work as homeworking seems to be with us for a long time. Londoners favour working from home more than their counterparts elsewhere in the country. Research suggests that about one third of them expect to work from home more in the future, mirroring the one-third of our working residents who are currently working from home. If workers in the City of London stay at home, there is serious concern for the future of the support economy that services those jobs.

What should policy do?

So what can be done? Employers need supporting to create jobs, and to support young people into the workplace – something that can be more challenging when staff are working remotely or when the economic future is uncertain.  Peabody are pleased to be getting involved with the Government’s Kickstart Scheme for jobs and apprenticeships for young adults, which shares many ideas with the Opportunity Guarantee that Peabody has supported.

Given the broader shifts towards homeworking, many of us have taken on new digital skills, some of which we might take for granted. In February 2020, how easily could you share your screen on Zoom or co-edit documents on Sharepoint? For people who have lost their job during the pandemic or been unable to transition to homeworking, coordinated digital skills programmes will be needed to prepare for a future of working remotely. Other people have worked outside the home and developed a range of new skills – from taxi drivers learning new road layouts due to increased pedestrianisation to care staff learning to use PPE, our residents have told us of a huge range of new skills developed. Those not in work may need training to catch up and renter the workplace.

And despite encouraging signs of recovery, we need to make sure the welfare safety net functions well at the time it is needed most. That is why we continue to call for Universal Credit wait times to be reduced and the £20 per week uplift to be made permanent.

Helping social housing residents into work

At Peabody, we try to use the best evidence to help our social housing residents. During the pandemic, this means the evidence must analysed quickly and spread through to our teams. The Peabody Employment  and Training Teams have helped 451 people into employment, supported 92 residents to achieve accredited qualifications and a further 103 residents into non-accredited training.

Delivering this support remotely has been challenging. We have developed a mix of online resources, independent training support, and general information sessions with guest speaker presentations. We try to make these sessions well-rounded, with guest speakers from local MPs, GLA Assembly Members and the South-East Chamber of Commerce. We are seeing a rise in those who are self-employed or planning to open a business. Our monthly business forums aim to help people get these ideas off the ground.

Not all work is done online, even during the pandemic. We have supported procurement opportunities and facilitated pop-up markets to provide the businesses with an opportunity to trade during and in-between lockdowns. This year we saw Thamesmead businesses, supported via our enterprise programme, on both the Greenwich and Bexley side win at their local business awards.

More needs to be done as we pull out of this pandemic. So much of the past year has been responsive – trying to make sense of the pandemic and its impacts. Only with rigorous research and evidence-based policies and programmes can we start to shape the future of work in London and the UK.

<span class="has-inline-color has-accent-color"><strong>Greg Windle</strong></span>
Greg Windle

Greg is a Research and Insight Analyst at Peabody.

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Surviving Student Accommodation Landlords

Students often experience some of the worst housing conditions in the country, yet their voices are often marginalised and ignored. The issue has worsened, to the extent that student housing has essentially become a joke, with various popular culture depictions portraying the often disgusting conditions in which students are forced to live.

Fresh Meat provides a prime example of this; while it might seem hyperbolic at first glance, for those who didn’t go to university or who were privileged enough to be able to spend extortionate amounts on purpose-built student accommodation. Even students who can afford this, still face problems with the standard of accommodation and value for money available.

However, slug trails, mould, broken windows, burglaries and malfunctioning boilers are all issues that students are faced with regularly. This is not hyperbole, it is reality.

I have spoken to many of my friends and family members about student housing and nobody was surprised by my experiences of substandard housing and neglectful landlords. Everybody knows that this is happening. In my own experience, I have dealt with broken windows not being fixed for four months, mice, slugs, mould, no heating or hot water for weeks, windows with no curtains that woke me up at sunrise everyday and landlords turning up unannounced during a pandemic without masks.

Throughout this pandemic hundreds of students have posted on platforms such as TikTok, showing leaking ceilings, broken kitchen equipment and rat infestations. So it begs the question of why this is allowed to continue. It is a woeful neglect of young people and it leaves students incredibly vulnerable and living in awful conditions. 

This isn’t only a problem with students privately-renting, it is also a problem with student accommodation, whether provided directly through the university or a third party provider. As the Guardian reported, student accommodation ‘doesn’t officially classify as housing…as it falls outside a specific use class, it doesn’t have to adhere to the usual standards associated with dwellings’. It means that student housing is often treated as either a hotel (C1) or residential institution i.e. care home or hospital (C2), because these types of accommodation are not intended for prolonged residence, there are far fewer regulations when it comes to space and daylight.

The responsibility for the poor conditions and facilities that students endure in purpose-built student housing lies directly with universities and third parties. Universities have, or should have, a duty of care to their students and exploiting gaps in housing regulations completely contradicts this moral obligation. 

There is a huge divide in student cities, between aging university-owned student accommodation that is in dire need of refurbishment, and brand-new purpose-built accommodation often in city centres. For the majority of students, choosing their university accommodation for the first time they are faced with a dilemma: spend all or the vast majority of their student loan on quality accommodation and struggle with living costs for the year or have more money to enjoy their first year of university life, but live in poor housing.

Most students choose the latter and while it might seem like a good compromise for them, students should not have to choose between having enough student loan to survive, and living in adequate housing.  

Part of this comes down to a lack of understanding about tenants’ rights among students. I’d argue that the blame for this lies with the universities themselves. They clearly understand the position that young people are in when they arrive at university. Yet, they don’t provide any real information to students about their rights with regards to renting. The vast majority of young people rent for the first time at university and so this kind of information would be crucial to these students. Why is none provided? 

ACORN renter’s union has been working hard in many major student cities to provide students with more information about their rights. Additionally, they have taken action on behalf of students who are struggling with neglectful landlords, such as their recent action in Manchester when ‘over 25 ACORN members marched on the business address of Zear Property who left university student Kelsey in squalid living conditions so bad, that she was forced to move cross-country back to her hometown in the middle of the pandemic.’

While, of course, it is great that students have groups on their side in these situations and this support is clearly needed, it should be the landlords themselves and universities that are taking action. Additionally, it is clear that gaps in regulations surrounding student accommodation needs to be resolved. 

It is interesting then, that when young people attempt to make their voices heard about their housing experiences they are often dismissed and deemed irrelevant or naive. The state of the housing market at present means that it will likely be decades before current university students are able to put down a deposit on a first house, and so their experiences of renting are incredibly valid.

Moreover, if young people do not know their rights with regards to tenancies and are taken advantage of during their university study, they will likely continue to be taken advantage of once they graduate. This creates more opportunities for landlords to cut corners, provide substandard accommodation and charge extortionate prices for the privilege. 

The government has argued that it has introduced measures to protect students in student housing and this is woefully inaccurate. Although protections have been put in place regarding deposits, and this has been a welcome development, there is much more that needs to be done. This government announcement suggests that more has been done to make sure that landlords resolve problems quickly, yet this is just not being seen implemented in reality.

From my personal experience, I had to wait for three months for our heating to be fixed, despite being in constant contact with my landlord asking them to resolve the issue. Landlords certainly seem to exploit the lack of understanding of the rights of tenants at present and government action has done little to resolve this. 

We need real, robust action from universities to provide useful information to students from the moment they apply, months before they will need to choose accommodation. Young people need to be aware of their options, realistic expectations and rights before they enter into any contracts. Some universities provide lists of approved landlords, who do not attempt to take advantage of students, while other universities actively attempt to discourage any such lists being made.

Universities need to be standing up for their student populations and working with local councils to ensure that private student housing is up to scratch. MPs also need to be raising this issue, to draw attention to the increasing disparity between aging student accommodation and modern expensive accommodation, but also to amend legislation to make sure that student housing is adequately regulated.

Greater consultation with students over their housing experiences would help to identify major problems and explore mitigation. Our experiences are valid and they represent a significant problem of landlords having too much power that is present throughout our housing sector. 

<strong><span class="has-inline-color has-accent-color">Amy Dwyer</span></strong>
Amy Dwyer

Amy is the Chair of the Young Fabians Education Network, Founder of the University of Manchester Young Fabians and Co-Secretary for Labour Doorstep.

Alongside this, Amy is also studying for her MA Politics and is standing as the Labour candidate for Longton and Hutton West in the South Ribble Borough Council By-Election.

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Solving the housing crisis requires action at all levels

The UK is in the midst of a housing crisis that isn’t going away anytime soon, with the pandemic only exacerbating this problem and leaving people struggling financially. Whilst we are seeing strong levels of first time buyers get onto the property ladder, simultaneously nearly 1 in 5 (18.7%) of households are occupied by private renters, with a further 16.7% of households occupied by social renters.[1] This is a huge proportion of the population, and whilst we are working to increase access to homeownership, it’s important that those who are currently renting are not left behind.

At MTVH, it is part of our DNA to support people at all levels and provide a quality home. Whilst we offer a dedicated shared ownership through our SO Resi brand, we also support those who are renting. For example, in London we offer London Living Rent which is a form of ‘try before you buy’ and allows Londoners to rent whilst building up savings to buy a home.

But let’s start with shared ownership.

Shared ownership is needed in society, as it provides an affordable opportunity for people to have access to a stable, well-located home. My personal belief in shared ownership is firmly rooted in my own experience – it’s not only how my wife and I were able to buy our first home, but also how my parents were able to get onto the property ladder after moving to the UK in the 1960s. My story is not unique and so many of my colleagues at MTVH have similar anecdotes about how shared ownership has given them the security of homeownership, which we know helps to open other doors to improve overall quality of life.

Our dedicated shared ownership brand SO Resi recently published a research report in conjunction with Cambridge University that looked at the shared ownership market in 2020. Perhaps most significantly, our research showed that since 2015/16, the number of shared ownership completions per year has increased from just 4,084 to 17,021. But it’s important to understand why shared ownership is taking centre stage for young buyers.

A combination of staggering house price growth, increasingly high deposits and a lack of lower loan to value mortgage options has led to aspiring homeowners moving away from the open market and utilising government products such as shared ownership. Whilst the government’s new 95% mortgages may work to address some of these problems, for many people a five per cent deposit on the open market is still out of reach.

Our research also revealed data sets surrounding the proportion of those who staircase each year. There is a misconception that those in shared ownership homes will never staircase, but our research shows that on average between 2-3% of shared owners staircase to 100% ownership each year. Staircasing isn’t possible for all shared owners, but the flexibility of shared ownership means individuals can make the scheme work to suit them – whether that’s living with a 25% ownership or working to increase your shares over a period of time.

Shared ownership has been around for decades, and the government’s plans to amend the product simultaneously presents both opportunities and concerns. Many of those who took part in our research specifically raised concerns around changes that will allow buyers to purchase a minimum 10% share rather than the current minimum of 25%. Housing providers will also be responsible for repairs for 10 years, leading to an increased financial commitment from providers.

There is no denying that these changes are advantageous for the buyer, and will open the doors even wider to homeownership. However, those surveyed believe the shift in responsibility of repairs will reduce the supply of homes that they are able to build. If the level of affordable homes available drops, this will worsen our current housing crisis and plunge more people into difficult situations when it comes to finding a home.

We know that a good home and environment are key in ensuring that everyone has the chance to live well. But homeownership isn’t possible for everyone – and whilst shared ownership increases access, there are still those who rely long-term on renting, whether privately or through a social housing provider.

To solve the housing crisis, we need to offer solutions that deal with different challenges, which vary as people need homes to rent and to buy. Instead of pitting one tenure against another, we need to collaborate and support those who do depend on the rented sector. Rent prices are rising and this is leaving a generation of people locked in paying high rent prices with no possibility of saving, either for a house deposit or to improve their quality of life.

Long-term, we need some clarity on solving the housing crisis as simply launching temporary schemes isn’t enough anymore – we need real policies that tackle the problems faced by young people today to ensure they can continue to get onto the property ladder at an affordable price in their preferred area.

In the current economic climate, shared ownership demonstrates its importance by supporting people to grow and start their families, put down roots and enjoy the benefits of homeownership without having to find the astronomical deposits required to buy on the open market. Like any product, shared ownership isn’t perfect, nor is it the single solution to the housing crisis, but it is an incredibly important offering that bridges the gap between renting and full ownership.

<strong><span class="has-inline-color has-accent-color">Kush Rawal</span></strong>
Kush Rawal

Kush is the Director of Residential Investment at Metropolitan Thames Valley Housing


[1] https://www.statista.com/statistics/286444/england-number-of-private-rented-households/

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Priti’s persecution of Gypsy, Roma, and Traveller communities

In the last election Conservatives ran on a manifesto targeting the Gypsy, Roma, and Traveller community. They sought to give police new powers to arrest and seize the property and vehicles of trespassers who set up unauthorised encampments – in “order to protect our communities”. But at what cost and where will these families go?

Unauthorised encampments yet another symptom of a failing planning system

The recent Government consultation on ‘Strengthening police powers to tackle unauthorised encampments’ closed on the 4th March. The Home Office is due announce its findings very soon. These callous changes could have far reaching consequences, resulting in persecution for those living with unmet housing needs.

England is already facing a systemic housing shortage where building new homes is illegal without prior permission. On one hand, the heavy hand of the law seeks to punish minority groups whose nomadic way of life our system fails. While on the other, bias, racism, and political failure to tackle the systemic shortages endemic in our planning system.

Current land use regulations leave the travelling community bottom of the list for unmet needs. Both Government and local authorities have failed to address the needs of the Gypsy, Roma, and Traveller community. The proposed criminalisation of their a way of life does nothing to solve the issues.

Consultation on whether to persecute most disadvantaged communities

Former Home Secretary Sajid Javid previously had plans on unauthorised encampments, in particular to amend sections 61 and 62A of the Criminal Justice and Public Order Act 1994. Priti Patel seeks to lower the criteria for police to be able to direct people away from unauthorised sites by changing this legislation.

Trespass is currently a civil offence requiring landowners or local authorities to seek a court order to evict people if they are occupying private or public land. Some describe the process as tiresome and slow. Out of the 23,000 traveller households in England, it is thought that 14% live on unauthorised sites, equating to around 3,200.

Sadly, lowering the criteria for permitting new sites for homes, or pitches for the Gypsy, Roma, and Traveller community seems to be a political hot potato. The recent planning reforms set out to consult on what new criteria might be required.

It could be a missed opportunity for the traveling community as local plans, which could be substantially consulted on, could outline potential pitches for authorised encampments. Instead of futile attempts at persecution.

Solution is to authorise new encampments

Research by Friends Families and Travellers (FFT) shows that 1,035 traveller caravans are located on unauthorised encampments in England, although this is widely considered to be an underestimate. Many have living arrangements that could currently result in them facing prison, a fine, or having their family’s home taken away from them.

Labour’s last manifesto offered nothing to the Gypsy, Roma, and Traveller community. It did not seek to protect the human rights of those who have the “crime” of having nowhere else to go. This is a community who have lived in England and practised a nomadic way of life since before the 16th century. We have witnessed some local authorities buckle under political pressure, having allocated funding for new sites, only to U-turn.

NIMBYism Leading to Local Authority Persecution of Gypsy, Roma, and Traveller Communities

Milton Keynes Council now seeks to extend the town’s two current sites and put any new ones on hold. Our current planning system caters for the ‘Not In My Back Yard’ (NIMBY), rather than those most in need. The recent story of Bethany Rose, who has been waiting for a pitch for over a year, highlights how the “NIMBY culture” has resulted in the West Sussex’s plan for 50,000 new homes being agreed with not a single authorised travelling pitch.

Attitudes need to change on planning, as well as how we accept others way of life. In England only 13 permanent sites have any available pitches for Gypsy, Roma, and Traveller families, out of a total of 59. Almost 1,700 households are on waiting lists for pitches on traveller sites. This illustrates a severe shortage of pitches available of people living on unauthorised encampments.

Manufactured housing: lessons to be learned from the United States

We must recognise that manufactured housing associated with mobile homes on such parks are considerably cheaper to build than typical bricks and mortar. These can be energy efficient and produce much less waste than traditional site-build construction, with considerably less embodied energy. This results in much more affordable rents.

Permanent sites often demonstrate how small lot sizes can result in high population densities. Market urbanism expert, Nolan Gray, has written for Strong Towns on how planners can learn from US ‘trailer parks’. Gray argues that a more permissive approach to such types of housing settlement should be taken. Primarily to not undermine access to affordable housing. But back here in England our planning system is failing to tackle the inequalities faced by these communities.

Tory persecution of the most disadvantaged affects education

We know Gypsy, Roma and Traveller children leave school at a much earlier age than any other ethnic group. They also have worse attainment standards from early-years onwards. Only a handful ever recording having attended university. Shelter’s report shows us the devastating impact of not having a permanent home. In particular on the ability of a child to participate in school successfully.

Government must stop treating low-income communities such as the Gypsy, Roma, and Traveller community as objects of contempt. We cannot continue to subject them to top-down paternalistic planning. It prevents families from putting down roots. Nor can we accept the unjust criminalisation of a communities nomadic way of life. Especially, not without offering a credible preventative alternative to such criminalisation.

Ultimately this is a failure of our planning system to effectively plan for some of the most disadvantaged groups. It comes as no surprise that the Tories have the Gypsy, Roma, and Traveller community in their sights. Simply because they lack political representation. With nowhere else to go, this criminalisation is nothing short of a targeted attack on the community.

Labour must recognise this and commit to ending the shortage of authorised sites, mandate designated sites, and embrace manufactured housing, if we are to truly commit to a more fair and just society.

<strong><span class="has-inline-color has-accent-color">Christopher Worrall</span></strong>
Christopher Worrall

Editor of Red Brick. He is currently an Investment Manager at Guild Living, a Non-Executive Director of Housing for Women, and is on the Labour Housing Group Executive Committee.

Chris also co-hosts and produces the PricedOut UK Podcast.

He writes in a personal capacity.

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Building a Coalition for Building Homes

In a way, it was almost inevitable that I would develop an interest in gentrification and housing. After all, I am a millennial and I grew up in Zone 2/3 of Inner London. I didn’t just watch my neighbourhood change as I grew up, I watched the door to a future my parents’ generation took for granted close before my eyes. 

My parents moved to Forest Hill, South East London in the mid-80s. Even back then my parents couldn’t afford to live in Hackney or Tooting (my mum had been a big Citizen Smith fan). Growing up, South London was the butt of jokes – most of which revolved around it being poorly connected, scary or dull. But by the noughties, my area would start appearing in the aspirational columns about London’s new exciting suburbs. Housing prices rose sharply and continuously. The global housing market crash in 2008 couldn’t stop this runaway train and the last decade has seen my neighbourhood transform. 

I noticed the most rapid changes taking place after 2011, when the London Overground was delivered to the area. I was away at university over this period and as I returned each summer, there were new cafes, estate agents and pizza places to replace the launderettes, sandwich shops and second-hand electronic stores. I remember chatting to the owner of Cafe No 41 on Brockley Rise around this period. He had owned Bertie Rooster’s Fried Chicken on the same site and he said he’d noticed the area changing, so he thought he’d better change too. Smart move. 

Local NIMBYs, true to form, opposed the transformative rail connections. I remember my dad, who worked in transport, railing against the local opposition to it. He had been arguing for greater capacity for the Overground, for longer trains, and an additional station between Surrey Quays and Queen’s Road Peckham. As the Overground now sits at bursting point — a victim of its own success — he should’ve been listened to. Ironically, the Overgound has been a huge boon to their property-owning NIMBYs that opposed it.

But while I infamously remain sniffy towards NIMBYism, I do understand it. A rapidly changing neighbourhood can be discombobulating and disconcerting. As a strange teenager, I remember pleading with my friends to go to the array of cornershops in Honor Oak instead of the new Sainsbury’s Local if they were buying drinks and snacks before we had a kickabout in the park. Instinctively, I didn’t like what I saw as the homogenisation of my local mini-high street and I knew that Sainsbury’s would destroy some of those independent shops (it did) that I felt I had a relationship with. My instincts were to, in a way, keep my neighbourhood ‘static’. 

I’ve been on a journey to try and understand the phenomenon that shaped my home town when growing up and understand my own feelings around it. While at university, I wrote my dissertation on the changing Toxteth and Canning areas of Liverpool. I had grand ambitions to start a university society that would work with the local community to improve ‘Town & Gown’ relationships in the nearby area. Like most of my plans, they crumbled due to a bad attitude and lack of endeavour. The dream ended with me getting into a fight at a Residents’ Association’s ‘cheese & wine’ night and quite literally being thrown out. 

However, looking back on the experience, it gave me a good understanding of how gentrification works and was a valuable insight into a world I would later inhabit. Gentrification is an organic process and one seen in major cities around the capitalist world. The cliched but illustrative example is as follows – artists move into an area due to cheap rents and large spaces. They create an artistic community and the area becomes ‘cool’. With it being cool, it then becomes desirable. The greater appetite for the housing then pushes up rents and prices and gradually the area’s demographics shift. 

It was once thought that cities would act like a pebble falling into a pond, rippling outwards and decaying inside. Yet from the 1970s onwards the shift has been back into the centre. Some hippies and squatters now own multimillion pound property in areas of our West End. Savvy boomers profited. 

The process of gentrification can be sped by developers who see the opportunities offered by a rent-gap to maximise profits. In this, developers are simply capitalising on a saturated housing market and building where demand is. Likewise, ‘gentrifying’ businesses are responding to their new clientele not moulding customers from thin-air and wishes. Cereal cafes and posh chicken shops are a symptom of gentrification, not a cause. Today, many of the anti-gentrification activists I come across are ‘first wave’ gentrifiers themselves, similar if not a bit older than my parents.

While it is an organic process, gentrification does cause profound issues. Sharp rises in the cost-of-living create havoc for low-income families and at its starkest, drives them from their neighbourhood. As I mentioned in my last blog, social homes with secure and affordable rent is a fire-wall against gentrification. But London is increasingly being hollowed out, swathes of North & West London in zone 1 & 2 have become binary and soulless places – the very well-heeled live alongside enclaves of council homes occupying parallel lives. I worry that the evaporation of London’s Little Italy, will eventually happen to our Little Bengal and our Little Portugal.

***

My blood still curdles at a previous generation of local politicians who seemed to actively encourage the gentrification of their neighbourhoods, as a means of improving their patch. Gentrification doesn’t solve poverty, it just kicks it down the road. But for some local politicians, that once seemed enough. Angered by what I saw, I vowed to campaign against it. It signalled my first forays into local politics. 

In my last blog, I wrote about Lewisham’s Residents Charter and how we’ve come along way from this era. Like our predecessors, we know that mixed communities are positive for social cohesion and shared uplift. Likewise, we also know that many of our large post-war estates are in need of urgent renewal. However, as an administration led by a new wave of politicians, we’re committed to ensuring that any regeneration produces a net gain in social homes, expanding our gentrification fire-wall in the borough. 

Yet I do not remain hopeful for the future. Writing this, I am struck by just how long I was part of the problem and what that says for the future. I was driven into local politics by the anger that while my neighbourhood was being torn up and built back up, none of these homes were for me.

Developers, greedily lining their own pockets, were building ‘luxury flats’. Councils were failing to stand up to them and accepting schemes with pitiful amounts of affordable housing. 

It’s been through sitting planning committee as a councillor that I learnt that most of these flats weren’t ‘luxury’. The only thing luxury about them was the unaffordable price. The housing crisis has simply become so insane in London that any market-value home is deemed luxury and therefore out of reach of someone like me — a young person without assets, earning the average London wage. 

This situation has bred a culture of cynicism among an entire generation. As we discuss rents at house parties and scoff in frustration at the mere idea of saving for a deposit, we’ve grown suspicious of new housing and growth. Moreover, the council-led schemes of the past have led to a sour taste in people’s mouths. While these schemes, directly reducing social housing, could be an example of top-down gentrification — it would be wrong to view gentrification as a whole, as planted from top-down from developers.

If writing to note to my younger self, I’d be rather pithy. ‘Dear Leo, sick of chain stores and the champagne et fromages under those new flats? Let many, many, more flats just like that be built, so rents and prices round here come down and the demographics that fed those independent shops and the sandwich shop you loved so much, can remain.’ As this article highlights, the forces that drive gentrification ‘do not come from the construction of specific apartment buildings or retail complexes, no matter how many granite countertops or artisanal coffee shops they might contain.’ Increasing supply will lower prices.

***

It is only now that I see how damaging the framing of gentrification as a top-down process, thrusted-upon benign communities by developers, has been. 

As a councillor, I have been shocked by the glacial and bureaucratic process of approving new homes in the borough. Not only that, I’ve seen how small interest groups have leant on councillors to reject new homes on spurious grounds. 

But this is only the tip of the iceberg. As this Centre for Cities report highlights, our planning system operates like the old Eastern Bloc, rationing supply through a permit system. ‘In both the former Eastern Bloc and the English housebuilding market, firms must apply to planners for a permit, or a planning permission, to get the inputs they need to do business.’

We currently have a system that cannot respond to demand. Developers need to go through the process of receiving planning permission which is slow, often costly and fundamentally uncertain (planners can downsize or councillors can strike down an application, years into the process). This means ‘the amount of land that they can develop tomorrow is fundamentally unknown.’

It is this risk, inherent in our system, that means developers hoard land that has planning permission (or is likely to receive planning permission). As Centre for Cities notes, ‘this ‘hamster-like’ behaviour is rational as it means they will always have land on which those assets can be operating, even if planning permissions temporarily dry up.’ The report also notes:

‘A site that has planning permission or is suspected to have a high chance of receiving planning permission can greatly increase this price, especially near cities and large towns with successful economies and expensive housing’. To illustrative this point, in 2010, agricultural land without planning permission around Cambridge was worth roughly £18,500 per hectare. Once it received planning permission for housing, the value per hectare increased to £2.9m.

Developers must cover these high land costs, and they cannot escape them by increasing production or efficiency as the planning system rations the supply of land they require. They therefore need to pass their land costs onto consumers and sell new houses at high prices.

Developers experience a disadvantage trying to acquire land which can be lawfully developed, they enjoy the advantage of a sellers’ market when selling new properties to consumers due to slow buildout rates. This means that predominantly only big powerful developers can get hold of land which will get large-scale planning permission, and once they have hold it, they can build a slow ‘absorption rate’ keeping house prices high due.

If developers could instead just buy land and develop it without applying for a planning permission, then “planning gain” and thereby the absorption rate would both disappear. The price of land would reflect local demand and, as firms would and could only buy what they immediately needed, they would be forced to build new housing as quickly as possible to outcompete rival firms that could now do the same.

It is our system which creates the circumstances for large developers to be able to buy the rationed land for development and build slowly as they face little competition. 

But this isn’t a cry to rip-up the rule book. Local planning frameworks should remain in place and offer clear rules of what can be built and where. However, areas zoned for development should be greatly expanded. As the campaign group Priced Out argues: 

‘For the areas that are zoned for development, there should be transparent rules about what cannot be built there — which could include what the developments are used for, and rules on look and feel — with everything that does not contravene these rules allowed. Alongside this we already have extensive national building regulations, rules on the sustainability of developments, and various other regulation which is already in place.’

Priced Out Manifesto | Rules-Based Planning

However, when reaching out to colleagues to express these views and concerns, I receive immediate and blanket push-back. Those I speak to see the bureaucracy of our planning system as a bulwark against lowering standards. They instinctively reject ideas about cutting red tape and increasing competition to raise standards. Developers are the bad guys that need to reined in by councillors, rather than firms rationally gaming a broken system that we uphold. 

It has become fashionable across the political spectrum to deny that our housing crisis is linked to a lack of supply. Campaigners against new market-sale homes often point to the fact that the UK has 216,000 long-term vacant homes, which could occupy a sizeable chunk of our 280,000 homeless people, if only they were happy to be bussed to Cornwall or Cleethorpes.

However, rather than suggesting that we do not need to increase supply, our empty homes highlight our nation’s stark housing shortage. In the UK, only 0.9% of homes are long term vacant. In a healthy market, surpluses provide ‘a strategic reserve which they can use to respond to sudden changes in consumer demand.’

Compare our situation to Japan, a nation with an affordable housing market. In Japan, less than 5% of homes are socially rented (here it is around 17%). Across Japan, 5.6% of homes are long-term vacant, while Tokyo the figure is 2.5% – which is a higher share of empty home than in Burnley – other most affordable city in England and the one with the most vacant housing. Suppressing vacancy rates in the UK will only make the situation worse. Instead, we need to build enough to homes to create a healthy surplus.

As I have written previously, the housing crisis cannot be tackled by local authorities building themselves. This blog succinctly nails the issue: The UK’s housing affordability crisis is too little supply, which cannot respond to prices. However, getting Labour Party colleagues and angry young millennials alike to accept that we need developments of market-rate properties on a huge scale in areas of the country where our housing shortage is most acute — will be an uphill battle. 

Steam-rolling through reforms won’t work. Instead, we need to start that process of chipping away – gradually building a coalition in support for house building. And maybe one day we can get more people to say yes-in-their-backyard to luxury flats.

<strong><span class="has-inline-color has-accent-color">Leo Gibbons-Plowright </span></strong>
Leo Gibbons-Plowright

Leo is a Labour and Co-Op Party Councillor for Forest Hill in Lewisham.

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New Roofs or Old Ceilings?

Under Corbyn, Labour announced its bid to combat high rents through old-style rent ceilings. If we look back across history we see these have had many unintended consequences. Often we have found the introduction and continuance of rent controls have done more harm than good. So should Labour continue to embrace such a policy?

We know rent legislation cannot cure housing shortages. Rather, regulations such as rent ceilings merely mitigate the effects by giving comfort to sitting tenants – at the expense of prospective tenants. All too often we see false views on rent control spill over from popular misconceptions into apparently learned debates. It is for this reason why Labour must resign rent ceilings to housing history and focus on the real problems at hand.

History shows Rent Controls are Bad

In Britain we have recognised the damage done by rent controls as far back as The Rent Act in 1957. Where at the time we witnessed expensive properties freed from such regulations. Why? Because old-style rent ceilings foster dilapidation of housing stock, encourage immobility, and distort land-use patterns. It simply makes housing worse.

Originally the introduction of rent ceilings sought to protect tenants from rent rises caused by war-time shortages. Often caused by bombing. Yet many places have seen them retained and enforced ever since. Their perception as a temporary measure were often short lived, almost always becoming destructively permanent.

Late Swedish socialist economist Assar Lindbeck once said “rent controls appears to be the most efficient technique presently know to destroy a city – except for bombing”

An unsurprising statement when the average waiting time for a rent-controlled unit in Sweden is 11 years. In Sweden keeping rents low for a small section of renters sees tenants hold onto property they no longer wish to live in. Rent regulation incentivises lucky rent regulated tenants to sublet in the black market, often for a significant profit. One would argue this is hardly a socialist panacea.

Price Signals Allow Markets to Respond

Back in 1906 an earthquake hit San Francisco. Subsequent fires destroyed thousands of acres of buildings in the heart of the city. It resulted in 225,000 people becoming homeless. The city of 400,000 lost more than half its housing in three days. Yet market driven construction of new homes put roofs over many earthquake victims heads. In effect developers were able to respond to market demand through rising price signals.

Nevertheless, each remaining household still had to shelter 40% more people than it did before the quake. So what do you think the first local paper observed following the earthquake – a huge housing shortage surely? No, in fact the first San Francisco chronicle following the earthquake made no mention of housing shortage at all.

The market had responded and there was over three times more homes available to rent than advertised for sale. Just goes to show what can be achieved by the market without rent controls having distorting effects on new supply.

Rent Controls Deter New Construction

Contrast this to 1946, where the San Francisco population had increased from 635,000 by 200,000. All over a six-year period. By comparison, the number of dwellings had only increased by a fifth. While in 1906 the city had to shelter 40% more people than before the earthquake, by 1946 the city only had to accommodate around 10-12% more than before the war. This did not stop the Governor at the time going on record to describe the housing shortage “as the most critical problem facing California”. But what was so different?

In 1906 higher rents could signal to the market to build new construction. However, by 1946 imposing rent ceilings made this method of stimulating supply for rental homes illegal. The result? 730 houses listed for sale for every 10 homes listed for rent. The absence of a ceiling on selling homes, in conjunction with a ceiling on rents, had considerably distorting effects. It meant that prices were to rise as a large and increasing demand encountered a relatively fixed supply.

This meant many landlords ended up selling at inflated market prices, rather than renting to tenants with a price ceiling. Rentals effectively become almost impossible to find. At least at legal rent levels. Rich people with money still found plenty of homes to buy. Ceilings on rent provide the rich an advantage to satisfy their housing needs. Restrictions on rent only make this condition worse. We must also recognise that during this time incomes in San Francisco had doubled in comparison to levels before the war. This allowed people to pay more in rent even though legally they did not have to, exacerbating the proliferation of the black market.

Rent Controls Reduce Mobility and Increase Unemployment

Research by Joseph Schumpeter on unemployment recognises the correlation between lack of labour mobility and structural unemployment. In turn, rent controls artificially create more pressures on cities, notably because inhibiting rent increases puts a brake on the natural drift out to towns. We know more people leave London for the rest of the UK, than move from other places in the country to the capital. This is primarily due to relative affordability.

Studies from San Francisco by Stanford University shows rent control limits renters’ mobility by 20% and lowers displacement, which comes at the expense of a reduction in rental housing supply by 15%. Rent controls lead to a less mobile workforce, more structural unemployment, and less supply. No doubt hampering the economy and increasing state borrowing unnecessarily.

Rent Controls are Denigrated Across the Political Spectrum

Notwithstanding the above, rent control is considered the least contentious area of economics and  is widely denigrated by economists from around the world. The agreement cuts across the political spectrum, from Hayek and Friedman agreeing on the “right”, to architect of the Swedish Labour Part’s welfare state Gunnar Myrdal on the “left”. It has literally been no longer a debate within the profession for a considerable length of time.

Rent Stabilisation is Ineffective

Maureen Corcoran has reflected on Germany’s rent regulation through its local rent index, arguing regulation improves affordability and transparency. But we have seen since Germany has moved to stricter rent control, with a 5-year rent ceiling, finding new rental property has become increasingly difficult. Rent stabilisation typically has more flexibility and freedom around having an ability to change tenant than old style rent ceilings. For example, if you make repairs, you can increase rents. Labour has mooted such types of control in the past, but we know these too still do more harm than good.

In New York rent stabilisation has ‘luxury de-control’, akin to the 1957 Rent Act in the UK. If a rent gets to a particular level, then it can leave the rent stabilisation regime all together. Professor Ingrid Ellen of NYU argues that outside of Manhattan rent stabilisation does not have that big of an effect on the market. She argues apartments can often be as close as $200 a part in terms of median market rental levels, in comparison to rent stabilised rents. This suggests even modern versions of rent ceilings remain ineffective for the most part.

The Evidence is Overwhelming: Rent Ceilings are Bad

Developers essentially end up wanting to build less, which can’t be a good thing. The rules in New York meant you typically did not have rent stabilised levels on new lettings, which was one way the rules tried to avoid such an issue. But still, what you saw in post-war New York was the conversion of a lot of rental apartment blocks into condominiums for home ownership. Once again, resulting in a net loss of rental stock. Lower supply means higher prices.

Thankfully, recent studies continue to put the rent control question to bed. In August 2020 by Thao Le, Edward Coulson, and Lily Shen published ‘Tenant Rights, Eviction, and Rent Affordability’. The paper demonstrated that for every one-unit increase in the toughness of rent control, evictions are reduced by almost 9%. It found rental housing costs becomes 6% more expensive where tenants have more protection against landlords through regulation. While a higher Tenant-Right Index is also negatively associated with a decrease in housing supply and an increase in the homeless rate. When we put ideology before evidence, empirically we see rent controls lead to worse outcomes.

Gauche Caviar?

Hanchen Jiang, Luis Quintero, and Xi Yang recently released their paper ‘Does Rent Regulation Affect Tenant Unemployment? Evidence from New York City’. It found that often the beneficiaries are those who are more well off and such regulation denotes a significant transfer of wealth to those on higher incomes. Rent-stabilised tenants are empirically more likely to be unemployed than private market-rate tenants, particularly if you are white and highly skilled. To what extent this could ever be seen as a progressive outcome still remains to be seen.

If Labour is to continue to encourage the proliferation of rent-controlled property it should achieve this through the construction of new social housing. Not blanket market distorting rent regulation. Rent control is great if you get it. However, it merely comes at the price of greater inequality for future generations.

Rent ceilings offer no cure to the housing shortage, and in combination with a planning system currently disconnecting local housing supply from local demand, demand-side rent regulations merely create more problems than they solve.

<strong><span class="has-inline-color has-accent-color">Christopher Worrall</span></strong>
Christopher Worrall

Editor of Red Brick. He is currently an Investment Manager at Guild Living, a Non-Executive Director of Housing for Women, and is on the Labour Housing Group Executive Committee.

Chris also co-hosts and produces the PricedOut UK Podcast.

He writes in a personal capacity.

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Rent controls: a retrospective

For more than 70 years, between the First World War and the late 1980s, the United Kingdom had a system of rent controls for private sector tenants.  The policy was, on almost every metric, a success – argues Nick Bano.

This middle portion of the 20th century stands in stark contrast to the housing conditions of the 21st: unlike today, there was no great housing or homelessness crisis; and the ‘homes fit for heroes’ and mass squatting campaigns of the 1940s and 1950s alleviated the worst of the of the scarcity caused by bomb damage.

In fact, as the brilliant 1939 film Tenants In Revolt shows us, mid-century working class housing campaigners were actively calling for “luxury flats” – a demand that has now become anti-gentrification groups’ ultimate bogeyman.  While today’s campaigners are forced to make insipid calls for the barest essentials of homelessness reduction, tenants under a rent control regime had moved on to demanding luxury.

Potted history: a consensus for rent controls

In 1915, reeling from a powerful rent strike movement in Glasgow that held the wartime government in check, Asquith’s administration passed the Rents and Mortgage Interest Restriction Act.  While it was designed a measure against wartime profiteering, the spirit of the 1915 Act remained in force almost uninterrupted until rent controls were finally dismantled in 1988.  Importantly, the government realised that rent controls have to go hand-in-hand with relatively secure tenancies, to stop landlords from escaping the law by evicting tenants and re-letting at a higher rent.  The 1915 Act therefore introduced security of tenure, too.

The rent control mechanism was immediately recognised as being important, popular and successful.  Just three years later the 1918 Hunter Committee found majority support for rent control among tenants and – strikingly – among landlords, too.  As a consequence, Parliament amended the 1915 Act slightly in 1919, before proper new legislation re-establishing rent controls (the Increase of Rent and Mortgages (Restriction) Act) was passed under Lloyd George’s Liberal-Conservative coalition government in 1920.

Again, Parliamentary inquiries (the Onslow Committee of 1923, the Marley Committee of 1931 and the Ridley Committee of 1937) acknowledged on the broad success of the measures, and recommended the continuation of the rent control scheme (with some adjustments to the mechanics, and an increase in the number and type of de-controlled tenancies).  This slight watering-down was then reversed in 1939, as war loomed again.

After the Second World War rent controls remained in place. They continued to function reasonably well for more than 10 years, even after the Blitz had caused a genuine and serious scarcity of homes.  Neither the 1945 Labour government, nor the Conservative government that followed, abolished them.

The following Tory government, however, seriously weakened the system under the Rent Act 1957: rent controls were abolished for all new tenancies, and some more expensive existing tenancies.  This led to the system of ‘Rachmanism’ – where tenants were bullied out of their homes (or bullied into accepting new rents) – which effectively forms the model of the current oppressive system of ‘shorthold’ tenancies.  A new Labour government in 1964, however, re-introduced rent controls in short order.

The high point came in 1974.  Following yet another glowing report on the functioning of rent controls (by Hugh Francis QC in 1971), a Tory government extended rent controls to furnished as well as non-furnished accommodation.

The destruction of rent controls in 1988

By the mid-1980s the Thatcher government had decided that it wanted to create a housing market that wasn’t restrained by rent stabilisation measures, the disastrous effects of which we are experiencing today.

The genius of the Thatcher regime was that it never actually destroyed rent controls.  They still exist, although the controls are (unsatisfactorily) tied to the market rate: a tenant who disagrees with a proposed new rent is still entitled to complain to a tribunal, and the tribunal will not let the new rent exceed the market value.  But the 1988 Housing Act destroyed security of tenure, which is crucial to the functioning of a rent control system.  Landlords know that they can avoid the rent control measures by simply demand a new rent – any rent they like – and that they can evict the tenant quickly on a ‘no fault’ basis if they can’t or won’t pay the higher rate.  As a result, the formal system of controlled rent increases is almost never used.  Rent control was abolished by the back door.

For the last 30 years we have not just had a lack of effective rent controls.  Instead, because Thatcher’s aim was to generate a profitable housing market, the current system has rising rents by design.

A second, odd effect of the 1988 Act settlement is that rent controls became controversial.  That never used to be the case.  For most of the 20th century, opposition to rent controls was the exclusive domain of landlords, war profiteers and hard-line Tories. But since the 1990s there has been a looming sense that we are all Thatcherites now: that anyone who advocates a return to a long-standing legislative programme (propped up by decades’ worth of inquiries and reports) was somehow radical.

A shrinking private rented sector is a victory

The major effect of the rent control regime was the decimation of the private rented sector.  By the 1980s it had fallen to just 8% of homes in the UK.  This is, for anyone who is not a landlord, a triumph.  Privately rented housing is the least secure and most expensive form of tenure, and anyone who is housed elsewhere is almost certainly better off for it. 

How does this reduction happen?  Rent controls restrain the profitability of landlordism, and some landlords flee the market.  But a reduction in the number of rented homes does not, of course, reduce housing supply: ‘disappearing landlords’ do not cause homes to be knocked down or to be left unoccupied.  As the Bank of England’s John Lewis and Fergus Cumming explain here:

Some landlords will sell up as letting becomes less lucrative. But at the end of each sales chain is either another landlord or someone who was previously renting. If it’s another landlord, aggregate rental supply and demand are both unchanged, and so are rents. If it’s a new owner occupier, the supply of rented property has shrunk by one, but so has the number of renters. The tightness of the rental market and thus rents are unchanged”.

Even if this happens on a large scale, the glut of supply caused by retreating landlords will necessarily reduce house prices.  It is this policy, rather than the proven failures of help-to-buy, shared ownership and high-end speculative development, that will achieve various governments’ stated aim of increasing home ownership.  The contemporary history of the UK shows this to be correct, and no amount of abstract economic modelling can erase that.

There will always be people who prefer to rent privately, of course, and the market has always catered for them.  But those generous souls who would prefer to pay off a landlord’s mortgage rather than their own presumably make up a figure much closer to the 7% of the population that rented privately in the mid-1980s than the 20% (4.5 million households) forced to rent privately today.

The Renters’ Reform Bill

In 2019 it became both parties’ policy, and then a formal Queen’s Speech commitment, to abolish ‘no fault’ evictions.  In other words, we can expect some form of security of tenure to be restored to private tenants.  As set out above, security of tenure is the missing piece of the still-existing rent control framework (without ‘no fault’ evictions, unless the tenancy agreement has a provision for rent increases, landlords will have little choice but to increase rents by the formal, controlled system of statutory notices).

So the good news is that the Tories – whether they realise it or not – have now reverted to their 20th century position: they are now within the consensus that supports rent controls.  I, for one, welcome them back into the fold.

<strong><span class="has-inline-color has-accent-color">Nick Bano</span></strong>
Nick Bano

Nick Bano is a lawyer and housing activist.

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Guilt by Associations

Leading housing associations are losing their integrity as charitable organisations. They continue to trade on a set of myths about the sector that no longer hold true – writes Suz Muna.

Housing Associations Build Social Housing

Associations are increasingly indistinguishable from private developers and landlords, and their activities are increasingly focussed on market-level rents and sales. The result is that the interests of tenants and leaseholders trail in the wake of the board’s need to generate large surpluses and satisfy their lenders.

Associations generate larger profit margins by developing for market sale and rent than from any other activity. Inevitably, the profits are greatest in London where house prices are higher. The boards of Associations increasingly gravitate towards construction, and especially in the South East. They are aided and abetted by government policy, regulatory institutions and finance houses.

Analysis of the sector shows that there has been a considerable shift in its stock profile over the last few years. For example, in 2019 the category of housing with the largest percentage of growth was in market sale (non-social leasehold), jumping almost 16% (8,500 units) on the previous year.

The change in profile over a seven year period spanning 2012 and 2019 illustrates a sharp jump in Low Cost Home Ownership (LCHO) units, and a corresponding decline in supported housing. The ring-fencing of grants under the Supporting People programme ended in 2009.

Stock profile changes include conversions from the more secure types of tenancy with cheaper rents attached such as social rent which is capped at 50% of market rents. Often these are converted to less secure tenancies with higher rents.

Property lawyers Savills captured this trend in May 2019 when they noted that “the amount housing associations generated from new open market home sales increased 16% (£221 million) to £1.61 billion between 2016/17 and 2017/18, with 37,000 homes for sale contractually committed to be built in the 18 months from December 2018”.

Housing Associations Fund Their Activities from Rents

This is a myth that should be busted, not least because it implies a stability that is absent. In fact, house building in particular is funded through debt leveraged on existing homes. The Regulator for Social Housing anticipates that debt of £42 billion will be added to the sector’s debts over the next five years. And ratings agency Standard & Poor predicted that the need for housing associations to rely on debt to fund their activities will increase not decline in the future.

Housing Associations are Governed by People with a Commitment to Social Housing

One trend drives another. The focus on development means that associations deliberately attract board members with backgrounds in equity and finance, squeezing out those with any genuine commitment to, or experience of, social housing. The exceptions are occasional hand-picked and often financially reimbursed ‘tenant board members’ with no democratic mandate.

Many housing associations publish brief biographies for their board members. What these show is just how widespread board-level involvement has become by people whose careers span financial services, planning, development, property markets, private finance initiatives, and insurance industries.

There also exists a golden circle whereby the housing association and housing sector institutions populate each others’ boards. One Housing Group, St Mungos, Clarion, Paradigm, and Onward Housing for example, are all led by ex-employees of the Regulator of Social Housing. The Chair of Peabody’s board, Lord Kerslake, previously headed the Homes and Communities Agency.

The corporate plans developed by associations inevitably reflect the highly commercial interests of its board members, and the vicious circle is complete.

Associations Have Inclusive Cultures

An inclusive culture would in fact be a terrible hindrance to an ambitious housing association, and frowned upon by its institutional backers. To help ensure that associations are unchecked in their commercial direction of travel, they are moving away from democratic influence by tenants and residents, preferring methods of engagement over which the landlord has almost exclusive control.

Tenant and Resident Associations (TRAs), the most democratic of engagement models, are being replaced by Tenant Scrutiny Panels whose members are appointed by the landlord. This is akin to the derecognition of a trade union in favour of an employer appointed staff council – something that many associations also seek to do.

The Greater London Assembly noted in 2018 that the Grenfell Tower fire had “brought into sharp focus the lack of effective mechanisms for social housing residents to have their concerns addressed and to hold their landlords accountable for property standards and management.” The Assembly also noted that TRAs were being actively undermined by having recognition by the landlord made contingent on adoption of the association’s model constitution.

What these trends produce for tenants is inadequate repairs and maintenance services, high rents and service charges, anti-social behaviour problems, discrimination against those with disabilities, unsafe homes, and the cladding scandal. Despite huge leaps forward in communication technology, alerting the landlord to a problem is becoming increasingly difficult, and attempts to find a resolution too often feel like a war of attrition.

It Doesn’t Have to be Like This

It is all too clear to the tenants, residents and staff of housing associations that this sector has undergone a fundamental transformation, but that public perception has yet to catch up. It is wealthy, powerful and almost wholly unaccountable. Remedy is needed in the shape of much firmer, independent scrutiny and regulation, rent controls, and a supply of genuinely affordable housing through local authorities.

The Social Housing Action Campaign (SHAC) is a democratic, voluntary network of tenants, residents, and workers in housing associations and cooperatives. It campaigns to improve the lives of those who live in HA accommodation and reduce the commercialisation of the sector. SHAC is keen to build links with Labour councillors and MPs with an interest in housing. It is developing a political representatives network and would welcome contact via shac.action@gmail.com.

<strong><span class="has-inline-color has-accent-color">Suzanne Muna</span></strong>
Suzanne Muna

Suzanne Muna has worked in housing for the last 20 years, serving continuously as a trade union representative alongside her paid work. She is secretary of the Social Housing Action Campaign, a trustee of the Public Interest Law Centre, and a member of the Unite Housing Workers branch committee

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Compromise and Council Houses

In part two of this three part blog contribution we continue to hear from inside the tent to what extent our planning system is truly representative and democratic. Do cries of ‘social cleansing’ hold any veracity, or does left-wing NIMBYism refusal to accept trade-offs manifest itself to the same effect?

Once upon a time, I would’ve stood on Reginald Street in Deptford in searing anger. Even with the land cleared and the hoardings up, I would still be bitter about what my colleagues had been put through. But today I’ve found myself mellowed. As I watch the diggers at work, laying the foundation for 117 new social homes, I wryly smile to myself. Today, the fight for these homes seems so easy, so tiny, so inconsequential. 

The old Tidemill school site on Reginald Road had long been earmarked for the development of new homes. Instead of allowing the vacated site to fester, Lewisham Council agreed to a ‘meanwhile use’ leased and the area was handed over to a volunteer community group to operate. With the land, they created a ‘community garden’. 

A ‘community garden’ is a bit of a misnomer, as it conjures up the image of an area open and shared by all in the neighbourhood. In reality, due to a lack of volunteers, by the time of its closure, the garden was overgrown, locked up, and open for a few hours each Saturday. Insiders say that a small clique living on well-heeled streets over in Brockley, operated the site as their own semi-private enclave. No big deal, we felt, because at least the land was semi-utilised.

The trouble only started when the council request the stewardship of the land to be returned so that our long-awaited housing development could get underway. Reneging on their promise to hand back the land when the ‘meanwhile use’ was up, the community group refused to hand over the keys. And thus, the ‘Save Tidemill Garden’ campaign arrived. 

It quickly snowballed. 

Opposite the development site, sits the Birdnest pub in Deptford. I like the boozer, but if I say it wears its counter-cultural chic a little too earnestly on its sleeve, you might get what I mean. It’s filled with students, old rockers and geezers, and was a perfect local meeting point for the Save Tidemill campaign.

Close your eyes and picture a row of wooden tables, on each one, sits a different segment of the Save Tidemill campaign’s coalition. 

  • Table 1: The founders of the garden, mostly your classic NIMBYs, primarily asset-rich and comfortable. They’ll miss their garden when it’s gone and they don’t want pesky social housing spoiling their Saturday afternoon sun-spot.
  • Table 2: Assorted Left-wing groups. Nearly all older NIMBYs as well, these lot are driven primarily by political opportunism and they want to find a wedge issue to campaign against the local Labour council (internally in the Labour Party, or externally). For this group, they’ll reject any council-led development programme from the pin-head of ideological grounds. Any development that is not 100% council ‘target rent’ is rejected, even if the private sale properties on-site are necessary to fund the building of the social homes. It means that in reality, they reject any new large-scale affordable house building.
  • Table 3: Eco-Nimbys, probably Green Party members, you know the ones — the type of people who weep over fallen trees on the HS2 path, despite HS2 being a piece of crucial infrastructure to increase our rail and freight capacity and reduce our over-reliance on private cars and lorries which has a huge knock-on effect on our nation’s carbon emissions and the death of more of your bloody trees.
  • Table 4: Anarcho-crusties / Green-Black Groups. A bit like the Eco-Nimbys but they are more inclined towards violence towards the man. 

The Save Tidemill campaign only got as noisy as it did because Tables 1 & 2 framed the building of this new social housing as corporate ‘ecocide’ and therefore managed to connect with Tables 3 & 4. The campaign itself was risible. Misinformation was spread in the neighbourhood and councillors who spoke up for the scheme were relentlessly attacked. Eventually, the rhetoric spilt over into direct action.

Cllr Joe Dromey, one of the few who were brave enough to face the misinformation head-on, would eventually be attacked on the street by masked protestors. Cllr Paul Bell, who led the scheme, would take his address off the Lewisham Council website out of fear of reprisals. He had been accosted in the street as well, while leaving a council meeting. 

But as nasty as the campaign got, I never felt like our plans were in jeopardy. Here were 117 new social homes, as well as 41 for shared ownership and 51 for private sale, replacing a ‘meanwhile use’ garden and an old and dilapidated block at 2–30a Reginald Road. The new green space on the development would be accessible to all unlike the Tidemill Garden, and the tenants of 2–30a Reginald Road would be provided brand new high-quality homes on lifetime tenancies. Those in housing need would be given what they deserved. The case was a no-brainer. 

Lewisham Council has a Residents’ Charter that guarantees all residents impacted by a regeneration scheme are given the right to remain on their estate and guarantees an increase in genuinely affordable housing. To me, these guarantees are not only morally right, but they also make political-strategic sense. 

Left-wing groups and other opportunist political opponents have desperately and repeatedly tried to leap into our estate regeneration proposals for political gain. And while they may have recruited a few new paper-sellers in the process of campaigning, they have failed to stop any major schemes.

Take the regeneration of Achilles Street, New Cross. Despite a campaign by left-wing NIMBYs spreading fearmongering and disinformation among tenants and leaseholders, an estate ballot returned 73% in favour of the regeneration. The likely outcome of this renewal will be 450 homes on site, with a minimum of 50% of the total homes built being affordable, and a minimum of 35% of the total homes built will be Council-owned homes for social rents.

Similarly, even Lewisham Council’s joint-venture with Grainger to build 324 new homes for rent off Besson Street in New Cross slid fairly comfortably through planning, with the ward’s left-wing councillors speaking in favour of the proposals. On the Besson Street scheme, 65% will be leased at market rent to fund the 114 homes which will be lease at London Living Rent. The scheme also delivered an array of other amenities for the area including a new GP surgery and community space for the New Cross Gate Trust. 

The left-wing NIMBY groups rejected Besson Street because London Living Rent is not social housing. Instead, these are genuinely affordable rents set by the average incomes in the Telegraph Hill ward. Each household will sign a secure 5-year tenancy that is automatically rolled-over if they want to remain. In Lewisham, we need to build all sorts of tenures, not just social housing, and these homes are designed and will cater to our key workers who will never be eligible for social housing. 

On the hoardings that line Besson Street today, someone has scrawled ‘stop social cleansing’. But in fact, these new homes will help key workers —  your nurses, your police officers, your school teachers, remain in our borough near where they work. Even more absurdly, the cries of ‘gentrification’ and ‘social cleansing’ were used for Achilles Street and Tidemill Garden. These schemes offer net-gains in social housing — they are a firewall against gentrification and help low-income families remain in our community. 

The left-wing NIMBYs have tried to peddle the falsehood that these estate regenerations are not supplying social housing because the new homes will be provided at London Affordable Rent — which is pegged at 2016 social rent levels. London Council target rent is now £105.87pw for a two-bedroom property, while London Affordable Rent is £158.85pw. The 13 residents of Reginald House who would be offered a new home on the development, would continue to be housed at their target rent. For the 104 homeless families being offered a new home, it’ll be a huge fall in rent and for many, the first time they’ve ever had a secure, decent home for their family. 

Affordable housing funding is extremely restricted by an austerity-driven Conservative government. But as this article highlights, in 2016, Sadiq Khan as Mayor of London, managed to negotiate funding from central government for new affordable homes. While funding for social homes, at target rent, were ruled out, the government did agree to fund new homes at Khan’s London Affordable Rent. London Affordable Rent is sent at 2016 target rent levels and is deemed a social rent. While target rent levels have fallen since, year on year – a plan devised by George Osborne to reduce the housing benefit bill — London Affordable Rent has stayed static, that’s caused the disparity. 

The long and short of it is that for these homes to be funded and built at all, they’ll need to be at London Affordable Rent. Working with a charitable provider and building at London Affordable Rent was the only way Lewisham Council could get this many genuinely affordable homes built at the Old Tidemill site. For activists, it’s a choice of viable developments, providing social homes at London Affordable Rent, or no new social homes at all. Sadly, I know where some groups would side.

The refusal of these left-wing activists to accept those trade-offs, reveals, more than anything else, just how out of touch they are with the lives of London’s precariat and working-poor. The median rent for a two-bedroom property in Lewisham is £365.75 per week, above the housing benefit cap. Moreover, ‘no DSS’ discrimination remains rife in the private sector. Many of our poorest residents cannot afford the private sector and if they can, they remain in overcrowded sub-par accommodation.

Even if new homes on Achilles Street and Tidemill Garden are more expensive than target rent council homes, they are seismically cheaper and more secure than the private sector. The homeless families moving into these homes will care more about a new chance in life than the fact that a registered charitable provider is supplying them a life-time tenancy and not the council. Nor are they likely to quibble about a rent far more affordable than their temporary accommodation or home in the PRS. 

Don’t let perfection be the enemy of the working class. 

And that’s why these campaigns do not work and never build traction beyond those four tables. Because their arguments are devoid from the lived-reality of the housing crisis and the trade-offs necessary to build new social housing. Despite our reputation, councillors are not daft. We clock that no young renters joined the chorus against the Tidemill Garden development at our local Labour meetings, even if they did follow the Momentum whip.

During Lewisham Labour’s manifesto working groups in 2017, it was noted that it was our young Momentum members who were the ones most enthused by our Besson Street plans. Not only did they like that the income generated from the scheme would help provide services for our residents, they knew from personal experience how life-changing it would be to move into long-term, stable housing in the private rented sector. Like me, they can only dream of a home at London Living Rent.

Councillors speak to residents in our wards all the time and we know that the overwhelming majority accept schemes like Achilles Street, Tidemill and Besson Street are positive. Of course, we still take precautions — we ensure we engage early on any estate regen project and we ensure the facts of a scheme are widely disseminated. On Achilles Street, we held meet-and-greet drop-ins to tackle misinformation. Yet when push comes to shove, sensitive and policy-compliant council-led schemes to build new social and affordable housing are going to have broad support.

While not as politically-heated as large estate regeneration, smaller social housing developments, such as estate-infills can be trickier. Faced by densification of their area without an offer of a new home, current tenants and leaseholders on an estate often take a ‘what’s in it for us?’ approach to the building of essential affordable housing. Moreover, infills often only remain viable if they are larger in scale than many residents are willing to accept.

However, colleagues, alongside the wider public, accept the trade-offs needed to deliver social housing schemes and policy compliant applications will often be looked upon sympathetically. Broadly, public and institutional support (i.e. amongst the council’s political group) work in tandem. It is why councillors can feel emboldened to champion our promised new social and affordable housing schemes and face down the political pressure from noisy campaigns to abandon policy complaint schemes.

But in the grand-scheme of things, I know that all these battles for social housing are small-fry. Local authorities do not have the resources to purchase new land to build social housing on. The scope of what we can achieve is extremely limited. Despite our good work, we can’t even build enough council homes to replace the ones we continue to lose from right-to-buy. 

In short, only the private sector is going to get us out of this housing crisis. While affordable housing programmes have institutionalised support, across the political spectrum market-rate builds are viewed with suspicion. This suspicion leads to a widespread lack of public support for market-rate builds and in my view, this in turn leads to councillors having a pre-disposition to be swayed by NIMBY-campaigns.

In part three of this series, I’ll explain that if we don’t accept this reality, and take a new approach to development, the housing crisis will never be beaten. We need to build a new consensus — one that agrees that a lack of supply (+ building in the wrong places) is causing our housing crisis and that we need market-rate developments at large scales that we cannot deliver without reform.

This is option two, and the only one left. 

<strong><span class="has-inline-color has-accent-color">Leo Gibbons-Plowright</span></strong>
Leo Gibbons-Plowright

Leo is a Labour and Co-Op Party Councillor for Forest Hill in Lewisham.

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Shared Ownership Will Not Provide All The Answers For Key Workers Hoping to Buy

The Government has made the startling admission that it does not know how many people have transitioned to full ownership under its Shared Ownership model. Despite not knowing how effective it is, the Government has set out its expectation that Shared Ownership will account for the “vast majority” of the home ownership homes it funds.

Whilst the proposed new Shared Ownership model will make it easier both for people to buy an initial stake and then to increase their equity in the property, for some, the uncertainty over exactly how long it will take them to fully own their home will still not suit their needs. If you buy an initial 10% stake, after 15 years of gradual staircasing at 1% you would still only own 25% of the home. Legal fees apply at each increase and if shared owners want to buy larger shares using the existing process then all fees (valuation and legal) remain their responsibility. However large their share is, tenants also have to pay 100% of service charges.

For some aspiring homeowners, this part-rent, part-own process remains complicated and unattractive. Yet with first-time buyer deposits jumping £10,000 last year to nearly £60,000, key workers and those on lower incomes will struggle to buy on the open market. Despite the return of some 10% deposit mortgage deals, rising house prices combined with a partial public-sector pay freeze make saving this amount of money completely unrealistic for many.

As we have argued before in this blog, the key to widening access to home ownership is addressing the difficulty in saving for a deposit. It is this that is blocking many renters who could afford mortgage repayments from being able to buy a home. This has been compounded by coronavirus. The Joseph Rowntree Foundation’s annual report on poverty highlights that 41% of private renters who have seen a drop in income since March have had to use their savings to make up for the shortfall; savings that they might have been hoping to use for a house deposit. Many others didn’t have any savings to fall back on; over two thirds of social renters and almost half of private renters in the bottom half of the income distribution had less than £500.

Rent to buy schemes address this hurdle by not requiring any initial deposit when people move into a brand new house. They also provide a clear and defined route to full ownership with tenants buying their home outright at a set 5 yearly interval. Paying only an affordable rent enables them to save more for a deposit than if they were renting privately. At Rentplus we add to that by giving them a gifted lump sum of 10% of the value of the property when they are ready to buy.

In the meantime all repair and maintenance costs are covered by the landlord and service charges are included up until the point they become full homeowners.

The model is open to aspiring buyers provided they are working or in training. They undergo a financial assessment of their likely ability to buy before being accepted onto the scheme. Generally, applicants need to be on the local housing waiting list or Help to Buy or Shared Ownership register to be considered and they usually have a local connection to the area. In some areas up to half of tenants have moved out of existing social housing; freeing this up to be re-allocated to those most in need. Over half of all our tenants are key workers.

Unlike the unknown effectiveness of shared ownership in helping people to fully own their home, this spring the first of Rentplus’ tenants will become 100% homeowners after just 5 years.

Whilst all tenants are currently on track to buy, inevitably down the line some people’s circumstances will change and not everyone will be successful in purchasing at the planned date. In these cases tenants can opt to renew their tenancy in five year increments up to 20 years. If at this point they still can’t buy, we will work with the council and housing association to support them to look for new accommodation. They will have still benefitted from a 20 year affordable rent.

Rentplus’ model is fully funded by institutional investment bringing in additional housing finance and enabling councils to direct their grant funding to delivering social rented homes.

The main constraint to the model is that demand outstrips supply as only a small proportion of local authorities have adopted it to date.

Homes England reported a 34% decrease in affordable home ownership scheme starts over the six months to September 2020. Whilst coronavirus was a factor, this highlights the much greater role that privately funded providers can play in boosting the overall number of homes for first-time buyers with no reliance on Government funding.

The Government and local authorities should do more to encourage the development of innovative home ownership models on a much wider scale instead of putting all their eggs in the unproven, shared ownership basket.

<strong><span class="has-inline-color has-accent-color">Steve Collins</span></strong>
Steve Collins

Chief Executive of Rentplus, the leading affordable rent to buy housing provider.
Steve has over 25 years’ experience in housing and development, both in private and public-sector organisations.

This includes working for the then Homes and Communities Agency where he had responsibility for the successful delivery of over 42 Government programmes with a combined value of c.£900m pa, aimed at accelerating the delivery of housing and public sector land across the country.