After a long lie-in on Tuesday (I had a day off), I found myself surprised by the rarest of things – a front page housing story. Nope, not asylum seekers jumping the queue into council housing, or a big family in West London claiming 50k in housing benefit. But, a story about homeownership in the Independent and a serious one at that. It was followed-up with coverage by Sky and the BBC.
It seems people are waking up to something aspiring first time buyers have known for a while: if you haven’t got parental help, owning a home for most people is a distant prospect.
House prices and deposits for mortgages are so high that it feels (and indeed is) an unrealistic goal for people to achieve.
We either accept that many people will become renters in the long term and put renting on a more equal footing with owning your own home. That means greater security for tenants and ensuring higher standards, with better ways to enforce tenants’ rights. It also means providing renters with tax-efficient ways to build assets and save in the same way owner occupiers build value in their homes and benefit from prices rises.
Or, we need to do something to keep house prices lower compared to earnings, so younger people can afford them in the future. That means limiting the real-term rises in house value the older generation may be relying on – to fund later care perhaps or provide their pension. It means making homeownership once again the goal of public policy, but a reformed homeownership, which is about a secure place to live and not a financial investment.
In both cases, it’s about transferring wealth from an older generation to a younger one, to those who own assets to those who do not – whether they are housing assets or take a different form.
The problem is what will convince the baby boomer generation to back reforms that do this? Only, I suggest, the realisation that their children will never realise an aspiration which the post-war generation came to take for granted. And that’s why this debate is a good thing, because at least it’s happening beyond the ranks of the housing professionals and creating wider awareness of stark housing choices.
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That vile word
I was once in a meeting of a housing association which was discussing buying land and developing homes in Stevenage. “I’ve been there” chirruped the Chief Executive, “it really is chavland”. I have been in plenty of other meetings where senior housing folk have talked about their clients in disparaging terms. I can recall one Housing Director in the north responding to a presentation on the Decent Homes programme by saying “There’s nothing wrong with our houses, it’s the people that need fixing”. Fortunately most people who work in the profession are more enlightened and have a more balanced view and a better choice of words.
As a fan (mildly obsessive) of EastEnders I get outraged by every story line that involves any character visiting a council estate. They are always the same. High blocks, lifts not working, rubbish strewn everywhere, hoodies gathered menacingly outside, drug dealers hovering, noisy music blaring, people shouting, and in the middle of it some poor EE character suffering terrible deprivations, and desperate to get back to the square where decent folk live (now there’s the joke). I used to start talks by asking people if they knew where the Jasmin Allen estate was. Invariably they knew it was a bad bad place where police only went in big groups because it was run by gangs and the residents appeared to throw rocks at them on every visit. Everyone thinks they’ve heard of it and the penny eventually drops that it was in The Bill, and was fictional. I believe the filming was done on an estate in south London famous for being visited by Tony Blair on his first day as Prime Minister.
I was got going on this topic by Polly Toynbee’s piece on ‘the vile word’ chav. How right she is that the use of the word chav is just one part of a sustained effort to ‘foster the loathing of a feral underclass’ thereby diverting public resentment about economic and social failure from the rich to the poor.
Polly quotes Baroness Hussein-Ece – a LibDem Equality and Human Rights Commissioner no less – who tweeted: “Help. Trapped in a queue in chav land. Woman behind me explaining latest EastEnders plot to mate while eating largest bun I’ve ever seen.” And then of course this week we have Iain Duncan Smith, hand wringing in public and in private getting his department to place stories in the media – and picked up endlessly by the BBC – about the ‘top ten’ most ridiculous stories told by some benefit scroungers.
For this government (LibDems should look suitably ashamed, I expect it from the Tories) and their supporters this is all part of the softening up exercise for the cuts. Everyone’s on the fiddle, no-one wants to work, they’re breeding like rabbits, they get subsidised housing and don’t even pay the rent, so we should take their benefits away from them. Even decent politicians run in fear from the stereotype and feel it is necessary to back some variant of ‘welfare reform’.
The outcome is that it is so much easier to make cuts that really hurt people. We have blogged about some of these before. The latest news this week, from the heads of Britain’s main charities dealing with mental health, concerns the ‘devastating effects’ welfare reform (ie cuts) is having on the mental health of hundreds of thousands of people.
The long title of Owen Jones’ book ‘Chavs’ being published this week is ‘the demonization of the working class’. That’s what is really going on and council tenants get the worst of the stigma. Some politicians and housing professionals need to read it and begin choosing their policies and words more carefully.
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Generation rent
I was suitably riled listening to Grant Shapps on World at One at lunchtime today, failing to answer sensible points and questions about the housing market from Tony Dolphin and Owen Hatherley. His ability to avoid any question and reply in ludicrous blandishments never ceases to amaze me.
According to Shapps, house price inflation only occurs under Labour. He must have been too young to remember the boom under Thatcher – and even worse the bust when home owners were abandoned with vast amounts of negative equity, a huge number of repossessions – and no government help. At least when the bust came in 2007 – and never forget it was an international banking bust whereas Thatcher’s was home grown – the Labour government took a series of important steps to protect tens of thousands of home owners, and the tenants of home owners, from foreclosure and homelessness.
Shapps simply fails to deal with the issues raised by two important reports today. The first, the one that grabbed the headlines, was from the Halifax who coined the phrase ‘Generation Rent’ to show that people no longer feel that they will be able to buy and that half of 20-45 year olds now think renting is the norm, similar to much of the rest of Europe.
The second, Tony Dolphin and Matt Griffith’s serious piece of work for IPPR, Forever Blowing Bubbles? takes a long hard look at housing’s role in the UK economy with a proper historical perspective. It makes a series of recommendations for mortgage regulation and the importance of stopping borrowers from thinking that housing market is a one-way bet. They also make a strong case for reform of the private rented sector to provide a real alternative choice for those who need to hedge their move into home ownership. As they say, “tenure rights are weak and the sector is poorly prepared for larger families and their needs. The professionalisation of the sector is much needed to make it the natural choice for those who wish to sidestep the risks of the owner-occupied housing market.”
At one level it seems obvious, but they demonstrate the importance of looking at the housing market as a single entity and not two markets of different tenures, arguing for “reform of the PRS to make it a less destabilising influence in the UK housing market. As we have seen, BTL (buy to let) investment has too often been speculative, volatile and a cause of pro-cyclical price pressures in the housing market. Worse still, it appears to have cannibalised existing housing stock, led to a weak response in total housing supply, distorted existing supply incentives to encourage the overproduction of small city-centre flats, and driven out large institutional investors by pushing prices up beyond sensible yields.”
Owen Hatherley, whose interesting article on home ownership and renting is also published today, put it to Shapps that people who could no longer afford to become home owners were left at the mercy of the unregulated and insecure private rented sector, and therefore faced no real choice at all. And that secure public sector tenancies should be a genuine option. Exit stage right for the Minister, off on another ramble about some excruciatingly complex shared ownership option he’s invented (effectively a cut-back and rebranded Labour scheme).
The Government avoids the big questions in housing policy today, especially how the housing market – and the vast majority of people live and will continue to live in market housing – can be made to work for people on low and moderate incomes. There is a real opportunity for Labour to build on these interesting reports and come to some radical but sensible and appealing policies of its own as the Housing Policy Review takes shape.
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Housing policy crossroads
In the week that the Labour Party issued its call for evidence for the Housing Policy Review, guest blogger Paul Lusk works through some practical issues that policy-makers need to address.
Housing is at a crossroads. There is an opportunity such has not existed for many years to put housing policy in the UK onto a practical footing – one where choices can be made based on value for money, not returns on financial manipulation.
First, take owner occupation. Tax privileges have fuelled a fifty-year bubble in prices whereby owners have bought homes for personal use and then stumbled on a gold plated pension plan which successive generations have bought into. Society will be wary of ever again repeating the conditions that led to the 2007 crash. Owner occupation remains a preferred form of tenure with the benefits of control and security. Its origins lie in Chartism and the co-operative building societies that were early fruit of British socialism. We on the left can be proud of this legacy, and cherish its continuation. But no longer can home-buying be a one-way street to apparently assured riches. An over-sudden readjustment of house values to their real worth would be catastrophic. The only realistic option is a standstill in housing values for a generation. It may be two decades before the adjustment is complete, but it’s the only way forward. The owner occupation boom is over, and a soft landing is now underway.
Now on social housing: by completing finance reforms that the Brown government started (but failed to complete), the coalition is stabilising the council housing sector at a shade under ten percent of the national stock. There will no longer be artificial incentives to shift council stock to housing associations, so any transfers will be about the strategic benefits of transferring control, not about financial manipulation. The seventeen percent of housing in the ‘social’ sector will settle down split roughly half and half between councils and housing associations.
That leaves the sector that provides homes for market rental. The so-called ‘private’ rented sector (housing associations, of course, also like to think of themselves as ‘private’) now provides nearly as many homes as the entire social sector. It is mainly geared around short-term lets by very small landlords, many of whom have bought homes as a speculative investment. Its capacity to provide good homes meeting housing need can be overlooked. It is now time to address the potential for a private sector that attracts more professional managers to deliver longer term homes with a recognised role in meeting housing need.
We need to think clearly about the whole issue of ‘housing need’ and subsidised rents. Generally we on the left know that social housing does not equal welfare housing but we have been reluctant to draw the obvious conclusion – that creating more lettings in the social sector does not equal meeting housing need. The private and the social sectors both have a role to play in meeting housing need, if this means enabling people to access essential accommodation which they could not otherwise afford. We need to think about both short term and long term housing needs, and the risks of defaulting into restricting the future choices of people whose short term housing need has been settled by the allocation of a social home. We need to think about whether the buying power of the state is properly rewarded by the current system of housing benefit with its array of poverty traps.
We also need to revive a central idea in the Cave review of social housing – making it easier to decouple housing services from stock ownership. Actually this applies also to the private sector if is to be made stronger and more efficient. The tax system heavily penalises landlords who devolve housing management to external providers, including tenant co-ops. The Tenant Services Authority abandoned its plans to empower tenants to ‘trigger’ a change in managing agent for reasons that it always refused to discuss, but the logic of removing the barriers to this separation of powers is irrefutable. All groups of long-term tenants should have the right to choose their own manager.
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Is Social Housing Welfare? (2)
Picking up Tony’s theme in our last post, our guest blogger seeks to answer the same question.
Monimbo
In housing circles there have been debates for years about the ‘role’ of council housing or more widely social housing, and of course these were given a further boost byJohnHills’ report in 2007. Before the election, as readers of red Brick are probably well aware, think tanks were falling over themselves to redefine – and usually narrow – social housing’s role.
But recently there have been even more worrying developments – typified by the media castigation of Bob Crowe for living in council housing which Steve covered in an earlier blog. Nothing could be more typical of the recent trend than the disgraceful article by Mary Dejevsky about fraudulent tenancies, which called for all council tenancies to be ended on 1st April 2013 at which point there would be a sort of moratorium and people (presumably by now waiting outside the front gates of their houses) would have to justify their entitlement to a continued tenancy.
As CIH’s Abi Davies has pointed out, while of course social housing is part of the welfare state, it is not ‘welfare’ in the sense that it’s only available when needed like a hospital emergency service. There has always been ambiguity about these issues in the media, most of whose commentators probably know and care little about social housing, but the recent trend is marked by a succession of coded comments about the sector by ministers, which are then regurgitated in the usual exaggerated ways by the media to produce a general picture of tenants who want to live in social housing long-term somehow being abusers of the system.
Steve has previously written about the misleading term ‘tenancies for life’, which is part of this slur campaign, when security of tenure is simply about proper consumer protection. CIH is about to publish a book, Housing and Inequality, which reminds readers that housing policy is about people’s homes and the home is a key ingredient of people’s happiness. This is something deliberately overlooked in current debate about security of tenure, the need for more ‘mobility’ and the issue of ‘underoccupation’. It is almost as if there are two housing systems, one in which owner-occupiers with adequate and secure incomes have an almost unthreatened dominion over their homes, while the more than one third of households who are not owners or who have only a tenuous grip on ownership have to live with much less security and less right to regard their house as their home at all.
The other slur is to describe council housing (in particular) as ‘subsidised housing’. There are several issues here. One is that all tenures are subsidised – the last government spent about £1bn in its last year subsidising owner-occupiers, for example. Of course social tenants pay sub-market rents, partly because of historic grants and subsidies and partly because social landlords are non-profit. However, if someone shops at the Co-op, we don’t describe his shopping as ‘subsidised’, do we?
Let me make a positive proposal to address this particular issue, at least as far as council housing is concerned. In a year’s time (April 2012) council housing becomes self-financing, and this presents a golden opportunity to kick the ‘subsidised’ tag. The Treasury is forcing councils to take on £6.5bn of extra debt, not currently in the system, to compensate the Exchequer for the profits (yes, profits) it would have made if council housing had still be on its books.
Let’s make a virtue of this necessity. Every Labour councillor, every council, the LGA, trade bodies like ARCH and the NFA, the CIH, trade unions, the four national tenants’ organisations – all should plan to publicly celebrate on 1st April 2012 the fact that council housing will have paid off its historic debts to government. From April next year it will no longer be subsidised, and in fact it will be making a modest return to reinvest in the homes it provides. Non-profit, yes, but subsidised – no!
Categories
Is Social Housing Welfare?
Abigail Davies (of the Chartered Institute of Housing) blogged on Wednesday about her concern that social housing was beginning to be seen as a type of welfare.
I think this is a horse that is about to bolt, if it hasn’t already, and we’re going to need some very robust arguments to shut the stable door.
It’s clear that David Cameron sees social housing as a form of welfare dependency and living in social housing a ‘problem’ to be resolved. As he put it so eloquently in 2009:
“Generations of families are trapped in social housing, denied the chance to break out or to buy their own property. I don’t want a child’s life-story to be written before they’re even born, and a responsible housing policy which helps people up and out of dependency can help re-write that story.”
So, if you’re in social housing, you’re life story’s already written, unless you get out fast.
If the Tories and Liberals win the argument that social and affordable housing is ‘welfare’ making the case for it is going to be even harder than at present.
Here’s why it isn’t welfare and this is the case we should make:
Social and affordable homes help people to stand on their own two feet and look after themselves – providing good quality, decent homes at rents that low earning families can afford. Because families can afford their housing costs out of their own wages, they don’t need to be part of the mean-tested benefits system. And that gives people every incentive to work more, get a promotion or help another family member into work. A secure and affordable home is not a threat to people’s independence, but the platform from which people strive to improve their circumstances.
A policy of expanding the numbers of affordable homes will allow more people to be supported in this way, especially those who, at other times, would have bought their own home.
Secondly, we must be clearer about the ‘subsidy’ in social housing. Yes, it requires grant and government funding up-front to build it. But it pays its own way overtime. The rents from social housing more than pay back the grant it takes to build them. Britain’s ‘social housing business’ makes a profit for the country.
Council housing currently provides the Treasury with a surplus and will until HRA reforms next year. Rent revenues from homes owned by housing associations helps fund further new build, or in organisations that don’t develop, ends up accumulating as a surplus.
In a nutshell, affordable housing isn’t subsidised by the taxpayer and makes money in time.
The housing sector makes a compelling case for the importance of social housing for the poorest and most vulnerable. This is important and essential. But, if we want to make a better case to counter the ‘welfare’ argument, we need to be more robust in showing how good affordable housing helps people to work and provide for themselves.
The recently launched Labour Party review of housing policy is issuing a ‘call for evidence’ from organisations and individuals with an interest in housing policy.
Earlier this year Labour Leader Ed Miliband MP established several Policy Reviews, including one led by Shadow Communities Secretary Caroline Flint MP which will focus on the key question: How do we meet families’ aspirations for good housing and a good home?
Written evidence is invited by Monday 27 June covering any or all of the above and any other relevant issues. A website is being launched and submissions will need to be in a specified format and may be published: we will publish details here when they are available, and the document will also be available on the LHG website at www.labourhousing.co.uk . This will be an important exercise and Red Brick encourages readers to consider the questions and make submissions. We would also be pleased to receive any comments for publication on this site.
The call for evidence starts by recognising that Britain’s housing system is failing and that there is a genuine housing crisis, the effects of which go well beyond the needs of those on housing waiting lists: “Our commitment is to a decent home for all at a price within their means, supporting successful, safe and sustainable communities where people are able to lead happy, healthy lives and contribute to their local community, and ensuring that the next generation of families has access to the sort of home that best suits their needs and meets their aspirations.”
The Housing Policy Review will consider:
1 – The Changing Landscape:
- What effect will significant demographic trends have on household formation and household type in the future?
- What will the impact of Government’s policies on housing be and how will it vary around the country?
- What will the housing market look like in 2015, and how significant will regional variations be?
- How are changes in the housing market affecting people’s expectations and aspirations for housing and decisions about their lives?
2 – Places where people want to live:
- Where do people want to live and what do people want from a home and from the community they live in? Does everyone want the same?
- How do we create and finance the infrastructure and amenities that communities need to thrive?
- How can housing support safe, healthy communities where people are able to work and their children can get a good education?
3 – Housing finance:
- How do we encourage more private and institutional investment in housing?
- Where should public expenditure on housing be spent?
- How do we create a housing market that contributes to economic stability and
- How do we balance a prudent approach to mortgage lending with a mortgage market that enables people to buy their own home?
4 – Housing supply:
- What are the causes of undersupply in the housing market and why have levels of house-building fallen to such low levels?
- What lessons can we learn from our approach in government and from what worked in the past or overseas?
- How do we support the construction industry to build more homes? And in an environmentally sustainable way?
- What role can converting empty residential or commercial units play in creating more homes and how can we increase supply amongst existing housing stock?
5 – Home ownership:
- Why do people want to own their own home?
- Are there aspects of home ownership that could be replicated in other types of tenure?
- What is preventing people from buying their own home?
- How do we make home ownership more affordable and accessible for first-time buyers?
6 – Social Housing:
- What is the role of social housing providers? Who should live in social housing and how should it be allocated?
- Why do people want to live in social housing and are there aspects of social housing that could be replicated in other types of tenure?
- What should the relationship be between social housing and the private rented sector and home ownership?
- How do we ensure that all social homes are decent?
7 – Private rented sector:
- Why do people live in the private rented sector?
- What do people want from a home in the private rented sector?
- How do we tackle bad landlords? Does the private rented sector need better regulation?
8 – Planning:
- How do we increase land supply for housing?
- How do we make better use of previously developed land and vacant dwellings?
- How do we overcome local opposition to proposed developments and get communities to champion new homes?
- How do we ensure that those outside the housing market aren’t excluded from decisions about development?
9 – Housing design and quality:
- How do we encourage the best design in new builds?
- Are homes in Britain fit for purpose and how do we improve the quality of housing?
- How do we set the standard for energy efficiency in new builds and improve energy efficiency in existing stock, especially private stock?
- What would a ‘green homes standard’ look like?
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Know any Lords?
The Opposition was defeated and the hand-wringers in the Liberal Democratic Party have done nothing yet. So the Localism Bill (see here and here and here) went through the House of Commons and now heads off to the House of Lords. There it will meet a few people who know a lot about housing, and it is time for them to take a firm stand.
There is encouragement from what a few LibDem MPs said during the second reading debate that a concerted attempt to remove or at least dilute some of the housing aspects of Bill could have some success.
For example,
- LibDem MP Annette Brooke said that she wanted “to put on record my concern about the two-year tenancies…… The Liberal Democrats want this issue to be revisited in the House of Lords. It is incredibly important to get it right….. as we pass this Bill to the other place, we do so with a lot of questions.”
- President of the LibDems Simon Hughes MP said he was “very supportive of the comments of my hon. Friend Annette Brooke, who expressed her concern not that the Government are not listening, but that they may need to go further in the House of Lords to accommodate the points made by those of us who for years have had a passionate concern for social housing and council housing.”
- And another LibDem Dan Rogerson set out a principle that shows what the debate is all about: “The key to social housing is longer-term tenure, which gives families, and particularly those with young children, confidence that they have a home for their family for the future. That is why we need to focus on the fact that social housing is meant to be not for short-term crisis accommodation but for family homes…… I should like a great deal of reassurance in that regard from those on the Treasury Bench before I join the Government in the Division Lobby” (for Third Reading).
So now is the time, if you know any members of the House of Lords, to get writing and lobbying to make sure that this nasty Bill doesn’t come back to the Commons without some substantial amendment.
Combining those that take the Labour Whip, concerned LibDem Peers and the many cross-benchers who take an interested in housing, there are enough votes to force the government into change.
Despite my many reservations about the House of Lords, forcing changes to the Bill would not be an undemocratic step. None of the Bill’s housing policies appeared in the Lib Dem Manifesto. Apart from housing mobility, none appeared in the Conservative Manifesto, which promised to “respect the tenures and rents of social housing tenants”. Apart from HRA reform and empty homes, none made it into the coalition agreement. This Bill is borne of thoroughly undemocratic practice: the British people were not told any of it at the Election and should not have to put up with it now.
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Human rights at home
Human rights and equalities, like Health and Safety, get a bad press. The media associate them with overweening European institutions and bureaucratic interference with the ability of people to do whatever they like. In reality it is about providing checks and balances to the power of the state or public bodies, seeking to ensure that individuals get equal treatment irrespective of their personal characteristics and are not subject to unfair or arbitary decisions.
The Equality and Human Rights Commission has just published an excellent guide to the human rights legislation and its impact on social housing. As the introduction to ‘Human rights at home: Guidance for social housing providers’ says: “Poor housing can affect a person’s health, work, education, relationships and life chances, which is why the right to respect for a person’s home is in the Human Rights Act.”
The guide deals with many of the current controversies surrounding the operation of the European Convention on Human Rights in housing, including the applicability of the Act to housing associations (broadly yes, but it does not make them public sector bodies) and the restrictions recently placed by the Courts on ‘mandatory’ rights to possession (including the ending of starter and demoted tenancies), where it is now clearly necessary to demonstrate reasonableness and proportionality in the decision.
The Guide includes a useful step by step set of questions designed to help providers to make decisions that are not in breach of the Human Rights Act. Given the timing of publication, it does not address the issues that may soon arise from the government’s legislative programme. I can think of two that might interest lawyers and the Courts in future – the application of rules to award and end flexible tenancies and the circumstances in which eviction would be justified in the case of a tenant who has fallen into arrears because their housing benefit entitlement has been severely curtailed due to underoccupation but for whom there is no reasonable means of obtaining a smaller home.
In my view the landlord/tenant relationship is shifting far too far in favour of the landlord and it is a good thing that the Human Rights Act provides a constraint on landlords’ activities. The Guide should encourage reflection amongst those who want to maximise the freedom of action of landlords: even if the Localism Bill appears to give them more absolute powers to end tenancies, the Human Rights Act is lurking in the background to provide some possibility of challenge, redress and amelioration.
Flicking through the Telegraph website on Friday, I came across this arresting headline ‘How Osama Bin Laden helped push up prime UK house prices.’
It reminded me of one of the most important facts of the London housing market – a large proportion, if not the majority, of the most expensive properties are purchased by foreign cash-buyers. The global super-rich find London a safe and secure place to invest and live – unsurprising if the alternative is Russia where the rule of law isn’t always strictly applied to oligarchs or a Middle-Eastern country where there is the potential for the occasional uprising.
The point of the article is that London became the destination of choice for Middle-Eastern investors owing to the antipathy towards foreign muslims in America after 9/11. This created more demand for our most expensive homes and pushed prices up further.
Cash-rich foreigners aren’t just buying up West London’s prime addresses, but are also changing the character of areas further afield, like Hampstead and Highgate. (I can report however that they do not seem to have reached Hackney yet).
These buyers operate in a market and an economy far divorced from everyone else experiencing a sluggish economy, falling house prices, a mortgage famine, shrinking public services etc. Property prices at the top end continue to soar away, while they fall elsewhere.
In a time of little public investment in anything, let alone housing, I wonder whether we couldn’t ask the global elite to contribute a little more for the security and stability of a London home? Perhaps an additional charge on stamp duty for foreign purchases above a certain amount? The revenues could be hypothecated to help first-time buyers, especially those with families, get a stable and secure home of their own.
Given the astronomical prices, the number of purchases and the fact that these people are so wealthy even the global financial crisis didn’t dent their appetite for Mayfair mansions, I think we could raise a fair sum to put to better purposes.