Category: Blog Post

Action on neighbours from hell ‘a chocolate teapot’?

Post author By Steve Hilditch
Post date January 14, 2011

Steve Hilditch

Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone. Steve sits on the Editorial Panel of Red Brick.

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Yet another attempt at populism by Mr Shapps with his announcement that ‘neighbours from hell’ will face faster eviction under ‘radical plans’ to introduce a new additional mandatory ground for possession against social tenants, under which tenants with a track record of anti-social behaviour can be evicted from their council or housing association property much more quickly. At its core, the proposal means that being found guilty of housing related anti-social behaviour in one court will provide automatic grounds for eviction in the county court, removing the need to prove the incidents of anti-social behaviour for a second time.

So far so good, it would be hard to find a stronger consensus on any issue than the one in support of tackling anti-social behaviour quickly and effectively.

However, m’learned friends at the consistently excellent Nearly Legal website take a different view. And, as NL says, it is housing lawyers who will have to make sense of this when court cases follow.

So what are their key points?

First, NL say that a criminal conviction would already be incontestable as a fact in civil possession proceedings – there is no need for something to be ‘proved again’ on a possession claim at all.

Secondly, they see definitional problems. Mr Shapps says the new mandatory ground will follow a tenant being found guilty of ‘housing related anti-social behaviour’ – but, say NL, that “covers a lot of ground, from the minor but annoying to the very serious indeed. And ‘found guilty’ – does this mean a conviction in the Magistrates or Crown Court? Or the Magistrates making an ASBO or ASBI?”

Thirdly, they see problems in the word ‘mandatory’, which due to a case called Pinnock, is a bit more of a tricky concept than it used to be and not as certain as Mr Shapps would like.

Fourthly, they say there is little if any evidence that non-mandatory possession proceedings are what is getting in the way of dealing with the problem, even in the dreadful ASB cases quoted in Mr Shapps’ press release.

NL places the problem closer to home, and in particular the failure of some landlords and the police to take more effective and joined up action against perpetrators or to support victims, and the lack of dedicated funding. So, they conclude, “Unless existing powers are actually used (and the dedicated joined-up ASB teams funded), the fact that there may be a kind of mandatory possession proceeding .. is going to make no practical difference to the situation at all, as there will be as few ‘housing related ASB’ prosecutions as there are now, or even fewer.”

Mr Shapps announcement is therefore, they say, “a chocolate teapot”.

PS – another sceptical lawyer writes on 24 Dash – see here http://www.24dash.com/news/housing/2011-01-14-Lawyer-in-warning-over-fast-track-evicitons-under-ASBO-reforms

Tags Anti-social behaviour, Security of tenure, Social tenant

Blog Post

Social housing investment peaks then plummets

Post author By Steve Hilditch
Post date January 11, 2011

Steve Hilditch

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An early glimpse into the new edition of the UK Housing Review, to be published at the start of February, reveals that investment in social housing has reached its highest level for 20 years but is due to plummet again when the cuts take effect in April 2011.

The review describes how overall gross social housing investment in Great Britain rose again in 2009/10, to the highest level in real terms for almost 20 years – up by over 80 per cent since the previous decade. The strongest annualised growth was seen in Scotland. Taking account of all private finance investment, the Review concludes that “the last two years have seen overall investment in social housing at its highest sustained level (in real terms) for three decades”.

“Going right back to the 1970s, in only in one earlier year – 1989/90 – was expenditure higher. This resulted from a coincidence of exceptional factors – peaking right to buy receipts in the late 1980s housing market boom, together with landlord action to pre-empt government spending restrictions that were announced before they took effect.”

For the Chartered Institute of Housing, which trailed the Review this week, Director of Policy and Practice Richard Capie said: “The last two years have seen record investment in social housing across Britain, both from central government and importantly through private finance. This allowed the provision of more homes, essential community regeneration and important improvements in existing homes. We have now entered a very different era, with 50 per cent cuts in cash terms to housing budgets in England and around 19 per cent in Scotland. We are in the midst of a housing crisis with fewer than half the homes we need being built. This latest research shows the sheer scale of the dramatic cuts we are now seeing in new housing. These are a body blow to first time buyers, low income households and the construction sector.”

Figures on cuts to housing investment for 2011-14 for England are taken from the National Affordable Housing Programme which was £8.4bn in 2008-11 and will be £4.5bn in the three years from 2011/12. Accounting for the inclusion of mortgage rescue and the recovery of empty homes this represents a cash terms cut of 50 per cent. In Scotland the draft budget prefigures a cut in housing and regeneration spending from £488m to £393m, a cash cut of 19 per cent. The Scottish Federation of Housing Associations estimates that allowance for spending brought forward in 2010/11 means that the real reduction in 2011/12 will be over 30 per cent.

The starkness of the figures adds strength to the points made by Tony in his post on how the anti-recession stimulus is running out with potentially dire consequences for the construction sector of the economy.

The website of the UK Housing Review is http://www.york.ac.uk/res/ukhr/index.htm 2010-11 and contains a wealth of statistical and financial information about housing in the UK. It is edited by Professors Steve Wilcox and Hal Pawson.

Tags Housing investment

Blog Post

Is keeping your house empty a human right?

Post author By Steve Hilditch
Post date January 8, 2011

Steve Hilditch

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In previous posts we highlighted the bizarre examples used in the government’s advice on how to deal with squatters, especially what to do if your home is squatted whilst out walking the dog. Bernard Crofton recalled that the dog example originated as an ironic comment made at a meeting many years ago. From his Freedom of Information request, it seems no such examples actually exist and, even if they did, the government wouldn’t know because it keeps no data on such cases.

It was with this in mind that I read the 7 January announcement by Secretary of State Eric Pickles that he planned to heavily restrict the use of Empty Dwelling Management Orders (EDMO), introduced by Labour to take action on properties that have been empty for 6 months or more.

Once again the justification for the policy is punctuated by colourful and extreme examples. Pickles said it was wrong that a bereaved family could face having their loved one’s home seized under an EDMO, and quoted examples of councils attempting to use the powers against someone caring for an injured daughter abroad and a 96 year old who had passed away in a nursing home.

These examples would indeed be extraordinary if true, and CLG will shortly receive an FoI request seeking more information about them. What is known is that only 44 EDMOs have been made since the law came into effect in 2006. Councils would indeed have to be out to lunch to have focused on such cases given how many empty homes there are to choose from.

Let me be clear: just as I disapprove of people squatting properties when homeowners are walking their dogs, I also disapprove of councils making EDMOs against ‘people in vulnerable situations’ as Mr Pickles calls them, or when a property is empty for good reason.

Having compulsorily purchased quite a lot of empty homes in a previous life (indeed under the Thatcher government) I know that owners get into complex positions especially if a relative has died intestate. Back then the owners would be given lots of opportunities to bring their properties back into use, and the same is true today with EDMOs. But the very fact that the council intervened and was willing to take strong action meant that many properties were brought back into use without any formal action being taken. The threat was taken seriously. Owners will see Pickles’ soft soap policy and laugh when the council comes calling.

The real reason for Pickles’ change is ideological: “The Coalition Government is standing up for the civil liberties of law-abiding citizens. Fundamental human rights include the right to property” he said. More important, it seems than the human rights of the homeless.

Pickles clearly has little understanding of the damage empty properties can do to neighbourhoods in a very short space of time. In future he will only allow EDMOs to be used where there has been vandalism or squatters and other forms of anti-social behaviour, and action can only be taken after the property has been empty for two years. So an owner will be able to keep a property empty in a vandalised state, a blight on the neighbourhood, for 2 years before the council can take EDMO enforcement action.

I hope councils will object strongly, both to the stupidity of the new policy and to the demeaning nature of the argument for introducing it.

Tags Civil liberties, Empty homes

Blog Post

March of the Meanies

Post author By Steve Hilditch
Post date January 5, 2011

Steve Hilditch

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A Day in the Life of Ministers in and around Communities and Local Government. On January 3^rd, Housing Minister Grant Shapps took action to prevent the demolition of a single house in Liverpool, occupied from the age of 0-4 by one Richard Starkey, later a drummer in a band. “Let It Be” trumpeted Mr Shapps in the CLG press release. More like Back in the USSR.

Meanwhile, just along the corridor, Bungalow Bill* (played by E Pickles) was condemning, in the strongest possible terms, “Whitehall’s addiction to micromanagement” whilst ending requirements limiting car parking spaces in new developments, alongside his friend, Lovely Rita, meter maid (aka Transport Minister Philip Hammond), who was removing restrictions on councils’ parking charge regimes. CLG didn’t risk calling the policy Drive My Car.

All I can say is Help. And Run For Your Life.

*John Lennon said that “‘Bungalow Bill’ was written about a man at the Maharishi’s meditation centre who went off to shoot a few tigers then came back to commune with God.

Tags Department for Communities and Local Government

Blog Post

We need Isambard and a tin hat

Post author By Steve Hilditch
Post date January 3, 2011

Steve Hilditch

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As Tony suggests in his post I agree with Grant, Grant Shapps deserves (begrudging) respect for raising the importance of achieving long term house price stability, but I hope he has his tin hat on in anticipation of the reaction in some parts of the media. The Mail has already highlighted Shapps’ own personal property dealings as they smell ‘hypocrisy’. Of course, never one to miss a political trick himself, Shapps also tries to pretend that house price hyper-inflation came in with the Labour government in 1997, whereas all the key trends and policies, long booms followed by a sharp and damaging busts, have been in place for a couple of generations now.

The real problem is that I can’t see anything in his or the government’s philosophy that might lead to the necessary actions being taken to bring house price stability about. The Mail quotes Shapps as saying that homeowners should no longer rely on their houses to fund their retirement and that ministers were hoping to engineer an era of ‘house price stability’ in which property values would gradually be eroded by rising earnings.

‘Engineering’ a market seems rather at odds with everything else they stand for.

Indeed rather a lot of extremely heavy engineering projects would be required to achieve long term price stability. We may need the housing equivalent ofIsambard Kingdom Brunel because all of them are hard to achieve.

The first is a better balance of supply and demand, which will need policies to massively increase the rate at which new homes are built over a sustained period of time, more than a decade. With the regional planning framework scrapped, and huge cuts in infrastructure investment, this seems a forlorn hope to me.

The second is the stable supply of mortgage funds on sensible terms, targeted towards the cheaper end of the new build market, to encourage developers to produce more affordable homes. This will require a stiffer attitude towards regulation than this government promises and lenders are used to.

The third is to tackle land prices and not just house prices – the problem in many places is not the cost of construction, but the price of the land – which can probably only be done through some kind of land value tax, not natural territory for any of the main political parties.

And fourth, we need a stronger safety net for home owners when interest rates spike or redundancy strikes – Labour’s policies during the credit crunch were a good start in this direction. Stable or falling prices need to be accompanied by reduced risk for individual households.

At the bottom of it the hardest change to make will be in attitudes. A good home ownership market is vitally important, but it will fail if it is regarded as the only tenure that brings status and respect, or as a get rich quick scheme or a proxy pensions market or even a place to bung the latest bankers bonus. The core business should be about delivering reasonably-priced homes to people on reasonable incomes, and shared ownership to people on ‘intermediate’ incomes who want it. But the market will still fail unless we have a better understanding of the relationship between tenures. A balanced housing market needs far more renting as well as more homes built for sale, so people at all income levels have real choice at different stages in their lives and are not forced into debt that they cannot sustain.

More care is needed with the language of ‘aspiration’, which has become synonymous with wanting home ownership. Of course many people would like to own their own home if they can afford it, but the aspirational classes may well give higher priority in future to getting their children through college and protecting their retirement.

These are real challenges not just for Grant Shapps but also for Labour’s housing policy review when it gets under way. It would be nice if a new consensus was emerging that enabled serious long term policy options to be discussed rationally, but I suspect the odds are against.

Tags Home ownership, Housing market

Blog Post

A Christmas Carol (in prose)

Post author By Steve Hilditch
Post date December 29, 2010

A guest post for Xmas from Bernard Crofton adding a seasonal spin on a topic previously reported on Red Brick here.

A Christmas Carol (in prose)…… being a …….. ghost story for Christmas.

In November of 2010, the two government departments facing amongst the biggest budget cuts, the Department for Communities and Local Government, and the Ministry of Justice, issued a new guidance leaflet : “Advice on dealing with squatters in your home” available as a pdf download from http://www.communities.gov.uk/publications/housing/advicesquatters, where there is a helpful summary as well :-

There are an estimated 20,000 squatters in the UK. This guidance is aimed at homeowners and to make them aware of their rights where their property has been unlawfully occupied. It has been jointly produced with the Ministry of Justice which makes clear that it is an offence for a squatter to fail to leave a residential property when required to do so by or on behalf of either a displaced residential occupier or certain other occupiers whose interest in the premises is protected under the legislation.

That stirred some queasy questions about the “new” advice; mainly “Why?” and “Why now? “ .

However, when I clicked and the pdf started its weary download, I heard the rattling of chains in the cellar. Surely Jacob Marley has been dead these seven years (or 17 since the Criminal Justice and Public Order Act 1994).

The Advice starts with these words:

“What can I do if my home has been taken over by squatters?

1 If you return from holiday or walking the dog to find squatters in your home and they refuse to leave, you can call the police and report a criminal offence. “

I was fascinated by the imagery. Mainly because part of it was mine, come back to haunt me. I was among the local government representatives consulted by the Home Office about the legislation. Actually the law, as laws of that era went, ended up quite fair. I never met any supporter of squatting who thought squatters should be able to move into an occupied dwelling and effectively evict the occupants. Nor did I ever find a case where this had happened. Canvassing round the councils in London (where statistically almost all the squatting in the UK was concentrated) we couldn’t find a single case where that was alleged to have happened.

We found a few cases where home-owners were trying to repair a newly acquired empty property before moving in, and it being squatted while undeniably unoccupied. We found very many parallel examples on council estates (and I managed a tenth of that national 20,000 squats figure) But the pubIic debate had far more of the tang of the illegal immigrants debate It was about scroungers and spongers but with a more direct threat: they wouldn’t just take your money indirectly through the tax system, they would take your home and all that was in it!

One newspaper (I think of it as being the Daily Mail but I may just be prejudiced) ran a tale of a family returning from holiday to find their home squatted. “Vox populi” in the neighbourhood were said to be frightened to leave their homes unattended in case squatters moved in. We tried to find this example. The local council, where it reportedly occurred, only came up with a couple who lived abroad and owned several rented properties in the UK, one of which they found squatted on a visit back to the UK. They were certainly neither “displaced residential occupiers” nor “protected intending occupiers” of the property.

So in discussions with the civil servants I pointed out that if I went out to walk the dog and found someone in my home when I returned, I would not find the Police reluctant to act on straightforward “breaking and entering” or even malicious damage grounds. My sarcasm was effective. That “walking the dog” phrase alongside the “returning from holiday” one became shorthand for the fact the legislation was an over-reaction or a pandering to right wing prejudices. I still do not believe any owner-occupier was ever “displaced” by squatters while the kettle was still warm, or as Confucius say “swinging chain, warm seat”.

The issue, as local government and voluntary sector consultees all argued, was the time it took to get to court to repossess a squatted property. Ironically,court waiting-times meant that if you bought an empty house that was immediately squatted, you were kept out of it for the full term of that other brilliant invention of the era: the shorthold tenancy. So the law was eventually drafted to include the situations of both “a displaced residential occupier” and a “protected intending occupier” of the property. And rather than put resources into reducing court waiting lists we got the “interim possession order”.

Now I never rule out the possibility there really was a case where people left their home to go on holiday and found it squatted on returning. I never completely rule out the possibility that somewhere there is a Big-issue seller who gets into his Rolls Royce at the end of the day. But I never met one remotely near that bracket, and so I remain sceptical. But as for home-owners being squatted while out for a walk with the dog, I never heard anyone ever suggest it has happened – except me as a sarcastic example of the hysteria over squatters.

Suddenly at the end of 2010, I find the example heading a new advice leaflet, not just from one but two government departments. So I wrote to them both under the Freedom of Information Act (we didn’t have that when the 1994 Act was proposed, it was up to us to produce our own statistics). I asked:“Please supply me with any statistical information held or viewed by the Department or its predecessors, as to the number of owner-occupiers who have found squatters in their homes: a) on returning from holiday; b) after walking their dog.”

DCLG were first to respond, with the classic line from Fawlty Towers “ I know nuzzing”. The Ministry of Justice were more helpful. The person with “responsibility for answering requests in the Ministry of Justice (MOJ) which relate to civil (non family) law and housing possession related statistics which are to be handled under the Freedom of Information Act 2000 (FOIA)” told me :

“I can confirm that the Department does not hold the information you have requested. MOJ does not record property owners or property occupiers who have found that whilst away from the property, for whatever reason, that it has been occupied by squatters.”

After advising me of the rights of the un-numbered disposed occupiers, he helpfully provided the following table which he was not obliged to do under FOI, as it did not directly answer my question. He hoped it would be of use to me, so I am using it below. He warned me :

Table 1 below shows the number of Interim Possession Orders and Possession Orders against trespassers made in the county courts of England and Wales for the past full five years. Please read the footnotes underneath the table which describe how the data were compiled. Please note in particular that the figures include cases where properties were occupied by types of trespassers other than squatters (figures for squatters alone could only be determined by inspecting individual case files at a disproportionate cost), involving non-residential properties; and also that not all such orders given result in actual repossession of a property from a trespasser.

Table 1 Number of possession orders and interim possession orders given for trespass in the county courts of England and Wales, 2005-2009

Possession orders Interim possession orders

2005 929 117

2006 1036 114

2007 752 154

2008 626 164

2009 653 136

Source HMCS manual returns

Notes:

1. Data from 2005 to March 2009 were gathered from the Dept’s Management Information System. Data from April 2009 were collected from the courts online data monitoring system One Performance Truth

2. Quality assurance checks have been carried out to remove outliers. However these decisions have not been verified by contact with the courts. These figures should therefore be treated with caution.

3. Orders against trespassers and IPOs can be given for the possession of both commercial and residential properties from trespassers.

4. Not all orders and interim orders given for possession against trespassers relate to properties that are occupied by squatters.

5. Not all possession and interim possession orders result in actual repossession of a property from a trespasser.

Now let’s ignore that the table includes squatted shop-units etc. and that not all trespassers are squatters. The table shows possession orders against trespassers (I recall the definition used to be “against persons who entered as trespassers” but that mayhave changed).

I conclude from this table the following.

The number of full orders has declined significantly in the last five years.

The number of interim orders has started to decline, after a rise.

That at the current rate of full orders it would take 30 years to remove the current number of squatters….if there were no new cases.

That at the current rate of interim (i.e. urgent?) orders it would take nearly 150 years.

No one seems in a hurry.

Is it me or is there something odd about the emergence of this new governmental advice from financially strapped departments just in time for the Xmas season? Conspiracy theories are accepted, but any genuine leaks as to why this ghost has been disturbed would be especially welcome.

Bernard Crofton

Tags Department for Communities and Local Government, Squatting

Blog Post

The ghost of Christmas yet to come

Post author By Steve Hilditch
Post date December 22, 2010

Steve Hilditch

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We don’t often link to the Telegraph on Red Brick. But the sting operation against leading Liberal Democrats has had a focus on one of our favourite topics – housing benefit.

So here is what Business Minister Ed Davey actually said to the undercover reporters on this topic. Hear the tape here.

“Well, their housing benefit cuts, for example, which are going to mean in my view if they go through that some people on the breadline will be put below the breadline. And that’s just deeply unacceptable. There is (sic) five changes to housing benefit, and there are two which I find are unsupportable. One which will come in in 2010-13 where if you were unemployed for 12 months and you still were passing the working test which is actively seeking work – to get jobseekers allowance, which is about £80 a week, something like that, so you can eat you will have to show that you are looking for work…… I don’t understand why you are on the breadline, you’ve been trying to look for work, you’ve been passing all the government tests, and you’re suddenly going to have your rent, which is your highest cost, your help with that, taken down by 10 per cent. No logic behind that whatsoever…. We spend too much on it. It’s pushed up rents and landlords, rich landlords, are getting their pockets filled. So the system doesn’t work, but I don’t think you kick people when they’re down.”

Contrast that with the pugnacious and ever so slightly pompous Mr Davey’s attack on Chris Bryant and Boris Johnson on BBC’s Question Time in October for using the word ‘cleansing’ to describe the housing benefit changes. He said:

“Chris and Boris Johnson should apologise. The language they are using is appalling and I think it is scaremongering and I think their analysis is completely wrong. And I’ll tell you why it’s appalling. I have Kosovan asylum seekers in my constituency who really were ethnically cleansed ….. what is being proposed is nothing of the sort, you should use temperate language and have a moderate and grown up and adult debate…. People will find that 790,000 social homes in London will be completely unaffected. They will find that the vast majority of housing benefit recipients across the country will be unaffected. And yes there will be some but we have increased massively the fund that will assist if there are problems to £140m. And even those people who will be affected, they will be able to find that up to a third of private rented sector homes in London still affordable under housing benefit. Now I’m afraid you are being factually wrong and pandering to people’s sentiment when we’re actually putting in a sensible policy….. The real issue here is that we are proposing after all these changes the state will still subsidise up to £20,000 a year rent in the private sector – £400 a week”.

A few facts

– Many social tenants will be affected by the 10% cut in jobseekers allowance, uprating benefits at less then RPI, and the increase in rents for some tenancies to 80% market rents

– The £21,000 a year cap is irrelevant to most private tenants. Many more will be affected by the 30^th percentile rule and the overall benefits cap of £26,000

– The ‘vast majority’ of private tenants will be affected, as the government’s own figures now show.

As an aside, Ed Davey’s rage about the use of hyperbole about cleansing looked synthetic at the time – after all, Lord Turnbull said Gordon Brown was Stalinist – but it looks even odder now that Vince Cable has called the government ‘Maoist’. It seems that comparisons to genocidal maniacs are more common that we think.

We’ve observed before that the more the government accuse the opposition of scaremongering, the more likely it is to be true. Below the breadline…… kicking people when they’re down. Mr Davey’s real views deserve to be heard, and should be acted upon.

Even Ebenezer Scrooge finally repents. If the LibDems stand up for their principles, they might just get to play the part of the ghost of Christmas yet to come.

Tags Housing Benefit, Liberal Democrat

Blog Post

What will housing look like at Christmas 2014?

Post author By Steve Hilditch
Post date December 21, 2010

Steve Hilditch

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Just published on the Labour Housing Group website is a fascinating article by LHG Executive member Graham Martin, who tries to predict what will happen to the 3 main tenures between now and Xmas four years hence, when we will be 5 months away from the most likely date of the next General Election. What will the Labour Party, when returned to government, be facing in housing? Here is a summary of Graham’s conclusions (figures are for England only).

Social Housing

Housing Associations currently own around 2.3m affordable homes. Given the size of the stock, the overall numbers will change slowly despite the planned changes.

The current (inherited and new) social rented programme will produce about 100,000-120,000 extra ‘target rented’ properties. But between 100,000-170,000 existing target rent homes will be relet at intermediate (upto 80% market) rents. In 2014 it is likely to be 50,000 fewer in total than now.
There will be around 285,000 more homes let at intermediate rents (say 135,000 relets and 150,000 new build).
The debt funded/rental cross-subsidised new Intermediate rented homes will be produced mainly in London and the South East (with some in the South West and Midlands) as it is here that the maths work best. In other parts of the country, intermediate rents will result in either a small increase or even a rent reduction, making development on the new model unviable.
The biggest impact is likely to be caused by the interaction of the various benefit changes, and in particular the overall benefit cap of £26,000, restricting tenants’ ability to pay.

Council house numbers will change slowly. There is little appetite and resources for significant stock transfers. Some other conclusions:

The reform of Housing Revenue Accounts is likely to improve councils’ financial strength and their ability to invest in their own stock. There is a risk that there will be a smash and grab raid on HRA money (rising rents, financially more secure) to cross subsidise the General Fund.
The provision by councils of Intermediate rented housing is likely to be slow.
Management issues around benefits are likely to be the same as with Housing Associations.
Changes to statutory homelessness rules, and changing letting priorities will have a significant impact.

Home Ownership

Graham projects that house prices might fall another 20%, maybe 25%-30%, as measured against inflation. This will be mainly due to the long term ‘deleveraging’ of the residential mortgage market – i.e. there will not be the money to lend to home owners to buy new homes (such money as there is will go mainly to those buying the nicest properties with the biggest deposits).

Home construction for home ownership will be remain low until 2014, after which is may start to increase again (from a very low base).

The lack of affordable homes for (all but the best off) first time buyers will result in increased pressure on the rental market, and more adult children living in the parental home.

Private Rented Sector

The hardest to predict. The only certainly is that there will be big change.

The changes to Housing Benefit (and total benefit) rules will profoundly impact on the sector. Landlords may split their properties into smaller flats to respond to the benefit caps and ceilings. Savills are projecting that the impact will be, first, large falls in demand for and rents of 1 bedroom flats (due to under 35’s now being subject to the ‘single room rate’ rule), and, secondly, increased demand for larger ‘shareable’ properties.

The new 30% centile cap on maximum HB and the plan to greatly widen the ‘Broad Market Rental Areas’ will have a big impact. There are areas where over 30% of private tenants are dependant on HB, but will be constrained to living in the 30% of cheapest properties. 40% into 30% just does not go….

It is likely that the gap in housing (especially ‘green’) quality between other tenures and the private rented sector will grow significantly upto 2015.

Regulation and quality control are likely to be drastically reduced due to spending cuts, and there is a danger that undesirable landlord practices will increase. This is unfair to tenants but also to responsible landlords and managing agents.

There is an opportunity to promote high quality institutional landlordism, with investment available if the regulatory structure is right. REITS – Real Estate Investment Trusts – could work well in residential letting, kick starting the UK residential construction industry, and providing high quality, long term rented property at market rents.

Tags Council housing, Home ownership, Housing association, Housing Benefit, Private rented sector

Blog Post

One cheer and one HuRrAh

Post author By Steve Hilditch
Post date December 19, 2010

Steve Hilditch

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In trying to look beyond this government’s irksome habit of claiming credit for things agreed before the Election, at least it can be said that the snail’s pace move towards the abolition of the housing revenue account national subsidy system continues in vaguely the right direction.

Having announced already that he planned to stick with most of John Healey’s proposals, announced it again as part of the November consultation on the reform of social housing, and announced it yet again as part of the Localism Bill package, Grant Shapps has now announced a ‘route map’ towards reform – in advance of a more detailed announcement next month! The route map makes it clear that more detail will emerge over the next year before implementation in 2012, no doubt offering Mr Shapps further opportunities to announce his great, but inherited, reform. Who said spin was dead?

Brought up on a council estate in Kenton, Newcastle, I have always had an emotional belief in council housing, and have often been outraged at the stigma attached to the tenure, the appalling media misrepresentations, and the snobbery. Although what Thatcher did to council housing was unforgiveable, I was hugely disappointed that it turned out to be not very New Labour either. But the rationale for council housing is not just emotive. Based on a system of rent pooling, so that surpluses from older homes cross-subsidise the cost of new ones, it was also a robust financial model. It could have provided hundreds of thousands if not millions of extra homes if it had been managed properly over the past 30 years.

The Tories’ failure to invest in managing and maintaining the council stock left Labour with a huge problem in 1997, including a backlog of disrepair estimated at around £19billion and an incoherent rent policy. Labour made some well meaning attempts at reform, such as the introduction of rent restructuring, the Major Repairs Allowance and the Decent Homes Programme, but funding for the latter carried the clear political price tag that direct management of the stock by councils was unacceptable to the government.

As some councils in the national HRA subsidy system had large historic debts and others had none, the system was unbalanced and rent pooling became unmanageable. It also became increasingly unpopular with tenants and councils in those areas where a third or even a half of local rents were taken for distribution elsewhere. Despite producing growing surpluses nationally, all of the participants were unhappy with the outcome, even those that gained from redistribution. As an annual system, there was no certainty about income and it was impossible for councils to plan long term and improve efficiency. Tenants simply could not engage with the key decisions that affected their homes and communities because they were only understood by a tiny number of civil servants and professionals. In its latter years, the Labour government became less hostile to the idea that council housing should have a long term future, and understood that a more local system suited the times. It embarked on the hugely complex exercise of unravelling the system.

The Localism Bill contains powers to implement the local system proposed by Labour. In future, councils will keep their rental income and use it locally to manage and maintain their own homes and service their debt. To get to the point where all councils have sufficient income to meet these costs, there will be a one-off payment between central government and each council, which will reallocate existing housing debt between councils in a final settlement based on 30 year business plans for each landlord. This is possible because the national system is in surplus – ie tenants are paying more in rent than council housing costs to run.

Communities and Local Government department’s task is complicated: they have to incorporate the implications of the new government’s shifting policies, for example on rents, as well as making important assumptions about inflation and the ‘discount rate’ (currently assumed to be 6.5%) used to determine the ‘net present value’ of each council’s housing business.

I have 2 main concerns. First, John Healey planned to allow councils to keep their right to buy capital receipts, whereas the Tories will retain the current system that returns 75% of net receipts to the Treasury. There will also be a cap on councils’ overall housing borrowing. Hope that HRA reform would trigger a resurgence in council housebuilding has been dashed. The overall receipt to the Treasury from all the various calculations is currently projected to be around £6.5b, but tenants may come to view this as being paid for out of a large rent increase next year of over 7%.

Secondly, Labour would have localised the HRA within the clear framework of the regulatory regime. There would have been an external check, through the Tenant Services Authority, and a place for tenants to go if, for example, their council set up backdoor arrangements that took funds out of the HRA to benefit the general fund. It is still not clear how regulation will operate without the TSA, and this will make tenants in some areas nervous about what their landlords will get up to.

At least we can look forward to further announcements.

Tags Council house, HRA

Blog Post

Localism Bill – the Pickle Family Circus

Post author By Steve Hilditch
Post date December 14, 2010

Steve Hilditch

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The famous American Pickle Family Circus was known for its ‘Big Juggle’ that ended every performance in an intricate club passing pattern. As the Localism Bill, published yesterdy, passes ‘powers’ (ie the blame for cuts) down to councils, ‘Pickles Big Juggle’ seems an appropriate metaphor.

For social housing and homelessness, the Bill had few real surprises as everything had been widely trailed or pre-announced. We’ll pick up on specifics in later posts but here’s an initial reaction to the Social Housing Reform chapter of the Bill.

On allocations, councils will be able to decide who goes on waiting lists, which will no doubt lead to great claims in the future about ‘cutting waiting lists’. We will be back to local manipulation of the list for political ends. Transferring tenants will be moved outside the waiting list, but there is no evidence to support the claim that this will make it ‘easier for them to move’.

On homelessness, its a nerve to call this reform rather than virtual repeal. Come on Shelter, time to wake up to what is actually happening here! And come on LibDems, the homelessness legislation was a Liberal private member’s Bill in the first place, something the Party has always been proud of – time for you to speak up. The government complains that 20% of social lettings go to homeless people ‘at the expense of other people in need on the housing waiting list’. A miserable and ‘divide and rule’ justification for an extraordinarily backward step.

The introduction of ‘flexible tenancies’ (insecure fixed term tenancies) which will gradually turn social housing into transit camp accommodation. Some housing association chief executives really like this, so I am even more concerned.

Reform of council housing finance is something I welcome but we still have to be careful about how much will be returned to the Treasury and how the detailed formulae will apply to different councils with stock. Called a ‘key plank of localism’ but a previous Labour measure.

The proposed Homeswap Scheme again is something to welcome as mobility arrangements need a boost. Landlords will be required to participate in home swap schemes.

‘Reform’ of the regulatory system and abolishing the Tenant Services Authority will, in some magical and as yet unexplained way, “put local people in control of driving up standards of social housing management and resolving most failings.” Social tenants will receive ‘stronger tools to hold landlords to account’ but I’ll believe it when I see it. The more likely explanation lies in the statement that ‘State intervention will be reduced’. A positive change will be to end the system of two separate ombudsmen handling complaints, providing a common route for all social housing tenants.

In London, new powers for the Mayor will include full control over housing investment, a good step, and the devolution of more planning decisions to the boroughs.

Watch this space for more discussion of these issues over the coming few weeks.

Tags Homelessness, Localism, Security of tenure