By Monimbo
How much of the recent growth in private renting is being fuelled unintentionally by right to buy sales? And what impact is this having on the housing benefit budget? This question was posed here last month by Paul Dimoldenberg, based on the evidence he turned up of almost 40% of properties sold under the right to buy in Westminster having ended up in the hands of private landlords. As he pointed out, this means that money is being spent not only on funding big discounts for the original purchasers but then year-in-year-out on the local housing allowance payments to the many low-income tenants now housed in them, who otherwise could have been in council lettings.
Category: Uncategorized
Steve said a few days ago, ‘it is interesting to note more people on the airwaves arguing that housebuilding is the best way get the economy moving.’
Here are two more:
According to the pollster Peter Kellner, the only economic Plan B that the public currently supports is to:
Categories
Pay to stay
The main reasons for opposing the Government’s proposals to charge more rent to social tenants with high incomes – the so-called ‘pay to stay’ policy – are practical, and the CLG Consultation Paper is seriously deficient in its consideration of the bureaucracy and cost involved in managing such a system.
In short, the plan is to allow social landlords to put rents up if a tenant (or the two highest paid individuals in a household) earns above a threshold of income, which might be £60k, £80k or £100k or even some other figure.
Following on from Tony’s post yesterday that it is the collapse in construction activity, and especially housebuilding, that has driven the economy into a third successive quarter of negative growth – the Osborne recession – it is interesting to note more people on the airwaves arguing that housebuilding is the best way get the economy moving. For example, economists Kate Barker and Vicky Pryce on last night’s Newsnight.
There also seems to be a greater recognition that housebuilding can be got moving more quickly than other infrastructure projects such as railways and roads.
It is hard to exaggerate how dire things are in construction. In his review of construction forecasts, Brian Green on Brickonomics shows how all the leading experts and trade bodies are adjusting their forecasts downwards, and from an incredibly low base. His summary is that: ‘The weakening economy and lack of resolution in the Euro zone have led the expert forecasters to doubt the ability of the private sector to pick up the slack as public spending cuts reduce demand in construction.’
This week, in a timely review of the housebuilding industry published for Shelter, FTI Consulting, advised by Kate Barker, asked searching questions about the industry and why supply is so inelastic. It looks at all the key factors that determine housing supply, the broad relationship between housebuilding and the wider economy, and the crisis conditions we have been experiencing since 2008.
Their analysis leads to an unpalatable conclusion that the issues facing the housebuilding market are not just related to the current crisis but might be even more deep-seated: ‘…while action to address market failures and limit the unintended consequences of government action may well lead to an improvement in supply, it still may not deliver from the market the level of house building that is required.’
And it raises an essential point: ‘These fundamental and inherent issues about the nature of the house building industry and the housing market raise questions about the appropriate role of the state in facilitating an economically and socially optimal level of supply.’
The report unfortunately shies away from directly trying to answer the question – saying it is beyond its brief – but makes a number of sensible suggestions for policy that might make a modest improvement in the way the market functions.
They are right to call for a re-examination of the role of the state in housing provision. On Guardian Housing Network recently, also available on Red Brick, I argued: ‘It will take many years of economic recovery to re-establish a self- assured housebuilding sector. Even then, there is no economic reason why the output from profitable housebuilders should coincide with our national aspiration to build homes.’
It is a relatively straightforward historical point: over the long term, the private sector has never built the number of homes that the nation requires. Since WW2 it has been surprisingly consistent in delivering around 150,000-175,000 homes a year, and it should be our policy ambition to get back to those kind of figures from the current disastrous lows. Housing associations have become bigger players and their output is important, but increases in recent years have been marginal in the overall scheme of things.
Total output (across all tenures) reached 350,000 in the 1950s and over 400,000 in the 1960s because there was political will at the centre and because local authorities made a huge contribution (issues of quality are for another day). As councils slowed down after the 1976 IMF intervention, and shuddered to a halt after the election of Thatcher, the slack was never taken up by either the private sector or by housing associations.
In the future, even if the planning system is improved, even if finance is more secure, and even if more people can get mortgages, there is no reason why the market will deliver the socially optimal output: it will produce the homes that can be sold and not the homes we need. To answer FTI’s question, the role of the state is not just to tackle the barriers that prevent the industry functioning better but to address the gap between what the market is capable of delivering and what society wants. Of course, over time the industry may adapt and improve and cut costs. But as FTI point out in their report, even under excellent conditions, from 1999-2004, when both house prices and mortgage lending levels were increasing, private housing output remained almost stagnant.
Councils remain the key agents in this. I have reservations but the Government has given them the primary planning role. There is little choice but to push them to become effective facilitators of housing development. But to get to where we want to be, Councils also have to build again, and on a large scale.
Really bad news today that the economy is in an even deeper recession than we thought. We’ve now had three quarters of recession in a row. The Chancellor’s been in charge two years, so eight quarters. In five of those eight the economy has shrunk. GDP is now lower than it was when the Tories came to power.
It’s a dismal record which gives little hope to people out of work and families struggling to make ends meet.
The figures out today show construction was by far the worst performing sector – a 5.2% drop in output. Steve (via Ben Chu) argued back in May that in Quarter 1 of this year, the collapse in public housebuilding pulled the construction sector into recession, and the economy with it.
With a further a 5 percent drop it’s hard to see how the same isn’t true again.
There is plenty the government can do to stimulate housebuilding: through reform, direct government investment or lifting the restrictions on councils investing.
Allowing housebuilding to continue to fall is a political choice.
While I’m on the subject of the economy:
- There seems to be a view among the commentariat that the economy doesn’t feel as bad as the numbers suggest. They should get out of London for a bit. You don’t have to go far – even in my South Eastern hometown more and more people are struggling and feel increasingly pessimistic about the future.
- If the Olympics provide an economic boost, just watch George claim that it’s in fact his careful stewardship which has led us back to growth. If there is no growth, then the Olympic disruption to travel and people staying away from work will be the excuse. None of it will wash anymore.
Categories
Tenants have their say
Monimbo
The National Tenant Organisations have embarked on an interesting exercise to test tenant opinion on a range of issues about housing policy, many of them about changes which the government has already made or clearly plans to do. It asks for views on issues such whether tenants with higher incomes should pay higher rents, the fairness of increased right to buy discounts, and the effects of welfare reform.
The NTOs are hoping for a range of replies from tenants’ groups and bodies that work with tenants. It will be good if they receive a big response and the bigger it is the more interesting the results will be.
I’m particularly looking forward to the response to a question that effectively asks for views on the government’s pay-to-stay proposal, which is still out for consultation. I’ve been surprised that straw polls of housing professionals show support for the idea, as it seems to me it is questionable on both practical grounds and because of the implications for the sector as a whole. Given that social landlords only collect income data – if they do at all – at application stage, how are they going to track down all their tenants who are not receiving housing benefit and administer means tests on them? And presumably not only do that once but repeat the exercise at regular intervals? To ensure everyone is treated equally, they will all have to be asked for similar proofs of income. The cost in training staff to do this and the time required in writing to and visiting one million tenants is surely going to be many times the cost of any potential savings? It is going to be interesting to see if tenants’ organisations are more switched on to these snags than housing officers evidently are.
Another question asked in the NTOs survey relates to the real reasons behind proposals such as pay-to-stay and the enhanced right-to-buy, as well as several more of the government’s recent policies. The survey asks what should be the future role and purpose of the social rented sector – should it be an ‘attractive sector of choice’ or a ‘tenancy of last resort’? In an interesting short book published by Shelter in 2009, The Future of Social Housing, Mark Stephens posed a similar question, looking at the different experiences of social housing sectors in different countries. He suggested three (rather than two) possibly roles for social housing. One is the commonest in the northern European countries: he calls it the ‘affordability’ role but it equates with an ‘attractive sector of choice’ because its purpose is to compete on similar terms with private renting and even owner-occupation. Another is to be an ‘ambulance service’ (or tenancy of last resort) as in Ireland, the US and Australia, whose social sectors are much smaller than Britain’s. Stephens puts the English sector between the two, as a ‘safety net’ (and by implication the same would apply across the rest of the UK).
But it’s not only in Britain that debates about the purpose of social housing are taking place, given pressures to reduce subsidies and either charge higher rents or concentrate on housing those on the lowest incomes. In some cases like Sweden and Austria the outcome so far has been to maintain the sector’s wider ‘affordability’ role. In others, such as the Netherlands, there is pressure for the (very large) social sector to target lower income groups. If the debate is resolved in a particular way it doesn’t mean there are no ensuing tensions. For example, in both Sweden and Austria there are marginalised groups like migrants who struggle to get access to social housing, and in Sweden and France there are now ‘sub-social’ sectors catering for such groups and providing less security. In the Netherlands, tenants who gain their house using a ‘priority card’ because of their housing need might well end up in a poorer neighbourhood than someone allocated a house through the waiting list.
So the ‘safety net’ role is perhaps a typical British compromise that attempts to get the best of both worlds – providing secure and attractive homes but without excluding the neediest groups. It is clearly under threat as the sector continues to decline and many who would like to enter it can’t do so. If tenants opt in the NTOs survey for an ‘attractive sector of choice’ they will (rightly) be challenging any further shift towards social housing becoming an ‘ambulance service’. It will be interesting to see if the government pays attention.
But it will also be important for the NTOs to show how a vision for social housing can balance creating or maintaining an attractive sector with a continued role in housing the most vulnerable. This is a challenge for housing organisations, too – and of course for the opposition front bench in developing its new housing policy. Although it doesn’t provide all the answers, boosting supply is clearly one of the biggest priorities. A sector that – in the course of this year – will provide fewer tenancies than private renting is rapidly ceasing to be available as an ‘attractive sector of choice’ for many on the outside who would like to make that choice but simply aren’t able to.
With her background at Shelter, Louise Casey understands the power that a strong case history can have in humanising and illustrating a complex policy issue. But her report on interviews with 16 families, in her current role as Head of the Government’s ‘Troubled Families’ project (or Troubled Families Tsar if you prefer), published this week, leaves a bad taste in the mouth.
The problem lies not so much in the project itself, which builds on the previous and successful work on family intervention, but in the spin and the dirty politics that lie behind it. A potentially useful programme is being dressed up for media consumption to make a point.
We have commented before that Ministers seem absolutely determined to portray these ‘troubled families’ in a particular way, to caricature them as depraved not deprived. That way they hope the public will conclude that all we have to do is address the personal behaviour of a tiny minority, heaping the blame on the so-called dependency culture rather than poverty and failing services.
The original estimate of the size of the problem, which led to the adoption of the oft-repeated ‘120,000 families’ figure, was based on 2004 data which took a much wider view of indicators of multiple deprivation, including poor housing, no qualifications, mental health problems, disability, and inadequate income to cover basics. The criteria for the selection of families are now much more targeted at involvement in crime, risk of going into care, school truancy, and domestic violence, factors that have very little to do with the original 120,000. This has been expertly exposed by Jonathan Portes and by Fullfact. As New Statesman says ‘This zombie statistic refuses to die’.
The excellent Fullfact have challenged the way CLG spins the 16 as being somehow representative of the 120,000, which they aren’t, and then spins the 120,000 as being somehow representative of a whole underclass, which is misconceived.
It looks like the project itself is being steered away from families experiencing multiple deprivation (which might require public resources to resolve) towards the Prime Minister’s idea of neighbours from hell (and he has experience given what we have discovered about his neighbours in Chipping Norton), and towards Eric Pickles’ notion of people we should understand less and condemn more. Gone are the criteria relating to poor housing and disability and low income. And nowhere is there reference to the fact that existing Family Intervention Projects have been subject to cuts so there are fewer services not more.
Casey’s report on the selection of 16 families is undoubtedly grim. The stories of violence and abuse are shameful and disturbing. As always, there are a few families that fit the Shameless stereotype and you do wonder what young people are being taught about contraception. But ultimately the report reads like a script from the loathsome Jeremy Kyle Show: pointing at the Chavs and moralising about their sub-human behaviour. Despite being mainly in the families’ own words, it feels like it has been put together by a redundant News of the World journalist.
I couldn’t get past case study 7 and jumped to the end. Here we find an assessment of the evidence that is largely balanced and occasionally insightful. But most journalists didn’t get that far and so more lurid headlines are generated. ‘Criminal culture at the heart of feckless families: Shocking report lifts lid on incest, abuse and spiral of alcohol abuse’ said the Daily Mail. No wonder that Zoe Williams in the Guardian concluded: ‘I believe the ulterior motive is the demonisation of the poor’.
The problem with the whole underclass theory is that many of the behaviours that are identified are classless. Undoubtedly they have a much harsher impact, and are a lot harder to resolve, when the family is also badly housed, poorly educated, and very poor – but that is the bit the Government doesn’t want to recognise. Having a child with ADHD, or a parent with mental ill-health, as many of the 16 families have, would devastate most middle class families with good incomes. Alcohol and drugs can have a huge impact on even the wealthiest families, witness the Rausings; but children from wealthy homes don’t normally end up in the disastrous care system. Sexual abuse and violence have been perpetrated by the most religious as well as the most godless. And as for incest…..
The problems faced by the 16, or the 120,000, and indeed many more families, are rooted in poverty and bad housing whatever their individual pathology or personal failures. The latter will not be treated without also treating the former.
Here’s a post the people at Progress commissioned from us. Great to see Labour coming out with real proposals for private renters:
Renting is something people do for a short time, when they are young, while they save for a deposit or wait for social housing – that’s still the perception of renting among many homeowners. That view, however, no longer reflects the reality.
There are now as many people renting privately as there are social renters and over a million families now live in rented housing. With a shortage of social housing and high prices locking people out of buying, we are entering a period when many people will have no choice but to rent long-term and may never buy – the so called ‘Generation Rent’. That’s why it’s important Labour makes renting a better option than it is at the moment.
Growing demand means rents are rising fast and becoming less and less affordable. The tenancy rules under which people rent (the Assured Shorthold Tenancy) allow landlords to end tenancies with only two months’ notice. In practice, it is often only a month. Standards in private rented homes are highly variable with a large proportion falling below the ‘decent homes’ standard which prevails in social housing.
Jack Dromey this week made the first solid steps to improve the situation for renters by proposing to regulate lettings agents.
Renters often fall victim to the actions of unscrupulous letting agents with their high fees, hidden charges and broken agreements. I’m not the only person to wonder why on earth it costs £100 or more to resign a tenancy agreement, when the cost to the agent is a second-class stamp. Or why people should hand over deposits of hundreds of pounds in cash without knowing whether they’ll get it back or if the person on the other side of the counter is reliable.
Labour is exploring a code of conduct for lettings agents, greater transparency in fees and charges and new standards people must meet before they open a lettings agency. Such rules have been in place for estate agents for a long time.
We’ll need to do more to make renting a secure long-term option and we can expect further measures from Hilary Benn and Jack Dromey in the coming months. This is the right thing to do and an important opportunity for Labour. When political parties respond to people’s housing needs and ambitions they reap a long-term political benefit.
Labour’s postwar programme of council housing helped give a majority of people a secure and affordable home. To this day social housing tenants are some of Labour’s strongest supporters.
Margaret Thatcher’s Right-to-Buy turned a generation of working-class people Tory by fulfilling their ambitions to own their own home (though to wider public detriment).
This new and growing constituency of renters (often the children of that Right-to-Buy generation) are yet to find a political voice and Labour is right to stand up for their interests.
By Paul Dimoldenberg
A report to today’s meeting of Westminster City Council’s Housing Scrutiny Committee shows that more than 3,500 former council flats are now owned by landlords, often charging more than four times a council rent.
The report reveals that the Council has sold 9,135 (45%) of its 21,243 Council flats under the Right-to-buy and that 3,603 (39%) are now sublet and “owned by small and multiple landlords”.
Former Council flats in Westminster owned by Buy-to-let landlords are now rented out at more than £500 a week, over four times the average rent of Council flats, and are out the price range of the vast majority of Westminster residents in housing need. The transfer from public to private ownership has a huge cost to the public purse as many of the Buy-to-let landlords are being subsidised by thousands of pounds of Housing Benefit payments.
The Right-to-buy has transformed many Council estates in Westminster into Buy-to-let goldmines for private landlords. Rather than meeting housing need, some of Westminster’s Council estates are now providing Buy-to-let landlords with increasing financial returns as rents continue to escalate, often with the help of a huge Government subsidy. Meanwhile Westminster residents in overcrowded conditions have to wait even longer to get rehoused.
We need a massive building programme of new homes at social rents right across London and an end to the current sell-off of more Council property. Westminster’s housing stock of homes for those on low incomes has been almost halved over the last 30 years. No wonder there is a housing crisis of epic proportions. When will the Government see sense and reverse its damaging housing policies?”
Councillor Paul Dimoldenberg is Leader of the Labour Group on Westminster City Council.
Categories
I’m sorry I haven’t a clue
Photo BBC website, with apologies
Starring Boris Johnson on the kazoo and Grant Shapps on the swanee whistle
The ‘affordable rent’ scheme is up and running but FOI requests show that the Housing Minister and the Mayor of London appear to know little about what it means for rents.
The Government’s ‘affordable rent’ programme allows landlords to charge rents at up to 80% of the market rate. They say that the homes will be let to the same people who previously would have been offered homes for social rent, and that they will receive full housing benefit if entitled (robbing Peter (CLG grant towards new homes) to pay Paul (increased HB cost on substantially higher rents)).
The ‘affordable rent’ scheme is costing hundreds of millions of pounds and an untold amount of additional housing benefit. It is a dramatic shift in policy as Government subsidy for social rented housing has virtually ended. Rent levels are a crucial factor in the scheme. You would therefore be forgiven for thinking that there would be some careful monitoring of the rents being charged by providers.
In the run up to the election the Mayor of London tried to take the sting out of the housing debate by claiming that most ‘affordable rent’ rents would be similar to the old social rent levels and that the average across the programme as a whole in London would be 65% of market rates. He made great play of his efforts to keep rents reasonable.
Last week’s National Audit Office report on the ‘affordable rent’ scheme didn’t pay much attention to the implications for tenants, but it did note that the annual average rent would be £6,552 compared to £4,698 under the previous National Affordable Housing Programme, that the average rent across the whole programme would be 75% of market rents, and it confirmed that ‘in London providers typically planned for rent levels at approximately 65 per cent’. I have taken ‘typically’ to mean average. It strikes me as a statistical oddity that London, which will get more than a quarter of the programme’s homes, will charge 65% of market rent but the national average, including London, is 75%. What does that imply for rents outside London?
The NAO also confirmed that there was little monitoring of rents for homes of different sizes – one of the key pieces of information demonstrating affordability for different types of household. They say: Our analysis of the high-level information held by the [Homes and Communities] Agency shows that average weekly rent will range from around £100 a week in the North East, Yorkshire and the Humber to £182 a week in London. However, it does not have information on rent levels charged across homes of different sizes. As a result, we could not compare actual rent charged under the model and rent levels under previous programmes.
A month ago I put in a Freedom of Information request to the Mayor of London seeking information about a) how the 65% average figure was calculated, b) the average for each bedroom size category, and c) how many homes were being ‘converted’ from social rent to ‘affordable rent’ to help pay for the scheme.
In his response, the Mayor says:
The 65% affordable rent to market rent figure is based on an overall programme average across the 60 partner programmes approved during the allocation round for the 2011-15 Affordable Homes Programme. Partners provided an overall view of the affordable rent level against market rent that would be achieved across their programme covering indicative programmes where firm schemes were not identified. As an overall programme average based on a partially indicative programme it is not possible to provide a breakdown by unit or bedroom however we will be publishing details on rents annually.
This is, how should I put it, disingenuous. I have sought further details, arguing:
Thank you for your email. I regret to say it does not answer my question nor on the face of it does it appear to comply with the requirements of the Freedom of Information Act, specifically my request for papers and emails. I believe I am entitled to see these unless a reason for non-release is provided. Of course I would be happy for any commercially confidential material to be redacted on the usual basis. I am also happy to receive information in electronic form.
The Mayor and the Deputy Mayor for Housing have both made statements over the past few months that the average rent for ‘affordable rent’ properties will be ‘65%’. I wish to see information showing in some detail how this figure has been calculated, as their statements are, as far as I can see, the only public information available on rents within the new programme. Given that the level of rent is a critical factor is assessing the worth of the programme, the requirements of scrutiny suggest this information should be available. Given that this is the Mayor’s primary housing programme, and now fully his responsibility, I suggest that there must be monitoring information showing the position on all contracts and a document or documents showing the calculations that lead to such definitive statements that the outcome rent is ‘65%’…..
Frankly I find it extraordinary that there is no information on rents for different size units, given that achieving a good share of family units was one of the Mayor’s stated objectives and a requirement of the bidding process. I believe that there must be, within the GLA, a document or documents showing the estimated bedroom size breakdown of the programme and their expected rents. I wish to have these documents released to me. The fact that it is indicative is neither here nor there as the information must have been sufficiently robust to enable the Mayor to approve contracts worth millions of pounds.
I therefore look forward to receiving the information originally requested.
It is extraordinary that such a significant shift in policy, using large amounts of public money and private borrowing, and involving a huge increase in rents, should be accompanied by such flimsy monitoring. It demonstrates little interest in the actual output of the scheme, who it houses and how it might meet needs, apart from a simple numbers count of the number of homes produced. As a minimum Government should know what bedroom size mix is being achieved and at what rents; it should know the pattern of cross-subsidy if rents of some homes are held down whilst others are pushed up; and it should be able to estimate the overall impact on the housing benefit bill.
The ‘affordable homes’ programme has been badly managed from the outset, as the NAO report makes clear, and contains major risks. But even more risks arise from not having a clue what is happening, and that is what Grant Shapps and Boris Johnson stand accused of.
Find out more about the real ‘I’m sorry I haven’t a clue’