Once again Boris Johnson has refused to answer important questions about the ‘Affordable Rent’ programme in London. Written questions by Nicky Gavron AM have failed to elicit informative or even intelligible answers to key questions such as the rents to be charged.
Tag: Affordable housing
Yesterday’s publication of the consultation document (and the draft impact assessment) on the Government’s plans to increase the discounts available for the Right to Buy and for ‘one to one replacement’ with affordable homes is about as cheering as the pre-Xmas homelessness figures.
In many ways it’s a clever offer, or a clever bit of spin, in that it appears to deal with previous complaints about the RTB, and especially the lack of replacement of the homes sold, which meant that future generations of potential tenants effectively paid the price for sales. It remains to be seen whether the proposed rise in discounts – to an upper limit of £50,000, an effective increase from 25% to 50% – will ‘reinvigorate’ the RTB as much as the Government hopes. They estimate that some 300,000 tenants are eligible for the RTB and have the financial means to exercise it. But many houses and the more attractive homes have already been sold and there is huge uncertainty over future property values – we are all more risk averse than we were.
A proportion of the additional receipts will be channelled back, either nationally or locally, into further housing provision. But this will meet only a share of the cost of replacement, which will be variable between regions. If the additional RTB proceeds only meet part of the cost it cannot be said that the new scheme itself achieves one for one replacement. Replacement will require the use of other existing resources – land, borrowing capacity, local affordable housing funds (eg from s106 deals) and New Homes Bonus. These should already be committed to affordable housing provision. At best this seems like double counting and is more like a sleight of hand.
As a nationally conferred right, RTB sits uncomfortably with the Government’s commitment to ‘localism’. Few if any local choices are available within the scheme and, given that local authorities are supposed to be in the driving seat of new housebuilding, the Government is reticent about placing the responsibility for replacing the homes sold at the local level.
Councils will not have any choice when it comes to deciding what type of replacement homes should be provided. By central dictat they will be ‘affordable rent’ and not ‘social rent’. Given that all of the homes that will be sold will be social rented, even if you accept the ‘one to one’ replacement argument it cannot be said that they are ‘like for like’. The exclusion of the option to provide social rent is another step in its removal as a form of tenure and its substitution by the much less affordable and much less secure ‘affordable rent’ product. CLG’s assertion that the provision of ‘affordable rent’ to replace RTB sales will ‘ensure that our ability to meet housing need is not impaired’ is highly questionable. The misuse and indeed abuse of the word ‘affordable’ is getting worse every day.
The consultation runs until February and it is planned to introduce the new discounts through secondary legislation in April 2012 or shortly after.
Government Ministers have consistently argued that the changes in local housing allowance would lead to reduced rents in the private rented sector and would not lead to more homelessness.
Labour MP Karen Buck spoke at the launch of the NHF’s Home Truths report this morning, and writes exclusively for Red Brick below.
Guest post by Karen Buck MP, Labour MP for Westminster North
A year ago, Iain Duncan Smith said in the House of Commons debate on Housing Benefit:
“The purpose of these (HB) changes is to give a real impetus to getting the rents down to make affordable housing more available in some areas…… Through the emergency Budget and spending review, we proposed a set of housing benefit reforms designed to bring back under control a system that has been out of control. I accept that the responsibility of Government is always to get the balance right as we protect, incentivise, and ensure fairness in the system. Critically, for housing, that means getting the rents down….. There should be no need, with the discretionary allowance, for people to be made homeless. That is just the nonsense with which Labour Members want to scare everybody.”
One year on, we now know that the mean rent increase in London was around 12%.
We are facing an unprecedented crisis of supply and affordability. This has not all occurred since May 2010 – and some of the present problems have roots in the decision to
switch subsidy from ‘bricks and mortar’ to personal subsidy three decades ago. Still, recent developments have intensified the problem acutely.
Over the last year, homelessness has risen sharply, reversing a fairly steady medium term decline. The recent pattern by which homelessness/temporary accommodation has been diverted via the prevention and relief of homelessness strategy is faltering, because families are reluctant to abandon future security as the PRS becomes increasingly unaffordable. (Meanwhile, there are over 100,000 households to whom local council accepted homelessness duties but then diverted them into the private sector who will be
at risk of re-presenting as rents rise and benefits fall).
The central issue remains one of the supply of affordable homes, especially for rent, but whilst we are seeing the final wave of new supply coming through as a result of the Labour government’s investment, the future looks less hopeful because of the Orwellian ‘affordable rent’ model and housing benefit cuts.
‘Affordable rents’ as the means of filling the grant gap mean not just places like Westminster become unaffordable – an ‘affordable rent’ set at 65% of market rents would require a household income of £65k to cover the cost without benefit – but so do poorer
places like Haringey and Newham. In Haringey, a rent set at 80% of local market rents would require a household income of £31k for a 1 bed flat, and in Newham a 2 bed flat would require a household income of £27k. This at a time when the median income for social housing tenants is £12k.
The Household Benefit Cap and Housing Benefit cuts, meanwhile, are estimated in a recent report by London Councils to leave 133,000 households unable to pay their current rents.
Even if this proves to be an over-estimate, staggering numbers of households face a dramatic shortfall in their income and are at risk of upheaval and homelessness as private rents continue to soar. Boroughs with lower housing costs can anticipate a sharp increase in numbers of incomers, many with high service and support needs.
It is worth noting that unemployment, the freeze in real wages and rising housing costs have already contributed to a rise in the number of private sector Housing Benefit
claimants, especially in the suburbs- the London Borough of Redbridge, which includes part of the constituency of the Secretary of State for Work and Pensions, saw a 65% increase in Local Housing Allowance claims in a little over a year, the largest increase in the country. Some of the areas facing the biggest cost pressures are not the Knightsbridge’s and Mayfair’s of popular myth, but places like Hillingdon and Croydon, whilst Newham will be amongst the places worst hit by the overall Benefit Cap.
Supply may be the solution over the medium and longer term, but in the very short term we need DCLG and DWP to sort out their differences and develop an integrated approach
to housing need and homelessness before they escalate.
The affordable homes alliance Housing Voice has launched its National Inquiry into the affordable homes crisis and will hold its first regional hearing at Exeter University on 9 December.
The aim of the Inquiry is to gather the views of civil society through oral
hearings, submitted evidence and an online survey. It aims to publish its report
around May next year.
Housing Voice is supported by Citizens Advice, CDS Co-operatives, Child Poverty Action Group (CPAG), National Housing Federation, National Union of Students (NUS), Sitra – the charity for supported people, TUC and UNISON.
Chaired by Lord Whitty, Housing Voice aims to champion the need for more affordable homes to buy or rent. With the shortfall in housing projected to be 750,000 by 2025, the average house price more than 8 times the average salary, more than one 1.6 million households on waiting lists, the average age of a first time buyer being 37 and rents in the private rented sector continuing to grow faster than incomes in many parts of the country, Housing Voice believes NOW is the time to tackle the affordable housing crisis.
For information about supporting organisations, how to submit evidence and the regional
evidence sessions, go to the website at http://www.housingvoice.co.uk There is also an online survey.
Even 18 months in, this Government’s most commonly-used phrase is ‘the mess we were
left by the last administration’. It’s beginning to wear thin, especially as the imminent new recession is clearly the result of events and actions that have taken place since Cameron entered No 10.
It is no surprise that any good news is not credited to the last Government. And one area where there has been a bit of good news is in annual housing completions. What is absolutely clear is that these are the legacy of Labour and have little if anything to do with Messrs Pickles and Shapps, whatever they say.
The number of social rented homes added to the stock in 2010/11 (therefore started under
Labour) was 39,170 (of which 30,780 were funded through the Homes and Communities Agency), continuing an upward trend that started in 2004. In addition there were 21,460 additional ‘intermediate homes’ including intermediate rent and low cost home ownership. Total additional ‘affordable’ homes topped 60,000 and the mix between social rent and intermediate homes of roughly two-thirds to one-third seems about right when judged against needs.
Of course even this scale of output is not enough, but the trend was in the right direction despite the recession. The Labour Government had realised that the most effective way to get growth in the economy and meet needs in the community at the same time was to boost housing construction. 60% cuts in the programme showed that the Coalition did not share this analysis.
The legacy of this Government in 2015/16 will look very different. They will bust a gut (and housing association finances while they’re at it) to try to keep the total affordable figure as high as possible, but the sub-headings will look very different. The new, mis-named, ‘Affordable Rent’ programme will be there, at rents of up to 80% of market rent and possibly averaging about 65-70% depending on the outcome of the negotiations between associations and the HCA after the intervention of many councils trying to keep rents down.
The figure for ‘social rent’, let within the current ‘target rents’ policy, will inevitably plummet. From the patchy information available, there appear to be virtually no social rented homes in the ‘affordable housing’ contracts awarded by the HCA so far, so new social rent homes will only become available from planning gain schemes, councils building directly, and the few councils who have refused to have anything to do with ‘Affordable Rent’.
The picture on the ground – social rented lettings coming through to homeless people and
people on the waiting list – will be even worse than the new build programme implies. A proportion of social rent lettings (no-one knows how many yet) will be stolen from the social rent pool and put into the ‘Affordable Rent’ pool to help pay for the programme.
The Government will continue to mask the real implications of their policy with bluster. They will use the figures for ‘affordable housing’ and ignore the importance of social rent to people on low incomes and to the policy of encouraging people into work. They will continue to claim that the same people will benefit from ‘Affordable Rent’ as benefit from ‘social rent’ despite the fact that people on the ground know that this just isn’t true in most parts of the country where market rents are high and rising rapidly. To add to the confusion, they will continue to say that ‘Affordable Rent’ is ‘social housing’. Orwell’s Ministry of Truth would be pleased by these efforts.
The debate needs to shift from numbers alone, important though they are, to the genuine affordability of the homes coming out of the programme. The idea being worked on by the London Labour Housing Group, defining a London Living Rent as a benchmark by which to assess whether rents are affordable or not, is attracting a lot of interest. Like the London Living Wage when it started, it would not be a technique for directly controlling rents but a campaigning tool which will have influence over rent-setting policies in the longer term.
The Government, the HCA and the housing associations who have signed up to HCA
contracts remain extremely coy about the rents they will charge for ‘Affordable Rent’ homes – one housing association board member I know says their officers even refuse to tell the board because of HCA confidentiality rules.
But the information will eventually come out and the ‘affordable’ in ‘Affordable Rent’
will be seen to be a complete con. And it will fall to the next Labour Government to deal with ‘the mess we were left by the last administration.’
Nicky Gavron, Labour’s London Assembly housing and planning spokesperson, has called on Mayor Boris Johnson to come clean over claiming credit for 16,000 affordable homes that will never be delivered. Nicky has today written to Richard Blakeway, the Mayor’s housing adviser, to explain why he has apparently double counted around 16,000 affordable homes.
Blakeway said this week that “around 54,000 completions” are expected over the “next four years” (2011-15), apparently including 16,000 affordable homes that will already have been counted towards the Mayor’s target of 50,000 homes by 2012.
Nicky wrote: “I am extremely concerned at the way the mayor’s office has apparently
double counted this information. At best it is a lazy, yet very important, error. At worst you have blatantly misled Londoners on your housing delivery.”
She went on to say that the misuse of statistics “undermines the challenges we face, and this apparent sleight of hand does nothing to reassure Londoners we are delivering what the city needs.”
Nicky commented: “The mayor needs to be beating targets, not cheating them. He’s already broken his election pledge to deliver 50,000 homes by 2011. It now looks like he’s trying to claim credit twice for thousands of extra homes.”
Richard Blakeway wrote in the Guardian on Thursday 1 September, “the mayor is on course to deliver 50,000 affordable homes by April 2012 …. The pipeline of affordable
housing for the next four years is also strong, with around 54,000 completions expected”.
In April, Alan Benson, head of housing at the Greater London Authority, told the London
Assembly’s housing and planning committee: “About 28,000 homes … are in the pipeline to be delivered. We will deliver about 16,000 of them by 2012. The rest will be delivered in the following year, 2012/13. There is a substantial pipeline of homes in development currently, on site, which will deliver over the next couple of years, which the Government is committed to funding and which are an entirely social rent/intermediate mix as we know it.”
- Lindisfarne community prioritises affordable homes
As you arrive into the village from the causeway out to Lindisfarne, there is a ‘welcome’ notice board. It records the history of the island in timeline form. All the key dates are there, the arrival of St Aidan in 635AD, the death of St Cuthbert in 698, the arrival of the Vikings in 793, and all the rest.
And, given equal status, are the key dates for ‘affordable housing phase 1 completed’ and ‘affordable housing phase 2 completed’.
Simon Schama might not agree, and David Starkey certainly won’t, but that’s what I call a balanced view of history.
Like other areas in rural Northumberland, Lindisfarne has suffered from rocketing house prices, driven by the second homes boom, and rapid rent rises, driven by shortage and competition from the holiday lettings trade. Local people could not afford to buy or to rent on the island, the school closed, and the traditional community was dying. Showing great foresight and determination, the islanders formed the Holy Island of Lindisfarne Community Land Trust (CLT), which raised charitable and community donations to fund the building of a small but vitally important number of homes for social rent.
Later, other small developments were financed by the Housing Corporation/Homes and Communities Agency. The landlord of the Crown and Anchor pub put it simply – “Getting one of these new homes means we’ll be able to stay put, carry on running the pub and be a part of the local community.” The homes will be available for low rent occupation in perpetuity, irrespective of future land value rises.
This inspirational story contrasts with this week’s report from the Countryside Alliance concerning the death of rural communities around the country caused by the shortfall in affordable homes. According to the group, almost 80,000 affordable homes are needed each year in rural areas but just 17,000 were delivered in 2010/11.
The report, ‘The critical shortfall in affordable rural housing in Britain‘, argues that rural housing remains less affordable than in urban areas due to average wages being
£4,655 lower than the national average.
As the Lindisfarne example shows, to survive rural communities need to prioritise low cost housing for rent. As in the cities, the market simply cannot do the job that communities need without positive intervention.
Categories
Donkey con
It doesn’t matter how many times you call a donkey a horse, it’s still a donkey.
Grant Shapps announcement of the so-called ‘affordable homes’ programme boasts that the programme will spend around £1.8billion on producing 80,000 ‘affordable homes’ of which 63,000 will be for ‘affordable rent’ and 17,000 for ‘affordable home ownership’. Shapps says that “The new Affordable Rent model, which will be the principal element of the Programme, will make public subsidy go further while enabling local authorities and providers to target support where it is most needed.”
The implication from the announcement is that there are NO homes for social rent (ie at target rents) in the programme. Social rented housing and targets rents are not even mentioned.
Shapps’ announcement, and the listing of the 146 organisations who will receive funding from the Homes and Communities Agency (including 26 councils), is more remarkable for what it fails to say than what it does say.
There is NO information about the rent levels that the ‘affordable rent’ homes will be let at. This could be up to 80% of market rents although we know that many bidders have gone for a mix of rents to try to keep the rent of larger family homes down, but this crucial information has not seen the light of day. Housing website 24 Dash claims that the average rent will be 72-73% of market rent and that Mr Shapps is claiming that the average in London will be 65%, but the figures are not published. These averages represent enormous rent increases for tenants of new homes compared to the previous regime. They will intensify the poverty and employment traps and increase the housing benefit bill.
There is NO information about how many re-lets of existing stock will be let at ‘affordable rent’ levels instead of social rent or target rent levels to pay for the programme – the key policy that will lead to a large net reduction in the number of homes being made available from the exisiting stock for rent at genuinely affordable rents.
There is NO information about which bids were refused and why.
Classically, the information is stage managed to look good, to resemble a thoroughbred policy, building a good-sounding number of ‘affordable homes’. But new subsidy is now only available for what is really ‘intermediate rent’ and low cost home ownership. I have been an advocate for intermediate housing over the years as a parallel programme to social rent, but make no mistake: this policy is about ending social rent new build and gradually chipping away at the existing stock of homes for social rent. It has a few enthusiasts but they are the usual suspects in the housing association and local authority worlds who have wanted to stop providing housing for the poorest for some time.
There is no doubt: the policy is not a horse, nor even a mule. It is an ass.
May 3, 2011. Today is the deadline for housing associations to submit their ‘offers’ to the Homes and Communities Agency about what homes they might build over the next four years. Islington Council in London has thought long and hard about its strategy for delivering affordable homes. In an exclusive article for Red Brick, Councillor James Murray, Executive Member for Housing at Islington, sets out the borough’s plan.
Today marks the latest stage (and by no means the final one) in attempts by housing associations and others to steer a course through the government’s new ‘Affordable Rent’ programme. This programme’s headline has been known for a while: that housing associations would be allowed to charge up to 80 per cent of market rent on new build homes and a percentage of their relets. But teasing out the practicalities and implications of how this works in practice is taking a lot more discussion.
And in London, the acute implications of rent levels being set at 80 per cent of market – particularly in the inner-London boroughs and particularly for family-sized properties – have inspired months of discussion between London boroughs, the Homes and Communities Agency, and housing associations operating in the capital.
As part of this discussion, many London boroughs have set out their initial positions on ‘Affordable Rent’. In Islington, our position has focused on how we can respond to the concerns we have about the difficulty of using ‘Affordable Rent’ to address housing needs in our very high value borough.
We believe a different model is more appropriate for Islington. We are asking housing associations to work with us and use grant from the local authority – in the form of public land at discounted rates and capital from our new homes bonus – rather than grant from the government’s main ‘Affordable Rent’ programme. In return for this, we ask that housing associations build homes at social rents.
We believe that this is the best way to tackle our housing crisis in Islington. Like many London boroughs we have thousands of overcrowded families, and several hundred who are severely overcrowded (lacking two or more bedrooms). It is clear that tackling this means prioritising more family homes for social rent.
Since the election in May, 2010, we have prioritised a new council home building programme that means we will be on-site for over 100 new homes this year. Alongside our council-owned stock, we want to continue to work with our housing association partners.
In Islington we have a strong relationship with a number of housing associations. Through historical links, stock transfers, and new build projects, housing associations have played and continue to play a vital and positive role in Islington’s affordable housing stock.
We want this relationship to continue, and we believe that our plan for social rent with local authority grant will be the best way to enable willing housing associations to continue to build the kind of homes we need.
It goes without saying that the 80 per cent of market rent ‘Affordable Rent’ properties would be completely unaffordable in Islington. Our social rents are currently between 30 – 35 per cent of market rent, and so this would represent more than a doubling of the current levels.
Allowing properties to be developed at 80 per cent market rent would mean the new tenants either face an enormous rent hike or a deep benefits trap. Those not on benefits may decline to move into a new flat in future – even if doing so would relieve overcrowding or reduce under occupation – because of the unattractiveness of higher rents for new build properties. And for those on benefits, the looming prospect of caps makes the outlook uncertain and grim.
Some have suggested allowing 80 per cent market rent on, say, one-bed properties, and offering a rent level less than 80 per cent on the larger family dwellings. This may work in some places, but we do not believe it works in Islington. Our planning policy is explicit that we need the family homes rather than new one-bedroom flats. Our current council-owned stock is over 40 per cent one-bed properties – we are in fact piloting a separate programme of selling certain one-beds through shared ownership and using the capital raised to build new family homes.
So our priority in Islington has to be family homes at genuinely affordable rents. With our well-known high property prices in Islington, we believe that social rents, offering close to a level playing field with council rents, are the right level for this.
That is why we have said we will support schemes from housing associations that offer homes at social rent, and that are subsidised where necessary through our grant in the form of public land or capital. We have a pipeline of sites identified from public land – enough land for over 500 homes immediately, with several hundred more being looked at for the future. And our decision to dedicate almost all the borough’s new homes bonus to new home building means this year we can offer £1 million capital grant.
We have been pleased by the positive reaction from a number of housing associations to our plans. We are currently in negotiation with one of our housing associations on the details for a new scheme that would be the first under the new regime to offer social rent with land subsidy from the borough.
Our model will not be appropriate for allLondonboroughs – just as the ‘Affordable Rent’ model is not appropriate for Islington. But although it is self-evident that our position is outside the government’s main programme, we are committed to working with willing housing associations to make this work for them and for those in our borough with the most acute housing need.
Categories
Institutional chaos
The Chief Executive of the National Housing Federation, David Orr, spoke last week about the ‘institutional chaos’ facing housing associations and the need to think carefully about balancing the needs of their business with their mission.
He said “You might take a strategic business view that the smart thing to do is wait until all the moving parts have settled down and not take any risks. But that is pretty disastrous in mission terms with the scale of the housing crisis.”
Housing associations (HAs) certainly face huge dilemmas in the current policy framework. It is no longer possible to build what is needed most – social rented housing at genuinely affordable rents – except in tiny numbers as a special case. So, if HAs with development programmes want to keep them going, and most are assembling their bids at the moment, there is little choice but to plan a mix of private housing, shared ownership and the new, grotesquely-named ‘Affordable Rent (AR)’ product (which is little different from the intermediate rent products we have seen before). Of course it can be argued that building almost any housing is useful given the current shortage, and AR at 80% of market rent is not that much different from social rents in those parts of the country with the lowest values. But everywhere else, the virtual removal of social renting from the mix totally disregards the needs of communities and the people on lowest incomes.
One thing HAs with a development programme can and must do is protect the existing stock of social rented homes when they become available for re-letting. The government wants them to re-let a share of their existing homes at AR rent levels to generate funding for new development. I think they should demonstrate their commitment to their mission, to borrow David Orr’s word, by refusing to do so and by re-letting these homes at social rent levels. Councils, in revising their housing strategies and setting their new ‘tenancy strategies’ under the Localism Bill, should set out their opposition to existing social rented homes being re-let at such high rents.
Lettings policies, already the art of getting a quart in to a pint pot, will come under even greater strain. Demand for homes that are re-let at social rents will increase as supply contracts even further. Who will the new AR tenancies at up to 80% market rents be allocated to? The government argues that the profile will be the same as those who currently get allocated social rented homes, but they also say that the new policy will not impact on the requirement for housing benefit – and they can’t have both of these. Higher rents require more housing benefit, as we have argued before and as Family Mosaic’s research showed. Once again their housing policy and their welfare reform agendas are in direct conflict.
HAs caught in the middle say quietly that this is an argument that the lenders may ultimately decide – they don’t like it when the tenants can’t pay their rents and this will be reflected in their risk assessments of new schemes. One middle course would be for HAs to refuse to set AR rent levels above the limit for Housing Benefit, irrespective of local market rent levels. That would reduce the yield but would keep the homes available for people on housing benefit. But, in higher value areas, it is the total benefits cap (rather than the housing benefit limit) that will prevent many tenants from being able to pay their rent. This will be reflected in the risk assessment for new schemes and the pressure will be on to let to people with sufficient income to be able to afford the rent.
So, there are dangers both ways. If AR homes are let to people on low incomes who would previously have qualified for a social rented home, then housing benefit spending will go up. If AR homes are let to people who can afford the higher rents, then people on lower incomes will be squeezed out and more will end up in private rented accommodation at higher rents with a higher requirement for HB support. Either way, there is likely to be upward pressure on HB spending: the government will have to find more money or look for more cuts. The prospects are grim.