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Lurking danger in red tape review

Once upon a time Governments cared about the neutrality and independence of people that were appointed to undertake public tasks.  But the announcement that the Cabinet Office’sRed Tape Challenge’ review of housing regulation is to be championed by Simon Randall and Stephen Greenhalgh puts two of the country’s most dedicated Conservatives in charge of a dangerous exercise that could have major ramifications for the social, private rented and construction sectors.
Simon Randall CBE has a string of Tory appointments and Cllr Stephen Greenhalgh – described by Conservative Home as ‘a successful entrepreneur and landlord’ (no conflict there then) is of course the Tory Leader of Hammersmith and Fulham.  Greenhalgh notoriously co-wrote the Localis pamphlet on social housing which, despite denials by Grant Shapps and others at the time, became the template for the destruction of the social rented sector which the Government is now pursuing.  He is also behind the policy of redeveloping social housing estates in his borough against the wishes of the residents.
We have previously warned on Red Brick that the Red Tape Challenge holds serious dangers for the sector and the standards it operates to, and is mainly a device to bring in deregulation whilst no-one is looking.
As an example of the lurking danger in this exercise, most people in the sector believe that there is a need for stronger regulation of standards in private renting and in particular in houses in multiple occupation.  Yet a series of regulations to do with private renting and HMOs are on the Red Tape list for review and possibly for abolition.  Indeed, the Cabinet Office trumpets as beacons what has already been done by the Government to deregulate short-term holiday lets and HMOs.
The need for greater not less vigilance in housing is amply demonstrated by the publication of a shocking report by a group of housing associations in Staffordshire warning that the housing benefit cuts could see private landlords ‘subdivide’ properties to provide homes for those displaced from social housing.  The report shows the extreme danger posed by de-regulation when it is driven by the supposed need to provide ‘choice’ for tenants and reduce the ‘burden’ on landlords.  Unlike the Red Tape Challenge, the report concludes that councils should increase regulation of the private rented sector and give higher priority to the ‘enforcement of minimum standards’ as the number of low quality but more affordable houses in mutliple occupation increase.
The Staffordshire case is the reality of what is happening in the sector, with benefits increasingly cut well below even reasonable social rents and many more desperate people seeking solutions on the private market.
Messrs Randall and Greenhalgh claim they wish to hear the sector’s views and, always willing to help, here is the reply email:  I hope points like those contained in the Staffordshire report are made loud and clear.  But I fear that the Red Tape champions will hear only that which fits their world view.  Deregulation is set to become the next in a long line of battlegrounds.

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Cameron makes it up

If Ed Miliband had said anything as ludicrous as David Cameron’s claim that private rented sector rents are going down he would have been all over the news facing demands that he apologise with detailed analysis by pundits of the figures that show he is wrong.
In response to a question by Joan Ruddock MP, Cameron had the nerve to claim that the housing benefit reforms were bringing rent levels down: “what we’ve seen so far, as housing benefit has been reformed and reduced, is that actually we have seen rent levels come down. So we’ve stopped ripping off the taxpayer.”
Cameron’s statement was contradicted by everyone who has ever done any work on private sector rents.  Chartered Institute of Housing quoted National Valuation Office Agency data showing that LHA baseline rates, which are based on market rents, have increased or stayed the same in 853 out of 960 local authority areas since March 2011.
However the apparent misleading of Parliament never made it big in the mainstream news.  The fact is that Cameron gets away with saying things that aren’t true and gets an easy ride from the media.  No 10 set out the case for the defence.  They told Inside Housing “We are hearing of cases where in return for direct payments to landlords our reforms are beginning to work” but, as IH notes, the spokesperson “was not able to provide numbers to back up the claim, saying that the Government will publish data on the impact of LHA reforms later in the year”.
If Miliband had tried such a pathetic explanation as that deployed by No 10  – “we’ll let you know in a few months” – he would have been ripped to shreds.  “Hearing of cases”?  What cases, where, how many, publish the data!
It is interesting, though, that commentary on private sector rents now often includes reference to Ken Livingstone’s idea of the London Living Rent, even if it is often misunderstood.  Ken is seeking to open up the debate about rents by setting a benchmark – after due research – for the proportion of income that should reasonably be taken by rent if households are to retain sufficient income to meet their other needs.  As the idea develops it should put pressure on social landlords who are beginning to charge excessive rents under this Government’s policies, but also kick off a debate about how to exert an element of control over the private sector as well.
The countries with the most successful private rented sectors have a stronger measure of rent control than we do, and better security of tenure as well – but it is difficult to work out how we get from where we are to where they are.
Apart from saving cash, which they look increasingly unlikely to do, the argument deployed most frequently by Iain Duncan Smith and Lord Freud, and repeated by Grant Shapps, was that the HB changes would bring down rents.  It’s how markets work, they explained.  We argued at the time that this was nonsense economics: the policies would do nothing to bring rents generally down as there was excess demand in the system, but would put upward pressure on rents in the lower end of the market as more people chased fewer affordable homes.
Labour Housing spokesperson Jack Dromey MP has been chasing Cameron over his mis-claim, but it would be good to see it feature in a future PMQs so that Labour nationally can show, as Ken Livingstone is doing in London, that someone will stand up for private tenants on low incomes.

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Housing horrors

A new campaign launched by Ken Livingstone
Rip-off agency fees. Deposits lost unfairly. Rogue landlords evicting tenants with little notice and hiking rent with no warning.  Smashed windows, faulty locks and broken fridges not being fixed for weeks or months. Rodent infestations. Damp and mouldy bathrooms being left to rot.
These are just some of the housing horror stories Londoners renting in the capital have told me about in recent months. But I am under no illusions that there are many more out there.
Hundreds of thousands of people live in the private rented sector across London and I am determined to stand up for ordinary Londoners and improve housing for all.
In the coming months I will be setting out ambitious plans to improve the private rented sector which will be shaped by the experiences of Londoners.
I’m urging people to  tell me about their housing experiences so that if elected I can take action to improve housing for all.
You can leave your story on my website (click on the link at the top of the page), or get in touch on my facebook page, or on twitter using the hashtag #housinghorrors
Ken Livingstone

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For a change, more light than heat on the PRS

Tony has pointed out that amongst the soggy canapés there are loads of meetings and discussions about housing at this year’s Labour conference.  Tomorrow we will find out
what if anything about housing makes the Leader’s speech, but today two of Ed Balls’ key initiatives involved housing: a specific commitment to use a repeat Banker’s bonus tax to fund affordable housing and a new commitment to reduce VAT on maintenance to encourage owners to repair homes.
One meeting Tony didn’t highlight attracted my attention and I went along to a meeting sponsored by New Statesman and the National Landlords Association on the future of the private rented sector.  Although I don’t always agree with what Caroline Flint has to say about social housing, I thought she was spot on in her analysis of the PRS, the need for regulation and how it might work.  I had forgotten that she was Minister when the Rugg Review was commissioned, so she has some background in this issue.  She also rather shamelessly plugged her chapter in the so-called purple book just published by Progress, in which she evidently sets out her views on PRS reform.
Although the NLA seems to favour accreditation rather than registration as the basis of a regulatory system, there was a surprising degree of consensus in the room about what a regulatory system should seek to achieve: an expanding and increasingly professionalised PRS, support and help for good landlords who want to meet good standards, and strong enforcement against bad landlords who exploit tenants and refuse to bring their properties up to scratch.  Despite the presence of several landlords and landlords’ representatives, there was no support from anyone for the current government’s laissez-faire (or is it couldn’t care less?) approach.
I was particularly impressed by a letting agent present in the audience who spoke strongly in favour of registration as the way forward, and there were good contributions on how to achieve longer tenancy terms, especially for families needing security and stability, how to control subsidy flowing to bad landlords through housing benefit, and enforcement by environmental health officers.
Sometimes a discussion hits the right tone of seriousness without ladles of rhetoric and generates more light than heat.  Here was one and I hope there will be more, especially during the housing debate scheduled for Thursday morning – housing was one of the four issues chosen through a ballot of delegates for debate on the floor of the Conference.

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What goes up won’t come down

The changes to Local Housing Allowance and the rest of the Housing Benefit system have been covered frequently on Red Brick.  We don’t think much of them.
But one argument that the government deployed seemed logical to a lot of people.  That was the common Ministerial assertion that, because LHA claimants make up as much as 40% of the private rented market, the level of LHA  payments must be a big factor in the rise in private rents over recent years.  And the corollary was that cuts to benefit, and hence to tenants’ ability to pay, would inevitably lead to a fall in rents, which would be a good outcome.
In my old economics textbook I find some support for this in theory: if supply is constant and effective demand falls, then the price should fall as well.  Cue much Tory-speak about the good old market mechanism.
However in the real housing market demand is in such excess over supply that the neat little supply and demand chart really doesn’t work.  If you reduce benefits so that tenants in high demand relatively expensive areas have to move out, there are many people willing to replace them at the same price.  The price will not fall.  Yet in the cheaper areas where the tenants are expected to move to, there will be more people chasing the small proportion of homes that become available at or below the 30% percentile (the new cap) at
any one time: the price is likely to rise.
A new report ‘Leading the Market’ from the Chartered Institute of Housing and the British Property Federation pours more cold water on the ‘LHA causes high rents’ argument.
They conclude that

“The increase in average rent levels during this period (2008-2010) is entirely due to a shift in the relative distribution of the caseload from the North and the Midlands towards London and Southern England. After adjusting for this ‘caseload effect’ average housing benefit rent levels fell by 1% (instead of the reported 3% rise).”
“We found no evidence for a relationship between the LHA inflation rates and the proportion of the market that is let to housing benefit tenants.”
“There is no evidence to support the contention that the LHA is inflationary or produces a feedback loop.”
“Our findings call into question the Government’s strategy that it can use its power as a bulk purchaser to force landlords to reduce their rents.  If LHA rates do not contribute towards rent inflation then conversely they cannot be used as a tool to force rents down.”

In short the policy is not just wrong in principle: it is wrong in theory and it is wrong in practice.

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When the facts change, I change my mind. What do you do, sir?

George Osborne would do well to read more of John Maynard Keynes, and in particular his General Theory of Employment Interest and Money published in 1935.  Unlike Osborne and Cameron, Keynes (a capitalist economist and a Liberal) learned lessons from the Great Depression and was determined never to see it repeated.
One of JMK’s well-known sayings – ‘When the facts change, I change my mind. What do you do, sir?’ – was uttered after he was criticised for changing his position on monetary policy during the Great Depression.  It applies well now to Osborne’s repetition of the Great Depression mistake (and indeed Japan’s more recently) of cutting demand in a recession.
But it might equally be applied to private rented sector rents and the policy of slashing the Local Housing Allowance for private tenants.  Minister after minister, from Cameron down, trotted out the line that cutting benefits would reduce rents, that the HB sector was holding rents up high, and that the free market would respond to HB cuts, effectively lowering demand, by lowering price.  Iain Duncan Smith frequently said that the fact that his department was responsible for 40 per cent of the private rental market was ‘staggering’ and that the aim of the reforms was ‘to drive down market rents’.
Logical thinkers came to different conclusions.  With current levels of excessive demand, tenants forced to move by cuts in their HB payments would be easily replaced by new tenants able to pay market rents.  There would be no price reduction in more costly areas.  However, the displaced tenants would be looking for homes in lower rent areas, boosting demand and competition for the cheaper homes that come on the market.  Rents in those areas would be likely to rise.  The problem would be compounded by a proportion of landlords taking family homes off the market to make them available instead to the growing number of single people who would only receive the shared accommodation HB rate in future.  Letting to 4 or 5 singles was likely to be more lucrative than letting to a single family.
The anecdotal evidence is that sharing and overcrowding are increasing as people, and especially larger families, try to find cheaper – which often means smaller – accommodation.  Harder evidence, from agents and landlords, shows that rents continue to rise above inflation.
Nor are there any signs of rents turning down in the future.  The head of research at Savills recently concluded  “High rent rises are not confined to the prime market and, as more aspiring buyers are frozen out of home ownership, demand for private rented stock in the country as a whole can only grow. Our prognosis for the private rented sector as a whole remains extremely bullish.”
Even if the government believed its little bit of idiot economics when it started the policy, surely the evidence is accumulating that they are just wrong, rents will not fall and people will be put through endless misery because of it.
The facts have changed.  But does Iain Duncan Smith have the bottle to change his mind as JMK suggests he should?

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Landlords from hell: doing nothing is not an option

Channel 4’s ‘Landlords from Hell’ Dispatches documentary on Monday showed people with no options being forced to live in the most appalling conditions in private rented housing, in one case with a sickeningly violent landlord masquerading as a charity.
The shocking thing was that it wasn’t shocking to anyone who has worked in the lower end of the sector over the last 30 years.  When I worked there in the 1980s, I can recall a house being discovered by environmental health officers in Haringey which had 50 people living there in shifts.  The growing housing shortage is clearly making things worse, and it is inevitable that the housing benefit cuts will make the scramble for the cheapest and worst homes even more intense.
Anecdotal evidence tells me that there are fewer environmental health officers and housing advisers working in the sector than there were then, and the Chartered
Institute of Environmental Health’s journal EHP regularly reports cuts in posts and services.  Back then, in boroughs like Haringey and many others, programmes like Housing Action Areas meant that the poorest areas were identified and additional powers taken for small areas of particular housing stress.  Local teams of housing advisers (who understood tenants’ rights) and environment health officers (who understood property law and enforcement) worked together to go systematically from house to house dealing with bad conditions.  Although landlords sometimes responded by ending a tenancy, it was the council and not the tenant that was responsible for action being taken, making it clear to the landlord that getting rid of the tenant was no way out, thereby making tenants feel less vulnerable.  Picking up a small number of homeless people as a result of a large programme of intervention was seen as a price worth paying.  The method was carrot and stick – grants were available to help with the works, but we would not shy away from compulsory purchase when it was necessary.
Things seem to have got worse over the years despite many changes in the legislation and
the introduction of the health and safety rating system.  The service and enforcement of notices seems to be as complex and bureaucratic as ever.  The sector has grown but resources, especially the number of housing environmental health officers on the ground, seem less, and it is less common to have local teams who get to know the landlords and develop relationships with them.  The system seems to have reverted to responding to tenant complaints rather than planned programmes of inspections focusing on the riskiest properties.
A system that puts tenants at risk – of eviction, and occasionally of harassment – if they
complain will never work effectively.  It is interesting that the CAB’s advice on getting repairs done starts with the warning:  “Trying to get a repair done may put a tenant at risk. People with limited security may face eviction if they take action against their landlord.”  This is the central conundrum in dealing with bad conditions in the private rented sector.
Labour’s proposed reforms following the Rugg Review were a start but are now abandoned, and the current government’s laissez faire attitude is seriously deficient. Anyone watching Grant Shapps’ interview with Jon Snow would spot the complacency and, frankly, lack of concern.  There is nothing wrong with emphasising that most landlords are good, and that most tenants are satisfied, but this is no excuse for failing to have a strategy to tackle the bad landlords and the bad properties.
Private renting is the last great unmodernised industry, run by amateurs and too often
driven by the dream of the quick buck.  The landlords’ organisations seem far more responsible and less defensive than they used to be: they also support action against rogue landlords and support the professionalisation of the industry.
There seems to me to be a great opportunity – rising demand, good returns, a flat property
market – for radical reform that will benefit tenants and landlords together.  Taxation of private renting needs reform to encourage investment in repairs and improvements.  I would argue for a stronger measure of security of tenure and the abandonment of the worst aspects of the local housing allowance changes as well.  But the way forward for private renting must be based on proper regulation against a clear code and standards, a professional service, clear contracts between service provider and consumer, and swift intervention that is driven by council inspection and not tenant complaints.  Just like any
other industry that has a major impact on people’s lives.

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Jon Snow's 'shocking eye opener'

I doubt very much if he will recall it, but I met Jon Snow in 1973 when I organised a
conference on homelessness in London’s West End on behalf of Voluntary Action Westminster and he was the main guest speaker.  Jon worked at New Horizon Youth Centre but he was already a stunningly charismatic and committed man.  I understand
he has kept in touch with New Horizon ever since.  I have only come across him once since, when he devoted almost the entire Channel 4 News to a brilliant analysis of the Westminster Auditor’s guilty verdict on Dame Shirley Porter’s gerrymandering.
On the basis of these two little episodes I have taken it as read that he had a feel for housing issues as they affect people at the very sharp end.  He himself says that what he saw of poverty and homelessness in the West End in the 1970s has informed his life ever since.
Jon has now revisited the bad end of the housing market for a Dispatches programme which airs next Monday.  He calls it ‘a shocking eye opener’.
On his blog, Jon says;

This month I have spent hours in flats and houses in which you would not leave a dog for an hour. I have smelt the dank fungi that leaches its way across the walls of a two-bedroom flat in Rochdale and wandered between rows of garden sheds to the West of London in which rafts of men live two, three, and four, to a shed. At night you hear the voices in the dark, see the chinks of light through the boards, hear the clank of cooking pots as they prepare supper at the end of a working day.
It perplexes me that society can be so consumed with the state of education and health provision in Britain, and yet turn so active a blind eye to the true state of where people actually live.

At a time when it seems to be increasingly acceptable to blame the poor for their poverty and the homeless for their homelessness, and politicians line up to talk about housing benefit as if everyone was getting tens of thousands of pounds to live in luxury, the programme will show what life is really like at the bottom of the housing market in the worst of the private rented sector.
It is, says Jon, ‘a shocking and upsetting watch’.  And as the government rips the homelessness safety net to shreds and cuts housing benefit to the bone, lets hope it makes them feel just a little embarrassed.

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Health and Housing – why we need to recognise the links

Labour Housing Group and Socialist Health Association held a conference ‘Prescription for a healthy Britain’ on Monday 13 June.  Conference papers are available on the LHG website here.  In a guest post, LHG Vice chair Marianne Hood picks up the conference theme.
Despite the fact that the links between health and housing have been recognised for well over 100 years, and despite over a century of public health and housing interventions, we still have people with the worst health living in the worst housing.
The original impetus in the 19th century for improving housing conditions (for example slum clearance to tackle squalid living conditions, severe overcrowding and dilapidation) was clearly focussed on improving health outcomes. Sadly, in the 20th century the focus shifted to issues of ownership, access, management and cost – losing the link between improving housing to improve both mental and physical health.
Now in the 21st century many of the policies being driven forward by the Tory-led coalition risk returning us to that early 19th century situation with severe overcrowding and the poorest and most vulnerable people being driven into the poorest homes in an unregulated private sector. Make no mistake, there is a wealth of evidence to show that the private sector, especially the private rented sector, contains the highest proportion of ‘non-decent’ homes with a significant percentage of older people living in the very poorest private sector homes.
If investment in housing is not substantially increased, much of the expenditure on health and care programmes will be totally ineffective. In a report commissioned specially for the LHG/SHA Conference earlier this week, environmental health expert Stephen Battersby* reminded us that poor housing conditions cost the NHS at least £600 million per year, that the one-off costs of works to improve private rented housing gave an annual financial saving to the health sector, and that every £1 spent on providing housing support for vulnerable people can save nearly £2 in reduced costs of health services, tenancy failure, crime and residential care.  
The Labour Housing Group believes that housing should be recognised as a community capital asset that needs to be properly maintained, most of our current housing will still be here in a hundred years time, because if it is neglected the cost of demolition and replacement will ultimately fall on the state.
Surely we owe it to current generations, and to our children and our children’s children, to have good housing and health policies fit for the 21st century? Policies that recognise that investment in housing is an essential prerequisite for tackling inequality overall but especially health inequalities.
 *University of Surrey and University of Warwick, current President of the Chartered Institute of Environmental Health.

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Generation rent

I was suitably riled listening to Grant Shapps on World at One at lunchtime today, failing to answer sensible points and questions about the housing market from Tony Dolphin and Owen Hatherley.  His ability to avoid any question and reply in ludicrous blandishments never ceases to amaze me. 
According to Shapps, house price inflation only occurs under Labour.  He must have been too young to remember the boom under Thatcher – and even worse the bust when home owners were abandoned with vast amounts of negative equity, a huge number of repossessions – and no government help.  At least when the bust came in 2007 – and never forget it was an international banking bust whereas Thatcher’s was home grown – the Labour government took a series of important steps to protect tens of thousands of home owners, and the tenants of home owners, from foreclosure and homelessness.  
Shapps simply fails to deal with the issues raised by two important reports today.  The first, the one that grabbed the headlines, was from the Halifax who coined the phrase ‘Generation Rent’ to show that people no longer feel that they will be able to buy and that half of 20-45 year olds now think renting is the norm, similar to much of the rest of Europe. 
The second, Tony Dolphin and Matt Griffith’s serious piece of work for IPPR, Forever Blowing Bubbles? takes a long hard look at housing’s role in the UK economy with a proper historical perspective.  It makes a series of recommendations for mortgage regulation and the importance of stopping borrowers from thinking that housing market is a one-way bet.  They also make a strong case for reform of the private rented sector to provide a real alternative choice for those who need to hedge their move into home ownership.  As they say, “tenure rights are weak and the sector is poorly prepared for larger families and their needs. The professionalisation of the sector is much needed to make it the natural choice for those who wish to sidestep the risks of the owner-occupied housing market.”
At one level it seems obvious, but they demonstrate the importance of looking at the housing market as a single entity and not two markets of different tenures, arguing for “reform of the PRS to make it a less destabilising influence in the UK housing market. As we have seen, BTL (buy to let)  investment has too often been speculative, volatile and a cause of pro-cyclical price pressures in the housing market. Worse still, it appears to have cannibalised existing housing stock, led to a weak response in total housing supply, distorted existing supply incentives to encourage the overproduction of small city-centre flats, and driven out large institutional investors by pushing prices up beyond sensible yields.”
Owen Hatherley, whose interesting article on home ownership and renting is also published today, put it to Shapps that people who could no longer afford to become home owners were left at the mercy of the unregulated and insecure private rented sector, and therefore faced no real choice at all.  And that secure public sector tenancies should be a genuine option.  Exit stage right for the Minister, off on another ramble about some excruciatingly complex shared ownership option he’s invented (effectively a cut-back and rebranded Labour scheme). 
The Government avoids the big questions in housing policy today, especially how the housing market – and the vast majority of people live and will continue to live in market housing – can be made to work for people on low and moderate incomes.  There is a real opportunity for Labour to build on these interesting reports and come to some radical but sensible and appealing policies of its own as the Housing Policy Review takes shape.