"We are a London-based branch of the national trade union
UNISON, which organises workers providing public services.
We organise over
3,000 workers across Greater London who are employed by housing associations and
are recognised by most of the G15 housing associations as well as a number of
smaller housing organisations.
We welcome the opportunity to submit evidence to
the Communities and Local Government Select Committee and have consulted with
our members and activists in order to compile this response.
Background
· Last year housing associations were assured that they could plan ahead for the future with a new rent increase model of CPI inflation plus 1% increases per year. Instead they have now been instructed to apply a 1% cut in rent every year for the next 4 years. This could mean that some will go bust since they modelled an increase into their business plans when they took loans and bonds to pay for new building. There is an advantage to social tenants in receiving a cut in rents but not if it leads to a net decrease in the social housing stock.
· Last year housing associations were assured that they could plan ahead for the future with a new rent increase model of CPI inflation plus 1% increases per year. Instead they have now been instructed to apply a 1% cut in rent every year for the next 4 years. This could mean that some will go bust since they modelled an increase into their business plans when they took loans and bonds to pay for new building. There is an advantage to social tenants in receiving a cut in rents but not if it leads to a net decrease in the social housing stock.
·
The
reductions in rents will also inevitably mean threats to jobs and services.
Housing associations have been for many years been providing additional
services to residents such as floating support to vulnerable tenants, job
training and youth clubs. These will all be at risk.
·
Housing
costs in London are high and decent housing is scarce. The cost of non-socially
provided housing in London outside is unsustainable, with private rents
averaging £1,500/month, and the average cost of buying a house at around
£480,000 (nearly 20 x average wages). Extending the Right to Buy to HA tenants is therefore likely
to be extremely popular with London residents; for many this may be their only
hope of every buying a property. For some inner London boroughs the number of
properties purchased under Right to Buy is over 60%.
Implications of extending Right to Buy to housing associations
·
Extending
Right to Buy will also mean some housing associations going to the wall especially
if the government does not fully refund any discount (which will be over £100k
in London). Others will have financial problems with paying off early fixed
rate loans (such as LOBOs) and meeting their convenants, even if they get the
full value of any sale.
·
Many housing
associations currently have charitable status and many of them have benefited
from money or gifts of land in the past. This could cause problems with their
status if they sell property in this way. This is a real threat to the
existence of many associations and means that after years of real-terms pay
cuts or stagnation our members may find themselves out of work altogether.
·
If
local authorities have to sell their housing stock in order to fund the
discount then that will be not only unfair but financially disastrous for them
and their tenants. The 3 year settlement on council housing finances has also
been ripped up.
·
It has
been rumoured that instead the government will take away the remaining subsidy
for new investment and use it to fund the discount. This will pretty much end
the supply of new homes at sub-market rents in expensive areas such as
London.
·
Even if
the government does fully refund the cost of Right to Buy (which
has not yet been clarified) then since new homes costs more to build than existing
properties there will still be an overall reduction in social homes. With high
land prices and opportunities for development in inner London low, selling off
housing association properties through Right to Buy would mean a net decrease
in the numbers of social housing properties across the capital, as properties
are sold and not replaced.
Changes to benefits
·
The
proposed maximum benefit cap of £23k per family in London and £20k outside will
not only result in more evictions and rent arrears especially for tenants with
children. It will also make it harder for landlords to let their empty
properties to residents on waiting lists since many will not be able to afford
the rent due to the cap. This is crazy.
·
The so
called "pay to stay" will mean that tenants who earn over £40k
in London (and £30k outside) will have to pay "market rates". This
will be unworkable unless housing associations are given the powers to demand
income details from tenants with criminal sanctions, which will of course, go
down badly with all tenants. Changes to benefits such as the bedroom tax have
already increased the workloads and stress levels of our members, who do a
difficult job at the frontline of the government’s austerity regime.
·
If "pay
to stay" does go ahead and means that renters are charged full market
rent they will be effectively forced to try and exercise the right to buy in
order to stay in their homes. Even if you are on £40k per year salary in
London, you will find it difficult to get a mortgage even with a discount – the
Islington and Shoreditch Housing Association recently advertised a property in
Hackney for sale under a supposedly ‘affordable’ shared ownership scheme for
£1,000,000. Market rents will be completely unaffordable in parts of the city.
This will increase social cleansing leaving large parts of London available
only to the very rich.
·
Inside Housing recently showed that around 40% of
council houses sold under Right to Buy are currently being rented privately.
There is no reason why this pattern should not be repeated in the housing
association sector, meaning that private landlords will benefit from homes
built through public subsidy. Furthermore, many of these properties are
occupied by tenants who are claiming housing benefit – a transfer of wealth
from the state to private landlords which would be completely unnecessary if
these properties were still owned by local authorities. It is this transfer of housing benefit to
private landlords which has led to the Conservative government claiming that
the welfare bill is unsustainable and to their cuts to the social security
system – a problem that could be solving by relieving the pressure on housing
both in London and nationwide.
·
It is also
possible that the certain individuals and rogue companies will be looking to
make deals with vulnerable tenants into "loans" to enable them to buy
their property in order to get hold of the £100k discount.
Sustainable future
· The UNISON Housing Associations branch believes that the housing crisis, particularly in London, will not be solved and indeed will be worsened by extending Right to Buy to housing associations. As workers we feel this will remove or dilute the social aspects of our work and lead to increased stress, job losses and the forced closures of many associations. As housing workers and as London residents we do not feel this is the way to solve the housing crisis.
· The UNISON Housing Associations branch believes that the housing crisis, particularly in London, will not be solved and indeed will be worsened by extending Right to Buy to housing associations. As workers we feel this will remove or dilute the social aspects of our work and lead to increased stress, job losses and the forced closures of many associations. As housing workers and as London residents we do not feel this is the way to solve the housing crisis.
·
We call
for a programme of mass house-building in the capital, both for social rent and
for private ownership. We also call for greatly increased regulation in
the private rented sector to give tenants greater protection and security of
tenure, and for rent controls to be reintroduced and rents capped at a “Living
Rent” set by an independent commission.
·
We note that Right to Buy for
housing associations was defeated in the 1990s following a broad based campaign
against it. The UNISON Housing Associations branch will continue to campaign
against Right to Buy in housing associations and for a fair and sustainable solution
to the housing crisis.
