Local authority pension fund investment in affordable housing: is there a case for doing more? APPG 22 Feb 23

I am speaking at this virtual APPG event and looking forward to debating this key topical issue. Can local authority pension funds invest in "affordable" homes and still make an appropriate return? 

The terms "affordable" and of course "social" housing are in my view misused and arguably meaningless. Sub market rents are obviously better than market rents but very often they are "unaffordable" to so many in housing need. 

The Government interference into investment decisions and governance by Local Authority pension funds is also of concern. Will they try and force funds to invest into possible vanity infrastructure projects?  

While I believe that residential housing can be a very appropriate asset class (type of investment) for pension funds, if we want subsidised truly "affordable" or dare I say "social" rents (40-50% below most market rents) then we need subsidy from someone to bring rent levels down. This is not rocket science.

It is not only about rent levels but if you provide homes you also have to consider housing management standards, benefit allowances, security of tenure and meaningful resident participation.

Hat tip Inside Housing for great picture

ONLINE EVENT – REGISTER HERE

SPEAKERS

Paddy Dowdall (Assistant Executive Director at Greater Manchester Pension Fund)

Helen Collins (Head of Affordable Housing, Savills)

Cllr John Gray (Vice-Chair, Local Authority Pension Fund Forum)

John Butler (Finance Policy Lead, National Housing Federation)

Chair: Clive Betts MP

I am delighted to invite you to attend the next meeting of the APPG for Local Authority Pension Funds which will focus on local authority pension fund investment in affordable housing.

Local government pension funds have steadily increased their investment in place-based impact investments, which include both new and refurbished affordable housing. Most of the investment - from build to rent and shared ownership to temporary accommodation and specialist housing - is through co-investment partnerships and special purpose delivery vehicles with investment companies, charities and private and social housing providers.

Some have called for LGPS funds to further scale up investment in alternative assets and invest more in affordable housing. The Government is also calling on the LGPS to increase local investment and the chancellor has stated that the government will consult on requiring LGPS funds to consider illiquid asset investment opportunities.

This Zoom event will discuss what has been achieved and what more could be done to maximise investment opportunities. It will examine recent experience and best practice and explore the constraints and barriers to investing in affordable housing.

This meeting will be held online, if you want to attend please register here.

Best wishes

Clive Betts MP

Chair, APPG for Local Authority Pension Funds

Sent by the Secretariat of the APPG for Local Authority Pensions Funds which is sponsored by the LAPFF

Planning Battle Won for More Social Housing (War continues)

I was really proud tonight of West Ham Ward residents who objected, organised and worked hard to oppose a planning application that would have robbed local people and the homeless of chance of homes at an "affordable" or social rent.

We managed to persuade the Newham Strategic planning Committee to unanimously defer the application due to failures in consultation and uncertainty around the provision of social housing. Many thanks for taking this decision and to the members of  West Hammers Team 4 Social Housing - Tina, Ian, John, Joe & Seyi (sorry if I have missed anyone out).

Tina was very good at the meeting, quoting that the Newham Mayor, Robin Wales, had very  recently told Clive Betts MP and his House of Commons Select Committee that at least 35-50% homes are always affordable in Newham development. So she asked why in this scheme are we only be offered 25%?

We all had 2 minutes to speak.

I said "My name is John Gray and I have been a Cllr since 2010 for West Ham ward where this site is located, speaking in support of residents objections against this application. I would like to start by saying ward Cllrs and Residents want to work with the developers to resolve our differences but the percentage of social housing offered is utterly and absolutely unacceptable

I also speak as someone who has spent most of his professional career working in housing in east London, I am genuinely amazed that this application is only proposing that 25% of these homes to be so called “affordable”.

This is a prime site, right next to a tube station with excellent other transport, retail & leisure facilities. There is limited decontamination works to be done to prepare the site.

Therefore, if Cllrs were minded to pass this application, I would like them to suspend the process and order that the financial viability plan put forward by the developers, claiming that they can only only afford 25% is published and put out to public scrutiny like other local authorities do.

Let me be clear, I have never met nor no knowledge of these particular property developers however it is in the public arena that other developers have padded out their plans with costs that they have no intention of spending.

For example, claiming they will use expensive building materials, when in practise they use much cheaper materials, in the knowledge that the local authority will not have the ability or resource to check.

So please, pause this application and let elected representatives and residents make sure that no one is cooking the books".

Result was application deferred and developers have (sort of) agreed to disclose viability plan and agreed to meet us in person (and I will want team West Hammers)

(see pictures of some members of West Hammers outside the dreadful hoarding outside the Stratford Town Hall which I have already complained about further to the Newham Chief Executive Officer) 

The end of social housing? 10 Tory plans to finish it off

Hat tip to progressive Housing blog "Redbrick" where I have stolen their arguments about Government housing plans and put my own slant on it.  They highlight 10 problems with these plans for social housing :-

1. "The new Affordable Homes Programme (AHP) – which precludes building for letting at social rents. 
2. Conversions – the last AHP (which ended in March) led to 80,000 homes being built but at the cost of converting more than 80,000 existing homes from social rents to ‘Affordable Rents’. Even more conversions will be needed for the new AHP. 
3. Right to buy sales – council starts (see above) have been vastly exceeded by sales and the gap will grow as discounts are increased. 
4. Right to buy 2 for housing associations – like RTB1, it will see social rented homes sold and (perhaps) replaced by units at Affordable Rents. 
5. Planning gain (section 106) – numbers of units delivered will fall as more loopholes open up, allowing obligations to be reduced or avoided completely. 
6. Estate redevelopment – with encouragement from the housing minister, more homes will be demolished and the new units will be less affordable and fewer still will be let at social rents. 
7. Welfare reforms – the next wave will hit social housing even harder, making it especially difficult to house larger families and pushing more low-income tenants out of their homes. 
8. Discretionary housing payments – helping to mitigate the effects of the bedroom tax and other ‘reforms’, are being cut year-on-year. 
9. High-value council house sales – yet-to-be-defined plans will force councils to sell off their most valuable properties as they fall vacant; if replaced, they will be with homes at Affordable Rents.
10. (If we add the possible end of prudential borrowing to this list").

Redbrick concludes that this "starts to look like a concerted attack on social housing (and particularly on council housing)" I think if all above happens then this will effectively mean the end of social housing. High rent areas such as London will be "cleansed" of the poor first. The poor will be forced to move to low cost areas but this increase in demand which will eventually force up rents even in traditional low cost areas. One day there will be virtually no "social housing" anywhere since everywhere will be at some 80% of market rents (so called "affordable rents").

Ironically, this will also result in life long dependency on housing and state benefits for all low income workers at a massive cost to the taxpayer.

(Photo of Labour canvassers in a Tower Hamlets social housing block last month.  If these 2 and 3 bedroom flats are let at 80% market rent, then families on benefits will not be able to live here)

Tories condemning London low paid to life long poverty and benefit dependency

Do the Tories really know what they are doing with their so called "affordable rent" housing policy? Do they realise they are going to force many London workers to life long poverty and dependency on state benefits?

Even in Newham which traditionally is one of the most inexpensive boroughs in London to rent or buy.

The policy which is being enforced by Tory Mayor, Boris Johnson across London requires nearly all new social housing and re lets of many existing homes to be at an average 80% of market rents.

This is to make up for the slash and burning of capital grant aid by this Government to subsidise the building of new homes.

Leaving aside for the moment the short term idiocy of not building new homes when we have a massive housing shortage and need to increase economic demand in the economy. 

An one bedroom Council home in Stratford, let at a so-called "affordable rent" (80% of market) is still a staggering £191 per week. Council tax for Band B property is £19 per week (£974 a year). So total housing costs of £210 per week (figures Newham Council).

If a worker earns a London living wage (£342 gross per week) how would they live and pay the rent? After tax and national insurance they will be left with £287 per week. After housing costs of £210 per week they will be left with £77 per week - before you take into account travelling costs, fuel, clothing and food etc. The Taxpayer will have to step in to give housing benefits and/or tax credits especially if they have children.

Of course many workers in Newham don't even get a living wage and try to survive on the minimum wage of £248 per week. (£223 after tax and national insurance).

If they had a traditional social rent (around say 45-55% of a market rent) at £85.56 per week then they would at least have the chance to pull themselves out of poverty.

So instead of the government funding the building of homes at social rent and allowing low paid workers to escape benefit dependency as the Tories claim they want they are forcing low paid workers and their families into lifelong benefit dependence.

95p in every £1 spent on housing by this government is spent on housing benefit and only 5p on new homes. What a waste.

For better paid workers who cannot afford to buy then 80% of market rate is of course better than 100% but unless there is a subsidy to enable rents for the low paid to be at a social level then you are just condemning the vast majority of low paid workers to a life on benefit dependency.

(picture used in recent BBC "Beds in Sheds" programme. The new Tory "Barracks for the Poor"?)