"Landlord licensing can help protect our communities"

"Before I became the cabinet lead for Housing Services in May 2018, I had worked in inner City housing for over 25 years and thought rather arrogantly I had seen it all. The squalor, deprivation and human misery I have seen while out with our licensing inspection officers shocked me out of this complacency.

On one of my first visits we went into a small unlicensed 3 bedroom terrace house which had families in each bedroom, the living room and the loft. The rear garden shed was also used as accommodation but was at the time empty. The property was damp, poorly decorated, dirty carpets, broken and worn furniture with dangerous electrical and gas fittings. Each family were charged from £600 to £1,000 per month for their room. I am sure that Charles Dickens would have seen similar scenes in Victorian London.

This is despite Newham having one of the most extensive, longest running and most effective landlord licensing schemes in the country. Set up in 2013, renewed for another 5 years in 2018, the current scheme lasts until 2023. To do this we had to persuade a somewhat sceptical Government that licensing was necessary to tackle serious anti-social behaviour and housing hazards but also to protect tenants from exploitation and criminal landlords.

There are an estimated 17,000 landlords who have to register, pay a fee and comply with the terms of the license and we estimate there are at least 47,000 households renting privately licensed accommodation in Newham. Since February 2018 we have fined 247 landlords and prosecuted 38. Recently we have doubled the number of enforcement officers.

We have a huge private rental sector in Newham. In 2001 only 17% were privately rented; now it is nearly half of all homes. Prices of properties in Newham were traditionally low and this enabled private landlords to buy homes cheaply by London standards. However, between 2011 and 2018, rents increased in Newham by 56%, house prices by 89% – but salaries have only risen by 21%. Median monthly private rents in the third quarter of 2018 were above £1,400. This is one of the chief reasons that 50% of families in Newham live in poverty after their housing costs are taken into account.

There are a number of myths about local authorities and private sector rental licensing. I have been to ‘lively’ meetings with local landlords who are convinced that this is a “money making machine” for the Council and do not understand that their license fees are ring-fenced for enforcement and cannot be used to cross subsidise other council services.

We are definitely not, repeat not, “anti-landlord”, but we are anti exploitative and criminal landlords. There are many conscientious landlords who want to work with us to drive up standards. Many landlords will privately admit that bad landlords who fail to maintain their properties drive out their tenants who live nearby.

Some residents and tenants are frustrated that we are not always able to take the immediate and direct action to tackle anti-social behaviour and disrepair that they want to see enacted. To prosecute bad landlords we need to obtain sufficient evidence of criminality (“beyond reasonable doubt” standard) which is needed to satisfy the courts. It can sometimes be a slow and complex process.

To be clear, licensing is a success story, but is far from being a panacea for all housing ills in Newham. For example, we cannot license rent levels for affordability. We have a long wish list of improvements, including ending the incredible exemption that local authorities and the National Asylum Service enjoy from being licensed (and that includes our own council). We need the government to keep to its promise to get rid of section 21 (no fault evictions) but also the abolition of immigration checks on rental agreements and no recourse to public funds.

The Covid-19 pandemic has made all of us in housing stop and think about what we can do protect our community. Despite staff working from home they have managed to prevent many illegal evictions and stop people being thrown onto the streets.

Targeting our inspections and enforcement on dealing with damp, disrepair, overcrowding, unlawful HMOs, poor energy efficiency and fuel poverty would seem an obvious initial response to Covid-19. To be frank, we are also worried that when/if the Government allows housing courts to fully operate again then there could be a huge increase in evictions (legal and illegal).

Licensing and our Homeless prevention and assistance service will be working together to manage this. We will not hesitate to prosecute anyone who criminally evicts or harasses tenants. We will also, if appropriate, refer them also to planning enforcement, council tax fraud and HMRC.

Future plans include: completing the setting up of new Empty Homes and Energy Efficiency teams; a communications campaign planned over the summer to increase awareness of rights and responsibilities for tenants as well as legal requirements for landlords; creating post(s) within the service to support PRS tenants and advise landlords.

We are stepping up not only enforcement but also our advice and support. Hopefully, when a future Cabinet lead goes out on inspections they will find a different story." John Gray

Hat Tip Red Brick blogThe place for progressive housing policy debate

(Check out Labour Housing Group event 10.30am Saturday 4 July "Developing a Private Rental Sector Fit for Purpose)

"Welcome to the new Red Brick blog! The place for progressive housing policy debate"

Check out the new home for Red Brick blog, if you are interested in housing policy and debate then this should be your first port of call. 

Why voluntary right to buy for Housing Associations is nuts

So scare government grant is being used to effectively give an existing social tenant a home which will then be lost for ever from social housing instead of being used to help build another social home? This is nuts in a housing crisis.

Hat tip Red Brick

Voluntary Right to Buy: should housing associations be ‘proud to be involved’?

Posted on May 10, 2019 by stevehilditch

"The headline is based on an Inside Housing article this week by a director of a national housing association, Stonewater, which is one of those taking part in the government’s pilot scheme in the Midlands. Sue Shirt says they are ‘unashamedly supportive of the VRTB’ and ‘proud’ to be selling off their houses, estimating that around 170 will be sold in the pilot period (presumably in most cases houses currently let at social rents). She gives two main reasons for this. One is that they are giving tenants what they want. The second is that (unlike with council housing right to buy) they plan to replace every home sold. She says that it keeps tenants in their communities whereas otherwise they would move out to buy. In Stonewater’s view, VRTB ‘helps the social housing journey’ by enabling financially secure tenants to buy instead of rent.

Superficially, of course, Ms Shirt has a point. No doubt the lucky buyers of Stonewater houses are over the moon, especially as they have qualified for discounts of up to 70% – or £82,800 outside London – the same levels as for council right to buy. They’ll have to raise a mortgage but instead of paying rent they’ll have a valuable asset to pass on to their children or to sell or let out at a later date. In many ways it’s surprising that the pilot scheme isn’t proving more popular. Stonewater has so far completed just 11 sales, and if it reaches its projected level of 170 it will have sold just two per cent of its stock in the region. That’s a lot of effort to reach such a small proportion of tenants, and the government is said to be considering extending the pilot scheme to raise more interest.

What is missing from Sue Shirt’s assessment is any examination of the wider picture if the pilot scheme does turn out to be successful. Of course, one reason why a housing association like Stonewater is willing to take part is that it gets full and instant recompense for the hefty discounts it has to give, so they can aim to have one for one replacement of their own stock. The money comes from a Treasury pot of £200 million created for the purpose. An extended scheme would need more money. Failing some magic by the chancellor, the only sources are the rest of the housing budget or reviving the Treasury’s original plan, which was to force councils to sell their high-value council houses and hand most of the money over to subsidise housing association discounts.

Either way, a lump sum worth up to £82,800 to one ‘financially secure’ tenant who buys their home comes at the expense of the same amount invested in new social housing for people who are struggling to rent, let alone buy. It is not the narrow perspective of whether Stonewater replaces one for one, the essential point is that the money available in the housing system will produce fewer additional homes in total for people in need.

Sue Shirt says that the ‘crucial point’ about VRTB is that it helps more people into much-needed, modern, energy-efficient housing. But this is a very suspect argument. After all, tenants exercising VRTB are in a nice comfortable home already, and while the mortgage they will now pay releases a receipt that Stonewater can reuse, that’s only because the rest of the sale price will be made up by the government.

A supposed advantage is that VRTB buyers stay in their home when they might have moved out to buy elsewhere. While this may be advantageous for the community in the short term, it ignores the issue of what happens when the buyer eventually moves. A house that could be relet at social rent may well end up in the private rented sector, as is frequently the experience with the council RTB. It will be let at higher rents – costing more in housing benefit if that is needed – and quite possibly with minimal management, causing problems for other tenants in the area.

While the pilot scheme might involve selling a relatively small number of homes, up to 3,000, the real danger lies in its potential success. This could have two effects. One is that it hastens the day when all housing associations are persuaded into a ‘voluntary’ scheme by attractive offers about how fast they can access the receipts, without answering the crucial question of where the money will come from once the Treasury’s £200 million has been spent and what the impact of that will be on other programmes. Back in 2015, when it was planned to use ‘council high value sales’ to fund the VRTB, in Selling off the Stock CIH showed that a popular VRTB scheme might require all the receipts from selling high-value homes, leaving no money for replacements.

The second effect will be to prolong the right to buy in England when it should be on its last legs. It was scrapped in Scotland in 2016, it died in Wales earlier this year and soon it may be gone in Northern Ireland too. Only in Whitehall do politicians continue to find ways to breathe life into a policy that’s not relevant to today’s problems. Let’s put some more nails in its coffin, not try to revive the corpse".

Home ownership is the most ‘subsidised’ tenure

Another excellent housing "myth buster" by Red Brick (Website of the Labour Housing Group) "home ownership is now easily the most subsidised tenure, much more so than social housing, with private renting receiving the least help".

"It often seems that the term ‘council tenant’ automatically comes with the word ‘subsidised’ in front of it. It is part and parcel of the stigmatisation of the tenure by many politicians and much of the media – and even some within the social housing sector. Following Grenfell, the government in its green paper nodded in recognition of the unfair portrayal of council housing and noted that stigma has a deleterious effect both on the tenure and on the people who live in it. But even as they recognised it, they also repeated their underlying belief in the superiority of home ownership.

Despite overwhelming political and popular support, since 2003 or so home ownership has been in decline as the affordability of housing has deteriorated. For all its efforts, this government has not yet managed to reverse the trend. In his book launched last week, Josh Ryan-Collins showed that this was not just a UK effect, it has happened across what he calls the ‘Anglo-Saxon economies’ where banking systems have been deregulated in  the same way and at the same time. Encouraged by the collateral of bricks and mortar, overly keen banks with liberal lending policies pushed prices up much faster than incomes, hugely stretching price to income ratios. Other countries with different types of bank – notably Germany where banks are regional and based more on co-operative principles – have experienced much less house price inflation and have much less emphasis on houses being investments rather than places to live.

In the UK since 2010 we have seen the amount of public money put into social housing slashed yet there have been many, often costly, initiatives to help slow the decline in home ownership. The net effect is that home ownership is now easily the most subsidised tenure, much more so than social housing, with private renting receiving the least help.

The conclusion that the state gives far more help to home ownership cuts against the grain of conventional thinking. But it has now been very well documented in a report entitled Dreams and Reality? Government finance, taxation and the private housing market published today by the Chartered Institute of Housing and written by housing finance experts Steve Wilcox and Peter Williams. The authors reached their conclusion after an exhaustive analysis, taking account of all types of government intervention in the market, not only spending on grants, loans and guarantees, but also tax reliefs, welfare benefits and regulatory mechanisms which aim to stimulate or control the three main routes by which people get access to housing.

They show that government is directing about £8 billion annually into private housing over the five years to 2020/21, with over half going specifically to support home ownership and the remainder being more broadly aimed at the private market. In contrast, direct funding for new social housing is less than £2 billion annually.

Wilcox and Williams accept that the analysis is bound to be crude because financial support for the sectors comes in different forms – for social housing it is mainly grant spending whereas much of the private market support is via loans or guarantees. Some specifics:

• In terms of tax reliefs, home owners benefit much more than private landlords: net tax relief for owners was some £29 billion in 2016/17 (£10 billion paid in tax; £39 billion received in tax reliefs) whereas private landlords paid net tax of at least £8 billion.
• Within the benefits system, tenants receive much more assistance than home-owners, with about £15 billion annually going to social housing tenants and £8.5 billion to private renters.
• Private renting has a big advantage in mortgage regulation because it can access interest-only mortgages whereas new home buyers have to navigate various restrictions on mortgage availability.
• Despite the huge increase in general support for the market, the government safety net for those homeowners facing financial difficulty has been much reduced. Support for mortgage interest will soon migrate from paying mortgage interest charges for unemployed home buyers to providing loans – a further erosion.

CIH chief executive Terrie Alafat CBE said:

“This report demonstrates just how much government support is going to the private market, and to home-owners in particular – probably contrary to many people’s expectations. It takes a comprehensive look at the way the government supports our housing system – and we would urge ministers to do the same. Currently just 21 per cent of government investment is going to affordable housing. Rebalancing this budget to support people on lower incomes who can’t afford to buy could make a big difference. It is vital that the government supports councils and housing associations to build more homes for social rent.”

Wilcox and Williams also sneak a look into the future. If home ownership is stabilised at around 60% and if the social housing sector does not grow proportionately, it follows that future net growth will come mainly in the private rented sector. This will lead to a substantial long term increase in the cost of housing benefit (especially as working private tenants retire and become eligible for rent support). Unlike social housing, where housing benefit is retained by landlords and surpluses recycled, HB to private landlords funds profits which are removed from the sector.

‘It serves to make the point’, the authors say, ‘that the continuation of current trends is not a cost-neutral option for government’.

And in a massive understatement they comment that ‘there are questions as to whether we are spending as efficiently as we can in the housing sector, a pertinent point given the general pressure on public finances.’ In particular, they question the emphasis on intervention on the demand-side through Help to Buy and other schemes rather than supporting supply-side initiatives (ie directly building more houses rather than increasing buyers’ purchasing power).

We may have to wait a long time to see ‘subsidised home owners’ replace ‘subsidised council tenants’ in the headlines. But this report demonstrates that government intervention has become critically important to the operation of the private housing market. It seems highly unlikely that the schemes chosen by the government will lead to less volatility and house price inflation. Whatever happens, in future a much sharper focus will be needed on private renting, both in terms of the cost to households in rent but also the cost to government in benefits".

Red Brick - "The Help to Buy Gravy Train" by Steve Hilditch

A fascinating discussion yesterday evening with London Labour Housing Group on "Policy & Practice". Some great ideas and presentations.

I was a little late and missed items on policy context and improving the private rented sector but was there for - delivering new Council homes, working with with Housing Associations and best practice on community led housing. Chaired by lead GLA housing spokesperson Tom Copley

See below yet another superb article on "Red Brick" about the "Great British Housing Rip Off" by Steve Hilditch.

"Some people suffer because of the housing crisis, others do quite nicely out of it thank you. Land owners are perhaps the best example of those who have traditionally coined it in. Nothing much has changed since Winston Churchill, way back in 1909, called land ‘the mother of all monopolies’, criticising ‘the enrichment which comes to the landlord who happens to own a plot of land on the outskirts of a great city, who watches the busy population around him making the city larger, richer, more convenient, more famous every day, and all the while sits still and does nothing.’ And still they do.

But attention has been drawn more recently to another group of people who have been achieving great riches from the miseries of others – the housebuilders. You might say that at least housebuilders produce something of use, unlike the landowner, and the point is valid. But recently the vast profits being made by the volume housebuilders have been substantially donated by the government, free gratis and for nothing.

The housebuilders’ own special magic money tree is called Help to Buy. In an excellent article in the Times on 8 September, Property Correspondent Tom Knowles showed how the average profit made by housebuilders on each home has doubled since the scheme was launched. Knowles’ analysis showed that ‘the top five builders in Britain are making an average profit of £57,000 on each house they sell, compared with a mean average of about £29,000 in 2007’.

On Red Brick we have criticised Help to Buy from the time it was launched in 2013 because it is a subsidy on the demand side of housing – it enables people to spend more on housing without necessarily increasing supply. A little bit of economics tells us that in the longer term it is likely to be self-defeating because more demand with no more supply will lead to price increases. Far better, we have consistently said, to apply whatever public finance is available to boosting housing supply not demand.

At the launch of Help to Buy the argument was made that the scheme would boost supply by giving developers confidence that they would have buyers for their output – after all, no-one builds what they cannot sell. Yet Knowles confirms that the total number of new houses being delivered is much the same as it was ten years ago. He uses Barratt as evidence: profit per house has doubled since 2007 (he uses that date because it was the last full year before the global crash), but it is building only 411 additional homes. He provides a fascinating chart to illustrate the detail, repeated below.

Knowles quotes analysts who confirm that the largest driver of today's profits is Help to Buy. One assesses that housebuilders would be making £22,000 less profit on each house built for first time buyers if Help to Buy was not in place, and concludes that ‘someone is gaming the system’.

One of my favourite analysts, Neal Hudson, who puts good stuff on Twitter @resi_analyst, is quoted saying that shareholders had become ‘the main priority’ for housebuilders since the financial crash. ‘The over-arching factor has been big pressure from the City,’ he is quoted as saying. ‘The priority for them is profit margin not the number of homes built.’

One housebuilder chief executive was paid £75 million in a bonus last year, putting even bankers to shame. I suppose you could argue that no-one would turn down a nice earner, even if it is on the back of a government scheme designed to tackle the housing crisis. And, of course, it is government policy that is to blame. Since 2010 housing finance policy has been turned on its head. Instead of providing grant to enable genuinely affordable homes for those on low and medium incomes, Government help is now aimed at supporting the private housing market – and not very successfully it seems. The Chartered Institute of Housing’s Housing Review estimated that support for the private market is taking nearly 80% of current investment compared to just over 20% going as support for affordable housing.

At local level, the riches flowing into the pockets of the housebuilders should stiffen the resolve of councils who are fed up with developers pleading that schemes are ‘unviable’ due to modest requirements that a proportion of new homes should be affordable.

In this debate, profits per home of around 20-25% of the cost are taken almost as a given, a fixed cost. I can remember a developer telling me that the rule of thumb in building costs was ‘one-third for land, one-third for construction, and one-third profit’. In our Brexit-dominated world, construction costs are likely to inflate rapidly in the near future. So, if anything is to be done it must be to bear down on the other two elements: land and profit. We have posted a lot recently about land and taxation: another good step would be to tackle the Help to Buy gravy train.

"One article does not wipe the slate clean"

 A really important and interesting article by Steve Hilditch on the Labour Housing Group website "Red Brick" about the undermining of social housing during the last decade. The CEO of Notting Hill is not the only one and actually not the worse by far.

Yet another reason to start a National campaign to democratise Housing Associations make them accountable and bring them back  their real roots. Watch this space.

"Having attended Owen Jones excellent lecture on ‘optimism’ over the holiday, I had resolved to view 2017 with more positivity, looking at what is possible in the future rather than what has gone wrong in the past. Sadly, the feeling didn’t last long. I read an article by Kate Davies (the chief executive of Notting Hill Housing Trust for more than a decade) in Inside Housing. On the surface there was little to complain about, mostly I agree with the content. It explains the benefits of social housing, low rents and security, and complains about the lack of grant for new homes. It sets out the serious implications of the shortage of social housing, a common enough theme on Red Brick.

But context is everything. My annoyance at the piece stemmed from knowing Kate’s role, as I see it, in undermining the cause of social housing over the past decade, in two ways. First, she has led an organisation which deliberately decided not to provide as many social rented homes as it could have done – amounting to thousands of homes over the period which could have been used to house people in housing need. Secondly, she was a leading light in the campaigns and lobbying that seriously challenged the existence of social housing as we had known it, policies that were taken up directly by the Coalition and now the Tory Government. In her article, she makes no acknowledgement of her previous views and takes no responsibility for their impact.

Of course, she was not alone. There were many others in UK housing who went down similar paths. People fell over each other to disparage the social housing ‘offer’and to stereotype its occupants. It is the combination of failing to deliver as much social housing as possible, failing to defend genuinely affordable housing from attack, and failing to contradict the media’s demonisation of tenants, that has led me to be so critical of leading figures and institutions, especially in the housing association world. Homeless and badly housed people have been the victims of their loss of commitment and weakness of vision.

I was on the Board of Notting Hill Housing Trust for six years, from 2002-2008, having served on area committees before that and having had connections with the Trust since 1972. It is an organisation that really matters in west London and has transformed thousands of lives. Along with Kate and many others I worked hard, with some success, to improve the performance of a once great organisation that had hit the doldrums. With regard to housing development I am a pragmatist: I supported Notting Hill’s role in promoting shared ownership, and have had a long-held interest in providing homes in the ‘intermediate’ sector as well as for those most in need. As a Board member I supported tentative moves into highly profitable private development because it could be used to cross-subsidise an increase in social rented homes. It was a time when grant for social housing was substantial and the Brown Government had increased the budget considerably.

But the Trust came to be dominated by a philosophy which saw social renting as something to be disparaged, a ‘dead end’ and a route into ‘dependency’, and which also placed home ownership on a pedestal called ‘aspiration’. Provision of social rented homes was downgraded in priority, there were moves into making tenancies conditional (eg on seeking work), whilst more and more effort went into shared ownership and private development. There were skirmishes at the Board over individual schemes where the proposed balance between social rent and shared ownership was weighted in favour of the latter even though the finances of the scheme seemed to allow for more social renting in the mix.

It came to a head in early 2008 when a new 5 year development programme was put before the Board. It was fully costed, certified by the Director of Finance as a credible and viable plan, and it reflected in full the policy of the then mayor, Ken Livingstone, that development should be 50% affordable (35% social rent and 15% intermediate). Having drafted Ken’s housing strategy, I was delighted that NHHT planned to follow the lead. But the proposal was withdrawn by the chief executive and a different strategy was brought to the next Board. The amount of shared ownership was significantly increased and the share of social rent significantly decreased. After a long and difficult Board meeting, where I was an isolated advocate for the first strategy, the revision was passed (as I recall) by 8 votes to 1. The mix in the programme was proposed to shift from (social rent: intermediate) 70:30 to 40:60, much more extreme than even the policy of the incoming mayor Boris Johnson (although still much better than now).

I resigned. In my (July 2008) letter to the Chair, a clever businessman who helped improve the Trust in many other ways, I commented:

I cannot support the Board’s decision to approve the strategic plan proposed by the Corporate Management Team and the underlying attitudes it reflects. The basic premise of the growth strategy is that NHHT should make ‘shed loads of money’ from private development, which can then be applied to meeting housing needs.  But this argument falls if CMT and the Board then decide to provide many fewer social rented homes than could be provided within reasonable business parameters.  Real choices were available in deciding the strategy – and the final decision reflects serious differences of principle.  In short terms, I feel that NHHT is fixated with promoting home ownership and has insufficient commitment to meeting housing need.

Any reasonable analysis of housing need in London shows that the highest priority is for more social rented homes.  Of course other objectives come into play, and I have consistently supported mixed development and intermediate housing options .………  Compared to the first version of the corporate strategy in March (which was also recommended by CMT), the revised strategy would produce 1,500 fewer homes for social rent over 5 years. 

Externally, Kate was often heavily involved in policy development and lobbying. Amongst other things, she was a key advisor to the extremely influential Localis review (Principles for Social Housing Reform) on which Red Brick has commented many times (for example here). She chaired the ‘Housing and Dependency Working Group’ for Duncan Smith’s (misnamed) Centre for Social Justice producing a report – using NHHT resources – on housing poverty in 2008, where she repeated her call for an end to security of tenure and criticised social housing for providing ‘low cost living for life funded from the public purse’.

Of course Kate is fully entitled to hold her own views and to pursue them as she wishes. In many ways she is very good at her job. But the antagonism to social renting affected both what NHHT was doing and what it was saying to Government as a prominent housing provider. For example, in 2006 I managed to get the Board to agree not to submit draft evidence to the John Hills review on the future of social housing because it supported tax relief for first time buyers (without evidence) and because it called for the ending of security of tenure for social tenants and higher rents. My view was that the proposed evidence stigmatised tenants: social housing was described as ‘subsidised’ whilst shared ownership was not; tenants were seen as second-class citizens who needed ‘a springboard back into society’; social housing was a ‘dead end’ where lives ‘stagnate’. Home ownership was seen as the miracle cure for social ills.

It has become fashionable once again for leaders in UK housing to describe in graphic terms the rise in homelessness and the appalling degree of housing need in our country. But the industry has an awful lot to feel ashamed about and failing to defend social rented housing is top of the list. People should be held to account for what they did when the money was available, what they have advocated for as individuals in public debate, and, crucially, how they used the platform and resources provided by their organisations to promote their views. One article does not wipe the slate clean".

"Expensive exercise in futility’ Tory plans to evict tens of thousands over "Pay to Stay"

Hat tip to a hard hitting post in "Red Brick" seen below about the Tory plans to evict tens of thousands of working council and Housing Association tenants and their families.

This plan to means test all social tenants will cost millions to administer and result in many including the self-employed, teachers, factory workers and nurses to be thrown out or forced out of their homes.

"Spot the lies in this justification by the government of its pay-to-stay plans: ‘It’s simply not fair that hard-working people are subsidising the lifestyles of those on higher than average incomes’. Aside from the fact that it implies that social tenants aren’t hard-working (how else would they be earning more?), the two outright lies are that they receive taxpayer subsidies and that it is only those on above-average incomes who will pay more.

In fact, all but the lowest ten per cent of earners will be within or very close to the pay-to-stay threshold, because DCLG have been forced to set a very low starting point (£31,000 outside London, £40,000 within) in order to increase the projected income from the scheme. And of course, the government never misses a chance to refer to social tenants as ‘subsidised’, even though those on slightly higher incomes with little or no dependence on housing benefit are among the least subsidised householders in the whole housing market.

Red Brick makes no apology for saying ‘we told you so’ on pay-to-stay since we were among the first to draw attention to the risks. Back in 2011, when first mooted by Grant Shapps, it would have applied only to so-called wealthy people who choose to live in council houses and whose combined earnings came to over £100,000. It was of course aimed at people like the late Bob Crow, who earned £145,000 and had the temerity to live in a housing association flat. In response to widespread criticism that, if set at that threshold, the scheme would cost far more than it would generate, DCLG shifted the starting point downwards.

Red Brick predicted four years ago that this would be even more of a bureaucratic nightmare, since it would draw all tenants into having to declare their incomes and any changes to them. This point is now confirmed by Southwark council, who say that means testing tenants is an ‘expensive exercise in futility’ that could cost authorities millions to administer. If it has to be done, they want HM Revenue and Customs to do it for them.

And in any case, the extra red tape could now generate only £75 million annually, according to the LGA, rather than the £365 million that the government projects. This would add less than a paltry 0.8% to rental income, before admin costs are deducted, meaning the scheme could potentially produce no net income at all. As Jules Birch has pointed out, the government’s own assessment indicated that (at least in the first year) admin costs could be as high as £65 million, and Southwark’s warning shows that in practice this is very likely an underestimate, especially given the increasing variability of household earnings among those on modest incomes.

Even if the scheme does produce a small surplus, in a travesty of the principle that council housing is now self-financing, the money will have to be repaid to government. When council housing bought its financial independence in April 2012 by paying £7 billion to the Treasury, the government said this meant councils would ‘keep all the money they receive from rent’ and for tenants that ‘the level of rent you pay will continue to be a decision for your council’. It took barely a year for the government to issue the consultation paper which broke both these promises.

There are plenty more arguments against pay-to-stay too. It will be a disincentive to precisely those people who have jobs that pay modest salaries and who might want to try to earn more. It will encourage more tenants to exercise their right to buy, at which point of course they really will get a massive subsidy to help them buy their house, of a size unavailable to other first-time buyers. And it will lead to the further residualisation of social housing, eroding the mixed communities which were until recently an important aim of housing policy. As Natalie Bloomer commented on politics.co.uk, social tenants are now penalised for having too many bedrooms, penalised (by the benefits cap) if they don’t have jobs, and will soon be penalised if they do. The message to social housing tenants is: ‘If you don’t work, we’ll punish you. If you do work, we’ll punish you’. And as evidence of how struggling households will suffer, the Guardian has helpfully compiled some tenant stories of what the scheme’s consequences might be.

Fortunately, opponents of this daft policy appear to have an ally, someone who says that ‘while we continue to help the worst off we will also be focused on the millions of people for whom life is a struggle and who work all hours to keep their heads above water.’ She (and that’s a clue) has set up a powerful working group that will aim to make ‘life easier for the majority of people in this country who just about manage’.

Yes, it’s Theresa May, whose newly stated policy aims appear to run counter to those of the pay-to-stay scheme, and it’s Sajid Javid, the communities secretary, who joins her on the new working group. Ditching pay-to-stay would be an excellent no-brainer for the group when it first meets. After all, ending it would cost practically nothing while saving the government from a potentially embarrassing policy failure.

Our Tory Housing Future

Please read (and then weep) this examination of the new Tory Housing and Planning Bill on the blog Red Brick. In housing, as with the cuts in child tax credits, I don't think that people "get" just how right wing and extremist this Government is behaving. 

Councils will be stopped from building social housing with money raised from the section 106 levy on new developments, while at the same time they will be forced to sell off each year part of their already diminished existing housing stock to pay for the right to buy bribe to Housing Associations. 

Starter homes will be unaffordable for most and will even drive up prices further.

Where on earth are low income families going to live in the future? Shanty towns on the outskirts of our cities and towns. These really will be "Barracks for the Poor".

If you are a Council or Housing Association tenant your income and savings will now be compulsory means tested at pain of criminal prosecution. If you and your partner (or if you have an adult child living with you that works) earn more than £15,000 per year (£20k in London) you will be forced to pay full market rates (your rent will probably double - driving even more people onto benefits). 

It is more than ironic that such a right wing Conservative government is furthering its social and economic agenda by effectively nationalising (and stealing) Council assets and implementing state rent control and forced sales over private assets (belonging to housing associations and charities).

The only "good" thing to come out of this is a lesson for a future Labour government that nationalisation and state control is obviously perfectly acceptable. I shall look forward to the Labour government learning this lesson and exercising its power in the interests of working people and not just the rich. 

"The overwhelming case for new public housing"

Check out new report by John Healey and John Perry at Red Brick

Makes perfect sense to me.

"At its core, the crisis is a simple calculation: we need to build 250,000 homes a year yet 2012-13 saw just 108,000 new homes completed, the lowest since the 1920s, rallying to a not much better 119,000 in 2013-14. 

Rather less than half what is needed. Healey and Perry emphasise that a bigger contribution is required from everybody - commercial housebuilders, housing associations and councils – but that “Above all, strong leadership and smart action from government is imperative....

Recent modelling by John Healey shows that working up to building 100,000 new social rented homes a year by the end of the next parliament would not only pay for itself in less than 30 years but provide a net benefit to the public purse of £12bn through lower housing benefit cost."

(Picture from Homes for Britain Rally last month)

Red Brick on Lyons Review

Lyons does 90% of the job

Posted on October 16, 2014 by stevehilditch

For housing development nerds the Lyons Housing Commission report, published today, is a cracking read. Commissioned by the Labour Party, and launched by Ed Miliband, it is a serious review of all the problems and challenges facing the Party if it is to achieve its ambition in Government of building 200,000 homes a year by 2020....(click here)

"The world must have gone mad" Help to Buy You Negative Equity

Steve Hilditch from Red Brick New Year's message yesterday on the danger of this largely "Artificial and temporary recovery based on property inflation" is a welcome warning.

The Government flagship "Help to Buy" programme is helping to overheat the already unaffordable property market in London and the South East and push prices even higher.

Even that well known lefty organisation, the Institute of Directors thought that the introduction of "Help to Buy" meant "The world must have gone mad". 

What on earth is going to happen when interest rates rise? Which they will as surely as winter follows summer.

BBC report "The number of people using more than half their disposable income to repay debt could rise from 600,000 to a 1.1 million by 2018 if interest rates rise to 3%, said the Resolution Foundation.
If rates hit 5%, two million households would face huge repayments, it said".

If (when) rates increase people will not be able to afford their payments and they will default causing house prices to crash. 

Bank of England interest rates are currently at a historic low of 0.5%. The governor has indicated that he will increase rates when unemployment is below 7%. Unemployment is now 7.4%.

I can remember the housing crash of the early 1990s when the value of my property halved. It took years and years before it came out of negative equity.  Remember in 1991 interest rates were 15%!  15% is unlikely now but 5% is a long term trend. If you buy a property think whether your could afford it if rates doubled.

What this Government is doing is helping vulnerable first time buyers into negative equity. All for the sake of a boost to their election chances in 2015. 

Hat tip picture Henry Pryor

Should Labour follow the Housing Policies of Europe’s most successful Conservatives?

Fascinating post here by Steve Hilditch on Labour Housing Group blog "Red Brick" about Housing policies in Germany. There is a long tradition of rent controls in what is arguably Europe's most successful capitalist society.  The new Government coalition led by Chancellor Angela Merkel have agreed further powers for new developments to restrict rents.

Steve contrasts the German experience with the almost total opposition in the UK by our Conservatives to practically any form of rent regulation. Unless of course, David Cameron makes yet another "U" turn.

A History of Housing 1918 to 2012

Check out this excellent post at Red Brick about a new report on the "Politics of Housing" by the National Housing Federation.

As part of this report there is an interactive timeline on the history of housing from 1918-2012.

It is hard to believe that there was ever the time that both Labour and the Conservative pledged to build 500K homes per year if they were in Government!

One Nation Housing – 50 Policies for Labour

The Labour Housing Group has published this consultaton paper on its own website and on the housing site "Red Brick" in advance of their annual conference next month:-

Housing is central to Labour’s One Nation approach and our plans for economic recovery and social well-being.

Housing Investment

1.       Housing should be a central feature of a new National Infrastructure Plan looking ahead 10, 20 and 30 years at the country’s requirements for a modern economy and a cohesive society.

2.       Increasing housing investment in all tenures should be a key component of economic policy.

3.       To ensure an adequate supply of affordable homes, capital investment subsidies should be restored to 2008 levels as quickly as possible, with over-riding priority given to building homes for social rent.

4.       Councils should be enabled to invest much more under the new self-financing regime. The existing borrowing cap should be lifted and international conventions for measuring public borrowing (which exclude public corporations) should be adopted.

5.       Smart national accounting should be adopted that recognises how housing investment contributes to savings in health, education and benefits budgets. 

Planning for Housing 

6.       Councils should be under much stronger planning duties to meet housing needs in their areas, to plan for mixed communities, and to co-operate in planning for new housing across sub-regions, especially City regions.

7.       Local plans should prioritise social rented homes separately from other sub-market rented and low cost home ownership homes.

8.       Local communities should benefit more clearly from development through requirements for affordable housing and other facilities.  

9.       The New Homes Bonus should be ringfenced to be spent on housing infrastructure and benefits for communities affected by development only and should be phased out.

10.    A proportion of new homes should be made available to people from the local area.

11.    There should be much stronger duties on public agencies to release land for affordable housing.

12.    As a general principle, brownfield land should be used first and broad Green Belt protections should remain.

13.    Minimum space standards should be applied to all new homes.

14.    More rapid progress should be made towards achieving high environmental and energy efficiency standards in new homes, with higher priority given to cycling, play and recreation facilities.

15.    Planning permissions should expire sooner and should be based on project completion.

16.    Planning powers should enable Councils to take more effective enforcement action against rundown and empty homes that blight neighbourhoods.   

Tenure Reform

17.    Labour should undertake comprehensive tenure reform with standard mandatory tenancy conditions across private and social renting.

18.    Labour should adopt a plan to ensure that the Commonhold form of tenure, introduced by the last Labour Government, is more frequently used.

19.    Labour should renew its commitment to co-operative and new forms of tenure.

Private renting

20.    The private rented sector should be modernised and reformed, with longer tenancies, more predictable rents, better regulation, and proper enforcement of safety and decency standards.

21.    There should be tough regulation of letting agents and encouragement of not-for-profit agencies.

22.    Stronger enforcement action should take place in cases of landlord crime like harassment, illegal eviction and theft of deposits.

23.    All landlords should be registered in a self-financing scheme.

24.    As part of a package of reforms, Labour should review the tax treatment of private landlords to encourage investment, and reintroduce repair grants to achieve a new PRS decency standard.

25.    Shared housing should be regularly inspected to ensure compliance with standards. 

Social housing

26.    All social landlords in receipt of public money should be subject to effective regulation and occasional inspection to achieve higher standards in terms of customer service, efficiency, governance, accountability, and viability.

27.    Statutory requirements for tenants to be involved in scrutiny and in the regulatory system should be strengthened and the right to complain to the Ombudsman should be strengthened.

28.    Labour should ensure that housing associations remain not-for-profit organisations and review the scale and use of their surpluses.

29.    There should be genuine ‘like for like’ replacement of Council homes sold under Right to Buy. Give-away discounts should be restricted. Councils should be enabled to take an equity stake in sold property and strict covenants should be applied in relation to future letting and onward sale. 

30.    A new social sector Decent Homes Standard should be adopted with stronger environmental and communal area requirements.

31.    All social landlords should produce an annual Asset Management Statement, demonstrating how they have made best use of their stock. There should be a presumption against unjustified sales of property.

32.    Security of tenure should be restored so there is a basic requirement that a household cannot lose their home without the landlord’s case being tested in a court. 

33.    It should be a priority to ensure that homes that have been ‘converted’ from social to so-called ‘affordable rent’ revert back to their original status.  

Home ownership

34.    Government help for home ownership should be targeted to provide help with deposits for first-time buyers.

35.    Labour should require the energy industry to provide better grants and loans to ensure minimum standards in energy efficiency.

36.    Repair grants should be reintroduced in housing priority areas to enable owners to bring their homes up to basic standards.

37.    Labour should work with the development industry to introduce a Rent To Buy scheme for first time buyers.

38.    Labour should work with the mortgage industry to deliver more loans at higher loan-to-value ratios but without encouraging sub-prime lending. 

Tax and benefits

39.    The total benefit cap should be regionalised to take proper account of rent differentials between areas of the country.

40.    Local Housing Allowance should be made available up to the level of median rents in an area rather than the 30^th percentile.

41.    HB direct payments to landlords should be restored based on tenants’ choice.

42.    The ‘bedroom tax’ should be ended in favour of a new national plan to tackle under occupation based on incentives and a stronger ground for possession with a right to suitable alternative accommodation.

43.    Labour should develop and adopt a long term plan to switch from personal subsidies to investment subsidies in housing, reducing the benefit bill by reducing the cost of rented housing.

44.    A Mansion Tax on properties valued at £2m or more, or additional Council Tax bands, should be introduced.

45.    Options should be investigated to impose additional taxation on foreign buyers in the prime property market.  

46.    Additional charges should be levied on long-term empty properties and unused development land.

47.    A fundamental review of property taxation and reliefs should be undertaken, including council tax, capital gains, stamp duty, to find a system that meets wider housing objectives. 

General

48.    It should be a key target of a Labour Government to reduce homelessness. The strong homelessness safety net should be restored.

49.    A new National Tenant Voice should be created, for all tenants.

50.    Labour’s commitment is to encourage mixed and sustainable communities across the country - in cities towns and rural areas.