Armed and ready

Private finance initiative

Snapshot

About 13,000 council homes have been brought up to the decent homes standard using the private finance initiative with a further 4,500 due to be improved through schemes already signed.

Including unsigned schemes, a total of 26,600 properties should eventually meet the standard as a result of PFI.

Hit or miss

PFI is ‘not for the faint hearted’, says Steve Trueman, chief operating officer at the Homes and Communities Agency and a man who has spent much of the past decade promoting it in housing.

The first housing PFI deal (involving housing association properties) was signed in 1998. It was not used to refurbish council homes until 2003, when pathfinder schemes in Islington, north London, and Manchester that had been in the pipeline since 1999 finally got under way.

In the same year, the government extended PFI to new build, which sparked more interest from private investors. But with the pot now open to a greater range of schemes, when it came to financing decent homes work, PFI was likely to remain a sideshow to stock transfer and arm’s-length management organisations.

‘It’s always been the junior partner in achieving the decent homes standard,’ explains Mr Trueman, who previously worked at the 4Ps, an organisation that promoted PFI in local government. ‘It was complex and it’s still complex.’

Typically lasting up to 30 years, PFI schemes involve the council contracting private sector firms to improve their stock. Twenty-two of the 49 housing PFI schemes that have been approved involve refurbishing council homes. A total of £2.2 billion in PFI credits has been allocated, or provisionally allocated, to schemes contributing to the decent homes target.

The programme is now moving on with the sixth round of housing PFI, launched earlier this year, focusing on ‘transformational estates-based regeneration’ rather than decent homes.

View on the ground

By 2011, Islington Council should have brought more than 6,000 homes up to standard through PFI. Nearly half are already improved.

Patrick Odling-Smee, director of housing, says PFI has allowed the council to retain its stock, while the improvements have created a good social mix. ‘It’s enabled social housing tenants to live in the same street as [London mayor] Boris Johnson,’ he adds.

The verdict

In spite of its success in a few local authority areas, PFI has made a relatively limited contribution to the decent homes programme. The 26,600 homes due for PFI upgrades pale in comparison to the 2.3 million homes made decent by stock transfer associations and ALMOs.

Pathfinder councils, in particular, faced huge delays procuring their schemes, while it is virtually impossible to say whether, during their 30-year lifespan, they represent value for money.

Housing associations

Snapshot

Just 5 per cent of the 1.15 million homes owned by traditional (or non-stock transfer) housing associations failed to meet the decent homes standard in March 2009.

More than 95 per cent of all association properties should hit the December 2010 decent homes target. Most of the shortfall is accounted for by former council homes transferred to associations in order to raise decent homes cash.

Hit or miss

It is difficult to calculate how much has been spent on decent homes by housing associations not born of council stock transfers, since refurbishment work is ongoing and, in some cases, was planned before the standard was introduced.

John Bryant, policy leader at the National Housing Federation, says the decent homes programme has ‘resulted in certain additional spending and redirection of money that might have been spent on other types or repairs if decent homes hadn’t come long’.

Homes owned by traditional associations are generally newer than those of councils, transfer associations or private landlords, with many built in the 1980s and 1990s.

A 2007 study by former regulator the Housing Corporation covering 83 traditional and transfer associations revealed they planned to spend about £750 million on refurbishment over the following five years, with 56 per cent striving to achieve a higher ‘decent homes plus’ standard.

The most popular means of funding such work was rental income, followed by grants from utility companies and reserves.

Only 28 per cent intended to use private borrowing. ‘A lot of [decent homes activity] provided a convenient badge for work which would have happened anyway,’ says Mr Bryant. ‘They didn’t wake up in 2001 and suddenly start updating kitchens and bathrooms.’

Hanover Housing, for example, used rents to meet the standard for its 19,000 retirement and extra-care homes in 2006. ‘We’ve always invested a lot in our properties,’ says chief executive Bruce Moore.

Hanover’s estates will be reviewed next year to assess how much work is needed to reach a higher quality standard and local agreements will be signed with tenants.

Nigel Long, head of policy at the Tenant Participation Advisory Service, praises landlords that involved tenants in the process. ‘We’re very keen that decent homes becomes much more localised,’ he says.

View on the ground

Earlier this year, Home Group installed a new heating system in Fiona Gallop’s home near Guildford, Surrey.

‘Rather than heating individual rooms, we heat the whole house and keep the overall temperature of the property constant,’ Ms Gallop says.

The rest of her home already meets the decent homes standard, but the kitchen is due to be replaced in 2012.

Ms Gallop, who sits on the group’s housing operations board, is delighted that Home applies its own, higher refurbishment standard.

‘To satisfy the government, we are going for the bare essentials, but it’s logical to look at the bigger picture,’ she says.

Verdict

Since most have always had ongoing maintenance programmes, it was always going to be easier for traditional housing associations to achieve decent homes - especially where stock is newer.

Even those aiming for higher standards seem to be taking things in their stride, although the current squeeze on budgets due to rent cuts and the collapse of property sales may lead to some having less to spend in future.

Private housing

Snapshot

Private housing and, in particular, private rented accommodation is generally in worse condition than other stock. The 2007 English House Condition Survey - published this September - showed 36 per cent of private housing failed the decent homes standard, compared with 29 per cent of social housing. In the private rented sector, 45 per cent of stock failed the standard.

In 2007, 61 per cent of vulnerable households living in private rented or privately owned housing had properties that met the decent homes standard.

Hit or miss

Rather than tackle the private sector as a whole, the government focused on private housing for vulnerable households (those in receipt of income-related or disability benefits). By 2006 it was on track to increase the proportion of vulnerable households in private sector decent homes to 70 per cent by 2010, increasing to 75 per cent by 2015. In 2006 it had reached 68 per cent (up from 43 per cent in 1996). Then the goalposts were moved - a new Housing Health and Safety Rating System, which replaced earlier fitness standards, made decent homes harder to achieve in all sectors. It also meant the proportion of properties classed as ‘decent’ fell back to 61 per cent.

The new rules stated simply that the government would increase the number of vulnerable private sector households in decent homes. These were now defined as those ‘without category 1 hazards’, which include inadequate heating, poor wiring and uneven floors.

Stephen Battersby, president of the Chartered Institute of Environmental Health, questions whether this constitutes a target. ‘[The original target] was upfront and showed what was expected,’ he says. ‘Now it depends upon the priorities of local authorities. Many are only interested in statutory duties and dealing with complaints about category 1 hazards.’

View on the ground

Chris Norris, policy manager at the National Landlords’ Association, believes the government has a clear vision for decent homes in the private rented sector, but wishes there was still a target date.

While some landlords make improvements, he says, ‘there has not been enough focus’ on providing funds to improve the private rented sector.

Verdict

By replacing its 2010 goal with a vaguer strategic objective, the government could be accused of abandoning its private sector decent homes target.

It is certainly doubtful whether councils will see private rented housing as a priority as public spending is squeezed.

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