Wednesday, 23 July 2014

Inside edge

Survey story – part one

Wed, 23 Jul 2014

It’s time again for a welter of new information about housing in England. Here's the first of a two-part blog on what caught my eye.

The English Housing Survey also covers stock conditions, energy efficiency and fire safety but this blog concentrates on the story on households. Information from it was first released in February but more followed today. Here are the first three of six themes that seemed significant to me.

The slow death of the property-owning democracy continues: I blogged about the key trends in tenure in February. It wasn’t just about the rise and rise of private renting (it had been clear that it would overtake social renting for some time) but a huge shift within owner-occupation. In 2012/13 the number of outright owners almost overtook the number of mortgaged owners. This is part of a generational shift (baby boomers are slowly paying off their mortgage and few of their kids can get one) that would have horrified Mrs Thatcher when she revived the old Tory idea of the property-owning democracy. Between 2008/09 and 2012/13, the proportion of households aged 25-34 who were private tenants rose from 31 per cent to 45 per cent.

The financial crisis had a dramatic impact on tenure: Mortgaged ownership has been shrinking for years but the trend seems to have accelerated dramatically as a result of the recession and credit crunch. The survey includes information on recent movers – households who moved into their current home in the last 12 months. In 2012/13 there were 2.3 million of them: 59 per cent moved into the private rented sector, 24 per cent into owner-occupation and 16 per cent into social housing. As the graph shows, a big shift happened in the two years between 2007/08 and 2009/10: the proportion of recent movers who went into owner-occupation dropped from 42 per cent to 20 per cent while the proportion becoming private renters rose from 43 per cent to 62 per cent.

Movers

Under-occupation is in the eye of the beholder: The bedroom tax has focussed attention on under-occupation in social housing, with ministers arguing that it desperately needs to be tackled to free up space for overcrowded families. As I’ve blogged before, the English Housing Survey tells a very different story and uses a different measure of under-occupation. The ‘bedroom standard’ is a slightly harsher measure of bedrooms needed than the rules on housing benefit (older children have to share) but has a more generous definition of under-occupation (two bedrooms more than needed rather than one as under the housing benefit rules).

With that caveat, the survey highlights four issues:

  • Owner-occupiers are most likely to under-occupy. Half of all home owners have two bedrooms more than need and another 36 per cent had one bedroom above the standard.
  • Social tenants – the targets for the bedroom tax – are least likely to under-occupy. Only 9.9 per cent had two bedrooms more than the standard and 28.7 per cent had one more. That total of 39 per cent compares to 85 per cent for owners and 51 per cent for private renters.
  • Under-occupation and overcrowding in social housing were both falling before the bedroom tax was introduced in April 2013. Overcrowding fell from 7 per cent in 2010/11 to 6 per cent in 2012/13. The 9.9 per cent under-occupation rate in 2012/13 was down from 10.3 per cent in 2010/11 and 12.1 per cent in 2003/04.
  • More than half of all under-occupiers (3 million out of 5.8 million with two bedrooms more than the standard) are aged over 65. Isn’t this where downsizing initiatives and incentives should be targeted?

I’ll be posting part 2 of this blog later. How satisfied are private renters? Who had the most affordable housing? And do TV shows get it right about social renters? Watch this space fort three more new perspectives from the English Housing Survey. 

A room of their own

Mon, 21 Jul 2014

What does the Lib Dem change of heart mean for the future of the bedroom tax?

It is not quite the u-turn that’s being claimed in some quarters but it is a significant change of direction. It’s not quite the mature change of mind in the light of the evidence that’s being claimed by the Lib Dems either: the evidence has been there from the beginning and the independent evaluation that supposedly triggered the change in policy must have been available at the DWP for weeks before it was sneaked out on Tuesday.

Read Rob Gershon’s great blog for a forensic analysis of Wednesday night’s statement by Treasury chief secretary Danny Alexander and all the previous evidence that he seems somehow to have missed. I’d add only one thing to that: Danny could have asked his dad.

This is of course not the first time that the Lib Dems have withdrawn support from the bedroom tax. In April it turned out that Tim Farron meant the party but not the bit of it that’s in government. This time around the leadership is falling into line with the grassroots to call for specific reforms to the policy.

It’s easy to accuse them of hypocrisy: without Lib Dem support, the bedroom tax could never have been introduced in the first place. And naivety: the bedroom tax is a symbol of the way the Conservatives forced through changes on welfare reform and housing that the Lib Dems were too quick to accept in the early days of the coalition. And it’s probably too late politically, as former Nick Clegg advisor Sean Kemp argues in The Spectator.

However, politicians are allowed to change their mind and it’s not a bad thing when they listen to the evidence. The Lib Dem change of heart is much better late than never and it could yet make a real difference to bedroom tax victims before the next election.

Danny Alexander spelt out more detail in an interview on Channel Four News last night. If you haven’t seen it, do watch again here as it’s interesting on four different levels:



First, it’s cringe-inducing TV of the highest order as Alexander struggles to justify his previous position and evades repeated attempts to get him to say ‘sorry’ until near the end. Alexander’s continued use of ‘the spare room subsidy’ (the name invented by the Conservatives to justify the policy) does not do much to convey contrition.

Second, the new Lib Dem policy seems to be more complex than the original statements made out. It amounts to an admission that discretionary housing payments (DHPs) have not worked and more exemptions are needed.  The interview hints that the party does not mean to exempt all disabled adults (something that might cover two-thirds of all bedroom tax victims) but a much smaller group of ‘people who have a medical need for an additional bedroom’. There would also be a new duty on social landlords to prevent under-occupation, though it’s not clear how that will work.

Alexander did not mention how the suitability of alternative accommodation for downsizers would be decided. This issue was thrown into stark relief in the package before the interview, which featured Wayne Blackburn, a disabled man who has already been forced to downsize into unsuitable accommodation. It’s also worth noting Inside Housing’s story today about rising numbers of out-of-area homelessness discharges: these are happening despite government guidance that ‘suitable’ should mean in the same area.

Third, Alexander still does not seem to understand his own policy. He repeats the discredited government line that Labour brought in ‘this self-same change for people in the private rented sector’. In reality even the Lib Dems’ reformed bedroom tax will be much harsher since the local housing allowance only ever applied to new tenants and operates in a completely different way.

Fourth, he drops some hints about what’s likely to happen next. If the Lib Dems want to reform the bedroom tax before the next election, they could vote for it in the House of Commons or negotiate it behind the scenes with their Conservative coalition partners.

On Commons votes, here’s what he has to say:

Q: If there was a choice in the House of Commons to vote for the policy you now support, will you vote for it?

A: Well, of course… if Liberal Democrats put forward our policy in the House of Commons of course I’ll support that.

Q: What about if Labour do?

A: I think we’d have to look at whatever Labour put forward.

Q: What about if Labour put forward your idea?

A: I think we’d have to look at what Labour put forward on a case by case basis.

Q: This is maddening political games. This is what drives people at home nuts. You can’t answer a straight question about if somebody does what you want you won’t vote for it.

A: You know that isn’t true because Labour would only be putting down a motion like that in order to play political games themselves.

I take this to mean that if Labour calls a vote to scrap the bedroom tax, the Lib Dems will vote against and Labour will use it to paint them as hypocrites. If Labour proposed reforms they might vote in favour, but would Labour want to? However, Lib Dem MP Andrew George, who came top in the ballot for private member’s bills, is drafting legislation that includes wide-ranging bedroom tax reforms. That will come to the Commons on September 5. What will the Lib Dems and Labour do then? Together they have the votes to push through reforms that will help many bedroom tax victims before the next election but only if they put policy before party politics.

On coalition negotiations, Alexander says that ‘it’s right that in the next few months in the run-up to the Autumn Statement that we should argue the case within government, which we will do’.

Q: You could force it through couldn’t you? you could force the Conservatives to deliver this if you want. How far will you take it? You could say you’re not going to get anything else in the Autumn Statement unless you give us this. Are you going to do that?

A: Well, we will make it part of what we’re arguing for as part of that process so you’ll see the results in the Autumn Statement.

Q: So that’s a guarantee that it will be in the Autumn Statement isn’t it?

A: It’s not a guarantee, it’s part of what we’re pushing for in the Autumn Statement and we’ll see how we get on.

So how will the Lib Dems play their hand? Alexander’s answers do not inspire that much confidence but they will get at least two chances to force through their new policy this year. Will they take them?

Shuffling the deck

Wed, 16 Jul 2014

So housing seems to have kept the politicians who should have gone and lost the one who was making a difference.

Speculation ahead of the reshuffle suggested that Eric Pickles and Iain Duncan Smith would leave their posts as part of the cull of middle aged men in the Cabinet. True, some of the stories seemed a bit thin (a woman with a posh accent overheard talking on the phone didn’t seem like much to go on) but I lived in hope. I also looked forward to the DWP press release arguing that it proved that universal credit is ‘on track and on schedule’.

Instead it’s business as usual at the top of their two departments with a shake-up lower down the ministerial scale. After just over nine months in the job, Kris Hopkins is now the former housing minister and is shunted sideways into local government. Brandon Lewis moves from that job and gets a promotion to minister of state for housing and planning. Penny Mordaunt comes in as junior minister responsible for coastal communities.

The good news is that housing is restored to the minister of state status it lost when Hopkins was appointed and that the housing and planning briefs have been reunited. Lewis seems on message about housing issues, recently helped open new council houses in his constituency and is a private landlord. He’s also a protégée of Pickles and co-hosted a local radio programme with his boss when he was leader of Brentwood council.

The bad news is that the revolving door of housing ministers is speeding up again. Hopkins replaced Mark Prisk, who was supposedly sacked for his lack of media profile. He did attract more publicity but mostly by putting his foot in his mouth with ill-advised comments about house prices and landlords evicting tenants. It’s tempting to say that his departure is linked to worry about a leaked report predicting a fall in housing starts ahead of the election but more likely it’s just an indication that who does the job does not matter very much politically.

The very bad news is that Nick Boles has also moved from the DCLG. He told a fringe meeting at the last Conservative conference that ‘if I’m still planning minister after the next election, I want you to shoot me’ and that his ideal job was working in the education department with old Policy Exchange chum Michael Gove. He’s got his wish but only half of it.

However, Boles was like a breath of fresh air at the DCLG and within the Conservative Party. He was prepared to put the case for new homes to sceptical voters and seemed to have license from the leadership to wind up the Daily Telegraph and even more sceptical members of his own party. Somehow I can’t see Brandon Lewis doing anything as brilliant as Boles’s confrontation with Simon Jenkins on Newsnight last year.

His departure could therefore signal a pre-election shift in the balance of power away from modernising Conservatives who see new homes as vital to economic growth in favour of traditional ones who want to resist them at all costs. A quick look around at recent local paper coverage bears out the potential: from Warwickshire Tories calling a site for new homes a ‘social dumping ground’ to Bradford Tories facing ‘assaults on their green spaces’.

The worrying news is that the DCLG is also about to lose Sir Bob Kerslake, who will stop being head of the civil service in the Autumn and retire as permanent secretary in February when he’s 60. Sir Bob was of course previously head of the HCA and many people credit him with protecting the housing programme in 2010 so it’s hard to see his departure as good news for the sector.

Allegra Stretton reported on Newsnight on Monday that he was being sacked for ‘poor performance’ (which seems to be code for resisting civil service reform). If the leak and the timing of an announcement about the civil service at the same time as a political reshuffle seemed remarkable, so does the fact that he was appointed and promoted under the coalition.

The man himself blogged yesterday about his pride in working with ‘brilliant’ people in the job and the ‘big and difficult transformation’ at the DCLG. But he added: ‘Less brilliant have been the ‘noises off’ criticising civil servants and accusing them of being reluctant to change.’

With a departing permanent secretary, yet another new housing minister and the loss of the Boles stardust, things do not look good for the DCLG ahead of the election. Perhaps it’s just as well that Pickles has outsourced policy development to the big housebuilders?

By comparison the DWP seems a model of stability. Out goes Mike Penning and in comes Mark Harper as minister for disabled people (after a period of confusion similar to the one about who was housing minister yesterday afternoon).

Iain Duncan Smith supposedly survived an attempt to remove him in the last reshuffle and now somehow he’s survived yet again. If you haven’t seen it, do read Chris Dillow’s brilliant blog on ‘why idiots succeed’. My money is on reason number one – the wet bed – plus Cameron’s fear of having one of John Major’s ‘bastards’ on the backbenches.

Here’s how Major summed things up last year: ‘IDS is trying to reform benefits. But unless he is lucky or a genius, which last time I looked was not true, he may get things wrong.’

The former prime minister was prescient. As I blogged yesterday, the DWP chose the reshuffle as the perfect day to bury the bad news in an independent evaluation of the bedroom tax that provides powerful new backing for critics of the policy. Only last week, it was embarrassed when Sir Bob Kerslake confirmed that the Treasury has still not signed off the business case for universal credit.

And yet somehow, with his flagship sinking underneath him, the captain sails serenely on.  

In case you missed it

Tue, 15 Jul 2014

Today looks like a very good day for the DWP to sneak out independent research on the impact of the bedroom tax and cuts to the local housing allowance.

While Iain Duncan Smith seems to have survived the Cabinet cull of middle aged men, the two reports offer in-depth scrutiny of two of his most controversial policies. There is as yet no DWP press release or comment but you can find the reports here and here on its website.

This blog will concentrate on the independent evaluation of what the DWP calls the removal of the spare room subsidy. The report by the Cambridge Centre for Housing and Planning Research and Ipsos Mori analyses the effects on and the responses of tenants, landlords, local authorities, voluntary and statutory organisations and advice agencies and lenders.

While this is the interim report and covers only the first eight months of implementation from April to November 2013, it’s also the most comprehensive analysis of the policy yet attempted is published by the department responsible for it. Here are some of the findings that I’m guessing it hopes that the reshuffle will distract you from reading about:

The impact on tenants. Around 80 per cent of those affected are paying some or all of the shortfalls on their rent but only half have paid it in full and 20 per cent had paid nothing in the first six months.

Of those who have paid, 57 per cent say they found the money by cutting back on household essentials and 35 per cent by cutting back on non-essentials.

A third have borrowed money to pay the shortfall. Most of this has come from family and friends (21 per cent) but tenants questioned whether this was sustainable given the low incomes of those they are borrowing from. Another 6 per cent have borrowed from another lender, 3 per cent from a credit card and 3 per cent had taken payday loans.

In total, that means more tenants making up the shortfall have done it through borrowing than by applying for a discretionary housing payment (22 per cent) or looking for a job or better pay or hours (21 per cent)or looking to move (16 per cent).

 Cut

Downsizing. The DWP might have seized on higher than expected figures for successful moves to smaller accommodation: 4.5 per cent of affected tenants had managed to downsize to another social tenancy in the first six months. The report notes that if this trend continued at the same rate for the next two years, over 20 per cent of those affected would have downsized within the social rented sector. A further 1.4 per cent moved into private rented homes in the first six months.

However, this trend may not be all it seems. It is only higher than expected because the DWP’s impact assessment assumed that there would be no significant moves. There were also big differences between areas:

  • landlords with the lowest proportion of tenants affected had seen downsizing rates almost four times higher than those with the highest proportion
  • demand for downsizing has been difficult to meet so far especially in large rural areas and in urban and suburban areas where the standard social rented property is a three-bedroom house
  • financial incentives to downsize offered by landlords are less available in areas most affected by the bedroom tax.

Meanwhile most tenants were reluctant to move away from services, work and support networks and landlords and agencies said most affected tenants would prefer to say put and pay the shortfall.

Discretionary housing payments. The research confirms other indications of gaps in the system and huge variations between different areas:

  • more than half of affected tenants were not aware of DHPs
  • there was widespread concern about disabled people in adapted properties being denied help because their disability benefits were counted as income
  • agencies were worried that some of the most vulnerable, including those with mental health difficulties, are missing out
  • there was widespread concern that the time-limited nature of DHP awards means it is only delaying the real impact of the policy and about the future size of DHP allocations.

The DWP has also just published a good practice guide for local authorities on DHPs.

Employment. Some 18 per cent of affected tenants said they had looked to earn more money as a result of the policy but ‘only modest numbers would appear to have been successful in the first six months’. The vast majority (87 per cent) of those looking for work or better pay have not found them.

Allocations and development. Some 41 per cent of landlords reported difficulties letting larger properties, with the problem greatest in areas most affected by the bedroom tax like Wales and the north of England (60 per cent) and lowest in areas least affected like London. However, the report found no statistically significant increase in national voids figures.

Of the 80 per cent of landlords involved in new development, a third said they had changed the profile of their programme due to the bedroom tax and benefit cap. The main impact has been a reduction in the number of larger homes and increase in one-bedroom flats being built. Many landlords were worried that losses in rental income could reduce their ability to develop in future but their relationship with lenders does not seem to have suffered yet. 

Overcrowding. The DWP has argued that the bedroom tax will help overcrowded families by freeing up larger homes. However, the report found that most local authorities and landlords believe it will have little impact and revisions to the definition of overcrowding as a result of the policy mean it will be difficult to assess the impact anyway.

Knock-on effects. Changing allocations procedures (for example 72 per cent of landlords have increased priority for downsizers) have increased waiting times for smaller homes but made larger homes available to other people on the waiting list. Two-thirds of landlords would consider letting larger homes to people not affected by the bedroom tax (pensioners and working people not on housing benefit).

Agencies working with the single homeless reported difficulties in hostel move-on to social housing because of the shortage of one-bed homes and landlord reluctance to let two-beds to single people.

Arrears and evictions. It was too early to expect much hard evidence on either but the report found widespread concern about ‘the impact of potential future evictions on local services, and on landlord finances as well as on the lives of vulnerable people’. The survey of claimants found 80 per cent were finding it very or fairly difficult to pay the rent and 79 per cent were running out of money very or fairly often (rising to 90 per cent for those in arrears).

Policies again vary hugely between areas. The chief executive of one local authority told the researchers ‘it is not the council’s business to evict people’ but a social landlord in the same area said it would follow usual procedures and ‘take supportive but robust action’.

And the research also reveals that small numbers of evictions have already happened and more could be on the way. The survey shows 45 evictions due solely to bedroom tax in the first seven months including 24 by one landlord. That is a tiny number but the report says that:

‘In terms of the level of arrears required to trigger court action, most landlords interviewed said that they were developing their policy over time. They were anxious not to be in the media for being the first in court for “bedroom tax evictions” and wantedf to give tenants every opportunity to pay. Nevertheless by the autumn a third had already begun the process of issuing formal warning letters and in some cases continuing further in the route to evicting non-payers.’

Ominously too, the report found that while most local authorities would not consider someone with bedroom tax arrears to be intentionally homeless, some said they would look to discharge their homelessness duty into a private tenancy and possibly into shared housing. 

Overall then, the report will increase rather than allay fears about the impact of the bedroom tax. If it had really wanted to, the DWP could have spun a positive story about some of the findings, for example on downsizing or the falling numbers of tenants affected. The response by IDS to the BBC’s story on the study is a nod in this direction but he familiar line about ‘scaremongering’ by critics is looking pretty tired.

Far better then to publish the report on a day when everyone’s attention is focussed elsewhere. 

Chance of a lifetime

Fri, 27 Jun 2014

MPs will get the chance to back major housing reforms including new significant exemptions to the bedroom tax later this year. Will they take it?

Andrew George, the Liberal Democrat MP for St Ives, has what he describes as ‘the chance of a lifetime’ to change things through legislation after coming first in the ballot for private member’s bills. Talking to him yesterday gave me a fascinating but slightly depressing insight into how the system – and party politics – work.

He consulted his constituents on a shortlist of options including housing, a Cornish Assembly and health care standards and after more than 2,000 comments has decided to plump for an Affordable Homes Bill with four key elements:

  • Extension of Help to Buy or a new Affordable Homes Investment Bank to underpin the ‘intermediate’ market (shared equity/shared ownership/mutual housing) to construct a new lower rung on the housing ladder for those who cannot afford full ownership.
  • New exemptions to the bedroom tax for anyone who has lived at an address for more than three years or who lives in a home with disabled adaptations
  • A new Use Class for ‘non-permanent residential use’ to empower local planning authorities to control the number of second homes in their area.
  • Enhanced powers of compulsory purchase for local authorities where developers land bank development sites or fail to use sites for which planning permission has been granted but development has not advanced or where need for affordable homes cannot be met on ‘exception’ sites through community land auctions/trusts.

To give a bit of context, Andrew George is my MP so I know he has a longstanding interest in affordable homes and a particular local one in the pernicious impact of second homes. More recently he’s been named the most rebellious Liberal Democrat MP of this parliament and has voted against the government on issues such as the bedroom tax, NHS reform and tuition fees.

All four of his proposals have the potential to attract cross-party support but there could be issues with all of them too. This is the starting point but not necessarily what the final Bill will look like since he may have to narrow it down to get majority support.

On intermediate housing, he argues that the market has not taken off because lenders are ‘iffy’ about it and people who buy a share struggle to sell. ‘I can’t see why anyone would object to it,’ he told me. ‘The Treasury might be worried about the budgetary implications but the principles can’t be objected to.’ Shared ownership sceptics may disagree but it could be a big improvement to Help to Buy.

Private member’s bills can only amend, rather than repeal, legislation, which is why he’s gone for exemptions to the bedroom tax. ‘The thing I’ve found offensive about it is the implication that because you’re poor you’re less entitled to a stable family home,’ he says. ‘This would significantly neutralise [the bedroom tax] and carve out a large number of cases.’ By my reckoning, his proposals would exempt the majority of those affected. Some 83 per cent of social tenants have lived in their home for more than three years (though that includes pensioners and the proportion of working age will be lower) and some newer tenants will be in specially adapted homes.

On second homes, his proposal could get support from other rural MPs but it does go against the grain of Tory deregulation (as I blogged earlier this week, the Deregulation Bill will liberalise short-term rentals in London). George says he has campaigned on the issue for years but been turned down by housing ministers under both the Conservatives and Labour.

Finally, his proposals on land banking chime with Labour policy but something similar has been proposed by Boris Johnson in London.

So what next? The reason that topping the private member’s bill ballot is the equivalent of winning the lottery for a backbench MP is that parliamentary time is very limited and the winner has the best chance of seeing their Bill become law. It’s not a guarantee though. The last MP who won the ballot and was successful was Labour’s Brian Iddon before the last election with a Bill to protect the rights of tenants of repossessed landlords and he was a member of the largest party and had government backing. MPs promoting Bills have to be prepared to negotiate to win support. 

George had to strike a balance between proposing something small to maximise support and something bigger with a higher risk of not getting it through. ‘I wasn’t going to run with something tame and anodyne,’ he says. ‘This is once in a lifetime chance to advance a cause rather than tinker at the edges.’ 

However, while all of us might hope that law-making at Westminster is a rational process in which proposals are debated and enacted on their merits, the reality is not quite like that. Party politics inevitably intrudes.

Take the bedroom tax, for example. My guess is that it would not survive a genuinely free vote in the Commons in its current form if the right compromise could be found. The all-party Work and Pensions Committee recommended significant exemptions and changes in a report in April. Some Lib Dems and even a few Conservatives have voted against it or abstained at various points.

However, with ministers and their aides expected to vote for government policy or resign, there have never been enough of them to succeed. Labour, meanwhile, has used opposition day debates to call for repeal of the bedroom tax but seemed more intent on pinning the blame on the Tories and Lib Dems at the next election than securing concessions in the meantime.

Too often then the parliamentary system and tribal party politics have seemed to trump changes to what most MPs know is a bad policy. Will it be any different this time? The early signs are not promising. ‘I’ve spoken to the Labour leads and they have indicated that they may not go for my bedroom tax change,’ says George.

From the Conservative side of the House, meanwhile, he’s had dark threats from Eurosceptics with their own agenda. ‘The Tories have threatened to talk my Bill out unless I allow the European Referendum Bill to get in first,’ he says. ‘The only way to prevent that is to get 100 people there on the day and I may struggle to do that.’

Andrew George is currently drafting his Bill and is prepared to narrow it down to the elements that will attract enough votes to pass. Can the Lib Dem rebel succeed? The first debate in the Commons is set for September 5. Watch this space.

Passing the buck

Fri, 27 Jun 2014

George Osborne has spent so long outsourcing responsibility for the housing market to Mark Carney that it’s easy to forget the Bank of England’s actual brief.

Far from controlling house prices, or tackling affordability or making the market less dysfunctional, the Bank’s Financial Policy Committee (FPC) ‘is charged with a primary objective of identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system’ and a secondary objective ‘to support the economic policy of the government’.

So the measures the FPC announced today on high loan to income (LTI) mortgages and a slightly strengthened stress test on lending are about preventing future house prices from increasing household debt to a level that poses risks to the financial system rather than tackling current price levels and affordability.

Loans of more than 4.5 times income will be limited to no more than 15 per cent of banks’ total mortgage lending from October. However, given that only about 9 per cent of mortgages (19 per cent in London) are above that level at the moment, that indicates the Bank is reasonably relaxed about increases in high LTI lending and in house prices.

Its central forecast is that house prices will rise by 20 per cent over the next three years but that affordability will be boosted by nominal income growth getting back to an average level of 4 per cent a year. As Capital Economics points out, the new measures seem designed only to kick in if prices rise more than the Bank expects.

As the Carney and the Bank acted, the Treasury announced that no new loans at more than 4.5 times borrowers’ income will be allowed under the Help to Buy mortgage guarantee scheme (HTB2).

Less than 5 per cent of HTB2 mortgages are at more than 4.5 time income so Osborne seems to have gone further than he need have done to satisfy his pledge to apply any proposals made by the Bank to Help to Buy. Was this more of a nod to Help to Buy critics than we might have expected? Or does it beg the question of why this was not the case from the beginning? Until the late 1980s the norm was mortgages at three times a single income or 2.5 times a joint income.  

The immediate reaction on the stock market was a sharp rise in the share price of leading housebuilders so clearly there was relief that the Bank had not taken more robust action.

Shortly after the announcements, Eric Pickles was downplaying concern about house prices at the CIH housing conference in Manchester. ‘I think we’re as far away from a bubble as you could possibly imagine. I think the bubble is in people’s imagination,’ he said. ‘I think that’s one of the reasons why the chancellor gave those powers to the Bank of England.’

Which brings me back to my original point about passing the buck. The Bank’s brief is to remove or reduce systemic risks to the financial system. Mortgages are the biggest asset class for lenders and the biggest element in household debt for borrowers so the risks are clear.

However, house prices are only part of that and arguably only a bubble that popped and led to a recession would be a systemic risk. The Bank seems relaxed about a 20 per cent rise in prices on current levels.

In any case, macro-prudential action on mortgage lending alone would not necessarily control house prices at a time when an increasing proportion of home sales are to cash buyers, overseas buyers and buy to let landlords, none of whom the Bank can influence directly.

According to the Intermediary Mortgage Lenders Association (IMLA) 36 per cent of homes sold in the first quarter of this year were bought entirely with cash, up from 24 per cent in 2007. Total housing demand financed by cash reached an all-time high of 61 per cent.

Meanwhile, 14 per cent of Britain’s outstanding mortgages are buy to let, which is not covered by the FPC’s measures – and in and case 44 per cent of landlord purchases are made without a mortgage.

In summary then, more draconian action by the Bank of England would have little or no effect on perhaps half of house sales but tilt the balance still further in favour of landlords and cash buyers and against first-time buyers.

As for the unaffordability of current house prices – something demonstrated graphically in analysis by Shelter yesterday – that is not the concern of the Bank of England unless it threatens financial stability. This despite the fact that Carney himself could only afford to work in this country because he was given a £250,000 a year housing allowance on top of his basic salary.

Sir John Gieve, the former deputy governor for financial stability at the Bank of England, gave his reaction to today’s announcements on the World at One at lunchtime. His key point was about the need to address the supply and taxation of housing. ‘We’ve under-taxed property and in particular we’ve under-taxed very high value property owned abroad,’ he said.

All of which means that there is only one man who can do something about the housing and affordability crisis: George Osborne. Passing the buck to the Bank of England won’t wash. The buck stops at 11 Downing Street.

Just as I was about to post this blog, I spotted this by Paul Smee, director-general of the Council of Mortgage Lenders, that sums things up perfectly:

This is about financial stability, not housing policy. These are Bank actions to safeguard financial stability and promote economic stability. They are not - and should not be seen as - a proxy for Government housing policy. These are not the tools for other policymakers, tasked with crafting a comprehensive, well-honed housing market strategy.’

Paying the bill

Wed, 25 Jun 2014

Blink and you may have missed it but significant housing legislation you may never have heard of passed its final stages in the Commons on Monday night.

Scant discussion in the housing press (including by me) of the Deregulation Bill is perhaps understandable when you consider that it is huge and it covers everything from the right to buy to outer space*. Several of the clauses involving housing were also not in the original Bill and have been added later.

However, here’s what will become law in England this summer as a result of Monday’s votes (there are other minor changes I don’t have room for):

  • The qualifying period for the right to buy will be reduced from five years to three
  • Local authorities will no longer be able to impose standards for new homes that go beyond the building regulations (mainly on energy efficiency)
  • Legislation banning short-term lets of homes in London will be repealed
  • The secretary of state will no longer have the power to require local authorities to produce housing strategies

The last of these may sound more important than it actually is because as I understand it the power has never actually been used but the other three could have major implications and there were last-minute attempts to amend all of them on Monday night.

The right to buy is obviously the big one for social landlords and tenants and the only one that has attracted the most attention. Effectively it restores the qualifying period to what it was before Labour extended it in 2004. Independent analysis for the Bill committee by the University of York found that it could mean extra 700,000 tenants are eligible for the right to buy. However, it found that a maximum of 56,000 of these are in work and earning enough to be able to buy.

Apart from the straightforward implications of those extra numbers – at a time when the right to buy is being abolished in Scotland, remember – the National Housing Federation raised concerns about the impact of the ‘preserved’ right to buy following stock transfer. Receipts are shared with the local authority but it has no obligation to spend them on new homes. It also wanted a reduction in the discount if the sales receipt does not cover debt secured against the property.

The government does seem to have moved on future transfers. The DCLG has published a stock transfer manual and solicitor-general Oliver Heald said on Monday that ‘the intention is that for transfers completing after 30 September 2014, net proceeds from preserved right-to-buy sales are, within three years, to be used to fund new affordable housing at no greater subsidy cost than under the main affordable homes programme’.

However, Green MP Caroline Lucas failed in an attempt to tighten up the rules on replacement homes. Her amendment would have forced ministers to publish a plan to replace homes sold under the right to buy and review the effectiveness of it within a year of the Bill getting Royal Assent. She argued that:

‘Currently, only one in every seven homes sold through right to buy has been replaced, and I find it astonishing that the Government are so complacent that they are not even monitoring the number of homes replaced following the preserved right to buy. Housing associations say that, in fact, the number is likely to be even less than one in seven. It is inexcusable that Ministers have not even consulted housing associations.’

The second produced an unexpected last-minute concession from the government. The Deregulation Bill prevents local authorities from going beyond the building regulations when they set local energy efficiency requirements as part of its more general review of housing standards. As I’ve blogged before, a good case can be made that the government is simply replacing what it sees as ‘red tape’ with blue and yellow tape but this is what it sees as ‘deregulation’.

However, the Bill risked leaving energy efficiency policy in limbo in the run-up to zero carbon homes and in the wake of the abolition of the Code for Sustainable Homes. It would also prevent local authorities that have not already adopted higher energy standards (as in London, for example) from implementing them.

Labour’s Jonathan Reynolds attempted to fix that on Monday with an amendment stipulating that the deregulation ‘shall not come into force until the secretary of state has laid a Zero Carbon Housing Strategy before both Houses of Parliament’. He argued:

‘If the Government are sincere in backing zero-carbon homes, they have nothing to fear from my amendment—it would make no difference to a Government committed to delivering an ambitious zero-carbon homes policy in 2016.’

The amendment was voted down but after the third reading there was an unexpected intervention by Oliver Letwin, the minister for government policy:

‘We are aware that within that framework, the decision on the commencement date for amendments to the Planning and Energy Act 2008, which restrict the ability of local authorities to impose their own special requirements, must be made in such a way that the ending of those abilities to set special requirements knits properly with the start of the operation of standards for zero-carbon homes and allowable solutions. I hope that will make the hon. Gentleman—and, indeed, my hon. Friends who are concerned about the same question of timing—rest easy. ‘

That appears to allow local authorities to continue with their energy efficiency work in the meantime. However, as I’ve blogged before, it remains to be seen how ‘zero carbon’ new homes will really be after 2016 given the influence of developers on the dilution of the standard and an exemption for ‘small’ sites that could amount to a loophole covering a third or more of new homes.

The section of the Bill on short-term lets in London was presented as a classic piece of deregulation by communities secretary Eric Pickles when he announced the change two weeks ago. It would end ‘outdated rules’ from the 1970s preventing London residents from renting out their own homes on a short-term basis without getting planning permission for a change of use. These ‘archaic’ rules caused controversy during the Olympics and are ‘irregularly’ enforced, he said.

However, the measure faced criticism on Monday night from both Labour and Conservative MPs representing Central London constituencies. The worry is that it could lead to a rash of homes being converted into holiday lets.  Conservative Mark Field complained that it was being rushed through before consultation was finished. Labour’s Karen Buck said that Kensington and Chelsea, Camden and Islington had all expressed strong reservations ‘precisely because of the fear that they will lead to a loss of residential stock in what are already highly stressed neighbourhoods’.

Oliver Heald said the government was working with London boroughs to try to achieve the right balance between freedom for Londoners and protecting housing supply: ‘We would not want that to be undermined. We are trying to ensure that speculators are not able to buy homes meant for Londoners and rent them permanently as short-term lets.’

However, Mark Field came back later to point out that the rules were introduced in 1973 at a time of acute housing shortage to protect the housing stock from being converted into visitor accommodation. He said the change would have significant implications for London’s stock of permanent accommodation and ‘may make it impossible for our local authorities to meet their targets for new homes’:

‘Above all, it threatens to make central London homes, already traded by many people as some sort of global currency, into little more than assets to be exploited for maximum profit.’

And Karen Buck argued that it would make it much more difficult for local authorities to enforce if they had to prove a property was in ‘habitual short-term use’. She said:

‘No one wants enforcement action to be taken against someone who lets their home for a few days or a couple of weeks, or who does a home swap, but there will be unintended consequences in a high-value, high-turnover and high- pressured area such as central London.’

I wonder if this little-noticed change in a little-noticed bill may turn out to be the most significant in the longer term because of the impact of new technology. Websites like offering short-term lets in major cities are booming around the world and allowing residents to turn their spare rooms into cash by renting them out to tourists by the night. It looks like a brilliant and irresistable use of the internet to bring people together. However, it’s not just rooms that are being let but complete homes.

A quick search of the best known site, Airbnb, reveals thousands of short-term lets available in London for a week from next Saturday. Most of these will of course contravene the existing law, though the lets seem to be happening anyway.

However, as I type this there are currently also 732 complete flats or houses in London available to rent next week. Some could be owners or tenants going on holiday themselves but how many are empty, available to rent to tourists but not to Londoners? And how many more will there be when the law is changed? How many other websites will there be? How many homes will be sub-divided into the smallest rooms possible for short-term lets? Who will pay the bill for deregulation?

* At first I thought the second bit was a joke made by a minister because the Bill has so many different elements but it turns out that it really does cover outer space too in a bit about satellites and liability insurance.

 

'We are not a charity'

Tue, 24 Jun 2014

An eloquent argument for social housing came from an unexpected source on Panorama last night.

The programme covered what it called a new housing crisis: homelessness and the private rented sector. The hook for Britain’s Homeless Families was the fact that the number of people being made homeless by private landlords has trebled in the last five years but it also looked at families stuck in temporary accommodation and facing eviction because of the benefit cap.

It began with the case of Vicky, who was forced to leave her home in Kent because she was on housing benefit despite the fact that she had never been in rent arrears and never had a complaint about her. ‘I’m a bit shocked actually,’ she said. ‘If you treated the property well and you paid your rent I couldn’t see what the problem would be.’

When I tell you that she was one of 200 tenants on housing benefit evicted by the same landlord in Kent you will probably guess that the landlord in question is Fergus Wilson. The man dubbed the king of buy to let justified the decision in the blunt language we’ve come to expect. ‘We are in business to make money, we are not a charity.’

His point was that rents are rising faster than housing benefit and that makes claimants too risky (though he’s been quite happy to allow housing benefit to finance his empire up to now). ‘If we went to the other extreme of having 100 per cent people on benefits we would go pop because of the default rates.’

Presenter Richard Bilton asked him: ‘Do you think you have a moral responsibility to these people or is it only profit that matters?’ Wilson replied: ‘Well we’ve had a moral responsibility for a number of years but it’s just reached such a point that we cannot continue.’

A brief interview followed with housing minister Kris Hopkins:

Bilton: ‘Is it acceptable do you think to evict people because they are on benefits?’  

Hopkins: ‘Um, well, in principle, if they’ve done something wrong…’

Bilton: ‘No, their tenancy ends, they’re on benefits, you’re a landlord and you don’t want benefits in your property.’

Hopkins: ‘Well, first of all an individual private business will make commercial decisions and if they actually decide they don’t want somebody on housing benefit in future that’s a perfectly legitimate thing for them to do.’

We then cut back to the case of Vicky and her daughter in Kent. ‘You move into a place and if you’re not expecting to have to move on every few months you start to put down roots and you start to think about the school that your child will go to,’ she said. ‘It just feels so unfair that in this day and age the rug can be pulled out from your feet like this in terms of where you live.’

If you missed Panorama last night, you can watch again here. The programme covered several other cases involving people in different circumstances. I’ve concentrated on the first one because I think it illustrates the problem most clearly: a tenant is evicted because she is on housing benefit; the landlord justifies the decision on the grounds that rents rising faster than benefit rates will inevitably mean arrears that threaten his business; the minister washes his hands of any responsibility by saying it’s a commercial decision.

The thing that stuck me is that all three of them are strictly speaking correct. Vicky is losing her home through no fault of her own. Wilson knows that local housing allowance rates have been cut and are set for years of below-inflation increases. Hopkins is right that there’s nothing to stop landlords doing what they want at the end of a tenancy.

But if you put the three statements together you wonder who is responsible if it’s not the tenant, the landlord or the government. The short-term answer, shown later in the programme, is the local authority and the taxpayer as we pick up the bill for homelessness and temporary accommodation.

Last week’s homelessness statistics showed that 58,250 households are in temporary accommodation (up 16 per cent since the election) including 81,000 children. Of those, 4,480 are in bed and breakfast (up 86 per cent) including 480 families with children who have been there more than the statutory six weeks (up 200 per cent). And 12,430 of the households in temporary accommodation have been sent to another local authority district (up 36 per cent in the last year and 120 per cent since the election).

Getting back to Panorama, the number of households accepted as homeless as the result of the end of an assured shorthold tenancy has trebled from 4,580 in 2009/10 to 13,650 in 2013/14 and has risen by another 14 per cent in the last year. Although the total number is lower than between 1998 and 2004, that takes no account of the way that homelessness prevention work has halved the number of acceptances. Loss of an assured shorthold now accounts for 27 per cent of homeless acceptances compared to 13 per cent ten years ago.

So the longer-term answer is that successive governments are responsible. First, we stop investing in social housing and sell existing stock under the right to buy. Second, we outsource housing provision to private landlords and create the conditions for the sector to expand. Third, we assure landlords and tenants that housing benefit will ‘take the strain’ of higher rents. Fourth, we fail to build enough homes so that house prices and rents rise. Fifth, we decide that housing benefit is too expensive and it will no longer cover the full rent. Sixth, we discover that the solution to homelessness is actually the main cause of homelessness: an assured shorthold tenancy. And on the seventh day we sit back and admire the revolving door we have created.

The world is of course not as simple as Fergus Wilson suggests (or I do in my neat summary). Many landlords regard his media appearances as an embarrassment and many people are working hard to make the system we have work as best it can (Havering’s long-term leasing featured in the programme, for example).

However, when Wilson says that ‘we are in business to make money, we are not a charity’ he not only speaks the truth about private landlords, harsh though it may be, he also spells out why an alternative is so desperately needed. One that’s not in it to make profits and might even be a charity. 

Something to shout about

Wed, 18 Jun 2014

Here’s hoping today’s launch of the SHOUT manifesto can be the start of a new era for social housing.

Anyone who’s read this blog will know that I support the campaign but the launch got me thinking in a deeper way about exactly what we mean by ‘social housing’ and why it is ‘under threat’.

The starting point is of course the way that the coalition has deliberately blurred the distinction between social and affordable rent. Only last week George Osborne’s Mansion House speech and Kris Hopkins’s press release on the latest affordable housing figures provided two classic examples. The latter even managed to mix up the stats on social, affordable and all homes.

On twitter I called it a ‘triple blur’ but Tom Murtha, one of the people behind SHOUT, came up with the much better metaphor of the ‘three-card trick’. I love the way that conjures up images of Osborne and Hopkins as shady operators inviting credulous punters to ‘find the lady’ while keeping a wary eye out for the police. For a more serious analysis of why the distinctions matter, not just in the construction of new homes but in the conversion of existing social rent homes to affordable, see this blog on Red Brick.

However, the blurring did not start with Osborne and Hopkins. In terms of the letter of the law, it could even be argued that they are correct when they mix up ‘social’ and ‘affordable’. The Localism Act follows Part 2 of the Housing and Regeneration Act 2008 in defining social housing as both ‘low cost rental accommodation’ and ‘low cost home ownership accommodation’ that are ‘made available to people whose needs are not adequately served by the commercial housing market’. Low cost rental means at a rent below the market rate. Low cost home ownership means shared ownership or equity percentage arrangements. Strictly speaking then, ‘social housing’ includes not just affordable rent and shared ownership but even the shared equity element of Help to Buy.

Except of course that virtually everyone in housing believes there is a clear distinction between social rent and affordable rent let alone shared ownership and shared equity. Social rents are affordable in relation to incomes whereas affordable rents are merely rents at below market levels and may therefore be completely unaffordable. Social housing tenancies offer the security that turns a house into a home rather than a short-term let. 

However, there are and always have been more grey areas. On rents, for example, the earliest council housing was generally only affordable to more affluent workers. The target rent regime is far from perfect: the current formula means that rents are rising faster than earnings and have been for years. There is also huge variation around the country: ‘affordable’ rents are not always ‘unaffordable’ and in some areas private rents are actually lower than social rents.

The crucial point for me is that social rents are set by a formula that includes earnings where affordable rents are merely a reflection of ever more unaffordable house prices and rents in the private sector. In whole swathes of the country, and especially in the South East, they will only be ‘affordable’ to working tenants if they can claim housing benefit.

Does that matter if housing benefit is ‘taking the strain’? For all kinds of reasons, yes it does: work incentives will be blunted; the housing benefit bill will rise at a time when it is already under pressure; inevitable cuts will leave tenants with increasing shortfalls; and the evidence seems pretty clear that it offers worse value for money over the long term.

On tenure, social landlords were using introductory and probationary tenancies for years before the Localism Act allowed them to use flexible tenancies. And security of tenure has only existed since 1981 and was enacted not by a Labour government but by Margaret Thatcher (though it was a bi-partisan policy to implement what was already seen as de facto security because council landlords were publicly accountable bodies).

However, starved of investment and denuded by the right to buy, social housing is very different now than it was then. Alongside a major programme of investment and the removal of restrictions on council borrowing, plus an end to affordable rent, SHOUT also argues that:

  • Social rented housing should be viewed as a tenure of equal status to others. It meets needs that other tenures cannot and is a tenure of choice for millions of people. This choice should be acknowledged and supported.
  • National and local politicians should be encouraged to take the lead in affirming the positive value and purpose of social rented housing, and challenging the demonisation and stigmatisation of social housing and social housing residents.

Kate Davies addressed some of these points in a recent Guardian Housing piece that condemned the stereotypes but was also dubious about ‘social housing professionals queuing up to express their love of social housing’.

‘I find the demonisation of social tenants obnoxious,’ she said, ‘but I also shudder at this crude promotion of council housing as an idealised workers’ paradise. Let’s be absolutely honest about the facts.’ Her point I think was that we should present social housing as it is rather than reach back nostalgically to the past: celebrate the achievements of aspirational tenants who want to move on while accepting that ‘it provides a safe haven for vulnerable people, and this is the real value of social housing today’.

I found myself agreeing with some of what she said, challenged by some of it but still troubled by the implications of accepting that social housing should be limited to what circumstances have made it. Go right back to the Localis report that influenced the coalition’s housing reforms and you’ll find it advocating social housing only for the most vulnerable and near-market rents for everyone else; go to where the reforms went furthest, in Hammersmith & Fulham, and you’ll find new criteria for the waiting list that are so restricted that it fell to just 700 and Conservative councillors saying that this proves there is no demand for social housing.

Take a look, for example, at the prospectus for the Estate Regeneration Programme published by the DCLG last week. The aim is to redevelop existing estates at a greater density to provide more homes. It sounds a good idea in principle as does replacing tower blocks with terraced streets. The prospectus does also distinguish between ‘social’ and ‘affordable’ housing. However, there are no stipulations as to the split between them and between homes for rent and for sale. As one of the specific objectives is to maximse the output of homes for the minimum amount of public loans available, it’s not hard to see the danger of Hammersmith & Fulham-style regeneration of existing estates with little or no social housing.  

It seems naïve to imagine that the clock can be turned back to before the Localism Act and still less to 1979 or 1945. With investment in short supply, it may well be that higher rents and flexible tenancies will be an important part of the housing and regeneration mix. However, they will continue to be regarded with suspicion unless government and landlords make a clear commitment to the future of social renting rather than collude in its slow death. With that commitment to genuine affordability in place, intermediate (definitely not ‘affordable’) rents could come to be seen as an important option for tenants who can afford them just like low-cost ownership is for those who can buy. The new ideas put forward by Generation Rent yesterday could come into play too.

With that, plus the all-party support seen at today’s SHOUT launch, could the way then be clear to reclaim the broader meaning of ‘social housing’? As a range of options to rent and buy a home for the millions of people who the market has failed rather than an A&E department for the poorest and most vulnerable? That really would be something to shout about. 

Fresh perspective on renting

Tue, 17 Jun 2014

A new manifesto for private renters published today highlights the new thinking on housing emerging ahead of the general election.

This is the first of two manifestos being launched this week by new organisations with different priorities and constituencies to the existing ones. We’ll hear from SHOUT, the campaign for social housing, tomorrow but today it’s the turn of Generation Rent.

And it’s about time. Since the creation of the assured shorthold tenancy and the invention of buy to let, the private rented sector has more than doubled in size. That’s great news for landlords and letting agents but not so great for tenants with minimal security of tenure and consumer rights.

To illustrate my point, here are three recent bits of news. First, take a look at the limp DCLG guide to ‘How to Rent’. Second see the incredible story on Nearly Legal of the ‘the unacceptable face of London landlords’ who turns out to be the Conservative mayor of Barnet. 

Third, have a read of last night’s debate in the Commons on the Consumer Rights Bill, which saw the defeat of a Labour attempt to ban letting agent fees to tenants. Business minister Jenny Willott ignored evidence that just such a ban has worked in Scotland without increasing rents and pressed ahead with the coalition’s plans to ensure that fees are transparent.

That gave Labour’s Stella Creasey the chance to repeat one of the most memorable Commons lines about housing during this parliament. Transparency on fees is, she said, ‘a bit like telling someone who is tied to the train tracks what the timetable is for the trains. However, as Willott pointed out, Labour had 13 years in government but failed to act.

The major political parties have at last woken up to the need for action and to the fact that private renters have votes at the next election. Even the coalition has made cautious moves on transparency and redress, while Labour has proposed not just the fees ban but minimum three-year tenancies with limits on rent increases.

Generation Rent goes further in today’s manifesto that it says will make the private rented sector fit for the 21st century. Proposals include:

  • The right to a five-year tenancy, with flexibility for the tenant
  • A national register of landlords and licensing of letting agents
  • Requiring landlords to prove their properties meet decency standards
  • Rent increases linked to average earnings 
  • A right to buy for private tenants (based on the right of first refusal still available to long leaseholders and regulated tenants when their landlord decides to sell).

The manifesto also includes reforms that could be introduced while the legislation is being implemented or if the government insists on maintaining a voluntary approach. These include tax reform to incentivise landlords to offer longer tenancies and a change for longstanding tenancies to get extra notice at the end of a tenancy on top of the existing two months.

Without going into the proposals in detail, reaction from landlords will no doubt be hostile, although the intention is to promote a professionalised sector based on longer tenancies. However, as with the Labour plan for three-year tenancies, there could be obvious loopholes for landlords to exploit, such as a discretionary ground for possession where the landlord or a member of their family wished to occupy their property.

However, Generation Rent’s manifesto is not just about the current plight of renters, it also looks to the future of the housing system and what it calls ‘a permanently affordable private rented sector’.

This amounts to a scaled-up version of the community land trust model with government backing. ‘A secondary market of new private rented homes, built by government and sold to buyers at close to cost price, is one way to produce affordable homes for renters,’ argues the manifesto. The initial affordability would come from requisitioning public land. Buyers would be able to live in the homes themselves or rent them out, but only at a greatly reduced rent to reflect the cheap purchase price.

More detail is set out in a separate paper on Buying out of the bubble: A bubble-free housing market. This proposes £1 billion of state funding (plus private funding) for a first wave of 10,000 homes, with sales receipts funding future waves and prices capped at 110 per cent of the build cost. All homes would be sold leasehold with price inflation capped.  Subsequent sales could only be at the regulated value and rental incomes would be capped at a fair proportion of the regulated value. Housing associations and councils could buy the homes for social tenancies, with the right to buy limited to the secondary market.

The manifesto offers three mechanisms for achieving reform:

  • A new Landlord and Tenant Act introducing wholesale rather than piecemeal reform
  • A new Department of Housing, with a dedicated secretary of state for housing, bringing together oversight of the private rented sector and social housing, but also taking over housing benefit from the DWP and combining the skills, planning and housebuilding functions spread between different departments.]
  • A review of how the legal system treats housing cases including consideration of a new housing court of tribunal. 

How much of this actually makes it into the policy of the next government does of course remain to be seen. However, the contrast between the debate that Generation Rent is opening up and the one in the House of Commons last night could hardly be starker.

And this is just the start of what will be a big week for housing policy, with SHOUT tomorrow and the IPPR’S Condition of Britain report with new proposals on the welfare state on Thursday. 

Dead air

Thu, 12 Jun 2014

There was a telling moment at the end of last night’s Radio 4 debate on housing: the sound of complete silence from the audience.

The dead air came in response to a question from presenter Mark Easton asking people at the debate at the London School of Economics (LSE) how many of them think our political leaders are doing their best to solve the housing crisis.

But I am not sure if what sounded like mostly a young audience was tremendously impressed by the answers from the panel either and that may have been down to the way the question was framed in Housing: Where Will We All Live?

The premise was: It’s been identified as the single biggest threat to the British economy: we are simply not building enough homes.’ The debate about ‘why the problem has developed and how best to fix it’ featured deputy London mayor Richard Blakeway, John Stewart of the Home Builders Federation, Rachel Fisher of the National Housing Federation, Paul Cheshire of the LSE and designer Wayne Hemingway.

But the programme began with two members of the audience describing their housing problems. Holly Baxter had moved from a place condemned as uninhabitable to a friend’s airing cupboard to renting a shared house with four other people, all while working full-time. ‘I can’t imagine that ever ending,’ she said. ‘I can’t even imagine renting a two-bed flat.’

Laura McGuiness is a management consultant with a partner also working in the City who have been saving for a deposit for five years. She described being continually outbid by buy to let investors and overseas cash buyers. ‘The homes we bid on all went for £70,000 over the asking price,’ she said. ‘Prices are going up at £10,000 a month.’

The panel were then asked to name their solutions:

  • Employer support for rental deposits and more shared ownership (Richard Blakeway)
  • Reform planning so housebuilders can deliver 75 per cent of the homes we need (John Stewart)
  • Link economic development, job creation and housebuilding with a national plan and think about shared ownership and other models rather than treat ownership as the only model (Rachel Fisher)
  • Tackle the ‘manufactured problem’ that the planning system forces us to live on 10 per cent of the land area of England and inflates the prices of homes and land (Paul Cheshire)
  • Tackle the way we provide houses and the politics that means ‘all we’re doing is making the 65 per cent [who own] richer and the 35 per cent poorer’ (Wayne Hemingway).

Some of these answers have more going for them than others. All of them addressed the question posed in the debate. However, none of them came close to tackling the issues raised by the two people from the audience.

Even before the programme (recorded on Monday) was broadcast last night, Holly Baxter had expressed her bitter disappointment with the answers on The Guardian’s website:

‘The fact that such a distinguished panel were hopelessly out of touch with the reality of housing left me deflated. I was expecting to hear practical solutions to the housing crisis, and a drive to burst the bubble. Instead, excessive pandering to landlords and an insistence that my experience was anomalous seemed to dominate. But the fact remains that my experience is the norm for people my age.

‘The only person who did speak passionately and sensibly about the issue was the designer Wayne Hemingway. He mentioned the psychological benefits of being able to decorate your home, of being able to choose your own furnishings, of choosing the other people you live with. It was the only acknowledgement I heard all night that the statistics about my generation had human faces behind them.’

The problem lay, I think, less with the panel than the premise of the programme: the assumption that increasing housing supply is the only solution to the crisis. The crisis certainly won’t be solved without increasing supply - and that requires urgent action now - but it will only have an effect over the long term. It will take at least until the end of the decade to get to 250,000 additional homes per year and it could take at least another decade of building at that rate to have an impact on prices.

Even if we can achieve that – a big if given the politics involved - remember that this was only the level that the Barker report said would bring house price increases down to the European average, not actually reduce them and that after 10 years of under-provision we need even more homes now.

The panel had some good ideas, especially from Rachel Fisher and Wayne Hemingway, and a real challenge to the current consensus from Paul Cheshire, but they had little to offer people already experiencing the worst of the housing crisis right now.

And given the narrow framing of the question there was little sense that there might just be other causes of the crisis – the affordability question, the distribution of the homes we already have, housing as an investment market, for example – that require other solutions. The failure of our political class on housing is much more profound than the question made out. No wonder it was met with silence. 

Gardeners’ question time

Tue, 10 Jun 2014

Just about everyone agrees that we need to build new garden cities – but that’s the easy bit. What comes next?

I’ve just been looking at the five entries shortlisted last week for the Wolfson Economics Prize. There were 274 other entries, which may be a product of the £250,000 on offer to the winner but also reflects an idea whose time has come (again). There now seems to be a remarkable acceptance right across the political spectrum that garden cities are an important part of the solution to the housing crisis (even though the prize itself is put up by a Conservative peer and administered by Policy Exchange).

eh

But what is a garden city? Should we build new Letchworths or Welwyns in a 21st century fulfilment of Ebenezer Howard’s vision pictured above? Is it a vaguer commitment to sustainable development? Or it is more of a marketing term and a signal of what it is not for Conservatives (a new town or, even worse, an eco-town)?

For the moment at least the third meaning seems prominent. An opinion poll commissioned by the Wolfson Economics Prize found that a remarkable 74 per cent of people think garden cities are a good idea. Even more remarkably 79 per cent of over-65s and 80 per cent of Conservative voters agreed. Lord Wolfson himself has urged his party to ignore opposition to new homes from ‘a very vocal majority’. Chris Walker of Policy Exchange argues that garden cities could be a ‘game changer’ in winning local support. On the Today programme this morning though Nick Clegg lamented the time it had taken him to get Tory support.

Looking through the entries, I was struck by the quality and breadth of ideas on offer (an entry from authors including planning gurus Peter Hall and David Lock and the former chief planner of innovative Freiburg did not even make the shortlist). However, while there was agreement on some issues there was complete disagreement on others. Here are some themes I spotted:

Garden cities can mean very different things. As Barton Willmore points out in its entry, Ebenezer Howard’s original utopian vision was attacked by Jane Jacobs as ‘towns planned by the few for the imagined lifestyles of the many’. It argues that:

‘Looking to the existing Garden Cities, the likes of the TCPA continue to promote large-scale, comprehensive masterplanning. But the places we love and cherish as part of our heritage almost all developed organically, built by a host of players over generations with a masterplan rarely in sight.’

And do they need to be standalone communities at all? Urbed’s entry calls for the creation of a ‘garden city’ of almost 400,000 people by doubling the size of an existing city. It argues:

‘Through this debate we have come to the fundamental conclusion that it is probably impossible to create a Garden City of any scale from scratch in the current economic climate.’

It’s all about the land. Almost all of the entries rely on land value capture and long-term investment and some form of development corporation model. As the entry from Wei Yang & Partners puts it:

‘What distinguishes a garden city from other forms of development is its approach to land value capture for the benefit of the community, community ownership of land and long term stewardship of assets.’

The uplift in the land value from development can therefore be used to fund the infrastructure rather than to line the pockets of landowners. But how much should existing landowners get? Many of the entries talk of ‘patient investors’, landowners willing to forgo a short-term cash receipt for a long-term equity share in the new community. Where the land is bought, all seem to agree on existing use vale plus a premium, but this ranges from ‘slightly enhanced values’ to 20 per cent to 20 times the agricultural value in the different entries.

Urbed’s entry argues that existing use value plus compensation is ‘not seen as politically acceptable’ to the coalition and proposes instead a model based on the great estates that developed London in the 18th and 19th century. ‘The key to their success was the retention of the freehold and the incremental development of the estate to benefit from the increase in value over time rather than taking a capital sum at the outset.’

And the planning. New communities also have to make it through planning and that is much easier said than done. Derwenthorpe took ten years and permission for Owenstown, the co-operative new town proposed in Scotland, was refused in April. The eco towns programme stalled in a series of local rows and David Lock fears garden cities could go the same way unless we use the New Towns Act.

Learning from history. The lessons offered by the new towns seemed to be forgotten under the Thatcher, Major and Blair governments. In times of austerity, realisation has dawned again that Letchworth received no public subsidy and that the new towns repaid their initial public loans many times over.

However, is some of our politics still lagging behind? In its entry, Wei Yang & Partners surveys the history of garden cities, new towns, new settlements and eco towns and concludes:

‘The logical response would be to propose a national plan, the reinstatement of regional bodies charged with plan-making and the return of the new town development corporations to ensure delivery. We believe that this is politically unacceptable: the localism agenda, now embraced by all political parties, has raised expectations on the part of local communities for engagement and a return to central control would be politically unacceptable. Any new initiative must engender the support, or tacit acceptance, of local communities.’

Garden cities are a very long-term solution to the housing crisis. New home completions in Milton Keynes averaged 5,000 a year from 1967 and 1991, then fell to about half that number. Urbed envisages a build rate of 2,800 homes a year for its imaginary city of Uxcester but it also points out that we need to build the equivalent of a Milton Keynes every year in England.

Don’t reply on big housebuilders. Support from small builders and self-builders is a key element of many of the entries. Urbed calls for balanced incremental development with opportunities for them, pointing out that 60 per cent of new homes in France and Italy are built like this and highlighting the way that custom build was pioneered at Almere in Holland. Shelter argues for ‘a town that built itself’ with self-builders making up a significant proportion of the early movers.

Who will live in the new communities? Kathleen Kelly of the Joseph Rowntree Foundation makes the crucial points that the homes need to be both affordable and available to people of all ages.

One entry that did not make the shortlist (by Martin Hewes) argues that older/retired people should form the core pioneer population for the new garden city. Could it therefore also be a mechanism for encouraging under-occupying empty nesters to downsize and free up larger homes in existing communities.

In a report last week, the Town and Country Planning Association argued that 30 per cent of homes should be for social rent and another 30 per cent for shared equity and discounted ownership.

Most of the entries talk about tenure diversity but from what I can see Shelter’s is the only shortlisted entry that breaks it down. Its garden city would have 30 per cent social rent and 7.5 per cent shared ownership as well as market homes sold at a discount.

Follow the train lines. Investment in HS2, Crossrail and East-West Rail (between Oxford and Cambridge) all create opportunities for new communities with good transport links that don’t rely on cars. Wei Yang & Partners identifies an arc from Southampton to Felixstowe and argues that the single location with the greatest potential is at the intersection of HS2 and East-West Rail around Bicester. The idea of a building a new town around an HS2 station midway between London and Birmingham seems so obvious that I once tweeted it myself. I was told that the big problem is that trains need around 100 miles between stations to be high speed rather than spend all their time accelerating and breaking.

Will public support evaporate when a specific location is suggested? Shelter’s entry is the only one to name a specific location: the Hoo Peninsula in north Kent. The location has much going for it, not least the lack of neighbours on three sides and the fact that 90 per cent of the land has a single owner (the Church of England). However, it also means that Shelter has to grapple with issues like flooding and transport in a much more detailed way than the other entries. And that’s before you get to the nightingales issue.

The 74 per cent public approval in the Wolfson poll seems remarkable, even though nimbyism is slowly losing its grip over public opinion. But how much of that 74 per is made up of people who think garden cities mean new homes will be built somewhere other than in their back yard?

Rough justice

Mon, 9 Jun 2014

Why did that picture of anti-homeless spikes get such prominence on Twitter and in the media over the weekend?

Here is the tweet from Anglican priest Sally Hitchiner that sparked an angry wave of Twitter reaction and follow-up stories in the national press.

Sally

 

What she called studs, but look to many other people like spikes, do indeed send a very negative message. Many people have noted the resemblance to anti-pigeon measures on London buildings. And Katharine Sacks-Jones of Crisis points out that there are just one part of a rough tale for rough sleepers. ‘We will never end homelessness with studs in the pavement - only by tackling the root causes,’ she says.

Yet for all those powerful arguments, anti-homeless urban design is sadly not new or unusual. There have been previous furores in Britain, notably involving Tesco, and there are much worse examples in other cities around the world.

Take a quick look at these anti-homeless barriers beneath an overpass in Chicago or these benches and sculptures in parks and shopping malls in Tokyo (the penguins and dolphins are not as innocent as they seem) and you’ll see what I mean.

Above all, take a few minutes to watch this amazing short video about anti-homeless design in Paris to see the lengths to which companies and the authorities will go to stop anyone sleeping on their benches or window sills or doorways:





The title of the film, The Fakir’s Rest, is a reference to exactly the same sort of spikes that feature at 118 Southwark Bridge Road.

So there must be more going on here than just the appearance of the spikes, the ubiquity of social media and Twitter’s tendency to magnify outrage.

Perhaps it’s because the very word reaches back to a deeper history of homelessness, when spikes were not sharp metal objects concreted into a doorway but the nickname for the vast dormitories for homeless men provided by local authorities. ‘The Spike’ was the title of George Orwell’s first published work in the 1930s and later became a key part of Down and Out in Paris and London. Spikes became the huge DHSS resettlement units that did not close down until more than 50 years later.

However, those spikes in a residential doorway have slightly different connotations in the contemporary world of homelessness in London and of No Second Night Out. The issues are highlighted in the nuanced reaction from Howard Sinclair of St Mungos Broadway to the furore:

‘Each year our teams, in Southwark and elsewhere, help thousands of people off the streets. Part of their role is to prevent people adopting a street lifestyle which, on occasions, means adapting the physical environment to prevent people sleeping rough in a particular location on a regular basis. These “studs” appear a rather brutal way of doing just that. However to undertake such measures without providing the necessary assistance to people who sleep rough is wrong - the aim is to help people move in, not just move on.’

The complex issues are also eloquently explained in this blog by a former outreach worker.

Yet for all that, the anti-homeless spikes still seem to be a symbol of something more, which I think is why they took off on Twitter and in the media.

Could it be that their presence in a residential doorway plays into wider narratives about the housing crisis in London and the proliferation of luxury flats? Or that they tap into our long history of vagrancy and the law and the Vagrancy Act?

Or could it be what the spikes say about our values as a society: the suspicion that what we care about is not so much homelessness itself as the public appearance of homelessness? 

Zero sums

Wed, 4 Jun 2014

Ministers once promised that Britain would lead the world on zero carbon homes. Do we now just lead the world in hot air?

The 2016 target for all new homes to be zero carbon seemed genuinely revolutionary when Gordon Brown and housing minister Yvette Cooper first announced it in 2006. Questions about practicalities and costs were brushed aside as they argued that the target would spark the mass adoption of new technologies, drive down costs and even open up vast new export markets for British firms. As Cooper put it at the time:

‘In 10 years, all new homes should be built at a zero carbon rating. No other country has set that sort of timetable or ambition but I believe that we need to do it to drive the environmental technologies of the future and ensure that we are building the homes of the future.’

Eight years, and six housing ministers, later and today’s Queen’s Speech promises that ‘legislation will allow for the creation of an allowable solutions scheme to enable all new homes to be built to a zero carbon standard’.  So far, so good. The Liberal Democrats even reached back to the days of Brown and Cooper with their claim on Monday of ‘Britain to lead world on zero carbon homes’.

In truth of course, the homes will about as ‘zero carbon’ as the speech is the Queen’s own work. Back in 2006, zero meant zero: 100 per cent of all carbon emissions right down to the electricity used to boil the kettle would be reduced on site.

Over time though the definition has been watered down. The nature of the emissions included has been steadily relaxed and more and more of the emissions reduction has been left to ‘allowable solutions’ rather than improvements in the energy performance of the building and on-site renewable energy generation. See Keith Cooper’s feature in Inside Housing last year for some of the detail.

The government will complete this process. The Queen’s Speech itself says that: ‘Legislation will allow for the creation of an allowable solutions scheme to enable all new homes to be built to a zero carbon standard.’

A more detailed briefing says that with the Infrastructure Bill the government remains committed to the zero carbon standard for new homes from 2016 ‘but it is not always technically feasible or cost-effective for house builders to mitigate all emissions on-site’.

The government will set a ‘minimum energy performance standard’ and the document goes on:

‘The remainder of the zero carbon target can be met through cost effective off-site carbon abatement measures – known as “allowable solutions”. These provide an optional, cost-effective and flexible means for house builders to meet the zero carbon homes standard, as an alternative to increased on-site energy efficiency measures or renewable energy (such as solar panels).’

The zero carbon home standard will be set at level 5 of the Code for Sustainable Homes but legislation will allow for developers to build to level 4 as long as they offset through allowable solutions to achieve level 5.

I’ll leave the technical details of this off-site offset to others with more expertise while noting that the Code itself is being scrapped as ‘red tape’. It’s possible to see the changes as yet another concession to the big housebuilders, again without any quid pro quo from them, or as the pragmatic implementation of the original bold aim – or perhaps as both. Even the boldest original version of zero carbon did nothing about the far greater quantity of emissions from existing homes but it’s clear that ‘zero carbon’ new homes means something very different now.

For a measured reaction, see this from Paul King of the UK Green Building Council, a prominent supporter of zero carbon homes:

‘The policy of allowing developers to pay into a fund to offset emissions they cannot reduce is a sound idea in principle, despite its lukewarm reception this week. If implemented properly, this could lead to investment in local, community energy schemes and drive innovation in clean technology. On the other hand, a weak scheme, that generates little investment that has no connection to the housebuilding which is taking place, would be a deeply disappointing outcome.’

However, that is not all the briefing document has to say on zero carbon. It goes on:

‘Small sites, which are most commonly developed by small scale house builders, will be exempt. The definition of a small site will be consulted on shortlfy, and set out in regulation.’

This is a crucial issue, with some reports suggesting that the definition of a ‘small site’ will be fewer than 50 homes. Paul King warns that the Lib Dem side of the coalition is ‘at risk of snatching defeat from the jaws of victory by letting small developments – a large chunk of the housebuilding market - off the hook’.

A much more hostile reaction came from the Sustainable Energy Association, which says today’s announcement ‘leaves zero carbon homes policy in tatters’ and will lock in higher energy bills for decades. It claims the new rules mean that ‘zero carbon’ will only apply to 30 per cent of new homes (70 per cent are in small developments, it says) and will require only a 44 per cent reduction in carbon emissions on 2006 standards.

And before anyone comes away with the idea that the Infrastructure Bill is a green bill, other elements will ‘guarantee long-term investment in the road network’ and ‘support the development of gas and oil from shale and geothermal energy by clarifying and streamlining the underground access regime’. We may be building ‘zero’ carbon new homes but we seem equally intent on fracking maximum carbon underneath them.

There are clearly a range of different environmental, economic and practical considerations that have to be balanced against each other here alongside the politics of eye-catching pledges and maneuvering to meet them and the question of whether the original aim was ever achievable.

However, I wonder what the late and much-missed Mel Starrs would have made of the latest changes.  Here’s a blog she wrote in 2011 on ‘the Zero Carbon Homes debacle’ pleading for the phrase to be ditched:

‘If we need to, we can still call 2016 targets “net zero” or more accurately “carbon neutral”, but please can we have the phrase “zero carbon” back so we can use it again for exemplar buildings?’

As it stands, ‘zero carbon’ homes remind me of nothing so much as that other triumph of political sleight of hand: ‘affordable’ homes. 

In our blood

Thu, 29 May 2014

On a first glance at today’s new figures, the help to buy mortgage guarantee scheme is failing to live up to the fears of its critics or the hopes of ministers.

The figures released by the Treasury show 7,313 sales in the first six months of the scheme. Of these, 72 per cent were for homes valued below £250,000 and 80 per cent were to first-time buyers.

Those completions account for around 1.3 per cent of mortgages over the six months so it’s hard to see how the help to buy 2 mortgage guarantee (HTB2) on its own can have contributed much to rising property prices.

And the regional breakdown shows that HTB2 guarantees account for the lowest proportion of mortgage lending in the regions where prices have risen most – London and the South East. Here are the figures:

Scotland accounts for six of the top 10 local authority areas seeing the most HTB2 completions: Glasgow, Edinburgh, Fife, South Lanarkshire, North Lanarkshire and Aberdeen. Leeds, Birmingham and Wigan also make the list, with Bristol the only entry from the south of England.

In contrast, most of the north London boroughs at the epicentre of the house price boom in the capital saw fewer than 10 HTB2 completions each. Brent and Camden saw one each and the tri-boroughs of Hammersmith & Fulham, Kensington & Chelsea and Westminster two apiece.

Worries that the cap of £600,000 would lead to a rash of high-value completions with high-value liabilities for the government do not seem to have been borne out either. There were just 31 completions worth over £500,000 and another 491 between £250,000 and £500,000.

The mean income of households with a guarantee was £49,056, and 60 per cent of households had an income of between £20,000 and £60,000. Judged against the mean property value of £151,597, that means house price: income multiples for HTB2 borrowers are actually lower than in the rest of the market.

So much for the fears – at least so far. In statistical terms, the impact of Help to Buy has been miniscule compared to low interest rates, Funding for Lending, buy to let and all the other factors underpinning and inflating prices. However, as I’ve blogged before, the deeper impact may have been psychological: the prospect of a state guarantee for the market has inflated the expectations of sellers. While HTB2 has helped 5,843 first-time buyers, Priced Out estimates that rising prices have excluded 250,000 would-be buyers from the market over the last year.

Take-up of HTB2 is accelerating – the 2,657 completions in March represents 36 per cent of the total so far – but it is still nowhere near the initial forecasts of 190,000 completions a year. The scheme was meant to guarantee £12.5 billion of mortgages but completions so far total just £153 million.

That may reflect the fact that help to buy mortgages are relatively expensive compared to the rest of the lending market and that prices in much of the South East are already too far out of reach for many first-time buyers.

It may also explain the curiously muted government spin this morning. The last time HTB2 statistics were released they came complete with case studies and personal appearances by David Cameron. The flipside of fears not being realised so far is that HTB2 has not actually helped many people to buy so far either.

Little wonder that Cameron’s press release this morning concentrates on the aggregate figure for both versions of Help to Buy. So far at least, the supposedly smaller HTB equity loan scheme (HTB1) has seen more sales per month than HTB2.

As he brought forward the launch of HTB2 in October 2013 George Osborne supposedly told the Cabinet: ‘Hopefully we will get a little housing boom and everyone will be happy as property values go up.’ So far his plans for May 2015 seem on course without much obvious help from Help to Buy.

David Cameron said this morning that: ‘As Britons, home ownership is in our blood - it’s about aspiration, planning for the future and laying down roots.’

The bigger picture is that home ownership is shrinking faster than he is helping people on to the ladder (see David Boyle’s apocalyptic warning at Hay yesterday). High and rising house prices mean that the patient expecting a blood transfusion is actually being bled dry.

Tax year

Wed, 28 May 2014

A year on and the evidence is stacking up about the impact of the bedroom tax.

Over and over again we’ve heard from ministers that tenants affected by what they call the removal of the spare room subsidy have choices: they can downsize; or they can take in a lodger; or they can get a job. And the safety net of discretionary housing payments (DHPs) is there to help the most vulnerable.

Over and over again, landlords, tenants and others have argued that it’s not so simple: smaller homes are just not available; jobs are not so easy to come by and may be impossible for many tenants with disabilities; few will want to take a stranger into their home; and DHPs are woefully inadequate to meet the scale of need.

A year on from its introduction evidence is emerging of the impact of the bedroom tax and of the sorts of behavioural change that the DWP found impossible to quantify in its impact assessments.

Looking at today’s report by the National Housing Federation, and here are what tenants told IPSOS Mori were their most common responses to bedroom tax.

Poll

The headlines were understandably taken by the 58 per cent of tenants who said they had spent less on food or heating and energy since being affected. Even more starkly on the ‘heating or eating’ numbers, tenants with a disability were almost twice as likely (31 per cent) as those without a disability (18 per cent) to say that they have spent less on heating and energy.

The percentage of affected tenants saying that they were in arrears most or all of the time has risen from 6 per cent to 31 per cent since the introduction of the bedroom tax. Among those who reported regularly running out of money, 57 per cent had made up the shortfall by borrowing from families and friends, 25 per cent by going without meals and 19 per cent by reducing their energy bills.

What also really struck me though were the tiny numbers of tenants who had taken the DWP’s choices.

Only 10 per cent had applied for a discretionary housing payment. Even discounting for the fact that these are tenants’ perceptions and some may have been helped by their landlord to apply without realising it, I find that a shockingly low number.

Just 6 per cent had looked for a job but before anyone thinks this is about workshy tenants the report also includes a more detailed analysis comparing the attitudes of tenants affected and unaffected by the bedroom tax. There was virtually no difference in the proportions saying they had looked for a job, taken new training, looked for an additional job or increased their hours. Ipsos Mori concludes:

‘For each of these activities there were no significant differences with non-affected tenants suggesting that the introduction of the size criteria had not resulted in any significant changes in employment behaviours at this stage.’

And only 5 per cent had looked at moving to another social tenancy, the same proportion who had borrowed money from friends or families, not paid their rent arrears and not paid other bills and gone into debt. The option of taking a lodger does not register at all in the polling.

If those answers give the lie to ministers’ complacent statements ahead of implementation, they might also give landlords pause for thought. Why hadn’t more tenants applied for DHPs – did they need more support? And why is there no mention of appealing against housing benefit determinations – as many tenants have successfully done on grounds including room size and use?

A second report on the bedroom tax a year on was published last week by Grand Union Housing. This found that 70 per cent of the 1,070 tenants affected by the bedroom tax in April 2013 were still affected a year later. Of the 317 others, 15 per cent had moved, 8 per cent stopped claiming housing benefit (implying they found work), 3 per cent had gained a new household member and 2 per cent had reached pension age and become exempt. However, some 286 new tenants had joined those affected since April 2013, so the overall numbers have not gone down by much.

Away from those headline numbers, two things leapt out of the report for me. First, on DHPs, it quotes the example of a tenant who applied and got asked why they needed an internet connection. She got help after her landlord intervene but it begs the question of how many others could have been denied on the basis of an internet connection that they already need to look for work and will need to claim the universal credit.

Second, there’s the whole issue of who gets the homes freed up by tenants who move because of the bedroom tax. If they really are going to other tenants who are overcrowded and in housing need, then it might be possible to see a very rough kind of justice at work.

However, the bedroom tax happened at the same time as local authorities were able to change their allocations policies and restrict who can apply to be on the register. The report says that many associations are seeing a drop in demand on three-bed homes because fewer people are being allowed to bid on them.

One association has had to re-advertise three-bed homes because there were no suitable applicants with three-bed need and then take people who qualify for two bedrooms but can afford the larger tenancy without relying on housing benefit. Under-occupation therefore continues but with a different family.

Another has seen 2,000 families removed from the registers by local authorities and is now letting homes to lower priority applicants as a result. One council has only 12 applicants eligible for a three-bed house compared to 400 before the change.

A year on and not many of the impacts of the bedroom tax predicted by ministers seem to have materialised. Many if not most of the fears expressed by critics have been borne out. And the unintended consequences of a pernicious policy keep mounting up. 

Flagship sunk

Fri, 23 May 2014

While UKIP has taken all the election headlines, in housing terms it’s hard to look beyond the Conservative defeat in the party’s flagship council of Hammersmith & Fulham.

The West London borough dubbed ‘David Cameron’s favourite council’ has pursued a radical strategy of cutting the council tax and cutting spending since it won power in 2006.

But it is of course also the birthplace of what I’ve come to think of as the third Conservative housing revolution. If the first was the right to buy and the second private finance for housing associations and deregulation of private renting, the third is about changing the nature of social housing completely.

The manifesto was of course the 2009 report for Localis called Principles for Social Housing Reform. Co-written by former Hammersmith & Fulham leader Stephen Greenhalgh, it argued that:

‘The current social housing is warehousing poverty in the core of our great cities – cities which need to be the very engines of economic growth. With fundamental reform, social housing would continue to be available to those who cannot house themselves and would provide properly for them, but the system would provide a hand up rather than a hand out to people who work hard and play by the rules.’

The report recommended the end of security of tenure and a national allocations framework for social housing, putting all tenants on near-market rents and the end of all capital subsidy for new homes.

Much of that agenda went on to be implemented under the coalition. The Localism Act allowed landlords to introduce fixed-term tenancies and change their allocation policies and subsidy was cut alongside ‘affordable’ rents. This may be a more moderate and voluntary version of the Localis agenda but the links are clear.

Back in West London, the council has used the new freedoms to change its allocations policy and slash its waiting list and favour intermediate rent and home ownership while selling off a proportion of social housing as it becomes vacant. And perhaps most controversially of all it’s pursued a regeneration strategy that includes the demolition of existing council estates like West Kensington and Gibbs Green as part of the Earl’s Court development and the creation of ‘decent neighbourhoods’ of high-priced homes.

Greenhalgh himself has since moved on from Hammersmith & Fulham to become London deputy mayor for policing and crime but the mantle of reform was taken up by Cabinet member for housing Andrew Johnson. As he put it in 2012:

‘We want to incentivise residents to make the most of their lives. Council housing can be a great safety net to help get people back on their feet — but it should be a springboard not a destination. The current system does not promote personal aspiration or provide tenants with any incentive to try to move into home ownership and does not make the best use of the housing we have.’

The idea of social housing as ‘a springboard not a destination’, as a form of A&E for people in temporary difficulty rather than a permanent home for people in need, mirrors the coalition’s wider programme of welfare reform. It’s a prescription that, as many people have blogged many times, amounts to the end of social housing as we’ve known it.

But now the Conservative revolutionaries of Hammersmith & Fulham have lost. Andrew Johnson was among the councillors who lost their seat in yesterday’s election though Conservative Home blogger Harry Phibbs kept his (see his reaction here). 

Labour regains control of the council after eight years out of power in which its councillors and local MP Andy Slaughter have campaigned vociferously against the Conservative housing policies.

Three of the five early pledges made by Labour ahead of the election featured housing:

  • Save our hospitals. The Conservative council plans to demolish Charing Cross Hospital to build flats for overseas investors. Labour will block this and defend our hospitals.
  • Homes for residents, not overseas investors. Conservative councillors approve more new homes for overseas investors than local people. Labour will reverse this and ensure homes are built that residents can afford and support social and private tenants
  • Put residents first, not property speculators. The Conservative Council puts property speculators first and ignores residents. Labour will give residents a real say with new powers.

The election was obviously about far more than just housing (see Dave Hill’s blog from Wednesday) but it will be fascinating to see what changes in Hammersmith & Fulham as a result.

Most immediately, what does the Labour victory mean for the residents of the West Kensington and Gibbs Green estates? Only on Wednesday they were appealing to David Cameron to intervene to save their homes. Now they have fresh hope – the scheme got planning permission last month but as Pete Apps reports this morning campaigners are optimistic about plans to transfer ownership of the homes to residents.   

Doubts about Dave

Tue, 20 May 2014

How do David Cameron’s claims this morning about home ownership and new housing in his own constituency measure up to scrutiny?

It’s a measure of the growing political importance of housing took top billing in his Today programme interview sandwiched between reaction to the conviction of Abu Hamza and Britain’s relationship with Europe. Listen again here from about 1:30 in.

The interview was notable for me for two things: first an unequivocal claim to the old Tory mantle of the ‘property owning democracy’; and second a denial that Tory councils are nimbys made with specific reference to West Oxfordshire (Cameron’s Witney constituency has the same boundaries).

On the first, Cameron said ‘yes absolutely’ when John Humprhys asked him if he considered the right to own your own home to be ‘a sacred right’. The prime minister went on: ‘It’s a deep, natural human instinct. That’s what Help to Buy is all about and what putting rocket boosters under Right to Buy is all about.’

He was of course speaking in the context of mounting concern about the impact of rising house prices, with comments in the last few days from both Mark Carney and Vince Cable. He also said that he would consider action on Help to Buy if it was recommended by the Bank of England. However, given that he seems relaxed, even chillaxed about the prospects of four more years of rising prices, don’t hold your breath on that one.

But ‘a sacred right’? Cameron was laying claim to the ‘home owning democracy’ mantle of Thatcher, Eden and Skelton but he is presiding over a continuing fall in mortgaged ownership and increase in private renting. What’s happening is looking more and more like a property-owning plutocracy than a democracy.

It’s true that Help to Buy is helping some people on to the housing ladder but rising house prices are excluding many more. The latest ONS house price index out today says prices rose 8 per cent in the UK in the year to March and by 17 per cent in London.

Similarly the Right to Buy is helping more tenants to own their own home but there is not much sign yet of the promised one for one replacement affordable homes (even allowing for the caveat that the pledge only applies to additional sales).

On the second point, Cameron used his own constituency as an example of why Tory councils are not nimbys. ‘We’ve been building in West Oxfordshire more houses than was actually set out under our plan,’ he said. ‘So I don’t accept that all these councils are nimbys.’

To declare a slight interest here, I was born in West Oxfordshire and lived in Woodstock and Bampton until I was seven. Bampton has since becomes famous as the location for Downton Abbey and it is also at the centre of a major row about new homes between developers, planners and local resident groups. This prompted headlines about a ‘nimby revolt’ in the Sunday Times last year and a ‘Downton demo’ in the local paper. The council approved one locally controversial application for 160 homes in March but turned down another for 127 homes in December.

Cameron’s specific claim was that West Oxfordshire has been building more homes than set out in its plan. Presumably that’s based on something but the DCLG housebuilding statistics do not seem to bear him out.

The council’s 2012 draft local plan accepted a need for 5,500 new homes between April 2011 and March 2029 (305 per year). However, is that enough? The latest strategic housing market assessment (SHMA) from Oxfordshire County Council says that the district needs between 635 and 685 new homes a year between 2011 and 2031.

West Oxfordshire is currently in the middle of a consultation on the new local plan with its Cabinet member for planning Cllr Warwick Robinson arguing that the SHMA ‘does not of itself set the housing target’.

However, as the graph below shows, the district’s actual performance on housebuilding is well short of those numbers.

What it shows first is the dramatic impact of the credit crunch, with starts slumping from over 180,000 in 2007 to just 75,000 in mid 2009. A recovery followed in the wake of Labour’s housebuilding schemes.  Completions inevitably lag starts and show a delayed and less volatile trend. 

In phase one of the completion, starts and completions both proved impervious to all government attempts to kickstart them. Up to the end of 2012 they flatlined and even drifted lower than the levels the coalition had inherited.

A strong recovery in starts began from the end of 2012 and has accelerated through 2013 and the first quarter of 2014. The launch of Help to Buy 1 in April 2013 has to be a factor but it’s difficult to separate out its impact from that of previous schemes such as Funding for Lending and the general recovery in the economy.

So far, so good for Pickles and Hopkins. The surge in starts (the March quarter total is 31 per cent up on a year ago) reflects obvious confidence from housebuilders that they will be able to sell their homes and completions too have at last begun to rise (12 per cent on a year ago, even though the March figure is actually down 3 per cent on the previous quarter).

Look at the graph again though and you’ll see that the recovery so far is actually no stronger than the Labour bounce in 2009 and 2010. Comparing what’s happened under the two governments, the first 15 quarters of the coalition have now seen the completion of around 420,000 homes. However, Labour’s last 15 quarters saw 475,000.

And then compare that to the new homes that are needed to meet demand and keep house price inflation in check. To meet the ubiquitous 250,000 a year target (which may now be an underestimate) the last 15 quarters should have seen completion of more than 900,000 homes. The new homes deficit has therefore grown by another half a million homes under the coalition.

On the assumption that the recovery will continue, the current starts and completions will almost certainly see further increases in the months to come. Savills forecasts that completions could rise to around 167,000 by 2018, which will be back to just below the peak seen before the credit crunch. However, that will still be well short of 250,000.

As I’ve blogged before, the government is helping some people to buy but rising prices are excluding many more from ownership. Figures also out today from the Council of Mortgage Lenders show that the number of first-time buyer mortgages is up 24 on a year ago. However, house purchase loans to buy to let landlords are up 46 per cent.

Far from ‘ensuring that anyone who works hard and wants to get on the property ladder will be able to do so’, the government’s record on housebuilding will send the ladder even further out of reach. 

Making the case

Tue, 13 May 2014

Why do we need social housing? The answer may seem obvious on this website but too often elsewhere the one you’ll get is ‘we don’t’. 

It’s a theme I’ve blogged about repeatedly over the last few years as social housing has been eroded from within and overtaken from without by the relentless rise of private renting. As coalition ministers never cease to remind us, the sector shrank by 420,000 in England under the last Labour government, but their own policies are merely accelerating the decline while they blur the distinction between affordable and social.

Former housing minister John Healey summed it up bluntly like this in December: ‘If social housing’s own won’t stand up and speak out loudly, then present policy will prevail by default.’ As my fellow IH blogger Colin Wiles has explained, social housing professionals formed the campaign group SHOUT (Social Housing Under Threat) in response. It’s already made a submission to the Lyons Review arguing that half of Labour’s promised 200,000 homes a year should be social housing. If you’re not already, you can follow the campaign on Facebook and on Twitter

In the meantime though, relentlessly negative coverage continues on TV. The intro to last night’s flagship 7pm news programme on Channel 4 was its controversial ident of the Aylesbury estate. Channel 4 News would not tolerate distortions like the artificially inserted clothes lines, shopping trolley full of rubbish and Sky dishes but Channel 4 itself continues to resist a campaign by residents to #changetheident and show their alternative more positive version.

Channel 4 is of course also the home of shows like Benefits Street and How to Get a Council House. Three housing professionals in Wales were so annoyed about the second series of HTGACH that they set up the Council Home Chat campaign to counter the stereotypes. If you’re not already, you can follow the campaign on Twitter and read myth-busting blogs by people who live, work and believe in social housing here.

Campaigns defending the principle of social housing and fighting back against negative images of it are in some ways two sides of the same coin. But there is also a deeper battle of ideas that the people who would answer my initial question with ‘we don’t’ think was won long ago. For them social housing is either old-fashioned or politically and morally undesirable or just economically inefficient. It may be a minority view but this is the thinking that lies behind both the slow death of social housing and the negative images on TV and it badly needs debunking.

A good place to start is with the two latest policy essays from the Chartered Institute of Housing from Steve Hilditch and Keith Exford. Between them, and coming from different angles, they make some important points.

As a housing campaigner and editor of the Red Brick blog, Steve’s staunch defence of social housing will come as no surprise. However, he also confronts many of those anti-social housing arguments in explaining how we got from a position of ‘the housing crisis is nearly solved’ at the start of his career in 1976 to a new crisis now. Perhaps above all:

‘We have failed to match the distribution of prices and rents in the housing system to the distribution of incomes. Inequality has grown and so has insecurity: the number of people with very low incomes in the “flexible labour market” with zero-hours contracts, casualised labour, irregular self-employment, and part- time work. The correct housing policy response to these changes is that homes need to be cheaper not more expensive.’

Steve explains what’s gone wrong in housing policy over that period and the rise of the perceived wisdom that social housing tenants are ‘subsidised’ even as the actual subsidy goes to ‘the least efficient and lowest value-for-money sector, private renting’. Along the way he raises questions about the commercialisation of larger housing associations and who social housing should be for. He concludes that: ‘Over the last 35 years it has had the life squeezed slowly out of it by ideology and bad policy. But it can be reinvented. And the benefits of doing so could be great.’

Keith Exford’s essay starts by asking why housing policy in general, and policy on affordability and rents in particular, is such a mess. As chief executive of Affinity Sutton, he quotes the example of one of its estates in Islington where the amount tenants pay varies from an £80 per week ‘fair rent’ to a £290 per week ‘affordable rent’.

But he also makes the point that ‘it is arguably impossible to improve affordability through rent levels alone. If for political and economic reasons we are prepared to countenance low incomes then high housing costs can only be defrayed through subsidising rents.’ And he argues that the ‘obsession in some quarters’ with expanding private renting ignores the fact that British pay rates are too low to make market prices affordable without housing benefit.

With no official government policy on affordability and rents, Affinity Sutton commissioned its own research to help it frame an affordable rent policy. ‘It is already clear that devising a market rent-related rent policy to help those on the lowest incomes is challenging to say the least,’ he says. ‘The “target rent” approach, which takes into account the housing market and lower incomes, may not be perfect but it at least offers a sensible starting point for a more logical approach.’

Other research shows that supply-side subsidy for social rents offer the best long-term deal for tenants, taxpayers and providers. He argues that a mix of social rents, affordable rents and market rents is the way forward in contrast to current policy. And drawing on the IPPR’s work on bricks and mortar subsidies he concludes: ‘Spending 95p of every housing pound on benefit just doesn’t make sense, does it?’

Both essays are worth reading in full. The detail of their argument may differ in some respects but both make the crucial link between housing and the labour market, rents and people’s ability to pay them. What both show, I think, is that the underlying case for social housing is not just as strong as ever but even stronger now than it was in an era of full employment and high wages. 

Why do we need social housing? The answers are there. Now people beyond this website need to hear them. 

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