Monday, 27 February 2017

Inside edge

All posts from: March 2010

Community chest

Wed, 31 Mar 2010

Suddenly mutualism and cooperatives are everywhere. No sooner has Labour promised a ‘moment for mutualism’ than the Conservatives are pledging to train a volunteer army to set up community groups.

The mutual manifesto launched by Cabinet Office minister Tessa Jowell today promises to make it easier for people to take control of public services like health and social care, sure start centres and housing. The plan would see ‘new and improved opportunities for tenants to manage their own homes and housing services’ alongside a range of other reforms that will see public services managed by the community.

At the same time David Cameron was promising to create a neighbourhood army of 5,000 community organisers to ‘give communities the help they need to work together and tackle their problems’.

The Tories had already put localism at the heart of their green papers on planning and housing, which proposed fresh support for community land trusts.

Jowell’s mutual manifesto also cites approvingly the record of tenant management organisations, housing co-ops and community land trusts around the country and promises reforms including:

  • a new fast-track route for tenants to take control of services like gardening and cleaning
  • improved opportunities for communities to build and run homes on a co-operative basis, with easier access to HCA funding and public land.

Although the manifesto does not actually mention Lambeth, advance reports quoted approvingly the south London borough’s plans for a model of John  Lewis-style services. If all goes to plan it is set to relaunch itself as Britain’s first co-operative council in August.

Lambeth leader Steve Reed sees the plan specifically in the context of the cuts facing local authorities after the election – and as a way of protecting public services against the no-frills approach adopted by Tory Barnet.

Back with the Conservatives, Cameron sees his plan to let charities and communities take control of services as part of a ‘big society’ approach to fixing ‘Broken Britain’.

It’s not at all clear how much real power either party will really give to tenants. The plans come after all just before an election and just before sweeping public spending cuts and neither of them has a great record on protecting or creating mutual building societies. But the opportunities are opening up.   

Community chest

Wed, 31 Mar 2010

Suddenly mutualism and cooperatives are everywhere. No sooner has Labour promised a ‘moment for mutualism’ than the Conservatives are pledging to train a volunteer army to set up community groups.

The mutual manifesto launched by Cabinet Office minister Tessa Jowell today promises to make it easier for people to take control of public services like health and social care, sure start centres and housing. The plan would see ‘new and improved opportunities for tenants to manage their own homes and housing services’ alongside a range of other reforms that will see public services managed by the community.

At the same time David Cameron was promising to create a neighbourhood army of 5,000 community organisers to ‘give communities the help they need to work together and tackle their problems’.

The Tories had already put localism at the heart of their green papers on planning and housing, which proposed fresh support for community land trusts.

Jowell’s mutual manifesto also cites approvingly the record of tenant management organisations, housing co-ops and community land trusts around the country and promises reforms including:

  • a new fast-track route for tenants to take control of services like gardening and cleaning
  • improved opportunities for communities to build and run homes on a co-operative basis, with easier access to HCA funding and public land.

Although the manifesto does not actually mention Lambeth, advance reports quoted approvingly the south London borough’s plans for a model of John  Lewis-style services. If all goes to plan it is set to relaunch itself as Britain’s first co-operative council in August.

Lambeth leader Steve Reed sees the plan specifically in the context of the cuts facing local authorities after the election – and as a way of protecting public services against the no-frills approach adopted by Tory Barnet.

Back with the Conservatives, Cameron sees his plan to let charities and communities take control of services as part of a ‘big society’ approach to fixing ‘Broken Britain’.

It’s not at all clear how much real power either party will really give to tenants. The plans come after all just before an election and just before sweeping public spending cuts and neither of them has a great record on protecting or creating mutual building societies. But the opportunities are opening up.   

Lost in the post

Tue, 30 Mar 2010

More 90% mortgages for first-time buyers and more financial inclusion from the Post Office sound like a great idea – except for one thing.

The plan announced by business secretary Lord Mandelson on Monday will see the Post Office offer a new range of 90% mortgages to first-time buyers and double its mortgage lending by 2010/11.

Alongside that are a range of financial exclusion measures building on those announced in last week’s Budget. There will be a new weekly budgeting account for people on low incomes, a children’s savings account and a new current account.

The one thing? It’s not the fact that its mortgages actually come from the Bank of Ireland and appear to be regulated in Dublin (its website includes the caveat that the ‘Post Office is an appointed representative of Bank of Ireland which is authorised by the Irish Financial Regulator and authorised and subject to limited regulation by the Financial Services Authority’).

Nor the fact that the Post Office used to do exactly the same things – it was the first in the world to offer free banking – before its National Giro/Girobank subsidiary was sold off under a previous government.

It’s more the fact that the Post Office/Bank of Ireland’s existing range of mortgages specifically excludes the one group of first-time buyers who arguably most need support and would benefit most from the planned ‘neighbourhood banking service’.

The list includes most of the standard exclusions made by mortgage lenders plus  a refusal to accept ‘properties being purchased under a Right-to-Buy, shared ownership, or shared equity arrangement’.

Time for a change of heart?

Lost in the post

Tue, 30 Mar 2010

More 90% mortgages for first-time buyers and more financial inclusion from the Post Office sound like a great idea – except for one thing.

The plan announced by business secretary Lord Mandelson on Monday will see the Post Office offer a new range of 90% mortgages to first-time buyers and double its mortgage lending by 2010/11.

Alongside that are a range of financial exclusion measures building on those announced in last week’s Budget. There will be a new weekly budgeting account for people on low incomes, a children’s savings account and a new current account.

The one thing? It’s not the fact that its mortgages actually come from the Bank of Ireland and appear to be regulated in Dublin (its website includes the caveat that the ‘Post Office is an appointed representative of Bank of Ireland which is authorised by the Irish Financial Regulator and authorised and subject to limited regulation by the Financial Services Authority’).

Nor the fact that the Post Office used to do exactly the same things – it was the first in the world to offer free banking – before its National Giro/Girobank subsidiary was sold off under a previous government.

It’s more the fact that the Post Office/Bank of Ireland’s existing range of mortgages specifically excludes the one group of first-time buyers who arguably most need support and would benefit most from the planned ‘neighbourhood banking service’.

The list includes most of the standard exclusions made by mortgage lenders plus  a refusal to accept ‘properties being purchased under a Right-to-Buy, shared ownership, or shared equity arrangement’.

Time for a change of heart?

Hopes and fears

Mon, 29 Mar 2010

Free at last? Not quite. But council housing may be closer to freedom now than at any time since Labour took power in 1997.

That’s the hope after housing minister John Healey’s announcement of a new deal to dismantle the housing revenue account (HRA) even if it was mixed with some disappointment that it will involve yet another round of consultation Supporters of the change had hoped for a deal that would allow local authorities to sign up in principle, putting pressure on the next government to follow through.

Now the whole package could be contingent on what happens in the next spending review on grants for the decent homes backlog and the existing programme of major repairs. Severe cuts might dissuade many local authorities from signing up.

However, that aside, there is little doubt that John Healey’s package is the closest Labour has come to fulfilling the hopes raised by deputy prime minister John Prescott. In opposition he had argued for council housing to be freed from restrictive rules on public borrowing . In power, the Treasury blocked any prospect of that.

The release of accumulated capital receipts meant the decent homes programme could get going but it soon became clear that the government remained as pro-stock transfer as its Conservative predecessor.

The position gradually thawed under successive housing ministers until the government finally conceded that there could be a fourth option (stock retention) for council housing and began to see that there might be a role for councils in new development. Even then, there seemed little appetite for HRA reform.

Campaigners give John Healey a lot of the credit for pushing the reform through, alongside other changes giving councils a role in new development. ‘Earlier ministers did not appreciate the significance of the change to local authorities,’ said one. ‘It was in the political doldrums and it’s down to Healey that it’s come to life.’

There’s still a long way to go. There is concern about the level of extra debt involved for local authorities, there’s the election and then there’s the spending review.

Meanwhile, as the CIH points out, council housing will never be totally free until the government removes those restrictions on public borrowing. That may still be a step too far for Labour and the Conservatives but it is the official policy of the party that could end up holding the balance of power in a hung parliament, the Liberal Democrats.

Hopes and fears

Mon, 29 Mar 2010

Free at last? Not quite. But council housing may be closer to freedom now than at any time since Labour took power in 1997.

That’s the hope after housing minister John Healey’s announcement of a new deal to dismantle the housing revenue account (HRA) even if it was mixed with some disappointment that it will involve yet another round of consultation Supporters of the change had hoped for a deal that would allow local authorities to sign up in principle, putting pressure on the next government to follow through.

Now the whole package could be contingent on what happens in the next spending review on grants for the decent homes backlog and the existing programme of major repairs. Severe cuts might dissuade many local authorities from signing up.

However, that aside, there is little doubt that John Healey’s package is the closest Labour has come to fulfilling the hopes raised by deputy prime minister John Prescott. In opposition he had argued for council housing to be freed from restrictive rules on public borrowing . In power, the Treasury blocked any prospect of that.

The release of accumulated capital receipts meant the decent homes programme could get going but it soon became clear that the government remained as pro-stock transfer as its Conservative predecessor.

The position gradually thawed under successive housing ministers until the government finally conceded that there could be a fourth option (stock retention) for council housing and began to see that there might be a role for councils in new development. Even then, there seemed little appetite for HRA reform.

Campaigners give John Healey a lot of the credit for pushing the reform through, alongside other changes giving councils a role in new development. ‘Earlier ministers did not appreciate the significance of the change to local authorities,’ said one. ‘It was in the political doldrums and it’s down to Healey that it’s come to life.’

There’s still a long way to go. There is concern about the level of extra debt involved for local authorities, there’s the election and then there’s the spending review.

Meanwhile, as the CIH points out, council housing will never be totally free until the government removes those restrictions on public borrowing. That may still be a step too far for Labour and the Conservatives but it is the official policy of the party that could end up holding the balance of power in a hung parliament, the Liberal Democrats.

Budget take two

Thu, 25 Mar 2010

This year more than ever, the Budget was as much about what it didn’t say as what it did.

The big news came on stamp duty and housing benefit: the politics of cutting costs for first-time buyers and neutralising headlines about claimants living in mansions. 

They are not unrelated, since the stamp duty cut for first-time buyers will be paid for by a new 5% rate on sales of homes worth more than £1m. The biggest concentration of those is in central London boroughs like Westminster, many of them the self-same properties with the rents that generated all the headlines in the first place.

Reports ahead of the Budget suggested that stamp duty would be cut on all properties worth up to £250,000 and that the top 1% of rents in each area might be excluded from local housing allowance calculations. In fact, the stamp duty holiday will only apply to first-time buyers and it seems that only the top 1% of rents in England will be excluded. 

That should mean the impact will largely be confined to the central London broad rental market area but it could lead to cuts in allowance rates of up to a third in boroughs like Westminster. Reports suggested payments would be capped at £1,100 a week. 

For Lib Dem leader Nick Clegg that summed up a Budget that did nothing for affordable homes. ‘The Chancellor has added to that by a change to housing benefit announced today that will make life impossible for low-income families in high-price areas such as London,’ he said.

 Liz Phelps of Citizens Advice describes the cut as ‘the least worst option’ but is worried that it could still lead to big problems. ‘The key question that we don’t have the answer to is what impact it’s going to have on affordable accommodation in central London,’ she says. ‘It’s really important that it doesn’t become a no-go area for people on benefit. It’s crucial to manage a change of that magnitude effectively to help people find something that’s affordable and give transitional relief.’

The other concern is that the change creates an easy mechanism for future housing benefit cuts. What’s to stop a future government looking at the £250m saving from excluding the top 1% and the total bill of £17bn and then deciding to exclude the top 5% or 10% of rents?

And cuts are of course the main thing that the Budget didn’t say. There were £11bn of efficiency savings, including £200m at Communities and Local Government that the department did its best to make sound pain-free.

Lurking unmentioned are the rest of the cuts that are to come (up to £25bn according to the Conservatives) and those stark warnings from the Institute for Fiscal Studies that protecting budgets like health and education will require cuts of around 25% in other areas and from the National Housing Federation of the risk of an 18% cut in the housing budget.

There was more good news yesterday with the extension of higher payments on support for mortgage interest and action on financial exclusion and there may be more today with an announcement due on council housing finance. But how much bad news is just around the corner?

Budget take two

Thu, 25 Mar 2010

This year more than ever, the Budget was as much about what it didn’t say as what it did.

The big news came on stamp duty and housing benefit: the politics of cutting costs for first-time buyers and neutralising headlines about claimants living in mansions. 

They are not unrelated, since the stamp duty cut for first-time buyers will be paid for by a new 5% rate on sales of homes worth more than £1m. The biggest concentration of those is in central London boroughs like Westminster, many of them the self-same properties with the rents that generated all the headlines in the first place.

Reports ahead of the Budget suggested that stamp duty would be cut on all properties worth up to £250,000 and that the top 1% of rents in each area might be excluded from local housing allowance calculations. In fact, the stamp duty holiday will only apply to first-time buyers and it seems that only the top 1% of rents in England will be excluded. 

That should mean the impact will largely be confined to the central London broad rental market area but it could lead to cuts in allowance rates of up to a third in boroughs like Westminster. Reports suggested payments would be capped at £1,100 a week. 

For Lib Dem leader Nick Clegg that summed up a Budget that did nothing for affordable homes. ‘The Chancellor has added to that by a change to housing benefit announced today that will make life impossible for low-income families in high-price areas such as London,’ he said.

 Liz Phelps of Citizens Advice describes the cut as ‘the least worst option’ but is worried that it could still lead to big problems. ‘The key question that we don’t have the answer to is what impact it’s going to have on affordable accommodation in central London,’ she says. ‘It’s really important that it doesn’t become a no-go area for people on benefit. It’s crucial to manage a change of that magnitude effectively to help people find something that’s affordable and give transitional relief.’

The other concern is that the change creates an easy mechanism for future housing benefit cuts. What’s to stop a future government looking at the £250m saving from excluding the top 1% and the total bill of £17bn and then deciding to exclude the top 5% or 10% of rents?

And cuts are of course the main thing that the Budget didn’t say. There were £11bn of efficiency savings, including £200m at Communities and Local Government that the department did its best to make sound pain-free.

Lurking unmentioned are the rest of the cuts that are to come (up to £25bn according to the Conservatives) and those stark warnings from the Institute for Fiscal Studies that protecting budgets like health and education will require cuts of around 25% in other areas and from the National Housing Federation of the risk of an 18% cut in the housing budget.

There was more good news yesterday with the extension of higher payments on support for mortgage interest and action on financial exclusion and there may be more today with an announcement due on council housing finance. But how much bad news is just around the corner?

Budget take one

Wed, 24 Mar 2010

The stamp duty cut looks like good politics and is already generating some good headlines but it remains to be seen how much difference it will really make to first-time buyers.

Increasing the threshold to £250,000 for the next two years will save them a maximum of £1,250 since properties worth up to £125,000 are already exempt [EDIT: that should have read £2,500 since the duty is on the whole amount].  

However, the price of the average house has increased by around five times that amount since April last year (based on the Halifax house price index). 

And the average deposit needed by a first-time buyer to get into the market in the first place is currently £33,000 according to Council of Mortgage Lenders (CML) figures. That’s 13 times the stamp duty saving and an increase of £20,000 on two years ago. 

As Liz Peace of the British Property Federation points out, it’s enough to knock 18 months off the 18 years it would take a typical 25-year-old to save the deposit.

That said, the concession is still a boost both for first-time buyers and for housing associations looking to boost their shared ownership sales.

The political dimension is that it borrows an existing Conservative policy and guards against the potential charge of being opposed to aspiration and owning your own home.

In contrast to previous stamp duty holidays this one will be restricted just to first-time buyers, which should reduce the chances of it helping to inflate a new bubble at a time when the market is already recovering.  

According to HM Revenue & Customs guidance the holiday excludes any buyers who ‘either alone or with others, have previously acquired a major interest in land which includes residential property, or an equivalent interest in land situated anywhere in the world’ and anyone not occupying it as their main home.

That begs the obvious question of how the system will be policed and verified - especially for people who have previously owned property abroad and for parents who buy in the name of their kids. 

Estimating how many buyers will benefit and what the total cost will be are both difficult since the usual estimates of first-time buyers include a high proportion of returners - people who previously owned a home but have since been renting. 

However, the CML’s best guess is that 136,000 buyers will be newly exempt from stamp duty at a total cost of £224m over the next 12 months. That’s roughly the amount it thinks will be raised by increasing stamp duty on homes above £1m from 4% to 5%.

See all Budget 2010 stories

Budget take one

Wed, 24 Mar 2010

The stamp duty cut looks like good politics and is already generating some good headlines but it remains to be seen how much difference it will really make to first-time buyers.

Increasing the threshold to £250,000 for the next two years will save them a maximum of £1,250 since properties worth up to £125,000 are already exempt [EDIT: that should have read £2,500 since the duty is on the whole amount].  

However, the price of the average house has increased by around five times that amount since April last year (based on the Halifax house price index). 

And the average deposit needed by a first-time buyer to get into the market in the first place is currently £33,000 according to Council of Mortgage Lenders (CML) figures. That’s 13 times the stamp duty saving and an increase of £20,000 on two years ago. 

As Liz Peace of the British Property Federation points out, it’s enough to knock 18 months off the 18 years it would take a typical 25-year-old to save the deposit.

That said, the concession is still a boost both for first-time buyers and for housing associations looking to boost their shared ownership sales.

The political dimension is that it borrows an existing Conservative policy and guards against the potential charge of being opposed to aspiration and owning your own home.

In contrast to previous stamp duty holidays this one will be restricted just to first-time buyers, which should reduce the chances of it helping to inflate a new bubble at a time when the market is already recovering.  

According to HM Revenue & Customs guidance the holiday excludes any buyers who ‘either alone or with others, have previously acquired a major interest in land which includes residential property, or an equivalent interest in land situated anywhere in the world’ and anyone not occupying it as their main home.

That begs the obvious question of how the system will be policed and verified - especially for people who have previously owned property abroad and for parents who buy in the name of their kids. 

Estimating how many buyers will benefit and what the total cost will be are both difficult since the usual estimates of first-time buyers include a high proportion of returners - people who previously owned a home but have since been renting. 

However, the CML’s best guess is that 136,000 buyers will be newly exempt from stamp duty at a total cost of £224m over the next 12 months. That’s roughly the amount it thinks will be raised by increasing stamp duty on homes above £1m from 4% to 5%.

See all Budget 2010 stories

Missed opportunity

Tue, 23 Mar 2010

Any policy that reduces fuel poverty and deaths in cold weather at the same time as it cuts carbon emissions from the least energy efficient homes seems an obvious winner.

But the Communities and Local Government (CLG) committee says in a report today that ‘we consider it a huge missed opportunity that the considerable political will demonstrated by the government in raising social sector housing to the decent homes standard has not been matched by similar energies with respect to the private sector; and that the policy in the private sector appears to have failed’.

According to the last English house condition survey in 2007, more than a third of homes in the private sector were non-decent. Meanwhile, half of vulnerable households in the private rented sector and two-thirds of vulnerable home owners lived in non-decent homes. Older people - those most vulnerable to this winter’s cold weather - are most likely to be affected and least likely to be able to afford improvements. 

The government had originally set a target of 70% of vulnerable households in the private sector living in decent homes by 2010 but since the 2007 spending review there has been no specific goal. The MPs conclude that ‘the downgrading of the target for decency in the private sector has weakened local authorities’ already patchy engagement with their responsibilities towards private sector housing’. 

The committee acknowledges several positive signs, including the government’s response to the Rugg review and the household energy management strategy that will pay for energy efficiency work through a combination of a levy on the energy companies and pay as you save financing for homeowners.

Obstacles including funding, enforcement and lack of clear information on conditions will make progress an uphill struggle but the MPs call on the government to commit itself to a programme of measures to ‘raise these problems up the political agenda’.

An early opportunity to do that will come in tomorrow’s Budget, when the chancellor has the chance to act on what is surely one of the most longstanding demands in housing: cutting VAT on improvement works. 

The MPs conclude there’s a good case for that but not in the current economic circumstances but say the government should make equalising the VAT rate between new build and improvements a medium-term policy goal.

That will disappoint campaigners who have been banging their heads against a brick wall on the issue for so long. But at least they would only pay 5% VAT to rebuild it. 

Missed opportunity

Tue, 23 Mar 2010

Any policy that reduces fuel poverty and deaths in cold weather at the same time as it cuts carbon emissions from the least energy efficient homes seems an obvious winner.

But the Communities and Local Government (CLG) committee says in a report today that ‘we consider it a huge missed opportunity that the considerable political will demonstrated by the government in raising social sector housing to the decent homes standard has not been matched by similar energies with respect to the private sector; and that the policy in the private sector appears to have failed’.

According to the last English house condition survey in 2007, more than a third of homes in the private sector were non-decent. Meanwhile, half of vulnerable households in the private rented sector and two-thirds of vulnerable home owners lived in non-decent homes. Older people - those most vulnerable to this winter’s cold weather - are most likely to be affected and least likely to be able to afford improvements. 

The government had originally set a target of 70% of vulnerable households in the private sector living in decent homes by 2010 but since the 2007 spending review there has been no specific goal. The MPs conclude that ‘the downgrading of the target for decency in the private sector has weakened local authorities’ already patchy engagement with their responsibilities towards private sector housing’. 

The committee acknowledges several positive signs, including the government’s response to the Rugg review and the household energy management strategy that will pay for energy efficiency work through a combination of a levy on the energy companies and pay as you save financing for homeowners.

Obstacles including funding, enforcement and lack of clear information on conditions will make progress an uphill struggle but the MPs call on the government to commit itself to a programme of measures to ‘raise these problems up the political agenda’.

An early opportunity to do that will come in tomorrow’s Budget, when the chancellor has the chance to act on what is surely one of the most longstanding demands in housing: cutting VAT on improvement works. 

The MPs conclude there’s a good case for that but not in the current economic circumstances but say the government should make equalising the VAT rate between new build and improvements a medium-term policy goal.

That will disappoint campaigners who have been banging their heads against a brick wall on the issue for so long. But at least they would only pay 5% VAT to rebuild it. 

What next?

Mon, 22 Mar 2010

So it’s finally clear: the Conservatives will scrap the Tenant Services Authority (TSA) if they win the election. But what they will put in its place?

Shadow communities minister Stewart Jackson confirmed at a delegated legislation committee hearing 10 days ago that ‘for the avoidance of doubt, a future Conservative government will abolish the TSA’. 

He argued that oversight of housing associations should involve tenants working through ‘properly elected boards with professional officers’ while the best regulator of local authority landlords was the voter - ‘whether they are delivering the goods at election time’.

Waste is the major issue for the Conservatives, with Jackson quoting TSA decisions to pay a public affairs consultancy ‘£100,000 to arrange meeting with influential ministers’ and a human resources expert ‘£89,000 to advise on and oversee the entire recruitment process’ of its board when it was ‘made up of two constituent predecessor bodies’.

So far, so clear, but what comes next? ‘We believe that if there is malfeasance and maladministration, it is proper for Ministers to be responsible for intervening in extremis, for the local government ombudsman to be charged with the responsibility of ensuring that tenants are treated fairly and with equanimity and for the Audit Commission to have a role. It could be argued—as some have—that even the Homes and Communities Agency should have a role across the country on matters of oversight and assessment of the performance of those who used to be called registered social landlords.’

Hmm. Except that those options were considered by the independent review that led to the creation of the TSA.

The Cave review also considered regulation by the HCA (then called Communities England)  and concluded that this was ‘not viable because of the conflict of interest created between an investment body and a regulator covering all providers of social housing, not all of which are capable in practice of undertaking development. A further conflict arises from the danger of the social housing investment programme dominating the agenda to the detriment of regulation.’

The review said that the Audit Commission was capable of being the regulator ‘but it has limited experience of housing regulation beyond what is involved in inspection; has little previous contact with for-profit providers (other than as a purchaser of services) and has little support from stakeholders’.

It also recommended a single ombudsman for all social housing tenants - but stressed that an ombudsman deals with individual complaints rather than collective rights. 

Which is why it came down in favour of an independent regulator. The fact that it was newly created would enable it to take a fresh approach. It would be focussed solely on social housing regulation. And it would put an end to the ‘silo’ approach of separate regulation of each sector that ‘generates systematically unequal outcomes for tenants, rather than the best available for all’.

The recommendation came from an expert on the regulation of other sectors such as airports, broadcasting, legal services, telecoms and water and was intended to give tenants the same sort of consumer rights as customers in those sectors. He saw an independent regulator as just part of a system that would genuinely empower tenants, promote different forms of ownership and create more diversity in management.

That sounds in tune with Conservative principles - and particularly the party’s big idea of giving tenants a right to move - but Jackson says ‘we do not believe that the Cave review has sufficiently made the case for an extra level of bureaucracy’.

However, if the driver behind the decision is financial rather than philosophical, the party would be introducing yet more change to the sector just at the point when it has agreed the TSA’s new regulatory framework and ending the era of tenant empowerment before it has really begun.

And there are other financial considerations too. The Council of Mortgage Lenders tells this week’s Inside Housing that the party needed to consider carefully ‘the availability and terms of private finance’. 

Scrapping the TSA is one thing. Deciding what to replace it with is quite another.

What next?

Mon, 22 Mar 2010

So it’s finally clear: the Conservatives will scrap the Tenant Services Authority (TSA) if they win the election. But what they will put in its place?

Shadow communities minister Stewart Jackson confirmed at a delegated legislation committee hearing 10 days ago that ‘for the avoidance of doubt, a future Conservative government will abolish the TSA’. 

He argued that oversight of housing associations should involve tenants working through ‘properly elected boards with professional officers’ while the best regulator of local authority landlords was the voter - ‘whether they are delivering the goods at election time’.

Waste is the major issue for the Conservatives, with Jackson quoting TSA decisions to pay a public affairs consultancy ‘£100,000 to arrange meeting with influential ministers’ and a human resources expert ‘£89,000 to advise on and oversee the entire recruitment process’ of its board when it was ‘made up of two constituent predecessor bodies’.

So far, so clear, but what comes next? ‘We believe that if there is malfeasance and maladministration, it is proper for Ministers to be responsible for intervening in extremis, for the local government ombudsman to be charged with the responsibility of ensuring that tenants are treated fairly and with equanimity and for the Audit Commission to have a role. It could be argued—as some have—that even the Homes and Communities Agency should have a role across the country on matters of oversight and assessment of the performance of those who used to be called registered social landlords.’

Hmm. Except that those options were considered by the independent review that led to the creation of the TSA.

The Cave review also considered regulation by the HCA (then called Communities England)  and concluded that this was ‘not viable because of the conflict of interest created between an investment body and a regulator covering all providers of social housing, not all of which are capable in practice of undertaking development. A further conflict arises from the danger of the social housing investment programme dominating the agenda to the detriment of regulation.’

The review said that the Audit Commission was capable of being the regulator ‘but it has limited experience of housing regulation beyond what is involved in inspection; has little previous contact with for-profit providers (other than as a purchaser of services) and has little support from stakeholders’.

It also recommended a single ombudsman for all social housing tenants - but stressed that an ombudsman deals with individual complaints rather than collective rights. 

Which is why it came down in favour of an independent regulator. The fact that it was newly created would enable it to take a fresh approach. It would be focussed solely on social housing regulation. And it would put an end to the ‘silo’ approach of separate regulation of each sector that ‘generates systematically unequal outcomes for tenants, rather than the best available for all’.

The recommendation came from an expert on the regulation of other sectors such as airports, broadcasting, legal services, telecoms and water and was intended to give tenants the same sort of consumer rights as customers in those sectors. He saw an independent regulator as just part of a system that would genuinely empower tenants, promote different forms of ownership and create more diversity in management.

That sounds in tune with Conservative principles - and particularly the party’s big idea of giving tenants a right to move - but Jackson says ‘we do not believe that the Cave review has sufficiently made the case for an extra level of bureaucracy’.

However, if the driver behind the decision is financial rather than philosophical, the party would be introducing yet more change to the sector just at the point when it has agreed the TSA’s new regulatory framework and ending the era of tenant empowerment before it has really begun.

And there are other financial considerations too. The Council of Mortgage Lenders tells this week’s Inside Housing that the party needed to consider carefully ‘the availability and terms of private finance’. 

Scrapping the TSA is one thing. Deciding what to replace it with is quite another.

On their own

Thu, 18 Mar 2010

Young people are gloomier than ever about their prospects of getting on the housing ladder, according to a new poll today. But are they actually being too optimistic?

The YouGov survey commissioned by the National Housing Federation finds that 86% of 18-30 year olds who do not already own their home cannot afford to buy. This despite the first house price falls most of them will be able to remember.

The poll also finds that 54% say they will only be able to afford to buy with help from their family, 37% think it will take them 10 years to get on the ladder, 12% think it could take 20 years and 6% think they never will.

The results prompt the NHF to call on all the main parties to build more homes for first-time buyers and address the shortage of new homes and to give the housing budget the same untouchable status in the next spending round as health, education and policing.

It’s a good argument but  the results also prompt a deeper question about what the next government will do because the truth is that young people’s prospects are even worse than they think. 

There are roughly 11m people aged 18-30 in the UK. Loans to first-time buyers are currently running at under 200,000 a year. Make whatever assumptions you like about how many of them will buy together, how many first-time buyers are actually older (the average age is 28) and lending increasing when the recovery starts and their prospects still look grim.

Meanwhile, thanks to the shortage of high loan-to-value mortgages, the average deposit they need to buy is currently more than a year’s salary. The Council of Mortgage Lenders estimates that the proportion needing parental help is now 80%.

One way forward is the one put proposed by the NHF - build more homes in general and affordable homes in particular.

Another would be to do everything possible to kick the mortgage market back into life - and get first-time buyer loans back up the level of 500,000 and more seen in the mid noughties. However, many of them only got on to the ladder thanks to sub-prime lenders and the securitisation that triggered the financial crisis.

However, as Adair Turner, chairman of the Financial Services Authority, argued in a speech yesterday to do that would be to risk repeating the whole depressing cycle of boom and bust all over again. 

He wants a range of ‘macro prudential policy tools’ to stop future asset price bubbles, with one of the best options being maximum limits on loan-to-value ratios applied either continuously or varied through the cycle.

That would certainly help stop future boom and busts and repossessions but it won’t do much for young people’s prospects of getting on the ladder. 

Put that together with the fact that homeownership has already been falling for the last five years and they look more than ever like a generation of renters than owners.

On their own

Thu, 18 Mar 2010

Young people are gloomier than ever about their prospects of getting on the housing ladder, according to a new poll today. But are they actually being too optimistic?

The YouGov survey commissioned by the National Housing Federation finds that 86% of 18-30 year olds who do not already own their home cannot afford to buy. This despite the first house price falls most of them will be able to remember.

The poll also finds that 54% say they will only be able to afford to buy with help from their family, 37% think it will take them 10 years to get on the ladder, 12% think it could take 20 years and 6% think they never will.

The results prompt the NHF to call on all the main parties to build more homes for first-time buyers and address the shortage of new homes and to give the housing budget the same untouchable status in the next spending round as health, education and policing.

It’s a good argument but  the results also prompt a deeper question about what the next government will do because the truth is that young people’s prospects are even worse than they think. 

There are roughly 11m people aged 18-30 in the UK. Loans to first-time buyers are currently running at under 200,000 a year. Make whatever assumptions you like about how many of them will buy together, how many first-time buyers are actually older (the average age is 28) and lending increasing when the recovery starts and their prospects still look grim.

Meanwhile, thanks to the shortage of high loan-to-value mortgages, the average deposit they need to buy is currently more than a year’s salary. The Council of Mortgage Lenders estimates that the proportion needing parental help is now 80%.

One way forward is the one put proposed by the NHF - build more homes in general and affordable homes in particular.

Another would be to do everything possible to kick the mortgage market back into life - and get first-time buyer loans back up the level of 500,000 and more seen in the mid noughties. However, many of them only got on to the ladder thanks to sub-prime lenders and the securitisation that triggered the financial crisis.

However, as Adair Turner, chairman of the Financial Services Authority, argued in a speech yesterday to do that would be to risk repeating the whole depressing cycle of boom and bust all over again. 

He wants a range of ‘macro prudential policy tools’ to stop future asset price bubbles, with one of the best options being maximum limits on loan-to-value ratios applied either continuously or varied through the cycle.

That would certainly help stop future boom and busts and repossessions but it won’t do much for young people’s prospects of getting on the ladder. 

Put that together with the fact that homeownership has already been falling for the last five years and they look more than ever like a generation of renters than owners.

Opening bid

Wed, 17 Mar 2010

What if the answer to the housing shortage is not national targets or local incentives but both - or neither?

That’s the intriguing question raised in a new report by the Centre for Cities that argues there is no shortage of land for new building - just a failure of the system that controls it. If the UK was a football pitch, all the developed land would fit into one penalty area and all the housing would cover just a third of the centre circle.

None of the main parties has the solution, it argues: Labour’s targets were ‘cumbersome and bureaucratic’ but failed to recognise the importance of building in the areas of highest demand; Tory council tax incentives won’t be remotely enough to encourage development when local power to resist it will be strengthened by the abolition of regional planning; and Lib Dem reliance on filling empty homes would only solve a fraction of the problem.

The alternative? Scrap the brownfield land target, and relax green belt protection and devolve power over both to local authorities. Give them real incentives to build and reduce their discretion over new development. 

The big (though not totally new) idea is local land auctions that would work a bit like the mobile phone auctions that raised billions for the Treasury. 

A council would announce a periodic land auction, perhaps every five years. Landowners would offer land for development and the price they would accept. The council decides which land to allocate for development as part of the local plan. Then it specifies what kind of development will be acceptable, what infrastructure will be provided by the developer or by public agencies and offers the land for sale to the highest bidder. 

The council earns the difference between the sell price of the landowner and the buy price of the developer, which the report estimates would work out at £76,000 per home in the South East (compared to £7,000 under the Conservative council tax plan and £10,000 under the community infrastructure levy).  

The report argues that the current system has consistently favoured the interests of people who already own houses against the interests of those who don’t. It quotes example after example of towns and cities in high-demand areas of the south and east of England where building is below the national average and crammed on to brownfield sites while the surrounding green belt is left untouched. 

Problem solved? Not quite - it’s hard to see any of the main parties going for diluting protection of the green built for starters and another obvious problem is the incentive for developers to build as cheaply as possible - but why not pilot the idea and see if it works?

Opening bid

Wed, 17 Mar 2010

What if the answer to the housing shortage is not national targets or local incentives but both - or neither?

That’s the intriguing question raised in a new report by the Centre for Cities that argues there is no shortage of land for new building - just a failure of the system that controls it. If the UK was a football pitch, all the developed land would fit into one penalty area and all the housing would cover just a third of the centre circle.

None of the main parties has the solution, it argues: Labour’s targets were ‘cumbersome and bureaucratic’ but failed to recognise the importance of building in the areas of highest demand; Tory council tax incentives won’t be remotely enough to encourage development when local power to resist it will be strengthened by the abolition of regional planning; and Lib Dem reliance on filling empty homes would only solve a fraction of the problem.

The alternative? Scrap the brownfield land target, and relax green belt protection and devolve power over both to local authorities. Give them real incentives to build and reduce their discretion over new development. 

The big (though not totally new) idea is local land auctions that would work a bit like the mobile phone auctions that raised billions for the Treasury. 

A council would announce a periodic land auction, perhaps every five years. Landowners would offer land for development and the price they would accept. The council decides which land to allocate for development as part of the local plan. Then it specifies what kind of development will be acceptable, what infrastructure will be provided by the developer or by public agencies and offers the land for sale to the highest bidder. 

The council earns the difference between the sell price of the landowner and the buy price of the developer, which the report estimates would work out at £76,000 per home in the South East (compared to £7,000 under the Conservative council tax plan and £10,000 under the community infrastructure levy).  

The report argues that the current system has consistently favoured the interests of people who already own houses against the interests of those who don’t. It quotes example after example of towns and cities in high-demand areas of the south and east of England where building is below the national average and crammed on to brownfield sites while the surrounding green belt is left untouched. 

Problem solved? Not quite - it’s hard to see any of the main parties going for diluting protection of the green built for starters and another obvious problem is the incentive for developers to build as cheaply as possible - but why not pilot the idea and see if it works?

Mirror image

Tue, 16 Mar 2010

Rising stamp duty, falling mortgage availability and now rising rents. Life doesn’t get any easier for would-be first-time buyers.

The residential lettings survey published by the RICS this morning shows a shift in the balance of supply and demand in the rental market that’s the mirror image of what’s been happening in the sales market. Demand from tenants are rising while new instructions to rent are falling. For the first time in 18 months more surveyors say rents are rising than falling and a healthy balance of surveyors expects them to go higher in the next six months. 

The RICS interprets all that as a clear sign that reluctant landlords are returning to the sales market. ‘If demand remains strong, which it is likely to as many first time buyers are still finding themselves priced out of the housing market, then rents should continue to rise as would be tenants compete for fewer properties.’

Figures from the Council of Mortgage Lenders (CML) last week showed that the number of loans to first-time buyers in January was down 54% on December. True, December’s figure was artificially high because buyers were rushing to beat the end of the stamp duty holiday on properties valued at between £125,000 and £175,000, but there are few signs of much recovery in the lending market before the election.

The number of first-time buyers is up on the lows seen in 2008 but still far below the average seen over the last decade. With deposits now averaging more than a year’s salary, up to 80% of them are dependent on help from their families and it will take several more months of falling prices for that to change. 

In that environment, sales by reluctant landlords - or ones like Fergus and Judith Wilson who’ve decided to get out of the market - seem as much if not more likely to go to other landlords as first-time buyers. Especially if, as the Priced Out campaign argues, landlords benefit from extra tax incentives. All of which means the number of reluctant tenants will continue to grow. 

Mirror image

Tue, 16 Mar 2010

Rising stamp duty, falling mortgage availability and now rising rents. Life doesn’t get any easier for would-be first-time buyers.

The residential lettings survey published by the RICS this morning shows a shift in the balance of supply and demand in the rental market that’s the mirror image of what’s been happening in the sales market. Demand from tenants are rising while new instructions to rent are falling. For the first time in 18 months more surveyors say rents are rising than falling and a healthy balance of surveyors expects them to go higher in the next six months. 

The RICS interprets all that as a clear sign that reluctant landlords are returning to the sales market. ‘If demand remains strong, which it is likely to as many first time buyers are still finding themselves priced out of the housing market, then rents should continue to rise as would be tenants compete for fewer properties.’

Figures from the Council of Mortgage Lenders (CML) last week showed that the number of loans to first-time buyers in January was down 54% on December. True, December’s figure was artificially high because buyers were rushing to beat the end of the stamp duty holiday on properties valued at between £125,000 and £175,000, but there are few signs of much recovery in the lending market before the election.

The number of first-time buyers is up on the lows seen in 2008 but still far below the average seen over the last decade. With deposits now averaging more than a year’s salary, up to 80% of them are dependent on help from their families and it will take several more months of falling prices for that to change. 

In that environment, sales by reluctant landlords - or ones like Fergus and Judith Wilson who’ve decided to get out of the market - seem as much if not more likely to go to other landlords as first-time buyers. Especially if, as the Priced Out campaign argues, landlords benefit from extra tax incentives. All of which means the number of reluctant tenants will continue to grow. 

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