All posts from: January 2011
Complaints of resurgent nimbyism in the wake of the end of housebuilding targets and doubts about the effectiveness of the new homes bonus are nothing new - but this time they come from a Conservative MP.
Richard Harrington, a developer before he became MP for Watford last year, a told a Westminster Hall debate on Tuesday that the government should not replace an obsession with centralism with an obsession with localism as the only way to get new homes.
Watford is not just close to the Welwyn Hatfield constituency of Grant Shapps - it’s also the town where the housing minister was born and brought up.
And Harrington had a message for his neighbour: ‘Although I fully support the Localism Bill and its core values of local people and their representatives being responsible for their own actions, I believe that in respect of planning, it could significantly adversely affect the supply of land for housing. If the incentives on offer do not outweigh the anti-development sentiments of residents and their elected representatives, we are in real trouble.’
He said the Bill failed to address the serious issue that while 80% of people believe Britain needs to build more housing for sale and rent, only 50% said they would welcome it in their immediate neighbourhood.
While regional spatial strategies had not worked, evidence of nimbyism had emerged since they were scrapped with areas like Bath and North Somerset cutting the number of new homes to be built by half.
Abolition of the strategies and targets has been one of the most popular coalition policies on the Tory backbenches - and one of the few that appeared in both the Conservative and Lib Dem manifestoes - but Harrington said they had at least set aspirations.
The problem was there was always a presumption against development locally, with councillors elected on anti-development platforms, and targets reduced ‘all over the place’.
He went on: ‘If a development of new houses is opposed by local residents, local councillors elected on a non-development ticket are unlikely to take action on an issue that might work against them at election time. I do not believe that five or six years of council tax will be a convincing enough reward. I say that not to discount the scheme but to raise obvious concerns to ministers that other weapons, tools and policies might be needed as well.’
The bonus might work on large flagship schemes like one cited by housing minister Grant Shapps in his Welwyn Hatfield constituency, but on smaller sites elsewhere it would not make sufficient difference.
Harrington called for a back-up plan to ensure that development continues. ‘We have to carefully monitor the incentives that we are introducing, such as the new homes bonus, to ensure that they in fact do what they are intended to do. If development targets continue to be halved by local authorities, surely we have to consider other ways to encourage the increase of supply that we all believe necessary. It would be much better if the powers were put in place now, rather than when the problem manifests itself, when it might be too late.’
And he went on: ‘I support localism and I applaud the government’s efforts to introduce it throughout the country, but my central argument, which I hope the minister will accept, is that it must be part of a balanced package. We must avoid any trap; for the last government it was their obsession with centralism—the Stalinism that I mentioned before—but that must not be replaced by a similar obsession with localism as the only way to obtain housing supply.’
Responding to the debate, he said that the new homes bonus was ‘potentially an incredibly powerful incentive’ but was ‘not intended to be the be-all and end-all’. Other mechanisms like action to free up mortgage lending and planning reform would help increase supply.
‘The changes will create a new attitude towards planning. It will not be us against them—the developer against the local community. It will be people working together to try to improve their local communities through neighbourhood plans.’
It certainly didn’t seem like he was admitting to the need for a Plan B, and he shrugged off the suggestion from his Labour shadow Alison Seabeck that: ‘We have noticed, housing experts have noticed and local government leaders have noticed—we have therefore now been told that Downing street has noticed—that the shine is coming off the minister’s policies.’
In the meantime though, the voices of the nimbys are growing louder in the shires. To take just one example, take a look at this story from the Northampton Chronicle last week.
‘Outrage at latest plans for 21,000 new homes in the county,’ says the headline. Except that 21,000 is half what was proposed in 2009 - a fact rather given away by the ‘40,000 houses is planning madness’ placards carried by protesters in the old photo used with the story.
Yesterday’s opening exchanges in the Localism Bill committee saw a concerted attempt by five leading groups to convince MPs to change key aspects of the housing reforms. Can they succeed?
Between them, Richard Capie of the CIH, Campbell Robb of Shelter, David Orr of the NHF, Jackie Peacock of the Brent Private Tenants Rights Group and Anthony Mayer of the TSA, pressed home concerns about flexible tenancies and security of tenure, the discharge of the homelessness duty into the private rented sector and affordable housing supply.
But much of their case was about the impact on the reforms of two issues that are not addressed in the Bill: cuts in housing benefit; and regulation (or lack of it) of the private rented sector.
Peacock argued that homeless families would be sent into a sector where ‘if you complain and try to enforce your rights, you lose your home’.
All five called for greater regulation - and Mayer even cast off his role as government functionary to make a personal plea.
‘You’ve got a hidden social housing sector out there that’s been ignored, ignored, ignored,’ he said. ‘And that is tenants in the private rented sector paying housing benefit to landlords where there’s no control or quality of service provided by those landlords other than in homes in multiple occupation.’
So can they succeed in changing the detail of the reforms to something more acceptable? Much could depend on convincing the Lib Dem members of the committee.
With 13 Conservative members, 11 Labour and one Democratic Unionist, the three Lib Dems hold the balance of power on the committee just as they do in the Commons.
Gilbert (St Austell & Newquay) is chair of the Housing All-Party Group and has been active on issues like second homes, park homes, rogue landlords and cuts in Supporting People. He’s also pledged to ‘ensure that this policy is gone through with a fine toothcomb to ensure that it will deliver the right changes in the right way’.
Ward (Bradford East) has already expressed opposition to the idea of cutting housing benefit for the long-term unemployed and attacked Eric Pickles for the ‘chaos and devastation’ he caused when he was leader of Bradford Council in the 1980s.
Even more significantly, he signed an early day motion last year arguing that ‘the only way to allow for greater mobility of council and social housing tenants to enable them to move to where the jobs are is not to reduce the security of tenure to which tenants have a right, but to increase the stock of public housing so that it can not only cope with the increased demand but also allow for more mobility of tenants’.
The third Lib Dem member is communities minister Andrew Stunell. Now one of the leading defenders of the reforms, he signed an EDM in the last parliament backing ‘a new generation of first-class council housing to provide secure tenancies and low rents’ and open allocation policies to return estates ‘to the mixed and sustainable communities they used to be’.
Last week’s second reading debate also revealed some unease within the coalition among MPs not on the committee. Influential Lib Dem Simon Hughes welcomed localism but said it has to be ‘localism with parameters guaranteeing that we build and increase the number of social homes, and at prices that people can afford’.
And Tory Martin Vickers expressed reservations about time-limited social tenancies ‘because the shorter a tenancy period, the less incentive there is for someone to contribute to maintaining the property and enhancing the area in which they live’.
Something to work with on the detail then? The government agreed an independent review of the housing benefit changes in the House of Lords this week. Maybe now it’s the turn of the House of Commons?
What’s happening to Supporting People in Cornwall provides a graphic illustration of the way that councils around the country are imposing disproportionate cuts in services - and an early test of whether protests can change their minds.
A survey published by the National Housing Federation (NHF) today finds that 73% of providers say that their local authority is imposing cuts of more than the 12% reduction in real terms announced in the spending review. Supporting People budgets have been vulnerable to being raided for other purposes since the previous Labour government removed ringfencing.
Councillors in Cornwall agreed a 40% cut in Supporting People over the next three years in November. However, when the government announced the allocations in mid-December the council was the only authority in the South West to be given an increased grant for 2011/12. Even after complex formula grant calculations it will still receive much the same as last year.
Despite that the cuts are still going ahead. Housing organisations and charities with contracts expiring on more than 80 services have been told they will have to make do with 60% of the previous contract price.
Stonham’s contract to provide floating support has already been cancelled from the end of March and vulnerable tenants face 12 months with no support as the service is unlikely to be reinstated until 2012/13.
The Supporting People commissioning body meets on Thursday to consider the impact of the cuts in services and local housing organisations hope this will be a chance to slow down the process and persuade the council to think again.
In addition to the leader of the council and the portfolio holder for adult care and support, the voting members on the commissioning body also include the portfolio holder for housing and representatives from the NHS and the Probation Service. All three can expect increased costs against their budgets as a result of the £5.6m cuts.
Local campaigners cite the case made by Eric Pickles to the communities and local government committee before Christmas that: ‘Most sensible local authorities will come to the conclusion that £1 spent on Supporting People will probably save them £5 or £6 further down the line.’
‘Councillors were saying that it’s not our fault, it’s the government,’ says John Coventry, vice-chair of the Cornwall Providers
Forum. ‘It’s now clear to a number of them that the cut in SP spending in Cornwall goes way beyond any cut the government may have made in Cornwall’s grant.
‘Almost by definition we are going to see an increase in homelessness. That will impact on the NHS, ambulance services, hospitals and GPs and on the whole criminal justice system who will have to pick up the tab. Saving £6m a year is actually going to cost the council and other public services £30m.’
So is this a case of ‘I agree with Eric (and Grant)’? Hmm. Yes and no.
Immediately before the bit I quoted above Pickles told the select committee: ‘I am aware of some places in the country that are taking significant cuts in Supporting People—I completely deprecate that. But most local authorities are protecting the scheme, not just to help vulnerable people but because it also makes enormous economic sense. One of the consequences of localism is that you have to allow local communities to make decisions about where that spending goes.’
The NHF survey suggests he got that wrong: 73% of providers reported cuts of more than 12%, 41% more than 20% and 18% more than 30%.
Can that really be a complete surprise to the government that councils facing deep and front-loaded cuts choose to raid a budget that is not ringfenced? And is it enough to leave it up to localism when the cuts do not just threaten the most vulnerable people in local communities but will also cost other public services more?
The regulators of the mortgage market got it horribly wrong in the noughties. Can they do any better this time around?
The big issue over the next few months is going to be the mortgage market review (MMR) by the Financial Services Authority (FSA). However, a European directive on responsible lending and borrowing is also due soon.
And lurking in the background is the small matter of lenders having to repay hundreds of billions of pounds worth of government support that was pumped into the market in the wake of the credit crunch: £110bn under the special liquidity scheme by January 2012; and £120bn under the credit guarantee scheme by 2014.
The MMR is designed to prevent a repeat of the irresponsible lending that fuelled the house price boom and contributed to the credit crunch and recession. Draft proposals envisage a requirement that all borrowers must verify their income, affordability tests for all borrowers and extra protection for vulnerable borrowers with a credit-impaired history.
They sound superficially sensible but they have prompted a vociferous and at times hysterical response from lenders and the national media. In November the Council of Mortgage Lenders (CML) accused the FSA of failing to understand how markets work.
Some housing organisations agreed. Eight groups led by the Home Builders Federation claimed that half of the current 11m mortgage borrowers would not have got a loan at their current level and 2.2m would not have got one at all.
However, others, including Citizens Advice and Shelter, said it was vital not to allow a return to the soft-touch regulation that had devastated the market in the first place.
Caught in the middle, ministers have been sending out contradictory signals: Grant Shapps made his admirable speech about house prices but also told a lunch in December that ‘I think it was at the moment that I realised I wouldn’t have a mortgage if the MMR changes went through that I thought this might be going a step too far’; David Cameron said lenders had already gone too far in preventing ‘good risk’ borrowers getting a mortgage.
Getting regulation right will involve striking a delicate balance between making the current market downturn worse without contributing the next boom and making it easier for first-time buyers to get on to the housing ladder without inflating the next house price bubble.
All those issues and more were raised in an adjournment debate in Parliament this week by Conservative MP Robert Syms. He told MPs: ‘I am concerned that if we are not careful, as a result of the excesses of a few lenders in the last property boom, we will have a set of rules that impairs some of those who are more marginal borrowers, makes it more difficult for people to get on the housing ladder, and penalises many lenders by putting up their costs, and that will not lead to a diverse, flexible market where there is innovation.
Syms warned that the review risked excluding first-time buyers and the self-employed from the market, trapping anyone with a credit-impaired history in their current loan and condemning shared ownership as a ‘high risk’ market.
It all seemed set up for the financial secretary to the Treasury Mark Hoban to agree and complete the government cave-in to the powerful interests who have a stake in rising house prices.
Instead he mounted a surprisingly robust defence of the FSA and its plans and insisted that the right balance had to be struck. He pointed out that the boom in mortgage lending between 2003 and 2008 led to a huge increase in house prices - but that the number of loans to first-time buyers and the overall level of owner-occupation both fell.
The FSA would carefully assess the effect of any changes before it introduced them, he said, and was committed to a transitional period. The self-employed would have do more to disclose their income (for example, submitting their tax returns). First-time buyers were already frozen out of the market and the emphasis on affordability would create a more stable market that would help them in the long run. There was ‘no in-built prejudice’ against shared equity but borrowers would still need to show they could pay the mortgage and the rent.
Leave aside that confusion between shared equity and shared ownership and it was impressive stuff. Perhaps the Treasury really is committed to the sort of regulation that will be vital to the long-term house price stability envisaged by Shapps?
The government’s radical reforms of social housing do not go far enough for one of the landlords that has lobbied hardest for them.
No prizes for guessing that I’m talking about Westminster City Council. Or that it strongly supports most of the proposed changes, from flexible tenure to homelessness
But there are some interesting differences of emphasis in its response to the consultation that ended this week and some glimpses of what the future holds for tenants and homeless families in the borough.
On top of what’s proposed in the consultation, the council wants the ability to charge tenants higher rents as their incomes rise, the power to take possession action against under-occupying tenants, no automatic right to security of tenure for existing tenants who move and safeguards against legal challenges to discharging its homelessness duty into homes in other areas.
Westminster’s starting point is that ‘we would always want households to be better off when working’. That means flexible tenancies should not disincentivise work and that it would only end tenancies for households who can afford alternative market or intermediate housing and where there are alternatives available.
The council also wants housing associations to be required to conform to borough housing strategies when they introduce affordable rent - any tenancies would have to benefit Westminster residents through in-borough development or nomination rights to out-of-borough developments.
But it has ‘concerns that some products will be more attractive than others, making some difficult to market and explain to customers, and applicants may simply wait for a tenancy at a target social rent or with security of tenure’.
And it argues that local authorities should be able to charge higher rents for flexible tenancies as tenants’ incomes rise to provide more harmony with association tenancies.
Westminster supports fixed-term tenancies of longer than two years for groups such as older people in sheltered housing, tenants decanted due to regeneration and transferring tenants that are downsizing. But it says local authorities should generally have as much flexibility as possible when setting fixed terms because they are a way of addressing under-occupation.
And it disagrees with the government that existing tenants should automatically get security of tenure when they move to another social rent property. Instead, it argues it should be up to landlords: anyone who has been decanted due to regeneration or who is downsizing should get security; but households moving to a larger property should not ‘as this would limit the landlord’s ability to address future under occupation, and it is these larger households that are more likely to under occupy in the longer term’.
It also wants a new power for social landlords to free up under-occupied homes to house over-crowded families. Ground 16 of the Housing Act 1985 should be changed ‘to allow landlords to take possession action in circumstances where the accommodation offered by the dwelling is more extensive than reasonably required by the tenant and their family, rather than just restricting the use of this Ground to under occupying successors’.
The council says it would take five factors into account when deciding whether to re-issue a fixed term: ongoing need for social housing; under-occupation; availability of market or intermediate housing that does not act as a work disincentive’; whether the property was on a regeneration estate and the tenant needed to be decanted; and evidence of fraud or anti-social behaviour.
However, it estimates that if all if its 600 council lets a year were on a flexible tenancy, ‘it is likely the vast majority of them at least in the short and medium term would be renewed, as in the main tenants’ circumstances aren’t going to change quickly’.
The council strongly supports the proposed change in the homelessness legislation and expects to use the power to discharge the duty into the private rented sector where the accommodation is appropriate and suitable. In some cases ‘discharge is likely to be out of borough given the LHA caps’.
It argues that: ‘Losing a home unexpectedly clearly represents significant upheaval and distress for households. Nevertheless it should be seen as a temporary housing problem, and we would expect to use fast access to high quality private sector accommodation as the primary means of offering housing stability to homeless households to whom we have accepted a statutory duty.’
As seen in correspondence between cabinet member for housing Philippa Roe and Grant Shapps that was leaked to Guardian blogger Dave Hill last year, Westminster was lobbying for many of the changes long before the consultation paper was published.
A particular worry then is reflected again in its response: ‘There is a concern that our need to discharge duty out of borough may result in increased challenges on grounds of suitability. We would urge government to ensure that the legislation is not restrictive on where the new home should be.’
Westminster is clearly keen to get moving as soon as possible: ‘We would welcome the ability to implement this change now, for those households currently in temporary accommodation for whom the private sector would be a good solution, but who are not willing to take up this option.’
But will those private rented homes be available? Westminster says that the LHA caps and £500 a week limit on total benefits are both likely to reduce supply in the borough itself, especially for larger families. It says it cannot comment on the situation in other areas ‘although it is likely there will be competition for supply in boroughs within the LHA caps’.
The battle over the detail of of the Localism Bill is yet to come but it’s clear from last night’s second reading debate that a key principle is missing.
I’m leaving aside for the moment the more obvious principles in the social housing reform paper that have yet to be scrutinised or debated. The timetable for the Bill more or less takes them as read anyway - consultation ending on the same day as the second reading; publication of responses promised within three months when the committee stage of the Bill will be concluded in less than two; and no sign yet of the impact assessment of the legislative changes promised for introduction of the Bill.
In purely housing terms, the gap I’m talking about is the one noted yesterday by the Chartered Institute of Housing: that allowing local authorities to discharge their homelessness duty into the private rented sector is not accompanied by any funding or powers to regulate private landlords.
Reforms proposed by the Rugg Review under the previous government were tellingly dismissed by Iain Duncan Smith from a sedentary position in a parliamentary debate as ‘bureaucratic nonsense’.
However, in the wake of housing benefit cuts that will affect a million private tenants and force many to move, fixed-term social tenancies that could see tenants forced to move out when they get a pay rise and homelessness changes that will see hundreds of thousands of families move from leased private temporary accommodation into unregulated private tenancies, the case for them has to be even stronger now.
And then there’s the wider political context. The number of private tenants in Britain rose from 2m to 3m in the noughties. Yet less than half of them are registered to vote and those at the most insecure end of the sector are the least likely to be.
That’s already a big problem for British democracy but things will get even worse when the coalition introduces its plans to reduce the number of parliamentary constituencies. Each will be based on an equal population - but only of those registered to vote, meaning that areas with a big private rented sector will be dramatically under-represented.
But it’s be a problem for the Localism Bill and its lofty talk of empowerment too. Speaker after speaker in the second reading debate last night enthused about the way that communities would be empowered to make decisions for themselves.
As Eric Pickles put it: ‘The Bill will give councils and communities the power that they need to tackle the housing challenges that they face. The coalition Government have inherited a deep housing crisis. Five million people languish on waiting lists, and many them have no chance whatever of being allocated social housing. It is a failing that hundreds of thousands of families live in overcrowded conditions while other homes are under-occupied, and that in half of all families who live in social housing, no one works.’
Because the disenfranchisement of those homeless and badly housed people, and the way that they can be forced to move at the whim of their landlord or the latest cut in housing benefit, ensures that they are not really part of those communities at all.
Conservative backbenchers queued up to praise the way that the Bill will scrap regional strategies and let communities decide how many new homes are needed and where they should go. But it is communities of the comfortably housed who will have the final say.
Monday January 17. The deadline for responses to the government’s consultation on its social housing reforms and the day the second reading of the Bill that will introduce them will be debated in the House of Commons.
I’ve argued before that both the consultation and the legislation are being rushed through in a manner that does not bode well for the effectiveness of the reforms or for future tenants. But that was before I’d read the response from the Chartered Institute of Housing (CIH)
It’s all the more powerful for coming from an organisation representing housing professionals that is clearly intent on working with the government. It supports the broad aims behind the reforms and was arguing for more flexiblity, localism and transparency in social housing long before they were proposed.
And yet its response, which was informed by a broad consultation with members, reveals a litany of problems and contradictions that threaten to undermine both the reforms and the government’s wider aims. ‘The short time offered for consultation is very problematic because it hinders ability to think through the complexities of the changes, and as such adds an unnecessary level of risk to national and organisational decision making,’ it argues.
Here are a selection of its responses to the key proposals. The full document should be available here later.
The CIH supports the general principle of flexible tenure, including fixed terms, but says the emphasis must be on offering tenants positive choices rather than ‘enforcing particular behaviour or eligibility’.
‘We are loathe to see social housing becoming exclusively welfare provision, with eligibility policed and managed by housing staff,’ it argues. ‘Tenancy reviews which determine whether someone keeps their home will be confrontational and not conducive to a positive landlord-tenant relationship,’ it argues.
And it has ‘strong reservations about the workability and possible adverse effects’ of the current proposals. They will lead to social housing becoming more residualised and stigmatised without addressing the fundamental problem of offering housing options at a price people can afford.
Two years is too short a minimum term because it will increase costs for landlords without necessarily delivering better outcomes for tenants. It risks creating a major and perverse disincentive for tenants to change their circumstances as well as creating instability in households and communities. Five years would be more appropriate.
It argues for a new approach that preserves security of tenure for all households but ends the guarantee of sub-market rents for tenants whose financial or other circumstances improve.
‘There is a definite concern within the housing profession that, despite being described as flexibilities, the proposed approaches will eventually become required practice,’ it warns.
The CIH argues that affordable rent is not the right approach to funding new social homes - and that the term ‘creates difficulties because it does not correlate with people’s ability to pay’.
It argues instead for more flexibility for landlords to manage their assets to cater for a wider range of needs and that this would raise revenue in a fairer and more effective way. Providers should be able to let homes on assured rather than fixed tenancies and to convert existing social rent to a tenure other than affordable rent if they choose.
On allocations, the CIH is ‘sceptical that closing housing registers will do anything more than reducing the number of people on them – it will not improve access to social housing or create more housing options for people struggling to meet their needs.
On homelessness, the CIH welcomes the broad thrust of the reforms including (controversially) allowing local authorities to discharge the duty into the private rented sector.
However, it has serious reservations about the availability, affordabilty and suitability of private housing in many areas and says that the reform must be accompanied by more funding and powers to regulate the sector.
That seems unlikely given that the government has dismissed the proposals of the Rugg review as ‘bureaucratic nonsense’. But without some form of tenancy support, the CIH warns of a high tenancy failure rate among the formerly homeless and wants to see further explanation of the plan for the duty to recur if a tenancy ends within two years.
Which brings me back to the timing of the consultation and the legislation. Taking just affordable rent, the policy seems to be still under development even now with contradictory signals emerging from the government.
‘The announcement of a very sketchily formed investment policy, followed by a series of inconsistent statements on the nature of its operation, has made it very difficult for housing professionals to plan for or evaluate the idea of affordable rent,’ says the CIH. ‘It is notable, for example, that the proposed tenure types to be used for affordable rent in this consultation and in the ministerial statement of 9 December are significantly different. This wastes time and effort, and causes great uncertainty.’
It highlights a whole series of problems that do not seem to have been remotely addressed yet. As things stand, the proposed rent levels would be unaffordable for most social housing tenants in high value areas and would be unlikely to generate enough revenue to support development in lower value areas. The proposals could lead to an overall increase in housing benefit, making future provision of housing vulnerable to any further cuts. And it points out that the consultation paper says that affordable rent will be required to be a fixed-term tenancy whereas the minister says that it won’t.
There could be political difficulties too as local authorities wake up to fact that housing associations are raising rents in one area to fund development in another. And the policy does nothing to address the housing needs of the millions of people who don’t qualify for priority for social housing but still can’t afford private housing.
That would be quite a list of problems to address even if there were several months to go before the legislation was drafted. With MPs due to start the debate on the second reading of the Localism Bill this afternoon, it looks an impossible task. Act in haste - repent at leisure.
Do I detect just a hint of double standards about the government’s attitude to empty property and anti-social behaviour?
Both seem more than justified on the surface and just to drive the point home the ministers have some powerful human stories to back up their case: the council that tried to seize the empty home of a 96-year-old as soon as he died in a nursing home; the divorced father who faced action because he only lived in his property at weekends when he visited his kids; the Sheffield tenant who faced eight months of abuse at the hands of a neighbour who made death threats against her; and the Derby tenant in her 80s who suffered sleepless nights and distress at the hands of noisy and abusive neighbours.
On the face of it, the human rights of both the property owners and the tenants are being flagrantly abused and anything the government can do to help has to be welcomed.
But then we come to the detail. Among other measures, Shapps is planning to introduce a new mandatory ground for possession to allow social landlords to evict anti-social tenants much more quickly. The DCLG press release explains: ‘Being found guilty of housing related anti-social behaviour in one court will provide automatic grounds for eviction in the county court, removing the need to prove the incidents of anti-social behaviour for a second time.’
Removing legal red tape and making it easier to solve the problem might seem to be justified but the other side of that coin is that someone can lose their home without any chance to argue their case in court - and the judge has no choice but to grant a possession order even if they think there are mitigating circumstances.
As several people have already pointed out in the discussion on Inside Housing’s news story, the problem is not necessarily solved either - simply transferred into the private rented sector.
And what exactly is ‘housing-related anti-social behaviour’? The excellent nearlylegal blog has more on this and a much more detailed discussion of the legal issues involved, pointing out that a criminal conviction can already be taken into account in civil possession proceedings without having to be proved again and the way the Pinnock case has made ‘mandatory’ a trickier concept that in my summary above.
In the meantime, Pickles is acting ‘to protect the rights of homeowners’. Local authorities can currently apply for an empty dwelling management order (EDMO) on a property that has been empty for more than six months. He complains that the property does not have to have been blighted or boarded up and it may even already be on the market if the council believes the price is ‘unrealisitc’ - and councils can seize the furniture and fixtures and fittings even in cases where the property was empty after the owner died.
In future, EDMOs will only apply to empty properties that ‘have become magnets for vandalism, squatters and other forms of anti-social behaviour’. The property will have to have been empty for more than two years and owners will have to be given at least three months’ notice.
That sounds sensible too - until you realise that only 44 EDMOs have been granted in four years and that empty property owners already enjoy a range of exemptions. Under the legislation, an EDMO cannot be sought if a property has been lived in at any time within the previous six months (which would seem to let that divorced father off the hook), or if the owner is absent because they are being cared for elsewhere or if the owner is expecting to inherit the property following the death of the previous owner (which would seem to cover the other case).
Above all, and unlike neighbours from hell, empty property owners have the chance to argue their case before a residential property tribunal and to appeal against a final EDMO. And the property is only ‘seized’ in the sense that it is compulsorily leased (for up to 12 months under an interim EDMO or up to seven years under a final EDMO) and then returned to the owner almost certainly in better conditions.
There is more to both announcements than the bits I’ve highlighted, including some welcome incentives to bring empty homes back into use through the new homes bonus and greater support for tenants and landlords on anti-social behaviour.
But compare and contrast the coalition’s attitude to the rights of tenants and property owners and landlords. Not just on empty property and anti-social behaviour either.
For owners, there is freedom from HIPs, imposed housing targets and planning restrictions on home improvements. For landlords there is flexibility on new tenancies and rents and the scrapping of Labour plans for licensing. For tenants, there are the scrapping of extra regulation in the private rented sector, the removal of security of tenure on new social tenancies and cuts in housing benefit and legal aid.
What are the chances of the dip in house prices in 2010 turning into a bigger fall in 2011?
According to the Halifax house price index today, prices fell 1.6% over the year. However, that compares the final quarter with the last three months of 2009. Comparing December 2010 with December 2009, the fall was actually 3.5%.
With few signs of any imminent rise in lending that would support higher prices or any increase in forced sales that would send them sharply lower, most forecasters expect something broadly similar in 2011. However, the ever downbeat Capital Economics predicts a fall of 10%.
For its part, the Halifax expects ‘limited movement in house prices during 2011 but with the risks on the downside’. Interest rates will remain low for some time, it says, boosting affordability for anyone entering the market and limiting pressure on existing owners to sell. However, economic uncertainty, weak earnings growth and higher taxes will all reduce demand.
The Halifax index is down 19% since the peak of the market in May 2007. However, that period has seen three distinct phases: a sharp fall until April 2009 as the credit crunch took hold; a recovery up to January 2010 as interest rates were cut to a record low; and another fall through most of last year.
Prices are still 5% higher than in the Spring of 2009 and another fall in a year of cuts and unemployment would not be a huge surprise.
Market fundamentals also suggest that prices are still over-valued in relation to earnings. The average house is now worth 4.47 times average earnings. That’s down from a peak of 5.81 in 2007 but is still significantly above the average of 4.00 seen since 1983.
Meanwhile a report last week suggested that potential new buyers have already seen the writing on the wall. According to the Bank of England credit conditions survey, demand for secured credit to fund a new house purchase fell markedly in the three months to December and was expected to fall further over the next three months. Lenders blamed the fall in house prices in the second half of the year, a general weakening in sentiment towards the housing market and uncertainty over the economic outlook in the wake of the spending review.
Two more factors add to the uncertainty. First, lenders seem set to face stricter regulation as a result of the Financial Services Authority’s mortgage market review - although the FSA is under some political pressure to water this down.
Second, the banks are due to repay £130bn under the Bank of England’s special liquidity scheme by the beginning of next year. That, plus capital requirements that encourage lenders to concentrate on low-risk borrowers, means there is little prospect of an increase in mortgage lending this year.
However, the key factor will be what happens next on interest rates. The Bank of England monetary policy committee meets on Thursday and most commentators expect it to keep rates at a record low 0.5%. However, if inflation continues to run significantly ahead of its target of 2%, an increase will become increasingly hard to resist.
That would send the factors that put a floor under prices in 2009 into reverse. In mid 2007 a typical borrower was spending 48% of their disposable earnings on their mortgage. They are currently spending just 29%.
Homeowners have effectively been enjoying a huge - and artificial - boost in their incomes. Sooner or later that has to come to an end.
For the moment prices seem to be falling gently in much the way that Grant Shapps hoped for. However, there is a risk of a sharper fall.
So the bonfire of the quangos has turned out to be a damp squib and the government cannot say how much it will save.
According to today’s report from the public administration committee, the Conservative manifesto pledged to save £1bn a year from quango bureaucracy, the coalition programme for government said it would ‘reduce the number and costs of quangos’ and produce savings of £500m a year.
But when the committee asked cabinet secretary Sir Gus O’Donnell for the latest estimates on savings he insisted that the ‘primary reason for the reforms to public bodies is to ensure that accountability rests in the right place’. He was unable to produce any estimate of the total savings, merely saying that quango reform would ‘make a contribution’ to wider targets for administrative savings.
So far, so obvious. A process that led inevitably to thousands of fat redundancy cheques and which abolished organisations rather than the functions they were responsible for was never likely to produce the savings envisaged.
But the problems with the bonfire of the quangos go deeper than that, according to the committee. The review of public bodies was poorly managed with no meaningful consultation, no clearly defined tests to be used and no proper procedure for departments to follow. The Bill giving the government the power to carry out the changes was so badly drafted that it is being significantly re-written in the House of Lords. And an opportunity was missed to transfer more activities to charities and mutuals.
And the bonfire is far from the only coalition reform to be introduced with what seemed like common sense in theory only to prove to be more complicated in practice.
Or the news in Inside Housing today that plans to force housing associations to publish details of all their spending above £500 could result all of their £40bn worth of borrowing being transferred into the public sector.
Or the way that the consultation on the most radical reforms of social housing for a generation has been squeezed with a deadline that breaches the government’s own guidelines to meet the timetable for the Localism Bill that will introduce them.
Supporters of the reforms will no doubt argue that decisive action is necessary to drive them through against entrenched vested interests - and cite Tony Blair’s ‘scars on my back’ complaint about resistance to his attempts at public service reform.
However, the dangers of a gung-ho reliance on common sense are there for all to see in today’s report - and the issues at stake in future are a lot more important than whether the Tenant Services Authority and Audit Commission retain their independence.
Like a stone dropped into the middle of a pond, the new affordable rent regime is going to produce ripple effects that go far beyond the apparent intention of giving landlords the flexibility to charge near-market rents on fixed term tenancies.
Two reports out this week conclude that housing associations will need greater clarity on issues such as rent policy, allocations and housing benefit as well as greater freedom and flexibility to operate as social businesses.
According to PricewaterhouseCoopers and London & Quadrant, if we get it right the result will be ‘vibrant, economically strong communities with a healthy degree of social mobility and social engagement’. But get it wrong and ‘we run the risk of increased poverty, of immobile communities isolated by income, alienated from the mainstream of society’. No pressure then.
And another report from accountant Beevers and Struthers concludes that demand for social housing can only be met by even more policy changes.
All the emphasis so far has been on whether associations can meet the government’s target of 150,000 new affordable homes over the next five years (and 400,000 over the next decade). Beever and Struthers says the maximum possible is 131,000; PwC and L&Q say 150,000 is possible but only if we realise that rents at up to 80% of market levels are not a magic bullet.
Beyond stretching the definition of ‘affordable’ to the limit, that will mean action on a wide range of fronts: giving associations more operational and financial flexibility; closer working with local authorities; continued use of government grant; maintaining lender confidence on regulation and welfare reform; and planning reform to maximise planning gain.
The implications, in other words, go well beyond anything that was published in the consultation paper before Christmas.
Seminar presentations from officials at the DCLG, HCA and TSA (go here for details) are filling in some of the gaps on how the new regime will work on the ground and in particular how grant will be part of a wider system of subsidy that also includes section 106, sales and conversion of voids.
Flexibilities in asset management will be part of a crucial safety valve, say PwC and L&Q, to enable associations to cope with increased financial risk and income volatility. And the end of rent convergence over the next few years will offer ‘the chance to develop a new rental settlement….covering existing social tenants as well as new tenants’.
My guess is that there are enough associations out there willing and able to become the ‘more agile and innovative social businesses’ they envisage - and who want access to the grant funding - to enable the new system to work on a financial level, albeit one with much greater risks.
The question that I’ve not seen answered is what happens to the customers of those businesses - the tens of thousands of families who would previously have received secure social tenancies at around half of market rents.
If those same families get fixed tenancies at rents of up to 80% of market levels, there are clear implications for work incentives, the housing benefit bill and their ability to pay given changes such as the 10% reduction in housing benefit for anyone out of work for more than 12 months.
If the homes go instead to working households able to afford the new rents, then those families will be displaced into the private rented sector on even higher rents with even greater implications for work incentives, the housing benefit bill and more.
Little wonder that both reports call for greater clarity both on the housing benefit caps and the future of direct payment to landlords under the new universal credit. One worry is the impact of the proposed £500 a week cap on total benefits but another should be the disconnect between a rent increase formula that will continue to be based on RPI + 0.5% and plans to uprate benefits by much lower CPI.
One of the few attempts I’ve seen to project the impact on tenants and potential tenants came on the excellent Red Brick blog. Graham Martin of the Labour Housing Group projects that by 2014 there will be 285,000 more housing association homes let at intermediate rents - 150,000 newly built and 135,000 re-lets. However, the number of target (social) rent homes will fall by 50,000 because re-lets at intermediate rents will outnumber completions though the continuing social rented programme.
As he points out, that’s a relatively small change when seen against the total association stock of 2.3m homes - but the effects will be concentrated in London and the South East because that’s where affordable rent will work best.
Given all that, it’s just as well that according to the DCLG’s presentation on affordable rent [download here], housing need peaked in 2009 and will fall steadily over the next decade. Just as well - and rather convenient.
Stretching definitions is one thing - solving the underlying problems is quite another.
Grant Shapps is spot on with his New Year message about house prices but can he possibly deliver on it?
The housing minister got good coverage in print and on the radio and TV with his call for a long period of stability - a period of 10 to 20 years in which earnings rise faster than house prices.
And justifiably so. As Evan Davis put it on the Today programme, many people will see it as ‘a hallelujah moment - a politician, namely you, has advocated lower house prices’.
That’s right - although it does ignore another hallelujah moment from Labour’s John Healey when he said in December 2009 that a fall in homeownership might not be a bad thing and was lambasted by Shapps for being anti-aspiration.
Shapps said it was part of the coalition government thinking long term. ‘And actually over the long term it would perhaps be desirable over a longer period of time if house prices didn’t do very much at all. Because over a longer period of time that would allow average earnings to catch up.’
That’s pretty much what happened to prices over the last 12 months (the Nationwide recorded an increase of just 0.4% in 2010) and most forecasters expect a similar pattern in 2011 thanks to a continued squeeze on lending by the banks and on real incomes by the government with its austerity package.
But it’s huge step to go from one to two years of stability in prices to ten to 20. House prices did fall in real terms for a few years in the mid 1990s but that was in the lull between a bust and a new boom. You really have to go back to the 1950s to find a decade in which house prices didn’t do much at all.
Shapps highlighted the hubris of promising to end boom and bust in the housing market (© Gordon Brown 1997) at the same time as raising tax on pensions (© Gordon Brown 1997). But he said that did not mean there was nothing that governments could do.
‘It would foolish to go as far as to say that you can simply end boom and bust but there are policies that can have an impact and they include things like housing supply, the way that mortgages operate and whether there are exterior policies such as the pension raid that can have an impact on where people invest their money.’
So far, so good, for the long period of stability, but then he goes and ruins it with a comparison that doesn’t quite fit.
‘If that was to happen for 10-20 years,’ he said. ‘If stability really became a hallmark of the housing market, then just as your fridge and your car and so many other things have become more affordable compared with your total income over a period of time, so with homes.’
It would be nice to think so. The problem is that the prices of fridges and cars have come down due to factors that do not apply to housing. With new homes, mass production might help to a limited extent, maybe some of the components could be manufactured in China, and perhaps even more of the work on site could be done by east Europeans, but there still wouldn’t be much impact on prices. With second-hand homes, it’s hard to see globalisation reducing prices at all - it’s more likely to promote migration to cities like London and increase demand and prices.
A fundamental shift in the market over 10-20 years would mean action on a whole range of issues: on new supply (no real evidence that the new homes bonus will increase it); on taxation (if housing continues to be under-taxed relative to other forms of investment then it’s rational to use homes as investments not places to live); on demographics (if net migration continues to rise without measures to disperse growth around the country, higher prices look inevitable in the South East); and on regulation (putting measures in place to stop irresponsible lending will be a lot easier now than when prices start to rise again).
Is this government - any government? - really up for that challenge?