Wednesday, 26 April 2017

Inside edge

All posts from: August 2011

New deal

Tue, 30 Aug 2011

After a year of writing about cuts in housing benefit, investment and supporting people, rising rents and homelessness and falling housebuilding, it makes a pleasant change to report some good news.

Preparing for self-financing of council housing may be a daunting challenge, with decisions about borrowing that could still go wrong.

However, as I found talking to local authorities and ALMOs with seven months to go until the switch to self-financing, there’s a real optimism about freedom from the dead hand of the housing revenue account in April 2012.

It’s also one of the few housing issues that’s seen consensus between the previous Labour government and Grant Shapps and the coalition – and between local authorities of all persuasions.

My feature in this week’s Inside Housing found that there are still some outstanding issues to be resolved.

For example, it’s still not clear how the government will treat Your Homes Newcastle’s £34m of prudential borrowing that’s outside the subsidy system but within the HRA or the £44m of debt associated with the soon-to-be transferred Byker estate.

And all the councils concerned need to decide how they will finance the new deal: from the public works loans board despite the hike in interest rates; or from a bond market that may not look as attractive now as it did before the latest market turmoil.

What the deal does not do, thanks to the cap on borrowing and the Treasury’s retention of 75% of capital receipts and despite more proposed new freedoms from the DCLG, is allow councils to do much on new build once they have met the needs of existing homes and existing tenants.

However, the mood I found was still overwhelmingly upbeat - and perhaps even a little guiltily upbeat given the doom and gloom elsewhere in local government.

Long overdue though the self-financing deal may be, it’s a long time since that could be said about council housing.

New deal

Tue, 30 Aug 2011

After a year of writing about cuts in housing benefit, investment and supporting people, rising rents and homelessness and falling housebuilding, it makes a pleasant change to report some good news.

Preparing for self-financing of council housing may be a daunting challenge, with decisions about borrowing that could still go wrong.

However, as I found talking to local authorities and ALMOs with seven months to go until the switch to self-financing, there’s a real optimism about freedom from the dead hand of the housing revenue account in April 2012.

It’s also one of the few housing issues that’s seen consensus between the previous Labour government and Grant Shapps and the coalition – and between local authorities of all persuasions.

My feature in this week’s Inside Housing found that there are still some outstanding issues to be resolved.

For example, it’s still not clear how the government will treat Your Homes Newcastle’s £34m of prudential borrowing that’s outside the subsidy system but within the HRA or the £44m of debt associated with the soon-to-be transferred Byker estate.

And all the councils concerned need to decide how they will finance the new deal: from the public works loans board despite the hike in interest rates; or from a bond market that may not look as attractive now as it did before the latest market turmoil.

What the deal does not do, thanks to the cap on borrowing and the Treasury’s retention of 75% of capital receipts and despite more proposed new freedoms from the DCLG, is allow councils to do much on new build once they have met the needs of existing homes and existing tenants.

However, the mood I found was still overwhelmingly upbeat - and perhaps even a little guiltily upbeat given the doom and gloom elsewhere in local government.

Long overdue though the self-financing deal may be, it’s a long time since that could be said about council housing.

Blame game

Tue, 30 Aug 2011

So the planning system for new homes is in crisis? I’m not so sure.

Figures released by the Home Builders Federation (HBF) this morning may suggest there is. According to its Housing Pipeline report, planning applications for new homes in the second quarter of the year were down 24% on the first quarter and 23% on a year ago.

The HBF has garnered some great publicity for its argument against what it sees as ‘irresponsible scaremongering’ by the environmental lobby over the government’s proposed National Planning Policy Framework (NPFF). As I’ve blogged before, ministers appear to believe that some sort of left-wing enemy within is at work at the National Trust and CPRE.

The HBF is right to be worried about nimbyism among the Barbour brigade, as Colin Wiles argues on his blog. But housebuilding is not at a record low because of the planning system.

There’s definitely a housing crisis. There is planning uncertainty caused by the way the government has replaced regional spatial strategies with a new system that has developers complaining it’s too pro-nimby and environmentalists complaining it’s too pro-development.

But a planning system in crisis? A dire shortage of land? Really? If that’s the case:

  • Why do major housebuilders have an average of six years’ worth of land with planning permission at current production levels? That’s up from an average of four years before the credit crunch.
  • Why is the proportion of planning applications approved at the highest level for 10 years? As Brian Green blogs at Brickonomics, DCLG stats show that in March 2011 81% of major applications (for 10 or more homes) were approved. That’s up from a low point of 63% in June 2008 and hardly seems to indicate a system in crisis.

The credit crunch left many housebuilders in serious trouble, with homes that would not sell and landbanks that became a liability because land values had to be written down in their accounts. They responded by reducing their landbanks, disposing of unwanted land and selectively buying new sites, and by cutting production to concentrate on fewer, larger, more profitable homes.

So it’s not a big surprise that the number of planning applications is down. The major builders have enough land to last six years at current production levels and it would be stupid to spend more money on planning when permissions only last for three.

They have been forced to cut production to cope with lower demand caused by the shortage of mortgage finance since the credit crunch and by the way that record low interest rates have propped up house prices.

Do something about that and you might help the millions of young people priced out of home ownership and trapped paying higher and higher rents.

The NPPF may help in the longer term by making it easier to build in the South East – hence the housebuilders’ interest.

In the short to medium term though, it’s no use blaming the planners for the miserable output of new homes. It’s not much use blaming housebuilders either for cutting production to ensure their survival.

Instead blame the banks, with more than 80% of the mortgage market now controlled by just six big firms, and the government, for pulling the plug on housing investment at a time when it should be doing the opposite. 

Blame game

Tue, 30 Aug 2011

So the planning system for new homes is in crisis? I’m not so sure.

Figures released by the Home Builders Federation (HBF) this morning may suggest there is. According to its Housing Pipeline report, planning applications for new homes in the second quarter of the year were down 24% on the first quarter and 23% on a year ago.

The HBF has garnered some great publicity for its argument against what it sees as ‘irresponsible scaremongering’ by the environmental lobby over the government’s proposed National Planning Policy Framework (NPFF). As I’ve blogged before, ministers appear to believe that some sort of left-wing enemy within is at work at the National Trust and CPRE.

The HBF is right to be worried about nimbyism among the Barbour brigade, as Colin Wiles argues on his blog. But housebuilding is not at a record low because of the planning system.

There’s definitely a housing crisis. There is planning uncertainty caused by the way the government has replaced regional spatial strategies with a new system that has developers complaining it’s too pro-nimby and environmentalists complaining it’s too pro-development.

But a planning system in crisis? A dire shortage of land? Really? If that’s the case:

  • Why do major housebuilders have an average of six years’ worth of land with planning permission at current production levels? That’s up from an average of four years before the credit crunch.
  • Why is the proportion of planning applications approved at the highest level for 10 years? As Brian Green blogs at Brickonomics, DCLG stats show that in March 2011 81% of major applications (for 10 or more homes) were approved. That’s up from a low point of 63% in June 2008 and hardly seems to indicate a system in crisis.

The credit crunch left many housebuilders in serious trouble, with homes that would not sell and landbanks that became a liability because land values had to be written down in their accounts. They responded by reducing their landbanks, disposing of unwanted land and selectively buying new sites, and by cutting production to concentrate on fewer, larger, more profitable homes.

So it’s not a big surprise that the number of planning applications is down. The major builders have enough land to last six years at current production levels and it would be stupid to spend more money on planning when permissions only last for three.

They have been forced to cut production to cope with lower demand caused by the shortage of mortgage finance since the credit crunch and by the way that record low interest rates have propped up house prices.

Do something about that and you might help the millions of young people priced out of home ownership and trapped paying higher and higher rents.

The NPPF may help in the longer term by making it easier to build in the South East – hence the housebuilders’ interest.

In the short to medium term though, it’s no use blaming the planners for the miserable output of new homes. It’s not much use blaming housebuilders either for cutting production to ensure their survival.

Instead blame the banks, with more than 80% of the mortgage market now controlled by just six big firms, and the government, for pulling the plug on housing investment at a time when it should be doing the opposite. 

Rhetoric and reality

Thu, 25 Aug 2011

Family intervention seems certain to form a key part of the response to the riots - but is the government doing enough?

So far most of the political noise has been about the police and legal response, with the government pondering evictions and the withdrawal of benefits. 

There are all kinds of problems with measures like this, as I blogged last week, but even the most hardline ministers and local authorities concede that evictions will not be enough on their own and the idea clearly divides Conservatives and Liberal Democrats.

So I was struck by a piece on conservativehome by Cllr Nickie Aiken, cabinet member for children, young people and community protection at Conservative-run Westminster City Council.

The council launched what it calls a Family Recovery Programme in 2008 and it’s since been cited by ministers as a model example of the family intervention approach. 

The idea is to support the most vulnerable and troubled families in the borough for six to 12 months and use the expertise of a multi-agency team of professionals to assess them and intervene. Families taking part have to sign an agreement that sets out sanctions including evictions, parenting orders and care proceedings if they repeatedly refuse to cooperate. 

‘The Family Recovery Programme’s success comes in its simplicity,’ says Cllr Aiken. ‘By sharing information, coordinating resources and pooling expertise local agencies can help our most troubled families.

As such it fits exactly with the pledge by David Cameron last week to address the problems caused by 120,000 ‘problem families’ (and a very similar one by Gordon Brown three years ago to target 110,000 families). 

According to Cllr Aiken, the programme even saves money. ‘The statistics speak for themselves,’ she says. ‘An initial £1 spent on Family Recovery is estimated to help avoid £3 to £4 after 24 months.’

So what’s the problem? The progamme was seen as so successful that it informed the national launch of community budgets last year where 16 areas were given pooled budgets to tackle the families with the most complex needs. 

But Cllr Aiken says the rhetoric has yet to meet the reality. ‘Pooled budgets, including those from large government departments, have failed to materialise and local authorities have struggled to fund programmes despite being able to demonstrate results due to a lack of financial support from Whitehall. Even a Department for Communities and Local Government ‘stock take’ noted that a lack of pooling had stymied the pilot programme’s progress.’

One reason seems to be that other parts of the public sector are reluctant to cooperate with local authorities in the pooled budgets despite clear evidence that family intervention delivers savings for all of them - and ministers elsewhere in Whitehall are reluctant to force them.

And so another programme that saves far more than it costs seems to be struggling (Supporting People, remember, saves more than £2 for every £1 spent) because it doesn’t fit with Whitehall power structures.

Speaking of which, another problem is looming for family intervention in general and Westminster in particular.

According to a council report in June on the implications of the housing benefit changes, 15 of the 51 families in its Family Recovery Programme are in the private rented sector. What will happen to them if they are forced to move out of the borough by the caps? 

I’ve asked Wesminster the question but it also begs a wider one about the winners and losers when families on the local housing allowance are shunted around by the caps (and potentially by more draconian evictions policy too). 

Rhetoric and reality

Thu, 25 Aug 2011

Family intervention seems certain to form a key part of the response to the riots - but is the government doing enough?

So far most of the political noise has been about the police and legal response, with the government pondering evictions and the withdrawal of benefits. 

There are all kinds of problems with measures like this, as I blogged last week, but even the most hardline ministers and local authorities concede that evictions will not be enough on their own and the idea clearly divides Conservatives and Liberal Democrats.

So I was struck by a piece on conservativehome by Cllr Nickie Aiken, cabinet member for children, young people and community protection at Conservative-run Westminster City Council.

The council launched what it calls a Family Recovery Programme in 2008 and it’s since been cited by ministers as a model example of the family intervention approach. 

The idea is to support the most vulnerable and troubled families in the borough for six to 12 months and use the expertise of a multi-agency team of professionals to assess them and intervene. Families taking part have to sign an agreement that sets out sanctions including evictions, parenting orders and care proceedings if they repeatedly refuse to cooperate. 

‘The Family Recovery Programme’s success comes in its simplicity,’ says Cllr Aiken. ‘By sharing information, coordinating resources and pooling expertise local agencies can help our most troubled families.

As such it fits exactly with the pledge by David Cameron last week to address the problems caused by 120,000 ‘problem families’ (and a very similar one by Gordon Brown three years ago to target 110,000 families). 

According to Cllr Aiken, the programme even saves money. ‘The statistics speak for themselves,’ she says. ‘An initial £1 spent on Family Recovery is estimated to help avoid £3 to £4 after 24 months.’

So what’s the problem? The progamme was seen as so successful that it informed the national launch of community budgets last year where 16 areas were given pooled budgets to tackle the families with the most complex needs. 

But Cllr Aiken says the rhetoric has yet to meet the reality. ‘Pooled budgets, including those from large government departments, have failed to materialise and local authorities have struggled to fund programmes despite being able to demonstrate results due to a lack of financial support from Whitehall. Even a Department for Communities and Local Government ‘stock take’ noted that a lack of pooling had stymied the pilot programme’s progress.’

One reason seems to be that other parts of the public sector are reluctant to cooperate with local authorities in the pooled budgets despite clear evidence that family intervention delivers savings for all of them - and ministers elsewhere in Whitehall are reluctant to force them.

And so another programme that saves far more than it costs seems to be struggling (Supporting People, remember, saves more than £2 for every £1 spent) because it doesn’t fit with Whitehall power structures.

Speaking of which, another problem is looming for family intervention in general and Westminster in particular.

According to a council report in June on the implications of the housing benefit changes, 15 of the 51 families in its Family Recovery Programme are in the private rented sector. What will happen to them if they are forced to move out of the borough by the caps? 

I’ve asked Wesminster the question but it also begs a wider one about the winners and losers when families on the local housing allowance are shunted around by the caps (and potentially by more draconian evictions policy too). 

Broken bandwagon

Wed, 17 Aug 2011

Unfair? Unjust? Counter-productive? Unworkable? Bonkers? All of the above? Take your pick from criticism of plans to make it easier to evict the families of people involved in looting.

The bandwagon behind the move has been rolling since last week, with ministers backing moves by Conservative and Labour local authorities and Grant Shapps extending the consultation that had already started on the grounds for eviction for anti-social behaviour.

However, the understandable desire of national and local politicians to be tough on crime and look like they are doing something is running up against some powerful arguments against. The bandwagon is beginning to lose momentum.

Even the Daily Mail, normally one of the cheerleaders for action on Broken Britain, found itself in a quandary when it reported on the family involved in the most publicised eviction case in Tory-run Wandsworth. The council threatened to evict a mother from Battersea after her 18-year-old son was charged with a looting-related offence. 

In its first attempt at the story, posted online on Saturday, the Mail reported it as you might expect. ‘I’m not responsible for my son’s actions - what about my human rights?’ says mother.

But a fuller interview with the family posted the following day was much more sympathetic and the Mail’s moral compass seemed to go haywire when it revealed they were active Christians. 

Meanwhile, as the Nearly Legal blog points out, the piece also raises doubts about whether the council really did issue a notice seeking possession or merely a warning letter. 

It’s an illustration if any were needed that blanket action against the families of looters risks some very rough justice - it seemed a moot point to Wandsworth that the son had not actually been convicted of anything yet.

Opposition also came from Lib Dems at the weekend, with deputy leader Simon Hughes and welfare spokeswoman Jenny Willott both expressing concern about a kneejerk response to the riots. It’s true that the party’s MPs  have talked up their opposition to many coalition housing and welfare policies only to troop dutifully into the government lobby but what’s being proposed here seems so illiberal as to be contradict the reasons they came into politics in the first place.

Meanwhile, on Radio 4’s Any Questions, the eviction plan surprisingly found Joseph Rowntree Foundation chief executive Julia Unwin and right-wing columnist Peter Hitchens on the same side [listen about 10 minutes from the end]. 

To summarise some of the main arguments against: 

  • Collective punishment is unjust. The Israelis bulldoze the homes of the families of suicide bombers. No heavy machinery is involved here but it amounts to the same principle. If the point is to make a moral example, what sort of example does this set? 
  • Singling out social housing is unfair. If  council tenants should lose their homes, why not private tenants and home owners?
  • Why should social tenants effectively be punished twice for the same offence?
  • Why single out housing? Why not cut the entitlement to, say, education for kids who loot and riot? 
  • It’s badly targeted - why evict the mother and the rest of the kids if you think absent fathers are to blame?
  • It may be disproportionate. Why should the family of someone convicted of stealing a  a £7.49 bottle of wine from Sainsbury’s (as one 12-year-old did in Manchester - he got a referral order and his family are now threatened with eviction) face the same sanction as that of someone convicted of arson or murder. 
  • If you evict families involved in looting away from their locality, why not evict them for any crime committed anywhere?
  • Aren’t you simply moving the problem elsewhere? Won’t it just encourage parents to kick their wayward kids out of home rather than risk losing it?

The legal issues are well covered in another post at Nearly Legal. Under the current law, there are discretionary grounds for action against tenants guilty of conduct likely to cause nuisance of annoyance to people in the locality or who have been convicted of an indictable offence committed in the locality. Locality is not defined.

Grant Shapps was already consulting on a proposal to introduce a mandatory ground for possession for people convicted of anti-social behaviour within the locality. He’s now added a question about a new discretionary ground ‘where a tenant or member of their household has been convicted of violence against property (including criminal damage and offences such as arson), violence against persons at a scene of violent disorder or theft linked to violent disorder.  There would in these circumstances be no requirement that the offence had been committed in the locality of the dwelling house, subject to it being committed in the United Kingdom.’

He argues in a covering letter: ‘We know that the threat of eviction can act as a powerful driver of improved behaviour.  It cannot be right for that sanction to apply only to criminal behaviour towards neighbours or in the locality of the property as it does at the moment.  Where a social tenant or a member of their household decides to wreak havoc in someone else’s community, social landlords should have the same scope to take action.’

However, there is a very good reason why the current law states that the offence must have taken place in the locality. The basis for social landlords taking eviction action is that they are acting on behalf of their other residents to help protect and improve their lives. Landlords involved will no doubt argue they will only do so in cases of families they already know are causing problems to their neighbours but the principle that they are acting to protect not to punish seems an important one. Meanwhile, even if the law is changed, the courts will still want to see that any action taken is proportionate. 

So, take your pick, the evictions proposal breaks basic legal principles and it’s arbitrary and unfair.

But there’s another fundamental reason why this is a very bad idea. By singling out social housing, it reinforces the impression that people who live on social housing estates are at best separate from the rest of society and at worst criminals. And it deepens the underlying ideology that says social housing is welfare housing for subsidised losers.

Which amounts to the perfect recipe for more looting and more riots. 

Broken bandwagon

Wed, 17 Aug 2011

Unfair? Unjust? Counter-productive? Unworkable? Bonkers? All of the above? Take your pick from criticism of plans to make it easier to evict the families of people involved in looting.

The bandwagon behind the move has been rolling since last week, with ministers backing moves by Conservative and Labour local authorities and Grant Shapps extending the consultation that had already started on the grounds for eviction for anti-social behaviour.

However, the understandable desire of national and local politicians to be tough on crime and look like they are doing something is running up against some powerful arguments against. The bandwagon is beginning to lose momentum.

Even the Daily Mail, normally one of the cheerleaders for action on Broken Britain, found itself in a quandary when it reported on the family involved in the most publicised eviction case in Tory-run Wandsworth. The council threatened to evict a mother from Battersea after her 18-year-old son was charged with a looting-related offence. 

In its first attempt at the story, posted online on Saturday, the Mail reported it as you might expect. ‘I’m not responsible for my son’s actions - what about my human rights?’ says mother.

But a fuller interview with the family posted the following day was much more sympathetic and the Mail’s moral compass seemed to go haywire when it revealed they were active Christians. 

Meanwhile, as the Nearly Legal blog points out, the piece also raises doubts about whether the council really did issue a notice seeking possession or merely a warning letter. 

It’s an illustration if any were needed that blanket action against the families of looters risks some very rough justice - it seemed a moot point to Wandsworth that the son had not actually been convicted of anything yet.

Opposition also came from Lib Dems at the weekend, with deputy leader Simon Hughes and welfare spokeswoman Jenny Willott both expressing concern about a kneejerk response to the riots. It’s true that the party’s MPs  have talked up their opposition to many coalition housing and welfare policies only to troop dutifully into the government lobby but what’s being proposed here seems so illiberal as to be contradict the reasons they came into politics in the first place.

Meanwhile, on Radio 4’s Any Questions, the eviction plan surprisingly found Joseph Rowntree Foundation chief executive Julia Unwin and right-wing columnist Peter Hitchens on the same side [listen about 10 minutes from the end]. 

To summarise some of the main arguments against: 

  • Collective punishment is unjust. The Israelis bulldoze the homes of the families of suicide bombers. No heavy machinery is involved here but it amounts to the same principle. If the point is to make a moral example, what sort of example does this set? 
  • Singling out social housing is unfair. If  council tenants should lose their homes, why not private tenants and home owners?
  • Why should social tenants effectively be punished twice for the same offence?
  • Why single out housing? Why not cut the entitlement to, say, education for kids who loot and riot? 
  • It’s badly targeted - why evict the mother and the rest of the kids if you think absent fathers are to blame?
  • It may be disproportionate. Why should the family of someone convicted of stealing a  a £7.49 bottle of wine from Sainsbury’s (as one 12-year-old did in Manchester - he got a referral order and his family are now threatened with eviction) face the same sanction as that of someone convicted of arson or murder. 
  • If you evict families involved in looting away from their locality, why not evict them for any crime committed anywhere?
  • Aren’t you simply moving the problem elsewhere? Won’t it just encourage parents to kick their wayward kids out of home rather than risk losing it?

The legal issues are well covered in another post at Nearly Legal. Under the current law, there are discretionary grounds for action against tenants guilty of conduct likely to cause nuisance of annoyance to people in the locality or who have been convicted of an indictable offence committed in the locality. Locality is not defined.

Grant Shapps was already consulting on a proposal to introduce a mandatory ground for possession for people convicted of anti-social behaviour within the locality. He’s now added a question about a new discretionary ground ‘where a tenant or member of their household has been convicted of violence against property (including criminal damage and offences such as arson), violence against persons at a scene of violent disorder or theft linked to violent disorder.  There would in these circumstances be no requirement that the offence had been committed in the locality of the dwelling house, subject to it being committed in the United Kingdom.’

He argues in a covering letter: ‘We know that the threat of eviction can act as a powerful driver of improved behaviour.  It cannot be right for that sanction to apply only to criminal behaviour towards neighbours or in the locality of the property as it does at the moment.  Where a social tenant or a member of their household decides to wreak havoc in someone else’s community, social landlords should have the same scope to take action.’

However, there is a very good reason why the current law states that the offence must have taken place in the locality. The basis for social landlords taking eviction action is that they are acting on behalf of their other residents to help protect and improve their lives. Landlords involved will no doubt argue they will only do so in cases of families they already know are causing problems to their neighbours but the principle that they are acting to protect not to punish seems an important one. Meanwhile, even if the law is changed, the courts will still want to see that any action taken is proportionate. 

So, take your pick, the evictions proposal breaks basic legal principles and it’s arbitrary and unfair.

But there’s another fundamental reason why this is a very bad idea. By singling out social housing, it reinforces the impression that people who live on social housing estates are at best separate from the rest of society and at worst criminals. And it deepens the underlying ideology that says social housing is welfare housing for subsidised losers.

Which amounts to the perfect recipe for more looting and more riots. 

Family values

Mon, 15 Aug 2011

David Cameron’s idea of a family test for all domestic policy is a good one. How about starting with some of his own policies?

His speech on the aftermath of the riots today sees the breakdown of the family as a key cause. ‘Families matter. I don’t doubt that many of the rioters out last week have no father at home. Perhaps they come from one of the neighbourhoods where it’s standard for children to have a mum and not a dad… 

…where it’s normal for young men to grow up without a male role model, looking to the streets for their father figures, filled up with rage and anger.’

The prime minister continued: ‘So if we want to have any hope of mending our broken society, family and parenting is where we’ve got to start. I’ve been saying this for years, since before I was Prime Minister, since before I was leader of the Conservative Party.

So: from here on I want a family test applied to all domestic policy. If it hurts families, if it undermines commitment, if it tramples over the values that keeps people together, or stops families from being together, then we shouldn’t do it.’

What he means, of course, is the well-worn territory staked out in a succession of reports by Iain Duncan Smith’s Centre for Social Justice (CSJ) in opposition.

Cameron’s speech was a little nuanced, with an admission that ‘moral decline and bad behaviour is not limited to a few of the poorest parts of our society’ and references to MPs’ expenses, the banking crisis and phone hacking.

But across large sections of his party the conviction seems to be growing that everything the CSJ had to say about Broken Britain was absolutely correct and the problem is that the government has not gone far enough in general and on tax breaks for marriage in particular. ‘No time for half-measures,’ says the CSJ itself. 

Influential Tory blogger Tim Montgomerie puts it most succinctly. ‘We don’t need an inquiry into the riots,’ he says at Conservative Home. ‘The Centre for Social Justice has been looking at these questions for seven years.’

He concludes: ’ An inquiry would take months, at best, and probably years. We need to seize the moment. Cameron needs to seize the moment and get on with a task that cannot be delayed.’

It’s not exactly an inquiry but Cameron’s family test does at least call for a review of policy. Remember: ‘If it hurts families, if it undermines commitment, if it tramples over the values that keeps people together, or stops families from being together, then we shouldn’t do it.’

For starters, how about the cuts in the local housing allowance that will force people to move miles away from their extended family and social support networks? They may have already started for new claims but it’s not too late to look at the way they hurt families and stop them being together.

How about reconsidering last year’s cuts in funding for things like family intervention projects and SureStart?

How about short-term tenancies? They will reduce work incentives and undermine settled communities on our estates. There’s still one last chance to change that in the Lord’s stage of the Localism Bill.

As for trampling on the values that keep people together, how about a policy that encourages parents to kick their problem children out or face eviction for the entire family?

Above all, what about the £26,000 a year household benefit cap? There’s still chance to amend the Welfare Reform Bill and amend a policy that will ‘bring hardship to as many as 50,000 families who will have the rug pulled out from them overnight. The impact of the average projected loss for such families of £93 a week could be highly damaging, and for some families who are predicted to lose much more, it is likely to be devastating’.

That’s not me speaking. It’s not the view of a Labour-sympathising think-tank. It’s the verdict of the Centre for Social Justice in its report card on the coalition’s first year in office. 

Family values

Mon, 15 Aug 2011

David Cameron’s idea of a family test for all domestic policy is a good one. How about starting with some of his own policies?

His speech on the aftermath of the riots today sees the breakdown of the family as a key cause. ‘Families matter. I don’t doubt that many of the rioters out last week have no father at home. Perhaps they come from one of the neighbourhoods where it’s standard for children to have a mum and not a dad… 

…where it’s normal for young men to grow up without a male role model, looking to the streets for their father figures, filled up with rage and anger.’

The prime minister continued: ‘So if we want to have any hope of mending our broken society, family and parenting is where we’ve got to start. I’ve been saying this for years, since before I was Prime Minister, since before I was leader of the Conservative Party.

So: from here on I want a family test applied to all domestic policy. If it hurts families, if it undermines commitment, if it tramples over the values that keeps people together, or stops families from being together, then we shouldn’t do it.’

What he means, of course, is the well-worn territory staked out in a succession of reports by Iain Duncan Smith’s Centre for Social Justice (CSJ) in opposition.

Cameron’s speech was a little nuanced, with an admission that ‘moral decline and bad behaviour is not limited to a few of the poorest parts of our society’ and references to MPs’ expenses, the banking crisis and phone hacking.

But across large sections of his party the conviction seems to be growing that everything the CSJ had to say about Broken Britain was absolutely correct and the problem is that the government has not gone far enough in general and on tax breaks for marriage in particular. ‘No time for half-measures,’ says the CSJ itself. 

Influential Tory blogger Tim Montgomerie puts it most succinctly. ‘We don’t need an inquiry into the riots,’ he says at Conservative Home. ‘The Centre for Social Justice has been looking at these questions for seven years.’

He concludes: ’ An inquiry would take months, at best, and probably years. We need to seize the moment. Cameron needs to seize the moment and get on with a task that cannot be delayed.’

It’s not exactly an inquiry but Cameron’s family test does at least call for a review of policy. Remember: ‘If it hurts families, if it undermines commitment, if it tramples over the values that keeps people together, or stops families from being together, then we shouldn’t do it.’

For starters, how about the cuts in the local housing allowance that will force people to move miles away from their extended family and social support networks? They may have already started for new claims but it’s not too late to look at the way they hurt families and stop them being together.

How about reconsidering last year’s cuts in funding for things like family intervention projects and SureStart?

How about short-term tenancies? They will reduce work incentives and undermine settled communities on our estates. There’s still one last chance to change that in the Lord’s stage of the Localism Bill.

As for trampling on the values that keep people together, how about a policy that encourages parents to kick their problem children out or face eviction for the entire family?

Above all, what about the £26,000 a year household benefit cap? There’s still chance to amend the Welfare Reform Bill and amend a policy that will ‘bring hardship to as many as 50,000 families who will have the rug pulled out from them overnight. The impact of the average projected loss for such families of £93 a week could be highly damaging, and for some families who are predicted to lose much more, it is likely to be devastating’.

That’s not me speaking. It’s not the view of a Labour-sympathising think-tank. It’s the verdict of the Centre for Social Justice in its report card on the coalition’s first year in office. 

Searching for answers

Tue, 9 Aug 2011

Trying to make sense of the riots is as tough for anyone as it seems to be for David Cameron and Boris Johnson.

Yes, the looting, the violence, the arson have to be condemned and yes the perpetrators have to be tracked down.

Yes, there’s a wider social context too. It seems no coincidence that the riots have happened in parts of London where deprivation is surrounded by affluence. Or that young people raised in a culture that values consumer aspiration above everything else should target the shops that have the merchandise.

But neither response seems enough on its own and even a combination of the two seems like a trite new version of tough on crime, tough on the causes of crime. How can you make sense of something senseless? 

I wasn’t in London yesterday but the TV news pictures took me right down to the summer of 1981, when riots spread within cities and from city to city (and were far more widespread than they have been so far this time around).

As shopkeepers boarded their shops in fear of the night ahead, commuters rushed home early and groups of youths hung around waiting for it all to kick off, the sense then was of a society and normal rules that had broken down, of a political elite completely out of touch with what was happening in the inner cities and of a police force that was part of the problem and struggling to be part of the solution.

Flash forward 30 years, and it seems clear that the police and the politicians have got things badly wrong. As Chris Gilson explains on the LSE politics blog, history should have told them that protests over heavy policing, and especially a police shooting, could trigger a riot.

Think Paris in 2005 and Los Angeles in 1992. Or think back to the other Tottenham riot, at Broadwater Farm in 1985, when the death of Cynthia Jarrett during a police seach of her home led to a terrible riot and the death of PC Keith Blakelock.

In one of the best blogs on the riots I’ve seen anywhere, Steve Hilditch what it felt like next morning on Red Brick:

‘Talking our way through hundreds of riot police, three of us opened the Broadwater farm Neighbourhood Office at 7am the following morning, dealing with many terrified people. Teams of council staff arrived spontaneously and began the clean up.  Shops and cars had been burned out but there was remarkably little damage to the residential parts of the estate – extraordinarily, the glaziers were hardly needed – although the impact on residents’ morale was palpable.’

Back in 2011, I’d seen the riots around the Pembury Estate in Hackney feature prominently on last night’s TV news. Inside Housing’s story today has a small message of hope that the estate was largely untouched by the violence all around it but also a sense of foreboding with Peabody pulling its staff out for fear of more rioting tonight.

Franklyn Addo, the Pembury resident who famously turned down a place at Cambridge, has a slightly different take on the Guardian’s Comment is Free. He tells of an estate that was once plagued by crime.

‘But anyone living here will be able to testify that over the last five years, the area has improved significantly and has become safer to walk through and live in. The local council was committed to providing funding for youth clubs and other regenerative schemes to deter young people from engaging in criminal activities, which contributed to the area improving greatly over time.

‘The events this week will undo years of work to regenerate the estate and restore the confidence of residents in their safety. Early on Tuesday morning, the estate resembled a desolate wasteland.’

He concludes that it will take millions of pounds to restore the damage caused in affected areas and years to rebuild community solidarity and trust. ‘Unfortunately, the mental scars and the afflictions of those who have been injured, those whose homes have been destroyed and those whose livelihoods have been adversely affected by these wholly unacceptable events, may never fully heal.’

The 1981 riots provoked just as much outrage and just as many calls for a police crackdown too. But even Margaret Thatcher knew that it was about the victims too and that more was needed in the inner cities.

The 2011 riots are happening only a few miles from the homes of the political and financial elite of this country but the gap between them and the deprived communities of London is now a million miles further away than it was then. 

Searching for answers

Tue, 9 Aug 2011

Trying to make sense of the riots is as tough for anyone as it seems to be for David Cameron and Boris Johnson.

Yes, the looting, the violence, the arson have to be condemned and yes the perpetrators have to be tracked down.

Yes, there’s a wider social context too. It seems no coincidence that the riots have happened in parts of London where deprivation is surrounded by affluence. Or that young people raised in a culture that values consumer aspiration above everything else should target the shops that have the merchandise.

But neither response seems enough on its own and even a combination of the two seems like a trite new version of tough on crime, tough on the causes of crime. How can you make sense of something senseless? 

I wasn’t in London yesterday but the TV news pictures took me right down to the summer of 1981, when riots spread within cities and from city to city (and were far more widespread than they have been so far this time around).

As shopkeepers boarded their shops in fear of the night ahead, commuters rushed home early and groups of youths hung around waiting for it all to kick off, the sense then was of a society and normal rules that had broken down, of a political elite completely out of touch with what was happening in the inner cities and of a police force that was part of the problem and struggling to be part of the solution.

Flash forward 30 years, and it seems clear that the police and the politicians have got things badly wrong. As Chris Gilson explains on the LSE politics blog, history should have told them that protests over heavy policing, and especially a police shooting, could trigger a riot.

Think Paris in 2005 and Los Angeles in 1992. Or think back to the other Tottenham riot, at Broadwater Farm in 1985, when the death of Cynthia Jarrett during a police seach of her home led to a terrible riot and the death of PC Keith Blakelock.

In one of the best blogs on the riots I’ve seen anywhere, Steve Hilditch what it felt like next morning on Red Brick:

‘Talking our way through hundreds of riot police, three of us opened the Broadwater farm Neighbourhood Office at 7am the following morning, dealing with many terrified people. Teams of council staff arrived spontaneously and began the clean up.  Shops and cars had been burned out but there was remarkably little damage to the residential parts of the estate – extraordinarily, the glaziers were hardly needed – although the impact on residents’ morale was palpable.’

Back in 2011, I’d seen the riots around the Pembury Estate in Hackney feature prominently on last night’s TV news. Inside Housing’s story today has a small message of hope that the estate was largely untouched by the violence all around it but also a sense of foreboding with Peabody pulling its staff out for fear of more rioting tonight.

Franklyn Addo, the Pembury resident who famously turned down a place at Cambridge, has a slightly different take on the Guardian’s Comment is Free. He tells of an estate that was once plagued by crime.

‘But anyone living here will be able to testify that over the last five years, the area has improved significantly and has become safer to walk through and live in. The local council was committed to providing funding for youth clubs and other regenerative schemes to deter young people from engaging in criminal activities, which contributed to the area improving greatly over time.

‘The events this week will undo years of work to regenerate the estate and restore the confidence of residents in their safety. Early on Tuesday morning, the estate resembled a desolate wasteland.’

He concludes that it will take millions of pounds to restore the damage caused in affected areas and years to rebuild community solidarity and trust. ‘Unfortunately, the mental scars and the afflictions of those who have been injured, those whose homes have been destroyed and those whose livelihoods have been adversely affected by these wholly unacceptable events, may never fully heal.’

The 1981 riots provoked just as much outrage and just as many calls for a police crackdown too. But even Margaret Thatcher knew that it was about the victims too and that more was needed in the inner cities.

The 2011 riots are happening only a few miles from the homes of the political and financial elite of this country but the gap between them and the deprived communities of London is now a million miles further away than it was then. 

True blues

Thu, 4 Aug 2011

If I were a Conservative I think I’d be feeling more than a little confused about the government’s attitude to new house building.

This time last year I would have been wrapped in the warm cocoon of nimbyism, celebrating the death of Labour’s detestable regional spatial strategies and dancing on the grave of garden grabbing.

The overwhelming popularity of that policy among our MPs was clear when they queued up to congratulate Eric Pickles during last year’s Queen’s Speech debate. The Home Builders Federation (HBF) called it a ‘recipe for disaster’ but most of us found the ingredients very tasty. 

Yes, I know Grant Shapps banged on about the new homes bonus and turning us into a national of housebuilders but we weren’t really meant to take that seriously, were we Grant?

A year on and the Localism Bill is almost through parliament but the alarm bells are ringing about the government’s real intentions.

First, it proposes to hand community right to build powers not just to local people but to ill-defined interest groups of business people.

Second, the national planning policy framework and that stuff about getting local planning authorities to ‘illustrate the expected rate of delivery through a housing trajectory for the plan period’ sounds like we’ve hired some of John Prescott’s old scriptwriters.

Meanwhile the HBF seems to be getting pretty much everything it asks for when it lobbies the government. 

Third, and most alarming of all, I’m reading a story today that Downing Street is pushing for a target of 450,000 homes a year in a housing strategy to be published in the Autumn. That seems so completely at odds with everything we’ve said about concreting over the countryside that I must admit I ignored it when it first appeared earlier this year.

But now it’s back. It’s by a reporter who knows her stuff (Isabel Hardman, lately of this parish) and she quotes sources close to Downing Street as confirming it even if Grant Shapps and the DCLG deny it. 

Maybe it’s just another half-baked idea from Steve Hilton, David Cameron’s blue-sky thinking guru, but put it together with what’s happening on planning and I’m not so sure. Prescott and Kate Barker converted the last government to the cult of new homes but 450,000 was not even in their wildest dreams.

No wonder No 10’s advisers are apparently warning that a housing strategy like that would frighten the public! They terrify me.

Until I get to think about that number. The only time we’ve even got close to building 450,000 homes was in 1966 (415,000) and 1967 (425,000) and that was for the whole of the UK.

The only reason we did that was because we were building almost 200,000 council houses a year at the time and all the blue sky thinking in the world is not going to make those days come back.

The most that private sector housebuilders have achieved since the war was 226,000 in 1968 - only a few more than the 197,000 they built before the credit crunch in 2007. All of the major firms seem to be concentrating on improving their margins and reducing their volumes at the moment so that seems a distant prospect too.

Which leaves who? Self-builders? Even if thousands of local builders get away with pretending to be self-builders I just can’t see 450,000.

Trouble is, I can perhaps see 250,000. Somehow, without quite realising how, we seem to be on a different side of the argument to the National Trust and the CPRE. This wasn’t what I signed up for. 

True blues

Thu, 4 Aug 2011

If I were a Conservative I think I’d be feeling more than a little confused about the government’s attitude to new house building.

This time last year I would have been wrapped in the warm cocoon of nimbyism, celebrating the death of Labour’s detestable regional spatial strategies and dancing on the grave of garden grabbing.

The overwhelming popularity of that policy among our MPs was clear when they queued up to congratulate Eric Pickles during last year’s Queen’s Speech debate. The Home Builders Federation (HBF) called it a ‘recipe for disaster’ but most of us found the ingredients very tasty. 

Yes, I know Grant Shapps banged on about the new homes bonus and turning us into a national of housebuilders but we weren’t really meant to take that seriously, were we Grant?

A year on and the Localism Bill is almost through parliament but the alarm bells are ringing about the government’s real intentions.

First, it proposes to hand community right to build powers not just to local people but to ill-defined interest groups of business people.

Second, the national planning policy framework and that stuff about getting local planning authorities to ‘illustrate the expected rate of delivery through a housing trajectory for the plan period’ sounds like we’ve hired some of John Prescott’s old scriptwriters.

Meanwhile the HBF seems to be getting pretty much everything it asks for when it lobbies the government. 

Third, and most alarming of all, I’m reading a story today that Downing Street is pushing for a target of 450,000 homes a year in a housing strategy to be published in the Autumn. That seems so completely at odds with everything we’ve said about concreting over the countryside that I must admit I ignored it when it first appeared earlier this year.

But now it’s back. It’s by a reporter who knows her stuff (Isabel Hardman, lately of this parish) and she quotes sources close to Downing Street as confirming it even if Grant Shapps and the DCLG deny it. 

Maybe it’s just another half-baked idea from Steve Hilton, David Cameron’s blue-sky thinking guru, but put it together with what’s happening on planning and I’m not so sure. Prescott and Kate Barker converted the last government to the cult of new homes but 450,000 was not even in their wildest dreams.

No wonder No 10’s advisers are apparently warning that a housing strategy like that would frighten the public! They terrify me.

Until I get to think about that number. The only time we’ve even got close to building 450,000 homes was in 1966 (415,000) and 1967 (425,000) and that was for the whole of the UK.

The only reason we did that was because we were building almost 200,000 council houses a year at the time and all the blue sky thinking in the world is not going to make those days come back.

The most that private sector housebuilders have achieved since the war was 226,000 in 1968 - only a few more than the 197,000 they built before the credit crunch in 2007. All of the major firms seem to be concentrating on improving their margins and reducing their volumes at the moment so that seems a distant prospect too.

Which leaves who? Self-builders? Even if thousands of local builders get away with pretending to be self-builders I just can’t see 450,000.

Trouble is, I can perhaps see 250,000. Somehow, without quite realising how, we seem to be on a different side of the argument to the National Trust and the CPRE. This wasn’t what I signed up for. 

Rents rise as cuts bite

Wed, 3 Aug 2011

Memo to Iain Duncan Smith: the index you used to justify your housing benefit cuts says private sector rents are now at an all-time high.

You’ll remember the brief prepared by the department that produced the killer stat that between November 2008 and February 2010 private rents fell by 5% whereas local housing allowance rates increased by 3%. 

True, you got in a bit of hot water by claiming in a parliamentary debate that the stat came from the Office of National Statistics when it actually came from findaproperty.com, a website owned by the publisher of the Daily Mail. 

But the gap came in very handy when you and ministers Freud and Webb repeatedly argued that the LHA system and greedy landlords had inflated rents and that the cuts would force a renegotiation.

The findaproperty.com index is now out for the second quarter of the year, which covers the first three months of the first round of the cuts. You may want to stop reading here, secretary of state.

Rents rose 1.9% over the quarter to reach an average of £876 a month in June - the highest level since the index began at the end of 2007.

The rise was even bigger in London, where the first round of the cuts such as caps by bedroom size will hit tenants hardest. The good news is that average rents in the capital rose only 0.6% over the quarter, perhaps suggesting a slowdown in the rate of increase. 

The bad news is that rents are up by no less than 14.5% since this time last year - when you first announced the cuts. 

And there’s more bad news too. The average asking rent for a property in London is now £1,979 per month. At this rate, by the time you introduce your overall benefit cap of £25,000 a year in 2013

One small compensation is that the department’s own stats show that the average local housing allowance award has been rising at a much slower rate. In the year to April the average payment went up just 1.1% to £114.66. 

The only problem with that is that it means awards were falling in real terms before any of the cuts came into force. So much for the argument that the government was failing to exploit the bargaining power that comes with housing benefit funding 40% of the market (itself a highly questionable claim).

So what’s going on? As I argued last year, the findaproperty index was never likely to give an accurate reflection of what’s happening in the part of the market funded by housing benefit: it records asking rents not actual rents; it covers rents of new lettings rather than all lettings; and its average rent is more than double the average LHA award.

What it does show, though, is that the key drivers in the market are rising demand and the state of the owner-occupied and mortgage markets rather than the local housing allowance. 

Findaproperty says that the record rents are the result of rising demand across first for flats and now for houses. The price increases happened despite a 10% increase in the number of properties coming on to the market.

Property analyst Samantha Baden says: ‘We are now seeing more rental properties coming onto the market as landlords look to take advantage of the increasing returns. In time this may start to bring rental prices under control but we expect to see rental prices continuing to rise for the foreseeable future.’

The website concludes that ‘buy to let is back’ with the return on investment from rental property now higher than for shares or cash. 

But what’s good for investors and landlords is bad for tenants. As I argued yesterday, demand is coming from the super-rich at the top of the market and frustrated buyers in the middle. 

That’s feeding into rent increases across the board at exactly the same time as the local housing allowance is being cut and the Localism Bill is set to push thousands more homeless families into the private rented sector. 

Rents rise as cuts bite

Wed, 3 Aug 2011

Memo to Iain Duncan Smith: the index you used to justify your housing benefit cuts says private sector rents are now at an all-time high.

You’ll remember the brief prepared by the department that produced the killer stat that between November 2008 and February 2010 private rents fell by 5% whereas local housing allowance rates increased by 3%. 

True, you got in a bit of hot water by claiming in a parliamentary debate that the stat came from the Office of National Statistics when it actually came from findaproperty.com, a website owned by the publisher of the Daily Mail. 

But the gap came in very handy when you and ministers Freud and Webb repeatedly argued that the LHA system and greedy landlords had inflated rents and that the cuts would force a renegotiation.

The findaproperty.com index is now out for the second quarter of the year, which covers the first three months of the first round of the cuts. You may want to stop reading here, secretary of state.

Rents rose 1.9% over the quarter to reach an average of £876 a month in June - the highest level since the index began at the end of 2007.

The rise was even bigger in London, where the first round of the cuts such as caps by bedroom size will hit tenants hardest. The good news is that average rents in the capital rose only 0.6% over the quarter, perhaps suggesting a slowdown in the rate of increase. 

The bad news is that rents are up by no less than 14.5% since this time last year - when you first announced the cuts. 

And there’s more bad news too. The average asking rent for a property in London is now £1,979 per month. At this rate, by the time you introduce your overall benefit cap of £25,000 a year in 2013

One small compensation is that the department’s own stats show that the average local housing allowance award has been rising at a much slower rate. In the year to April the average payment went up just 1.1% to £114.66. 

The only problem with that is that it means awards were falling in real terms before any of the cuts came into force. So much for the argument that the government was failing to exploit the bargaining power that comes with housing benefit funding 40% of the market (itself a highly questionable claim).

So what’s going on? As I argued last year, the findaproperty index was never likely to give an accurate reflection of what’s happening in the part of the market funded by housing benefit: it records asking rents not actual rents; it covers rents of new lettings rather than all lettings; and its average rent is more than double the average LHA award.

What it does show, though, is that the key drivers in the market are rising demand and the state of the owner-occupied and mortgage markets rather than the local housing allowance. 

Findaproperty says that the record rents are the result of rising demand across first for flats and now for houses. The price increases happened despite a 10% increase in the number of properties coming on to the market.

Property analyst Samantha Baden says: ‘We are now seeing more rental properties coming onto the market as landlords look to take advantage of the increasing returns. In time this may start to bring rental prices under control but we expect to see rental prices continuing to rise for the foreseeable future.’

The website concludes that ‘buy to let is back’ with the return on investment from rental property now higher than for shares or cash. 

But what’s good for investors and landlords is bad for tenants. As I argued yesterday, demand is coming from the super-rich at the top of the market and frustrated buyers in the middle. 

That’s feeding into rent increases across the board at exactly the same time as the local housing allowance is being cut and the Localism Bill is set to push thousands more homeless families into the private rented sector. 

Prime numbers

Tue, 2 Aug 2011

The rise and rise (and rise) of the central London property market continues apace, seemingly disconnected from the rest of the economy and the rest of the country.

Research released by Knight Frank yesterday found that prices in the prime central London market are up 9.6% over the last 12 months and are now 35% higher than their post-credit crunch low point in March 2009.

Prime central London rents, which had slumped in the wake of the credit crunch, are now 15% up on a year ago and are 1% higher than their previous peak in March 2008.

Contrast that with the picture of the market in general painted by Nationwide last week: UK prices were unchanged in June and down 1.1% on a year ago. London was the only region to show an increase year on year but the 2.9% rise in the price of the average home in the capital was still modest by comparison with that recorded by Knight Frank in the prime market.

Differences between the market in London and the rest of the country are nothing new of course. However, previous Knight Frank research has made clear the extent to which there is now a global market in central London property.

The study concluded that ‘the most important driver behind price growth has been growing demand for London property from international buyers’. Over the last 12 months, half of sales over £2m and two-thirds of sales over £5m had been to non-UK buyers.

That is a much higher proportion than other global cities like Manhattan (15% of properties over £2m) and Singapore and Hong Kong (25%).

And a ready supply of equity-rich investors from around the world (Russia had the most buyers but the Middle and Far East were not far behind) was pushing more would-be buyers in the rental sector and helping to drive up rents. 

The growth shows few signs of slowing down. The Financial Times reported yesterday that leading hedge fund Orion Capital Managers has acquired a prime site in Chelsea and plans to build a £400m housing complex that could rival One Hyde Park as the capital’s priciest address.

‘Residential in London is trading like gold at the moment,’ Aref Lahham, a director at Orion, told the FT. ‘If you are a billionaire and you want a safe place to put some of your cash, London real estate is a bolthole. People want to live in London. You have legal rights, human rights and you are between time­zones.’

More tax rights too: I stand to be corrected but as far as I’m aware non-doms pay no capital gains tax on their UK property. They can also afford the best accountants. 

It would be easy to dismiss this Monaco-on-Thames as a city inhabited by a few oligarchs and billionaires that has nothing to do with the rest of the country. I’m not so sure. 

The rest of the market is limping along hamstrung by the continuing shortage of mortgages, with prices propped up by low interest rates and lack of supply and rents buoyant thanks to rising demand from people who can buy.

The June buy-to-let index from LSL Property Services found that average rents in England and Wales were up 4.1% on a year ago. However, rents in London rose by 6.9% to break through the £1,000 per month barrier for the first time. 

Far from rents being restrained by cuts in housing benefit at the bottom of the market (as the government repeatedly claimed they would be), they seem to be rising on the back of soaring global demand at the top of the market and sustained demand in the middle. 

Their house prices and rents may be many times higher, but those oligarchs and millionaires are still living in the same city as the would-be first-time buyers trapped paying high rents and the housing benefits claimants forced to move out of central London. 

The bigger Monaco-on-Thames becomes, the more residential trades like gold, the more it is driving up prices and rents and housing benefit costs elsewhere.

And the more areas of central London are subject to the housing benefit clearances, the more space is created for those real estate boltholes.

Prime numbers

Tue, 2 Aug 2011

The rise and rise (and rise) of the central London property market continues apace, seemingly disconnected from the rest of the economy and the rest of the country.

Research released by Knight Frank yesterday found that prices in the prime central London market are up 9.6% over the last 12 months and are now 35% higher than their post-credit crunch low point in March 2009.

Prime central London rents, which had slumped in the wake of the credit crunch, are now 15% up on a year ago and are 1% higher than their previous peak in March 2008.

Contrast that with the picture of the market in general painted by Nationwide last week: UK prices were unchanged in June and down 1.1% on a year ago. London was the only region to show an increase year on year but the 2.9% rise in the price of the average home in the capital was still modest by comparison with that recorded by Knight Frank in the prime market.

Differences between the market in London and the rest of the country are nothing new of course. However, previous Knight Frank research has made clear the extent to which there is now a global market in central London property.

The study concluded that ‘the most important driver behind price growth has been growing demand for London property from international buyers’. Over the last 12 months, half of sales over £2m and two-thirds of sales over £5m had been to non-UK buyers.

That is a much higher proportion than other global cities like Manhattan (15% of properties over £2m) and Singapore and Hong Kong (25%).

And a ready supply of equity-rich investors from around the world (Russia had the most buyers but the Middle and Far East were not far behind) was pushing more would-be buyers in the rental sector and helping to drive up rents. 

The growth shows few signs of slowing down. The Financial Times reported yesterday that leading hedge fund Orion Capital Managers has acquired a prime site in Chelsea and plans to build a £400m housing complex that could rival One Hyde Park as the capital’s priciest address.

‘Residential in London is trading like gold at the moment,’ Aref Lahham, a director at Orion, told the FT. ‘If you are a billionaire and you want a safe place to put some of your cash, London real estate is a bolthole. People want to live in London. You have legal rights, human rights and you are between time­zones.’

More tax rights too: I stand to be corrected but as far as I’m aware non-doms pay no capital gains tax on their UK property. They can also afford the best accountants. 

It would be easy to dismiss this Monaco-on-Thames as a city inhabited by a few oligarchs and billionaires that has nothing to do with the rest of the country. I’m not so sure. 

The rest of the market is limping along hamstrung by the continuing shortage of mortgages, with prices propped up by low interest rates and lack of supply and rents buoyant thanks to rising demand from people who can buy.

The June buy-to-let index from LSL Property Services found that average rents in England and Wales were up 4.1% on a year ago. However, rents in London rose by 6.9% to break through the £1,000 per month barrier for the first time. 

Far from rents being restrained by cuts in housing benefit at the bottom of the market (as the government repeatedly claimed they would be), they seem to be rising on the back of soaring global demand at the top of the market and sustained demand in the middle. 

Their house prices and rents may be many times higher, but those oligarchs and millionaires are still living in the same city as the would-be first-time buyers trapped paying high rents and the housing benefits claimants forced to move out of central London. 

The bigger Monaco-on-Thames becomes, the more residential trades like gold, the more it is driving up prices and rents and housing benefit costs elsewhere.

And the more areas of central London are subject to the housing benefit clearances, the more space is created for those real estate boltholes.

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