Friday, 28 April 2017

Inside edge

All posts from: October 2012

Squeezed out

Wed, 31 Oct 2012

Housing is the big thing missing from today’s major report on living standards from the Resolution Foundation.

The final report of its Commission on Living Standards looks at the plight of low and middle income families. Things were bad even before the crash with average incomes falling by £570 between 2003 and 2008 as growing inequality meant that prosperity was not shared around. The gap was only made up by a £730 a year increase in tax credits.

However, incomes have fallen even more since 2008 and in the run-up to 2020 tax credits are being cut. Even on optimistic growth assumptions, says the commission, low income households are see their incomes fall 15 per cent over the next eight years, back to levels last seen in 1993, and middle income families will see their incomes fall 3 per cent to 2001 levels. That is a fall unprecedented in modern times.

To put that in financial terms, a low income household (the 10th percentile, or in the bottom 10 per cent) had an income of £10,600 a year in 2008/09. By 2020/21 that will have fallen to just £9,000 a year (at 2008/09 prices). A middle income household (at the 50th percentile) will see their income fall from £22,9000 to £22,100 over the same period.

The commission calls for a series of measures to boost wages for the bottom half of earners, with improved training and skills, a stronger Low Pay Commission to take a view on sectors of the economy that can pay an ‘affordable wage’ higher than the legal minimum and measures to help employers reduce their reliance on low pay.  That needs to be backed by measures to boost employment including support for parents and second earners with more free childcare, higher child tax credit for younger children and higher universal credit disregards.

That brief summary scarcely does justice to a report that analyses why the middle is being squeezed throughout the western world and why things are worse in the United States and Britain. The Resolution Foundation is doing a range of other work on housing policy but, since it was outside the commission’s scope, the report only touches on the way that housing costs have exacerbated the problem of the squeezed middle and the way that housing could contribute to a solution.

It describes the squeezed middle as ‘a group whose members are in work but on low pay; who work across all sectors, especially those – like retail and hospitality – that are rarely discussed in relation to policy; and who struggle to get on the housing ladder, to secure promotion and to save’. They are in other words very close to the ‘hard-working families’ and ‘strivers’ so heavily featured in coalition welfare reform rhetoric.

That’s backed with analysis of the mortgage costs, which shows that repayments are higher as a proportion of income now with base rates of 0.5 per cent than they were in the mid-1990s when rates were 7 per cent. Meanwhile other research for the commission concluded that: ‘mortgaged home ownership among low to middle income families will fall consistently over the next decade as more and more families are forced into the private rented sector’. Even with moderate growth in real incomes, 18 per cent of households will be renting privately by 2025 and that proportion could reach 22 per cent if income growth does not resume by then.

The report goes on: ‘Given the importance of housing to labour mobility, ensuring that supply can respond to projected patterns of demand will be very important not just to living standards but also to economic growth. Even so, it seems likely that under any reasonable scenario many more low to middle income households will find themselves raising children in rented accommodation. This will necessitate a change in the quality and security that the rented sector is able to offer.’

It’s interesting too that the start of the squeeze on lower and middle incomes identified by the commission coincides with the final stage of the last housing boom and the start of the boom in buy to let that have ensured that more and more low and middle income earners are priced out of the market. However, the analysis appears to assume that home ownership and private renting are the only two housing options available. One big reason why lower and middle income families have been squeezed is that social housing has been squeezed too. Almost a third of households were social tenants in 1981 and average household incomes were the same as those of private tenants. Flash forward 30 years and only 17 per cent of households are social tenants and their incomes are half those of private tenants.

The explanations for that are complex – the right to buy, residualisation of the social sector, deregulation of the private sector, the squeeze on mortgages and the rest – but it has squeezed lower and middle income families as surely as more general economic factors. That squeeze will only get worse if real incomes continue to fall as the report fears and  the shortage of housing supply continues.

Any reversal in that trend relies on reversing the orthodoxy of the last 30 years: that personal subsidies are more efficient than bricks and mortar subsidies because people only get support when they need it.

That may seem unlikely and a throwback to the world before the 1980s. However, if that orthodoxy was already shaky – it’s one big reason why housebuilding has slumped after all – then it has surely disappeared with the end of security of tenure in the social sector.

On the same day as the commission published its final report, the Telegraph reported a new initiative by the three Conservative-controlled west London councils that have embraced the social housing reforms most enthusiastically. Behind the headline about ‘council homes for middle class professionals’ like teachers and nurses, Westminster, Hammersmith and Fulham and Kensington & Chelsea are pressing for freedom to borrow against their housing stock. This will presumably be to build homes for affordable rent. Jonathan Glanz, Westminster’s cabinet member for housing, tells the paper: ‘We need to continue ensuring that we provide for a wide range of people and maintain mixed communities, including middle-class people on middle-range salaries.’

Whatever you think of five-year tenancies and the housing policies and priorities of the councils concerned, it seems like social housing of a sort is definitely back on the agenda for the squeezed middle. Even if the options for those below the squeezed middle look more limited than ever. 

Squeezed out

Wed, 31 Oct 2012

Housing is the big thing missing from today’s major report on living standards from the Resolution Foundation.

The final report of its Commission on Living Standards looks at the plight of low and middle income families. Things were bad even before the crash with average incomes falling by £570 between 2003 and 2008 as growing inequality meant that prosperity was not shared around. The gap was only made up by a £730 a year increase in tax credits.

However, incomes have fallen even more since 2008 and in the run-up to 2020 tax credits are being cut. Even on optimistic growth assumptions, says the commission, low income households are see their incomes fall 15 per cent over the next eight years, back to levels last seen in 1993, and middle income families will see their incomes fall 3 per cent to 2001 levels. That is a fall unprecedented in modern times.

To put that in financial terms, a low income household (the 10th percentile, or in the bottom 10 per cent) had an income of £10,600 a year in 2008/09. By 2020/21 that will have fallen to just £9,000 a year (at 2008/09 prices). A middle income household (at the 50th percentile) will see their income fall from £22,9000 to £22,100 over the same period.

The commission calls for a series of measures to boost wages for the bottom half of earners, with improved training and skills, a stronger Low Pay Commission to take a view on sectors of the economy that can pay an ‘affordable wage’ higher than the legal minimum and measures to help employers reduce their reliance on low pay.  That needs to be backed by measures to boost employment including support for parents and second earners with more free childcare, higher child tax credit for younger children and higher universal credit disregards.

That brief summary scarcely does justice to a report that analyses why the middle is being squeezed throughout the western world and why things are worse in the United States and Britain. The Resolution Foundation is doing a range of other work on housing policy but, since it was outside the commission’s scope, the report only touches on the way that housing costs have exacerbated the problem of the squeezed middle and the way that housing could contribute to a solution.

It describes the squeezed middle as ‘a group whose members are in work but on low pay; who work across all sectors, especially those – like retail and hospitality – that are rarely discussed in relation to policy; and who struggle to get on the housing ladder, to secure promotion and to save’. They are in other words very close to the ‘hard-working families’ and ‘strivers’ so heavily featured in coalition welfare reform rhetoric.

That’s backed with analysis of the mortgage costs, which shows that repayments are higher as a proportion of income now with base rates of 0.5 per cent than they were in the mid-1990s when rates were 7 per cent. Meanwhile other research for the commission concluded that: ‘mortgaged home ownership among low to middle income families will fall consistently over the next decade as more and more families are forced into the private rented sector’. Even with moderate growth in real incomes, 18 per cent of households will be renting privately by 2025 and that proportion could reach 22 per cent if income growth does not resume by then.

The report goes on: ‘Given the importance of housing to labour mobility, ensuring that supply can respond to projected patterns of demand will be very important not just to living standards but also to economic growth. Even so, it seems likely that under any reasonable scenario many more low to middle income households will find themselves raising children in rented accommodation. This will necessitate a change in the quality and security that the rented sector is able to offer.’

It’s interesting too that the start of the squeeze on lower and middle incomes identified by the commission coincides with the final stage of the last housing boom and the start of the boom in buy to let that have ensured that more and more low and middle income earners are priced out of the market. However, the analysis appears to assume that home ownership and private renting are the only two housing options available. One big reason why lower and middle income families have been squeezed is that social housing has been squeezed too. Almost a third of households were social tenants in 1981 and average household incomes were the same as those of private tenants. Flash forward 30 years and only 17 per cent of households are social tenants and their incomes are half those of private tenants.

The explanations for that are complex – the right to buy, residualisation of the social sector, deregulation of the private sector, the squeeze on mortgages and the rest – but it has squeezed lower and middle income families as surely as more general economic factors. That squeeze will only get worse if real incomes continue to fall as the report fears and  the shortage of housing supply continues.

Any reversal in that trend relies on reversing the orthodoxy of the last 30 years: that personal subsidies are more efficient than bricks and mortar subsidies because people only get support when they need it.

That may seem unlikely and a throwback to the world before the 1980s. However, if that orthodoxy was already shaky – it’s one big reason why housebuilding has slumped after all – then it has surely disappeared with the end of security of tenure in the social sector.

On the same day as the commission published its final report, the Telegraph reported a new initiative by the three Conservative-controlled west London councils that have embraced the social housing reforms most enthusiastically. Behind the headline about ‘council homes for middle class professionals’ like teachers and nurses, Westminster, Hammersmith and Fulham and Kensington & Chelsea are pressing for freedom to borrow against their housing stock. This will presumably be to build homes for affordable rent. Jonathan Glanz, Westminster’s cabinet member for housing, tells the paper: ‘We need to continue ensuring that we provide for a wide range of people and maintain mixed communities, including middle-class people on middle-range salaries.’

Whatever you think of five-year tenancies and the housing policies and priorities of the councils concerned, it seems like social housing of a sort is definitely back on the agenda for the squeezed middle. Even if the options for those below the squeezed middle look more limited than ever. 

Red flags

Tue, 30 Oct 2012

As the slow motion train crash of welfare reform continues, the driver is ignoring a succession of people desperately waving as he passes them.

Heedless of the big red flags they are holding, Iain Duncan Smith and his conductor Lord Freud sometimes even wave back and blow the whistle of their sleekly designed train in acknowledgement of what they see as the congratulations of the crowd.

All along they have argued that the universal credit – the one genuine reform amid all the welfare cuts – will make all the pain worthwhile and ensure that work pays and nobody is worse off.

Yet the warnings are now coming thick and fast and not just from the usual doom-mongers and government IT system sceptics. As I blogged last month, the people lining the track include former welfare reform tsar Frank Field, the Social Market Foundation, the Social Security Advisory Committee and maybe even cabinet secretary Sir Jeremy Heywood as well as councils, charities and housing organisations.

Now new research for the Joseph Rowntree Foundation acknowledges the advantages of the design of the new system in terms of streamlined administration and integration of in and out of work benefits but argues that these risk being undermined by the details of implementation. In particular, it highlights the dangers of:

  • Requiring people to claim online when only 20 per cent do at the moment and only  40 per cent are ready and able to do so in future
  • Paying out monthly when most people on low incomes budget on a weekly or daily basis
  • Paying out in a lump sum to the head of the household rather than paying individual elements separately with increased risks of budgeting problems, arrears and financial exclusion.

Amy Tarr and Dan Finn of the Centre for Social and Economic Inclusion recommend a series of steps that the government could take to mitigate the risk that the new system will leave people worse off than before and trap them in poverty. Better financial support and advice, reconsideration of the impact of localising council tax benefit and the social fund and a more visible ombudsman for the whole benefit system are just some of them while the report also calls for more information on the back-up arrangements in case the IT system fails.

But are IDS and Freud listening to the key message that their sleek new train needs a few design changes and that  ‘making work pay’ has to be about more than just toughening the sanctions regime for people on benefit?

The complacent response so far from the DWP (see the standard line to the Telegraph that ‘Universal Credit will help millions of people by making them better off in work than on benefits’) and the rose-tinted view of lessons from the direct payment pilots might suggest not. However, behind the scenes there are signs of movement on some of housing’s biggest concerns about the new system.

The Northern Ireland government has won three significant concessions: housing costs will continue to be paid direct to the landlord with an opt-out for tenants, rather than the other way around; universal credit will be paid fortnightly rather than monthly; and introduction of the new system will be delayed six months from October 2013 to April 2014.

Social security minister Nelson McCausland says the concessions are a recognition of the ‘unique circumstances’ of Northern Ireland, which is presumably a reference to the politics (of the coalition) and the institutional setting (with the Northern Ireland Housing Executive) in the province.

However, all three of the concessions would go some way to addressing the criticisms of the new system in the rest of the UK too and the second and third dangers highlighted by today’s research. It’s worth noting that there also seem to be ‘unique circumstances’ throughout the UK for mortgage lenders, since mortgage interest payments will continue to go direct to banks and building societies under the new system.

So it’s not too late for ministers to take heed of the people waving red flags beside the track. Getting the detail of the universal credit right will not solve the more fundamental problems of welfare ‘reform’ – the assumptions that making work pay can be achieved by cuts in benefits alone and that work alone can raise everyone out of poverty – but it may just avoid a preventable train crash. 

Red flags

Tue, 30 Oct 2012

As the slow motion train crash of welfare reform continues, the driver is ignoring a succession of people desperately waving as he passes them.

Heedless of the big red flags they are holding, Iain Duncan Smith and his conductor Lord Freud sometimes even wave back and blow the whistle of their sleekly designed train in acknowledgement of what they see as the congratulations of the crowd.

All along they have argued that the universal credit – the one genuine reform amid all the welfare cuts – will make all the pain worthwhile and ensure that work pays and nobody is worse off.

Yet the warnings are now coming thick and fast and not just from the usual doom-mongers and government IT system sceptics. As I blogged last month, the people lining the track include former welfare reform tsar Frank Field, the Social Market Foundation, the Social Security Advisory Committee and maybe even cabinet secretary Sir Jeremy Heywood as well as councils, charities and housing organisations.

Now new research for the Joseph Rowntree Foundation acknowledges the advantages of the design of the new system in terms of streamlined administration and integration of in and out of work benefits but argues that these risk being undermined by the details of implementation. In particular, it highlights the dangers of:

  • Requiring people to claim online when only 20 per cent do at the moment and only  40 per cent are ready and able to do so in future
  • Paying out monthly when most people on low incomes budget on a weekly or daily basis
  • Paying out in a lump sum to the head of the household rather than paying individual elements separately with increased risks of budgeting problems, arrears and financial exclusion.

Amy Tarr and Dan Finn of the Centre for Social and Economic Inclusion recommend a series of steps that the government could take to mitigate the risk that the new system will leave people worse off than before and trap them in poverty. Better financial support and advice, reconsideration of the impact of localising council tax benefit and the social fund and a more visible ombudsman for the whole benefit system are just some of them while the report also calls for more information on the back-up arrangements in case the IT system fails.

But are IDS and Freud listening to the key message that their sleek new train needs a few design changes and that  ‘making work pay’ has to be about more than just toughening the sanctions regime for people on benefit?

The complacent response so far from the DWP (see the standard line to the Telegraph that ‘Universal Credit will help millions of people by making them better off in work than on benefits’) and the rose-tinted view of lessons from the direct payment pilots might suggest not. However, behind the scenes there are signs of movement on some of housing’s biggest concerns about the new system.

The Northern Ireland government has won three significant concessions: housing costs will continue to be paid direct to the landlord with an opt-out for tenants, rather than the other way around; universal credit will be paid fortnightly rather than monthly; and introduction of the new system will be delayed six months from October 2013 to April 2014.

Social security minister Nelson McCausland says the concessions are a recognition of the ‘unique circumstances’ of Northern Ireland, which is presumably a reference to the politics (of the coalition) and the institutional setting (with the Northern Ireland Housing Executive) in the province.

However, all three of the concessions would go some way to addressing the criticisms of the new system in the rest of the UK too and the second and third dangers highlighted by today’s research. It’s worth noting that there also seem to be ‘unique circumstances’ throughout the UK for mortgage lenders, since mortgage interest payments will continue to go direct to banks and building societies under the new system.

So it’s not too late for ministers to take heed of the people waving red flags beside the track. Getting the detail of the universal credit right will not solve the more fundamental problems of welfare ‘reform’ – the assumptions that making work pay can be achieved by cuts in benefits alone and that work alone can raise everyone out of poverty – but it may just avoid a preventable train crash. 

Barbed wire

Thu, 25 Oct 2012

Is it possible to ‘hard-wire common sense’ into a mortgage market that has a track record of irrational excess?

The Financial Services Authority (FSA) launched the final version of its Mortgage Market Review (MMR) this morning after a marathon round of consultation with lenders and consumer groups.

As from the very beginning, with the Turner Review in 2009, the key task is to find a way to prevent a repeat of the irresponsible surge in lending up to 2007 without choking off the supply of mortgages and making the housing market even more dysfunctional as a result.

Along the way, the idea of explicit limits on loan to value ratios has been dropped in favour of more stringent checking of affordability, the virtual abolition of self-certified mortgages and much stricter control of interest-only loans. The new regime will apply from 2014.

However the final version also contains transitional protection to make life easier for ‘mortgage prisoners’ – customers trapped on existing loan terms and unable to remortgage or move. These will apply straight away.

Reactions so far suggest that the FSA has got the balance about right but I wonder if that will be the long-term verdict. Discounting the fact that it will be much more difficult for someone like me (in their 50s and self-employed) to get a mortgage in future, the package is geared to avoid future mistakes.

As for the consequences of the past, mortgage prisoners will be helped by new transitional rules that allow lenders to ignore the new rules on affordability and interest-only loans for existing borrowers who want to remortgage for the same amount or less and who have a good payment history.

Given that up to half of new mortgages in 2007 were self-certified, that will help a lot of borrowers. However, it does nothing for those locked out of the housing market and frustrated would-be first-time buyers may look askance at extra help for people who may have borrowed unwisely while they are protected from themselves and stuck paying rent.

Reaction from lenders and brokers is generally positive. They argue that most lenders are already operating most of the new rules. The Council of Mortgage Lenders said today that the rules would bring certainty and had avoided elements in the original draft that would have been difficult to implement or unduly restrictive. On the face of it, the proposal that lenders must verify borrowers’ income and that the mortgage is affordable taking into account their net income ought to prevent the abuses of the past. Making them take into account the impact on mortgage costs of future interest rate rises looks sensible. Making ‘a clearly understood and believable alternative source of capital repayment’ a condition of getting an interest-only loan does too – even if that leaves some room for interpretation, not to mention amazement that it is necessary to say so.

However, as I’ve blogged before, the problem with the new regime could be more what it does not cover than what it does. In December 2011, plans to regulate buy-to-let lending were dropped with the explanation that this was a ‘decision for the lending’. Similarly, proposals to regulate second charge lending were put off pending a wider review of consumer credit that is not due until at least April 2014. Neither is mentioned in the final version of the MMR. That is two major parts of the market that will not be connected to the hard wiring

Meanwhile, as the Joseph Rowntree Foundation’s housing market taskforce said in September, regulation of the mortgage market is only one element in tackling housing market volatility.  It warned that overall the government was being too timid and that ‘in some ways we are moving further away from this goal’.

Lenders and regulators told us after the 1990s crash that they had learned their lessons, only to forget them a decade later. The final version of the MMR may be the best compromise currently available between over-and under-regulation but it does little to make the wider housing market any less dysfunctional or any less stacked against the housing have-nots. Addressing that will take more than common sense, no matter how hard-wired. 

Barbed wire

Thu, 25 Oct 2012

Is it possible to ‘hard-wire common sense’ into a mortgage market that has a track record of irrational excess?

The Financial Services Authority (FSA) launched the final version of its Mortgage Market Review (MMR) this morning after a marathon round of consultation with lenders and consumer groups.

As from the very beginning, with the Turner Review in 2009, the key task is to find a way to prevent a repeat of the irresponsible surge in lending up to 2007 without choking off the supply of mortgages and making the housing market even more dysfunctional as a result.

Along the way, the idea of explicit limits on loan to value ratios has been dropped in favour of more stringent checking of affordability, the virtual abolition of self-certified mortgages and much stricter control of interest-only loans. The new regime will apply from 2014.

However the final version also contains transitional protection to make life easier for ‘mortgage prisoners’ – customers trapped on existing loan terms and unable to remortgage or move. These will apply straight away.

Reactions so far suggest that the FSA has got the balance about right but I wonder if that will be the long-term verdict. Discounting the fact that it will be much more difficult for someone like me (in their 50s and self-employed) to get a mortgage in future, the package is geared to avoid future mistakes.

As for the consequences of the past, mortgage prisoners will be helped by new transitional rules that allow lenders to ignore the new rules on affordability and interest-only loans for existing borrowers who want to remortgage for the same amount or less and who have a good payment history.

Given that up to half of new mortgages in 2007 were self-certified, that will help a lot of borrowers. However, it does nothing for those locked out of the housing market and frustrated would-be first-time buyers may look askance at extra help for people who may have borrowed unwisely while they are protected from themselves and stuck paying rent.

Reaction from lenders and brokers is generally positive. They argue that most lenders are already operating most of the new rules. The Council of Mortgage Lenders said today that the rules would bring certainty and had avoided elements in the original draft that would have been difficult to implement or unduly restrictive. On the face of it, the proposal that lenders must verify borrowers’ income and that the mortgage is affordable taking into account their net income ought to prevent the abuses of the past. Making them take into account the impact on mortgage costs of future interest rate rises looks sensible. Making ‘a clearly understood and believable alternative source of capital repayment’ a condition of getting an interest-only loan does too – even if that leaves some room for interpretation, not to mention amazement that it is necessary to say so.

However, as I’ve blogged before, the problem with the new regime could be more what it does not cover than what it does. In December 2011, plans to regulate buy-to-let lending were dropped with the explanation that this was a ‘decision for the lending’. Similarly, proposals to regulate second charge lending were put off pending a wider review of consumer credit that is not due until at least April 2014. Neither is mentioned in the final version of the MMR. That is two major parts of the market that will not be connected to the hard wiring

Meanwhile, as the Joseph Rowntree Foundation’s housing market taskforce said in September, regulation of the mortgage market is only one element in tackling housing market volatility.  It warned that overall the government was being too timid and that ‘in some ways we are moving further away from this goal’.

Lenders and regulators told us after the 1990s crash that they had learned their lessons, only to forget them a decade later. The final version of the MMR may be the best compromise currently available between over-and under-regulation but it does little to make the wider housing market any less dysfunctional or any less stacked against the housing have-nots. Addressing that will take more than common sense, no matter how hard-wired. 

Home truths

Mon, 22 Oct 2012

‘We’re not in any way complacent,’ Mark Prisk told the Today programme this morning – having spent his interview being just that.

It’s the first time I’ve caught a media appearance by the successor to Grant Shapps, who was so ever-present in the radio and TV studios that he was dubbed the minister for Daybreak. Prisk is not on twitter either so other than a few brief interviews and a few blogs he is still a bit of a mystery to me.

The housing minister was reacting to the latest Home Truths report from the National Housing Federation, which includes the stat picked up everywhere that the number of people in work on housing benefit is rising by 10,000 a month.

The report forecasts that private rents will rise almost as quickly (35 per cent) over the next five years as they have over the last five (37 per cent). If that’s correct, then even more people will have to rely on housing benefit even if they are working. The total of in-work household claimants has grown by 417,830 or 86 per cent since 2009.

In previous years, Home Truths has concentrated more on the plight of first-time buyers and the falling proportion of home owners so this year’s report and the extensive coverage it is getting in the media feel like a major change in perceptions of the housing crisis. The Prisk interview was preceded by one with Milly, a single parent in the South East who is working but recently had to move because of restrictions on the local housing allowance. The only way she could find new accommodation was to lie to her landlord about being on housing benefit and to share with another single parent.

As I blogged after David Cameron’s speech at the Conservative conference too, there are clear signs that the government at last gets the fact that it has to increase housebuilding even if that means offending the nimbys. There are also signs that things are changing underneath the surface, as in Isabel Hardman’s report on Friday about a proposal by Jake Berry, parliamentary private secretary to Shapps, to penalise developers who landbank sites without building on them.

So it was intriguing to see what Prisk had to say (listen here from about 2 hours, 15 minutes in). His response to the interview with Milly was that:

‘We’ve had many years of low rates of housebuilding. I think it fell to the lowest rate since the 1920s under the last administration. So this is a systemic problem of a dysfunctional market and as they’ve said the key issue is getting more homes built both for sale and to rent. You heard from Milly’s point of view that the best way to help tenants is to expand the private rented sector so she has much more choice. It’s quite clear from what she was saying that she has very little choice at the moment to be able to shop around and get a better deal.’

So, asked interviewer Sarah Montague, the answer is to build  an awful lot more homes?

‘Well I think we certainly do. Obviously it’s a controversial issue but I think when  you look at the long-term problem, the fact that the number of homes built has been something like less than half the number of households formed, you’ve got to do that and that’s why we’re putting significant money into the affordable homes programme, 170,000 additional houses, and also particularly for private renting which I think is really important for the first time putting a debt guarantee which sounds technical but essentially it’s allowing much more investment to come into this market. Get some of the experienced players in Germany, Sweden and America and elsewhere to really help people like Milly.’

Let’s leave aside that the coalition’s share of the affordable homes programme is actually 80,000, there are intriguing hints here of the way that private renting is now at the top of the government agenda. It’s telling though that he thinks it will be the Germans, Swedes and Americans that will come to the rescue rather than our own investment-shy institutions?

Sarah Montague then pressed him on affordable rent. As the public accounts committee pointed out last week, if you finance them with higher rents you simply add to the housing benefit bill and the problem. Prisk replied:

‘There’s a flaw in their report which I think is that they’re making an assumption that every local authority will charge 80 per cent of market rents in order to deliver that extra £15 billion of private investment. In fact when you look at the numbers it’s much more like 65 per cent so I think they’ve got that number wrong.’

This is weak even if you leave aside the fact that it’s not local authorities that will be charging the higher rents. For the record the PAC actually said: ‘The Department has not done enough to understand the full impact of higher rent levels on tenants. Housing providers can charge higher rents than before (on average 65% of market rents in London and up to 80% elsewhere).’ According to Prisk’s own department’s reply to a freedom of information request, the average proportion of market rent in regions outside London ranges from 77.7 per cent in the North East to 79.5 per cent in the North West.

In any case, said Sarah Montague, we know that [market] rents are going up so even if it’s a lower percentage it’s still of a higher rent. Prisk replied:

‘We come back to several things. One, make sure the rented market is growing so there are more properties. Two, add that extra 170,000 on the affordable homes programme.  Three, as the federation rightly say, let’s get that public land that’s been idle for too long sold – we’ve got land out there for about 33,000 houses sold now, get that into the market, get that underway. That’s the way to tackle this and make sure for example you help first-time buyers some of whom want to buy but are staying in rented property making more problems in the rented sector because they can’t raise a deposit.’

Montague pressed him again – ‘so public accounts committee are just wrong and have their facts wrong?’ – and Prisk replied:

‘Well they’re making assumptions about what councils are going to do on the basis that they’re going to charge 80 per cent. The evidence at the moment is that that is not the case. So I think that is where we differ with them.  But we’re not in any way complacent about the challenge, people like Milly highlight the fact that for years the last government, all governments, have actually failed to build enough homes. We want to change that.’

Leave aside a second mistake about councils setting affordable rents and you’re left with an implicit acknowledgment that this government as well as the last one has failed on housebuilding. But is it really true that all governments failed? Between 1945 and 1979 they seemed to do pretty well and John Major didn’t do too badly. Gordon Brown (despite presiding over the lowest number of starts since the 1920s) at least did something in response to the crash. The problems have been mainly down to just three governments: those of Margaret Thatcher, Tony Blair and David Cameron (in that order).

Not in any way complacent? As Brian Green blogs over at Brickonomics, even the big housebuilders believe they can produce no more than 160,000 homes a year by 2017 without a significant change in land availability. That leaves a huge gap for the Swedish, German and American cavalry to fill – and that is just to stop things getting even worse. It does nothing about high house and land prices. It does nothing to resolve the problems faced by private tenants like Milly in a landlords’ market or the soaring rents that have defied David Cameron’s attempts to argue they are falling. As with the energy market, it’s one thing to say you want to bring charges by private suppliers down, quite another to achieve it.

Sooner or later a government will have to take much more radical action than anything that is being contemplated by this one. That won’t happen until ministers realise just how much they are still being complacent about when it comes to the housing crisis.  

Home truths

Mon, 22 Oct 2012

‘We’re not in any way complacent,’ Mark Prisk told the Today programme this morning – having spent his interview being just that.

It’s the first time I’ve caught a media appearance by the successor to Grant Shapps, who was so ever-present in the radio and TV studios that he was dubbed the minister for Daybreak. Prisk is not on twitter either so other than a few brief interviews and a few blogs he is still a bit of a mystery to me.

The housing minister was reacting to the latest Home Truths report from the National Housing Federation, which includes the stat picked up everywhere that the number of people in work on housing benefit is rising by 10,000 a month.

The report forecasts that private rents will rise almost as quickly (35 per cent) over the next five years as they have over the last five (37 per cent). If that’s correct, then even more people will have to rely on housing benefit even if they are working. The total of in-work household claimants has grown by 417,830 or 86 per cent since 2009.

In previous years, Home Truths has concentrated more on the plight of first-time buyers and the falling proportion of home owners so this year’s report and the extensive coverage it is getting in the media feel like a major change in perceptions of the housing crisis. The Prisk interview was preceded by one with Milly, a single parent in the South East who is working but recently had to move because of restrictions on the local housing allowance. The only way she could find new accommodation was to lie to her landlord about being on housing benefit and to share with another single parent.

As I blogged after David Cameron’s speech at the Conservative conference too, there are clear signs that the government at last gets the fact that it has to increase housebuilding even if that means offending the nimbys. There are also signs that things are changing underneath the surface, as in Isabel Hardman’s report on Friday about a proposal by Jake Berry, parliamentary private secretary to Shapps, to penalise developers who landbank sites without building on them.

So it was intriguing to see what Prisk had to say (listen here from about 2 hours, 15 minutes in). His response to the interview with Milly was that:

‘We’ve had many years of low rates of housebuilding. I think it fell to the lowest rate since the 1920s under the last administration. So this is a systemic problem of a dysfunctional market and as they’ve said the key issue is getting more homes built both for sale and to rent. You heard from Milly’s point of view that the best way to help tenants is to expand the private rented sector so she has much more choice. It’s quite clear from what she was saying that she has very little choice at the moment to be able to shop around and get a better deal.’

So, asked interviewer Sarah Montague, the answer is to build  an awful lot more homes?

‘Well I think we certainly do. Obviously it’s a controversial issue but I think when  you look at the long-term problem, the fact that the number of homes built has been something like less than half the number of households formed, you’ve got to do that and that’s why we’re putting significant money into the affordable homes programme, 170,000 additional houses, and also particularly for private renting which I think is really important for the first time putting a debt guarantee which sounds technical but essentially it’s allowing much more investment to come into this market. Get some of the experienced players in Germany, Sweden and America and elsewhere to really help people like Milly.’

Let’s leave aside that the coalition’s share of the affordable homes programme is actually 80,000, there are intriguing hints here of the way that private renting is now at the top of the government agenda. It’s telling though that he thinks it will be the Germans, Swedes and Americans that will come to the rescue rather than our own investment-shy institutions?

Sarah Montague then pressed him on affordable rent. As the public accounts committee pointed out last week, if you finance them with higher rents you simply add to the housing benefit bill and the problem. Prisk replied:

‘There’s a flaw in their report which I think is that they’re making an assumption that every local authority will charge 80 per cent of market rents in order to deliver that extra £15 billion of private investment. In fact when you look at the numbers it’s much more like 65 per cent so I think they’ve got that number wrong.’

This is weak even if you leave aside the fact that it’s not local authorities that will be charging the higher rents. For the record the PAC actually said: ‘The Department has not done enough to understand the full impact of higher rent levels on tenants. Housing providers can charge higher rents than before (on average 65% of market rents in London and up to 80% elsewhere).’ According to Prisk’s own department’s reply to a freedom of information request, the average proportion of market rent in regions outside London ranges from 77.7 per cent in the North East to 79.5 per cent in the North West.

In any case, said Sarah Montague, we know that [market] rents are going up so even if it’s a lower percentage it’s still of a higher rent. Prisk replied:

‘We come back to several things. One, make sure the rented market is growing so there are more properties. Two, add that extra 170,000 on the affordable homes programme.  Three, as the federation rightly say, let’s get that public land that’s been idle for too long sold – we’ve got land out there for about 33,000 houses sold now, get that into the market, get that underway. That’s the way to tackle this and make sure for example you help first-time buyers some of whom want to buy but are staying in rented property making more problems in the rented sector because they can’t raise a deposit.’

Montague pressed him again – ‘so public accounts committee are just wrong and have their facts wrong?’ – and Prisk replied:

‘Well they’re making assumptions about what councils are going to do on the basis that they’re going to charge 80 per cent. The evidence at the moment is that that is not the case. So I think that is where we differ with them.  But we’re not in any way complacent about the challenge, people like Milly highlight the fact that for years the last government, all governments, have actually failed to build enough homes. We want to change that.’

Leave aside a second mistake about councils setting affordable rents and you’re left with an implicit acknowledgment that this government as well as the last one has failed on housebuilding. But is it really true that all governments failed? Between 1945 and 1979 they seemed to do pretty well and John Major didn’t do too badly. Gordon Brown (despite presiding over the lowest number of starts since the 1920s) at least did something in response to the crash. The problems have been mainly down to just three governments: those of Margaret Thatcher, Tony Blair and David Cameron (in that order).

Not in any way complacent? As Brian Green blogs over at Brickonomics, even the big housebuilders believe they can produce no more than 160,000 homes a year by 2017 without a significant change in land availability. That leaves a huge gap for the Swedish, German and American cavalry to fill – and that is just to stop things getting even worse. It does nothing about high house and land prices. It does nothing to resolve the problems faced by private tenants like Milly in a landlords’ market or the soaring rents that have defied David Cameron’s attempts to argue they are falling. As with the energy market, it’s one thing to say you want to bring charges by private suppliers down, quite another to achieve it.

Sooner or later a government will have to take much more radical action than anything that is being contemplated by this one. That won’t happen until ministers realise just how much they are still being complacent about when it comes to the housing crisis.  

Rent spiral

Fri, 19 Oct 2012

Remember when David Cameron claimed that housing benefit cuts were bringing down rent levels? I bet he doesn’t now either.

Cameron said at prime minister’s questions in January that: ‘What we have seen so far, as housing benefit has been reformed and reduced, is that rent levels have come down, so we have stopped ripping off the taxpayer.’

The claim provoked almost universal derision at the time but (ex) housing minister Grant Shapps backed up his boss and said he had been referring to a survey by LSL Property Services showing that the average rent fell 0.8 per cent between November and December.

Nine months on and the latest LSL survey has just revealed a 3.2 per cent rise in the average private rent in England and Wales to a new record of £741 a month. Rents soared by 1.1 per cent in September alone.

In London, where the bedroom size caps in local housing allowance hailed by Cameron should have had the most impact, rents rose almost twice as quickly. The average rent is now 6.2 per cent higher than a year ago at £1,092.

The one bright spot in the survey is that the 9.1 per cent of rent that was late or went unpaid was slightly below the 12-month average of 9.5 per cent.

However, that was put into context by a survey yesterday from the Money Advice Trust showing that calls to its national debtline about rent arrears have increased by 99 per cent since 2007.

Almost 10 per cent of callers between January and August 2012 had rent arrears compared to 8 per cent in 2011 and 6 per cent in 2007. And renters made up more than half of callers for the first time ever.

Joanna Elson, chief executive of the Money Advice Trust, warned of a ‘dangerous spiral’ as stagnant earnings growth and sharp jumps in rental costs risked pushing people over the edge.

The really worrying thing is that all this pressure is building up before the firestorm of welfare reform hits next April. Social tenants face massive problems of their own with the bedroom tax but social and private tenants will both be hit the overall benefit cap and cuts in council tax benefit. Six months later the universal credit starts and there were more dire warnings of the effect on disabled people and their families this week.

Far from the reductions in rents claimed by the prime minister and the new Conservative party chairman, welfare reform is looking exactly as critics claimed it would be: a guaranteed way of ringing up arrears and eventual homelessness.

Just as well then that Cameron has turned his attention to bringing down gas and electricity bills – but then that doesn’t seem to be working out too well so far either. 

Rent spiral

Fri, 19 Oct 2012

Remember when David Cameron claimed that housing benefit cuts were bringing down rent levels? I bet he doesn’t now either.

Cameron said at prime minister’s questions in January that: ‘What we have seen so far, as housing benefit has been reformed and reduced, is that rent levels have come down, so we have stopped ripping off the taxpayer.’

The claim provoked almost universal derision at the time but (ex) housing minister Grant Shapps backed up his boss and said he had been referring to a survey by LSL Property Services showing that the average rent fell 0.8 per cent between November and December.

Nine months on and the latest LSL survey has just revealed a 3.2 per cent rise in the average private rent in England and Wales to a new record of £741 a month. Rents soared by 1.1 per cent in September alone.

In London, where the bedroom size caps in local housing allowance hailed by Cameron should have had the most impact, rents rose almost twice as quickly. The average rent is now 6.2 per cent higher than a year ago at £1,092.

The one bright spot in the survey is that the 9.1 per cent of rent that was late or went unpaid was slightly below the 12-month average of 9.5 per cent.

However, that was put into context by a survey yesterday from the Money Advice Trust showing that calls to its national debtline about rent arrears have increased by 99 per cent since 2007.

Almost 10 per cent of callers between January and August 2012 had rent arrears compared to 8 per cent in 2011 and 6 per cent in 2007. And renters made up more than half of callers for the first time ever.

Joanna Elson, chief executive of the Money Advice Trust, warned of a ‘dangerous spiral’ as stagnant earnings growth and sharp jumps in rental costs risked pushing people over the edge.

The really worrying thing is that all this pressure is building up before the firestorm of welfare reform hits next April. Social tenants face massive problems of their own with the bedroom tax but social and private tenants will both be hit the overall benefit cap and cuts in council tax benefit. Six months later the universal credit starts and there were more dire warnings of the effect on disabled people and their families this week.

Far from the reductions in rents claimed by the prime minister and the new Conservative party chairman, welfare reform is looking exactly as critics claimed it would be: a guaranteed way of ringing up arrears and eventual homelessness.

Just as well then that Cameron has turned his attention to bringing down gas and electricity bills – but then that doesn’t seem to be working out too well so far either. 

Hidden costs

Mon, 15 Oct 2012

Bit by bit the facts about the affordable rent programme are leaking out but far too much remains hidden or unclear.

On Friday, in the typically under-stated style of all-party committees, MPs published their verdict so far. The public accounts committee concludes that ‘it is not yet clear whether the programme will deliver value for money in the long term’ and that ‘the department needs to do more work to understand the impact of the programme on tenants and its interaction with wider welfare reforms’.

It is still worried about slippage because the delivery of new homes is heavily skewed towards the end of the programme and warns that it may be a one-off way to take advantage of housing providers’ balance sheets.

All of this is worrying even though it is perhaps the understandable result of a programme developed in a hurry to keep the affordable housing show on the road. From the government’s point of view it delivers more homes for less money and, while the pressure will undoubtedly be on in the final year of the programme, it also again illustrates the ability of the Homes and Communities Agency and social landlords to deliver what they are told.

But deliver for what? Hard information about affordable rent is only just trickling out. The PAC report tells us very little that we did not already know: it repeats the DCLG’s impact assessment claim that the housing benefit bill will rise by £1.4 billion over 30 years as a result of the programme without questioning any of the assumptions behind that; an appendix quotes the headline figures that the average affordable rent will be £182 a week in London (65 per cent of market rent) and £133 a week in England (73 per cent); and it says that 63 per cent of homes in England and 5 per cent in London will be at the maximum 80 per cent of market rent.

That’s what we do know. However, the information is based on the original bids and not the final contracts that were signed and so may have changed again (as Inside Housing reports, a quarter of the London providers originally planned to charge higher rents when their bids were submitted). In addition, the DCLG did not collect information on the rent charged by bedroom size and we still do not know how the distribution of the homes, their size and their rent between the different London boroughs. Given the back-loading of the programme is it possible we will not know the full facts for another three years?

In some parts of the country, where social rents are already reasonably close to market rents, it may be hard to see the difference with affordable rent (though the new programme may also not be that viable). In other, more expensive, regions and especially in London we still do not know the answer to another question either: will the new homes be let to tenants who can afford the higher rents or will they do to tenants who are in the most housing need? If it’s the former, then more homeless households and people in the most need will be forced into the private rented sector and the housing benefit bill will be that much higher and the benefit trap that much bigger. If it’s the latter, the housing benefit hit will be smaller but still substantial and there will still be huge barriers to employment.

The PAC concludes that the DCLG ‘has not done enough to understand the full impact of higher rent levels on tenants’. It goes on:

The Department does not hold information on the rent levels being charged for individual properties and it has not considered the impact on tenants or prospective tenants of these rent levels or the interaction with wider Housing Benefit reforms. The Department should consult tenants and providers to understand the impact of the higher rent levels on tenants, and commission research into the financial and other characteristics of those tenants living in ‘affordable rent’ homes and build the results into future programmes.’

Apart from the danger of the new homes going to ‘the richest of the poor’ rather than those in the most need, there is also an issue about the allocation of the larger (and therefore more expensive) homes. ‘We are aware of cases where four bedrooms homes have gone to a couple with no children or a couple with one child,’ say the MPs.

Put this all together and we have a programme being developed in conditions of considerable secrecy and with seemingly very little attention being paid to what happens after the buildings are completed. However, the fundamental problem of what counts as ‘affordable’ is not new.

The most expensive shared ownership flats left behind the definition of affordable long ago. A quick look at First Steps London, the website for Boris Johnson’s ‘affordable housing programme’, reveals this £570,000 three-bed flat in Hackney. It can be yours for a deposit of £14,250 and a mortgage of £128,250 to buy a 25 per cent share. If you can get a mortgage, the monthly repayments will be at least £750 a month on top of the rent for the remaining 75 per cent of £1,048.27 and the service charge of £155.89. According to the website that requires household earnings of £60,935 a year, but that would mean that the estimated monthly cost of £1,954 would account for 56 per cent of take-home pay of £3,510.

Again, the housing organisations involved are doing their best to deliver new homes within the bounds of what is financially feasible and the tenants and shared owners will be paying less than they would be on the open market. However, that brings me back to the definition of ‘affordable’.

The only real way to guarantee that homes are affordable is to base the price or the rent on what people can afford to pay. That, broadly speaking, is how social rent works, with rents calculated on a 70:30 formula local earnings to market values. The minute you define ‘affordable’ solely in relation to market values that link is broken, especially when it happens at a time when many incomes are frozen or falling. And, as I blogged in June, the social – genuinely affordable – sector is set to shrink by around 250,000 homes over this parliament as a result of the combination of affordable rent re-lets, the right to buy, regeneration schemes and asset management by landlords.

In the meantime, UK house prices are propped up by ultra-low interest rates and quantitative easing. Whether you believe the warnings that prices are over-valued by 20 per cent or not, you have to wonder what will happen when interest rates eventually rise. There are big regional variations and rents are historically more stable than house prices but you have to wonder whether rents at (up to) 80 per cent of the market level will really seem so ‘affordable’ then, let alone affordable.

Hidden costs

Mon, 15 Oct 2012

Bit by bit the facts about the affordable rent programme are leaking out but far too much remains hidden or unclear.

On Friday, in the typically under-stated style of all-party committees, MPs published their verdict so far. The public accounts committee concludes that ‘it is not yet clear whether the programme will deliver value for money in the long term’ and that ‘the department needs to do more work to understand the impact of the programme on tenants and its interaction with wider welfare reforms’.

It is still worried about slippage because the delivery of new homes is heavily skewed towards the end of the programme and warns that it may be a one-off way to take advantage of housing providers’ balance sheets.

All of this is worrying even though it is perhaps the understandable result of a programme developed in a hurry to keep the affordable housing show on the road. From the government’s point of view it delivers more homes for less money and, while the pressure will undoubtedly be on in the final year of the programme, it also again illustrates the ability of the Homes and Communities Agency and social landlords to deliver what they are told.

But deliver for what? Hard information about affordable rent is only just trickling out. The PAC report tells us very little that we did not already know: it repeats the DCLG’s impact assessment claim that the housing benefit bill will rise by £1.4 billion over 30 years as a result of the programme without questioning any of the assumptions behind that; an appendix quotes the headline figures that the average affordable rent will be £182 a week in London (65 per cent of market rent) and £133 a week in England (73 per cent); and it says that 63 per cent of homes in England and 5 per cent in London will be at the maximum 80 per cent of market rent.

That’s what we do know. However, the information is based on the original bids and not the final contracts that were signed and so may have changed again (as Inside Housing reports, a quarter of the London providers originally planned to charge higher rents when their bids were submitted). In addition, the DCLG did not collect information on the rent charged by bedroom size and we still do not know how the distribution of the homes, their size and their rent between the different London boroughs. Given the back-loading of the programme is it possible we will not know the full facts for another three years?

In some parts of the country, where social rents are already reasonably close to market rents, it may be hard to see the difference with affordable rent (though the new programme may also not be that viable). In other, more expensive, regions and especially in London we still do not know the answer to another question either: will the new homes be let to tenants who can afford the higher rents or will they do to tenants who are in the most housing need? If it’s the former, then more homeless households and people in the most need will be forced into the private rented sector and the housing benefit bill will be that much higher and the benefit trap that much bigger. If it’s the latter, the housing benefit hit will be smaller but still substantial and there will still be huge barriers to employment.

The PAC concludes that the DCLG ‘has not done enough to understand the full impact of higher rent levels on tenants’. It goes on:

The Department does not hold information on the rent levels being charged for individual properties and it has not considered the impact on tenants or prospective tenants of these rent levels or the interaction with wider Housing Benefit reforms. The Department should consult tenants and providers to understand the impact of the higher rent levels on tenants, and commission research into the financial and other characteristics of those tenants living in ‘affordable rent’ homes and build the results into future programmes.’

Apart from the danger of the new homes going to ‘the richest of the poor’ rather than those in the most need, there is also an issue about the allocation of the larger (and therefore more expensive) homes. ‘We are aware of cases where four bedrooms homes have gone to a couple with no children or a couple with one child,’ say the MPs.

Put this all together and we have a programme being developed in conditions of considerable secrecy and with seemingly very little attention being paid to what happens after the buildings are completed. However, the fundamental problem of what counts as ‘affordable’ is not new.

The most expensive shared ownership flats left behind the definition of affordable long ago. A quick look at First Steps London, the website for Boris Johnson’s ‘affordable housing programme’, reveals this £570,000 three-bed flat in Hackney. It can be yours for a deposit of £14,250 and a mortgage of £128,250 to buy a 25 per cent share. If you can get a mortgage, the monthly repayments will be at least £750 a month on top of the rent for the remaining 75 per cent of £1,048.27 and the service charge of £155.89. According to the website that requires household earnings of £60,935 a year, but that would mean that the estimated monthly cost of £1,954 would account for 56 per cent of take-home pay of £3,510.

Again, the housing organisations involved are doing their best to deliver new homes within the bounds of what is financially feasible and the tenants and shared owners will be paying less than they would be on the open market. However, that brings me back to the definition of ‘affordable’.

The only real way to guarantee that homes are affordable is to base the price or the rent on what people can afford to pay. That, broadly speaking, is how social rent works, with rents calculated on a 70:30 formula local earnings to market values. The minute you define ‘affordable’ solely in relation to market values that link is broken, especially when it happens at a time when many incomes are frozen or falling. And, as I blogged in June, the social – genuinely affordable – sector is set to shrink by around 250,000 homes over this parliament as a result of the combination of affordable rent re-lets, the right to buy, regeneration schemes and asset management by landlords.

In the meantime, UK house prices are propped up by ultra-low interest rates and quantitative easing. Whether you believe the warnings that prices are over-valued by 20 per cent or not, you have to wonder what will happen when interest rates eventually rise. There are big regional variations and rents are historically more stable than house prices but you have to wonder whether rents at (up to) 80 per cent of the market level will really seem so ‘affordable’ then, let alone affordable.

Backyard blues

Thu, 11 Oct 2012

It’s great news that David Cameron used his conference speech to criticise nimbys and call for more homes but does he really get the problem?

In the week that has seen the launch of the pan-housing Homes for Britain campaign it was significant that the prime minister went beyond the odd dutiful word in his leader’s speech at Birmingham. The bit that really struck me was this:

‘There are those who say “yes of course we need more housing”…but “no” to every development - and not in my backyard.
 Look - it’s OK for my generation. Many of us have got on the ladder.
 But you know the average age that someone buys their first home today, without any help for their parents? 
33 years old. We are the party of home ownership - we cannot let this carry on.


‘So yes - we’re doubling the discount for buying your council house…we’re helping first-time buyers get a 95 per cent mortgage…but there’s something else we need to do - and that’s accept we need to build more houses in Britain. There are young people who work hard year after year but are still living at home.
 They sit in their childhood bedroom, looking out of the window dreaming of a place of their own.
 I want us to say to them - you are our people, we are on your side, we will help you reach your dreams.’

I’m not at the conference myself but I’ve had some positive reports about Homes for Britain and this section of the speech is further evidence of that. Ok, there are no specific policies, but this is still Cameron taking a stance on the issue and showing that he gets the point about generational fairness when he knows many (or even most) in his party are eager to find reasons to oppose new homes in their backyards.

So where’s the problem with all of this? First off, housing benefit. I’ve already covered this extensively this week here and here but Cameron again contrasted people who commute to work and pay their taxes with the ‘families – individual families – getting 40, 50, 60 thousand pounds of housing benefit to live in homes that these hard working people could never afford themselves’. He again contrasted the choice facing young people:

‘Choice one: Work hard. Go to college. Get a job. Live at home. Save up for a flat. And as I’ve just said, that can feel like forever. Or: Don’t get a job. Sign on. Don’t even need to produce a CV when you do sign on. Get housing benefit. Get a flat. And then don’t ever get a job or you’ll lose a load of housing benefit. We must be crazy.


‘So this is what we’ve done.
 Now you have to have to sign a contract that says: you do your bit and we’ll do ours. 
It requires you to have a real CV and it makes clear: you have to seek work and take work - or you will lose your benefit.
 And we’re going to look at ending automatic access to housing benefit for people under 25 too. If hard-working young people have to live at home while they work and save, why should it be any different for those who don’t?’

The phrasing on the under-25s was interesting. The government will ‘look at’ ending ‘automatic’ access sounds to me like a retreat from suggestions that it will be scrapped altogether. Perhaps the message is sinking in that more than half of the under-25s on housing benefit have children and that there may be good reasons why the rest cannot move back in with their mum and dad?

However, the rest of it was the familiar mix of exaggeration and generalisation from a tiny minority of cases. Never mind that only a miniscule number of claims ever amount to £60,000. Never mind that the fastest growing group of housing claimants is people in work who need it because wages are low and rents are high. Never mind that fact that all of the housing benefit goes to the landlord not the tenant. Never mind that, as the Priced Out campaign revealed this week, one in four Conservative MPs are landlords themselves. By my reckoning they include 13 of the ministers sat around the Cabinet table and Cameron himself.

Cameron clearly sees the ‘strivers’ as people struggling to pay the mortgage and justifies the government’s stance on austerity on the grounds that it has delivered ultra-low interest rates:

‘If we did what Labour want, and watered down our plans, the risk is that the people we borrow money from would start to question our ability and resolve to pay off our debts. Some may actually refuse to lend us that money. Others would only lend it to us at higher interest rates. That would hurt the economy and hit people hard. If you have a mortgage of £100,000, just a 1 per cent interest rate rise would mean an extra thousand pounds to pay each year.’

However, there are now as many tenants out there (7.4 million and rising) as people buying with a mortgage (7.4 million and falling). That means the ‘strivers’ are just as likely to be renters who have faced ever-increasing rents even though their landlords’ mortgage payments have fallen. The ‘strivers’ may even include many of the very people whose housing benefit Cameron wants to cut in the name of fairness.

And it seems to me that same logical disconnect applies when it comes to nimbyism. As I was reminded on twitter earlier, the problem is that being the ‘party of home ownership’ also makes you the party of nimbys. For every Tory MP like Nick Boles who is pressing the free market case for more new homes there are 10 like Mark Prisk with constituencies full of people opposing them because they know that new development will harm their house prices.

So two cheers for the anti-nimby rhetoric but it remains to be seen whether it turns into action on the ground. Is Cameron really prepared to take on the massed ranks of the National Trust and the CPRE? Is he prepared for decisions that will be opposed in a swathe of key seats in the South East? Does he see the way that high house prices, high rents, a high housing benefit bill and low housebuilding rates are connected?

Backyard blues

Thu, 11 Oct 2012

It’s great news that David Cameron used his conference speech to criticise nimbys and call for more homes but does he really get the problem?

In the week that has seen the launch of the pan-housing Homes for Britain campaign it was significant that the prime minister went beyond the odd dutiful word in his leader’s speech at Birmingham. The bit that really struck me was this:

‘There are those who say “yes of course we need more housing”…but “no” to every development - and not in my backyard.
 Look - it’s OK for my generation. Many of us have got on the ladder.
 But you know the average age that someone buys their first home today, without any help for their parents? 
33 years old. We are the party of home ownership - we cannot let this carry on.


‘So yes - we’re doubling the discount for buying your council house…we’re helping first-time buyers get a 95 per cent mortgage…but there’s something else we need to do - and that’s accept we need to build more houses in Britain. There are young people who work hard year after year but are still living at home.
 They sit in their childhood bedroom, looking out of the window dreaming of a place of their own.
 I want us to say to them - you are our people, we are on your side, we will help you reach your dreams.’

I’m not at the conference myself but I’ve had some positive reports about Homes for Britain and this section of the speech is further evidence of that. Ok, there are no specific policies, but this is still Cameron taking a stance on the issue and showing that he gets the point about generational fairness when he knows many (or even most) in his party are eager to find reasons to oppose new homes in their backyards.

So where’s the problem with all of this? First off, housing benefit. I’ve already covered this extensively this week here and here but Cameron again contrasted people who commute to work and pay their taxes with the ‘families – individual families – getting 40, 50, 60 thousand pounds of housing benefit to live in homes that these hard working people could never afford themselves’. He again contrasted the choice facing young people:

‘Choice one: Work hard. Go to college. Get a job. Live at home. Save up for a flat. And as I’ve just said, that can feel like forever. Or: Don’t get a job. Sign on. Don’t even need to produce a CV when you do sign on. Get housing benefit. Get a flat. And then don’t ever get a job or you’ll lose a load of housing benefit. We must be crazy.


‘So this is what we’ve done.
 Now you have to have to sign a contract that says: you do your bit and we’ll do ours. 
It requires you to have a real CV and it makes clear: you have to seek work and take work - or you will lose your benefit.
 And we’re going to look at ending automatic access to housing benefit for people under 25 too. If hard-working young people have to live at home while they work and save, why should it be any different for those who don’t?’

The phrasing on the under-25s was interesting. The government will ‘look at’ ending ‘automatic’ access sounds to me like a retreat from suggestions that it will be scrapped altogether. Perhaps the message is sinking in that more than half of the under-25s on housing benefit have children and that there may be good reasons why the rest cannot move back in with their mum and dad?

However, the rest of it was the familiar mix of exaggeration and generalisation from a tiny minority of cases. Never mind that only a miniscule number of claims ever amount to £60,000. Never mind that the fastest growing group of housing claimants is people in work who need it because wages are low and rents are high. Never mind that fact that all of the housing benefit goes to the landlord not the tenant. Never mind that, as the Priced Out campaign revealed this week, one in four Conservative MPs are landlords themselves. By my reckoning they include 13 of the ministers sat around the Cabinet table and Cameron himself.

Cameron clearly sees the ‘strivers’ as people struggling to pay the mortgage and justifies the government’s stance on austerity on the grounds that it has delivered ultra-low interest rates:

‘If we did what Labour want, and watered down our plans, the risk is that the people we borrow money from would start to question our ability and resolve to pay off our debts. Some may actually refuse to lend us that money. Others would only lend it to us at higher interest rates. That would hurt the economy and hit people hard. If you have a mortgage of £100,000, just a 1 per cent interest rate rise would mean an extra thousand pounds to pay each year.’

However, there are now as many tenants out there (7.4 million and rising) as people buying with a mortgage (7.4 million and falling). That means the ‘strivers’ are just as likely to be renters who have faced ever-increasing rents even though their landlords’ mortgage payments have fallen. The ‘strivers’ may even include many of the very people whose housing benefit Cameron wants to cut in the name of fairness.

And it seems to me that same logical disconnect applies when it comes to nimbyism. As I was reminded on twitter earlier, the problem is that being the ‘party of home ownership’ also makes you the party of nimbys. For every Tory MP like Nick Boles who is pressing the free market case for more new homes there are 10 like Mark Prisk with constituencies full of people opposing them because they know that new development will harm their house prices.

So two cheers for the anti-nimby rhetoric but it remains to be seen whether it turns into action on the ground. Is Cameron really prepared to take on the massed ranks of the National Trust and the CPRE? Is he prepared for decisions that will be opposed in a swathe of key seats in the South East? Does he see the way that high house prices, high rents, a high housing benefit bill and low housebuilding rates are connected?

Sound of silence

Tue, 9 Oct 2012

Amid all the rhetoric about those £10 billion cuts in welfare, what’s not being said could ultimately turn out to be more significant.

We’ve become so accustomed to welfare cuts that it’s easy to assume that another £10 billion is just more of the same. It isn’t and it is not at all clear where the savings will come from.

The cut would apply after the current spending review period ends in 2014/15 and, according to George Osborne yesterday, in the first full year of the next parliament, which I assume means 2016/17.

However, to put the £10 billion in context, we are talking about a cut on the same scale as was imposed in the June 2010 emergency budget and over what will be a shorter time period. The June 2010 cuts totalled £11 billion by 2014/15 and the spending review that followed in September added a further £7 billion.

Housing’s share of the June Budget savings was £1.8 billion by 2014/15, with the £490 million bedroom tax, £425 million reduction of the local housing allowance to the 30th percentile and £390 million uprating by CPI rather than RPI the three biggest elements in that. The spending review cut another £485 million from housing benefit (the single room rent and total benefit cap) and also cut council tax benefit by £490 million. Many of those cuts do not even take effect until April 2013 and we already talking about more.

In his speech to the Conservative conference yesterday, Osborne singled out three areas for attention and stressed that it was not just about saving money:

‘Iain Duncan Smith and I are committed to finding these savings while delivering the most radical reform of our welfare system for generations with a Universal Credit so work always pays. Because it’s not just about the money - it comes back to fairness and enterprise.

‘For how can we justify the incomes of those out of work rising faster than the incomes of those in work?

‘How can we justify giving flats to young people who have never worked, when working people twice their age are still living with their parents because they can’t afford their first home?

How can we justify a system where people in work have to consider the full financial costs of having another child, whilst those who are out of work don’t?’

On the Andrew Marr show yesterday, David Cameron was more specific (see my other blog for more). His comments about going ‘further’ on welfare reform went back to his speech in June that trailed the idea of removing housing benefit from the under 25s. To put this in context, the estimate at the time was that this would save £2 billion a year, which is almost as much as all the other housing benefit cuts so far put together.

IDS had previously resisted the £10 billion cuts but (in a joint article in the Daily Mail yesterday with Osborne) now agrees it is possible. That leaves the Liberal Democrats as the main political obstacle. Even though Osborne rejected the mansion tax that Nick Clegg said at the Lib Dem conference two weeks ago would be the price of his support, things seem to be moving towards a fudged compromise.

There is no shortage of warnings about the impact and the practicalities of the cuts. As I argued on my other blog on Sunday, the idea that you can simply make the under-25s live with their mum and dad bears no relation to reality. For the Joseph Rowntree Foundation, Helen Barnard highlights that too plus evidence that many people are trapped in poverty despite finding work, with an estimated six million underemployed who want to work more but can’t. For Shelter, Kate Webb argues that over half of the under 25s on housing benefit have children and that living with their parents is ‘not an option for those whose parents have died, divorced or downsized, been abusive towards them or simply don’t have the room’. For the TUC, Richard Exell highlights the amount of housing benefit that goes to people in work and what happened the last time a Conservative government cut benefits for young people in the 1980s. Blogger Joe Halewood argues that jobless families with large families will already be hit by the overall benefit cap – what he calls the fundamental flaw in universal credit.

Given all that, I was looking out for any specifics in the speech by Iain Duncan Smith to the conference yesterday. There was plenty of rhetoric about strivers and ‘families trying to do the right thing’. There were plenty of attacks on Labour for opposing previous reforms. There was plenty of boasting about the impact of the reforms so far and the benefits of the universal credit. But IDS said absolutely nothing about which benefits would be cut and where the savings would come from.

That silence is highly significant, I think. Part of this debate is obviously political, with the Conservatives positioning themselves for the next election and trotting out the familiar exaggerations about the culture of dependency and families who have never worked while ignoring unemployment, underemployment and (as David Cameron did again on the Today programme this morning) the fact that housing benefit is also paid to people in work. However, the numbers are real and will be in spending plans by the next election. 

The key point is that it is not clear to anyone where the £10 billion will come from. Analysis by the Institute for Fiscal Studies suggests that freezing all working age benefits and tax credits would save £2 billion a year but probably substantially less than that if the chancellor limits it to out of work benefits. However, would this apply to housing benefit? Increases in the local housing allowance are already restricted to CPI rather than RPI inflation until 2014/15. Extending that would save around £400 million a year and may seem like an obvious source of savings. However, the price would be that over time the gap between benefit levels and actual rents would grow wider and wider and that it will become harder and harder to find landlords willing to rent to tenants on benefit.

The IFS confirms that scrapping housing benefit for the under-25s would save £2 billion but questions how the government could distinguish between ‘those who can and cannot reasonably be expected to live with their parents’ and therefore how much it will be possible to save in practice. Saving £1 billion on benefits to large families would mean cutting £3,000 a year from each of 330,000 out of work families with at least three children. Is that really feasible?

Little wonder then that IDS cannot be specific and that the IFS says that ‘it is clear…that there is more we have yet to hear about if the government is to cut the welfare budget by an additional £10 billion per year’.

Given all that, and with ministers from David Cameron down singling out the housing benefit budget for attention, housing organisations can take absolutely nothing for granted about the way housing benefit will operate in future. If these cuts can be on the agenda, so is anything else you care to think of.

Or maybe there is now a window of opportunity to argue for an alternative. The housing benefit bill is over £20 billion because of high unemployment, low pay and rents that continue to rise ahead of inflation. Why not reform the private rented sector, shift the balance back to bricks and mortar subsidies and, as a united front of housing organisations is arguing in Birmingham this week, build some homes for Britain?

Sound of silence

Tue, 9 Oct 2012

Amid all the rhetoric about those £10 billion cuts in welfare, what’s not being said could ultimately turn out to be more significant.

We’ve become so accustomed to welfare cuts that it’s easy to assume that another £10 billion is just more of the same. It isn’t and it is not at all clear where the savings will come from.

The cut would apply after the current spending review period ends in 2014/15 and, according to George Osborne yesterday, in the first full year of the next parliament, which I assume means 2016/17.

However, to put the £10 billion in context, we are talking about a cut on the same scale as was imposed in the June 2010 emergency budget and over what will be a shorter time period. The June 2010 cuts totalled £11 billion by 2014/15 and the spending review that followed in September added a further £7 billion.

Housing’s share of the June Budget savings was £1.8 billion by 2014/15, with the £490 million bedroom tax, £425 million reduction of the local housing allowance to the 30th percentile and £390 million uprating by CPI rather than RPI the three biggest elements in that. The spending review cut another £485 million from housing benefit (the single room rent and total benefit cap) and also cut council tax benefit by £490 million. Many of those cuts do not even take effect until April 2013 and we already talking about more.

In his speech to the Conservative conference yesterday, Osborne singled out three areas for attention and stressed that it was not just about saving money:

‘Iain Duncan Smith and I are committed to finding these savings while delivering the most radical reform of our welfare system for generations with a Universal Credit so work always pays. Because it’s not just about the money - it comes back to fairness and enterprise.

‘For how can we justify the incomes of those out of work rising faster than the incomes of those in work?

‘How can we justify giving flats to young people who have never worked, when working people twice their age are still living with their parents because they can’t afford their first home?

How can we justify a system where people in work have to consider the full financial costs of having another child, whilst those who are out of work don’t?’

On the Andrew Marr show yesterday, David Cameron was more specific (see my other blog for more). His comments about going ‘further’ on welfare reform went back to his speech in June that trailed the idea of removing housing benefit from the under 25s. To put this in context, the estimate at the time was that this would save £2 billion a year, which is almost as much as all the other housing benefit cuts so far put together.

IDS had previously resisted the £10 billion cuts but (in a joint article in the Daily Mail yesterday with Osborne) now agrees it is possible. That leaves the Liberal Democrats as the main political obstacle. Even though Osborne rejected the mansion tax that Nick Clegg said at the Lib Dem conference two weeks ago would be the price of his support, things seem to be moving towards a fudged compromise.

There is no shortage of warnings about the impact and the practicalities of the cuts. As I argued on my other blog on Sunday, the idea that you can simply make the under-25s live with their mum and dad bears no relation to reality. For the Joseph Rowntree Foundation, Helen Barnard highlights that too plus evidence that many people are trapped in poverty despite finding work, with an estimated six million underemployed who want to work more but can’t. For Shelter, Kate Webb argues that over half of the under 25s on housing benefit have children and that living with their parents is ‘not an option for those whose parents have died, divorced or downsized, been abusive towards them or simply don’t have the room’. For the TUC, Richard Exell highlights the amount of housing benefit that goes to people in work and what happened the last time a Conservative government cut benefits for young people in the 1980s. Blogger Joe Halewood argues that jobless families with large families will already be hit by the overall benefit cap – what he calls the fundamental flaw in universal credit.

Given all that, I was looking out for any specifics in the speech by Iain Duncan Smith to the conference yesterday. There was plenty of rhetoric about strivers and ‘families trying to do the right thing’. There were plenty of attacks on Labour for opposing previous reforms. There was plenty of boasting about the impact of the reforms so far and the benefits of the universal credit. But IDS said absolutely nothing about which benefits would be cut and where the savings would come from.

That silence is highly significant, I think. Part of this debate is obviously political, with the Conservatives positioning themselves for the next election and trotting out the familiar exaggerations about the culture of dependency and families who have never worked while ignoring unemployment, underemployment and (as David Cameron did again on the Today programme this morning) the fact that housing benefit is also paid to people in work. However, the numbers are real and will be in spending plans by the next election. 

The key point is that it is not clear to anyone where the £10 billion will come from. Analysis by the Institute for Fiscal Studies suggests that freezing all working age benefits and tax credits would save £2 billion a year but probably substantially less than that if the chancellor limits it to out of work benefits. However, would this apply to housing benefit? Increases in the local housing allowance are already restricted to CPI rather than RPI inflation until 2014/15. Extending that would save around £400 million a year and may seem like an obvious source of savings. However, the price would be that over time the gap between benefit levels and actual rents would grow wider and wider and that it will become harder and harder to find landlords willing to rent to tenants on benefit.

The IFS confirms that scrapping housing benefit for the under-25s would save £2 billion but questions how the government could distinguish between ‘those who can and cannot reasonably be expected to live with their parents’ and therefore how much it will be possible to save in practice. Saving £1 billion on benefits to large families would mean cutting £3,000 a year from each of 330,000 out of work families with at least three children. Is that really feasible?

Little wonder then that IDS cannot be specific and that the IFS says that ‘it is clear…that there is more we have yet to hear about if the government is to cut the welfare budget by an additional £10 billion per year’.

Given all that, and with ministers from David Cameron down singling out the housing benefit budget for attention, housing organisations can take absolutely nothing for granted about the way housing benefit will operate in future. If these cuts can be on the agenda, so is anything else you care to think of.

Or maybe there is now a window of opportunity to argue for an alternative. The housing benefit bill is over £20 billion because of high unemployment, low pay and rents that continue to rise ahead of inflation. Why not reform the private rented sector, shift the balance back to bricks and mortar subsidies and, as a united front of housing organisations is arguing in Birmingham this week, build some homes for Britain?

Rogue state

Thu, 4 Oct 2012

There is good news and bad news in a Shelter survey about rogue landlords out today but neither is quite what it appears at first glance. 

The bad news is that complaints by tenants to their local authority about their private landlord are up 27 per cent in the last three years.

Worse, of 85,000 complaints in the last 12 months, 62 per cent related to category I and II hazards – things like dangerous electrics and damp that are serious or life-threatening, And there were 781 cases where health services had to get involved because of the behaviour or neglect of private landlords.

However, the 27 per cent increase in complaints may not be quite as large as it appears when you take into account the rapid increase in the number of private tenants. Over the last three years for which figures are available, the stock of private rented homes in England has increased by 20 per cent.

The good news is that successful prosecutions against private landlords are up 77 per cent in the last year. The figures are based on freedom of information requests to 326 English local authorities, with responses received from 310.

Successful enforcement is not just good news for tenants but for good landlords too because otherwise they are left paying the costs of compliance with the leglislation while others ignore it and undercut them.

However, the sheen is slightly taken off that increase in enforcement by the fact that it comes from such a low base. The actual total of successful prosecutions last year was just 487, and Shelter says most of them were carried out by a handful of authorities such as Newham, Leeds, Salford and Manchester.

When Shelter asked local authorities about rogue landlords in their area, they identified 1,449 who had given them continued cause for concern over the last year. Again, on the face of it, that ought to make it easier to target enforcement action but it’s unclear whether that represents the true scale of the problem or is just the total from councils who have got their act together on the private rented sector.

Put the good news and the bad news together and the picture is more blurred but it is still undoubtedly evidence that Shelter’s Evict Rogue Landlords campaign is paying off.

And despite fears that public spending cuts would render local authorities less able to enforce the law, there have been several high-profile legal cases recently:

  • A landlord in Brent in London was ordered to pay a fine of £1.4 million last week for illegally converting a house in Willesden into 12 flats. The fine is believed to be the highest confiscation order ever granted for a planning offence and is based on the assumed benefit that Salah Ali gained from breaching planning regulations. According to Brent council, he had continuously flouted them over the last ten years. Its planning enforcement team used powers that enable councils to recover the ‘proceeds of crime’.
  • In Sheffield last week, a bullying landlord who unlawfully evicted a tenant was jailed for nine months and a friend who helped him got a six-month suspended sentence. The landlord, Jay Allen, forcibly evicted Chris Blades after he ran up £900 in rent arrears and arrived with a friend to push him out of the door. According to the Sheffield Star, Allen has previous convictions for assault and affray and when Blades protested that he was breaking the laws he replied: ‘Do I look like I care?’ Judge Roger Keen told Allen: ‘You decided that because the rent had not been paid you were going to evict the tenant unless he came up with the money immediately, which was impossible. Using your considerable presence, together with that of your co-accused, you went to dominate, frighten and overwhelm Mr Blades.’
  • In Birmingham in August, a trainee BBC presenter was ordered to pay damages of £26,000 for attempting to unlawfully evict a tenant after her housing benefit stopped for a month. Nearly Legal reports that, despite being warned about her conduct by a council tenancy relations officer, Samina Amreen turned up with several members of her family including an uncle, Raja Amin, who was a magistrate. The tenant, Beckie Webb, had called the police and the TRO. However, under the pressure of a stand-off in which Amin refused to leave and threatened the police with TV coverage if they arrested him, she decided to leave with her children and the belongings she could carry.

Those are three tales from the rogue landlord frontline that actually made it to court. Good news, you might think, except when you bear in mind that the Birmingham case happened over four years ago in June 2008 and that Beckie Webb sofa surfed while her children stayed with her family until November 2008 when she was given temporary accommodation.

In ten years of rapid growth in the private rented sector and burgeoning housing need, the suspicion has been that rogue landlords have been free to do pretty much as they please regardless of the impact on their tenants and on good landlords who play by the rules. Today’s survey confirms that local authorities (or at least some of them) are getting their act together at last but there is still a long way to go. 

Rogue state

Thu, 4 Oct 2012

There is good news and bad news in a Shelter survey about rogue landlords out today but neither is quite what it appears at first glance. 

The bad news is that complaints by tenants to their local authority about their private landlord are up 27 per cent in the last three years.

Worse, of 85,000 complaints in the last 12 months, 62 per cent related to category I and II hazards – things like dangerous electrics and damp that are serious or life-threatening, And there were 781 cases where health services had to get involved because of the behaviour or neglect of private landlords.

However, the 27 per cent increase in complaints may not be quite as large as it appears when you take into account the rapid increase in the number of private tenants. Over the last three years for which figures are available, the stock of private rented homes in England has increased by 20 per cent.

The good news is that successful prosecutions against private landlords are up 77 per cent in the last year. The figures are based on freedom of information requests to 326 English local authorities, with responses received from 310.

Successful enforcement is not just good news for tenants but for good landlords too because otherwise they are left paying the costs of compliance with the leglislation while others ignore it and undercut them.

However, the sheen is slightly taken off that increase in enforcement by the fact that it comes from such a low base. The actual total of successful prosecutions last year was just 487, and Shelter says most of them were carried out by a handful of authorities such as Newham, Leeds, Salford and Manchester.

When Shelter asked local authorities about rogue landlords in their area, they identified 1,449 who had given them continued cause for concern over the last year. Again, on the face of it, that ought to make it easier to target enforcement action but it’s unclear whether that represents the true scale of the problem or is just the total from councils who have got their act together on the private rented sector.

Put the good news and the bad news together and the picture is more blurred but it is still undoubtedly evidence that Shelter’s Evict Rogue Landlords campaign is paying off.

And despite fears that public spending cuts would render local authorities less able to enforce the law, there have been several high-profile legal cases recently:

  • A landlord in Brent in London was ordered to pay a fine of £1.4 million last week for illegally converting a house in Willesden into 12 flats. The fine is believed to be the highest confiscation order ever granted for a planning offence and is based on the assumed benefit that Salah Ali gained from breaching planning regulations. According to Brent council, he had continuously flouted them over the last ten years. Its planning enforcement team used powers that enable councils to recover the ‘proceeds of crime’.
  • In Sheffield last week, a bullying landlord who unlawfully evicted a tenant was jailed for nine months and a friend who helped him got a six-month suspended sentence. The landlord, Jay Allen, forcibly evicted Chris Blades after he ran up £900 in rent arrears and arrived with a friend to push him out of the door. According to the Sheffield Star, Allen has previous convictions for assault and affray and when Blades protested that he was breaking the laws he replied: ‘Do I look like I care?’ Judge Roger Keen told Allen: ‘You decided that because the rent had not been paid you were going to evict the tenant unless he came up with the money immediately, which was impossible. Using your considerable presence, together with that of your co-accused, you went to dominate, frighten and overwhelm Mr Blades.’
  • In Birmingham in August, a trainee BBC presenter was ordered to pay damages of £26,000 for attempting to unlawfully evict a tenant after her housing benefit stopped for a month. Nearly Legal reports that, despite being warned about her conduct by a council tenancy relations officer, Samina Amreen turned up with several members of her family including an uncle, Raja Amin, who was a magistrate. The tenant, Beckie Webb, had called the police and the TRO. However, under the pressure of a stand-off in which Amin refused to leave and threatened the police with TV coverage if they arrested him, she decided to leave with her children and the belongings she could carry.

Those are three tales from the rogue landlord frontline that actually made it to court. Good news, you might think, except when you bear in mind that the Birmingham case happened over four years ago in June 2008 and that Beckie Webb sofa surfed while her children stayed with her family until November 2008 when she was given temporary accommodation.

In ten years of rapid growth in the private rented sector and burgeoning housing need, the suspicion has been that rogue landlords have been free to do pretty much as they please regardless of the impact on their tenants and on good landlords who play by the rules. Today’s survey confirms that local authorities (or at least some of them) are getting their act together at last but there is still a long way to go. 

Phoning home

Mon, 1 Oct 2012

It’s great to see Ed Balls putting his - or rather mobile phone companies’ - money where his mouth is on housing but his speech still begs some big questions. 

It’s good news too see housing finally making the headlines at the start of a Labour party conference rather than becoming a footnote before they sing The Red Flag at the end.

Media briefing ahead of the speech by the shadow chancellor was all about housing and his call for the £3-4 billion proceeds of the sale of 4G mobile phone licenses to be spent on 100,000 affordable homes and a new stamp duty holiday for first-time buyers. The idea seemed to go down pretty well with delegates judging from the applause in the hall.

The politics of this is important. Labour’s relative silence on housing over the last year has enabled the Conservative side of the coalition to make the running with its social housing reforms.

Coming on top of last week’s Lib Dem conference of a policy paper calling for 300,000 homes a year and calls by Vince Cable for 100,000 affordable homes, this makes clear that there is an alternative.

The financial side of it is much less clear. The 4G auction is due to happen next year so, unless I’m missing something, by the time of the next election in 2015 George Osborne will almost certainly have spent it on other things. If you read his speech carefully (my italics added for emphasis) this point is clear:

‘Let’s use that money from the 4G sale and build over the next two years: 100,000 new homes – affordable homes to rent and to buy - creating hundreds of thousands of jobs and getting our construction industry moving again. Add to that a stamp duty holiday for first time buyers buying homes up to £250,000 and we can deliver real help for people aspiring to get on the property ladder.’

Looked at like that, today’s statement by Balls is not a spending commitment at all, more a statement of intent about what Labour’s priorities will be when there is no money around to spend and a challenge to the government to do things differently.

However, that is still important, especially when combined with the statement by Labour leader Ed Miliband yesterday that housing would be a beneficiary of a tax on bankers’ bonuses.

Balls is promising a zero-based spending review if Labour wins the next election. That could be seen as a political device to avoid having to make spending commitments now but it’s also a signal that departments will have to justify all of their spending programmes from scratch.

The statements by Balls and Miliband therefore give housing an edge in the list of priorities but they do not answer all the questions. Just to take one example, even if the 4G money is still there to spend by the next election it will not mean anything unless it is additional to, rather than instead of, any spending review allocation. If it just means the latter, that would leave Labour spending less than the coalition.

Then there’s the question of whether it’s really worth spending £500 million on another stamp duty holiday. Individual first-time buyers may benefit by up to £1,250 each but would it really do more than just bring transactions forward?

There are much bigger questions for Labour to answer on housing. Will it go for IPPR’s idea of shifting spending from housing benefit to building homes? Will it finally free local authorities from the public borrowing rules (surely a prerequsitie for a serious housing policy)? Will it use quantitative easing for housing rather than boosting bankers’ bonuses? Where does it stand on affordable rent (Martin Hildtich is reporting that the 4G programme would be a mix of shared ownership, affordable rent and social rent)?

I’m hoping we get some answers this week. But this is still a great start and a big improvement on Labour conferences gone by when the housing debate was buried away in the final session and the leadership paid lip service to what its delegates said.

Phoning home

Mon, 1 Oct 2012

It’s great to see Ed Balls putting his - or rather mobile phone companies’ - money where his mouth is on housing but his speech still begs some big questions. 

It’s good news too see housing finally making the headlines at the start of a Labour party conference rather than becoming a footnote before they sing The Red Flag at the end.

Media briefing ahead of the speech by the shadow chancellor was all about housing and his call for the £3-4 billion proceeds of the sale of 4G mobile phone licenses to be spent on 100,000 affordable homes and a new stamp duty holiday for first-time buyers. The idea seemed to go down pretty well with delegates judging from the applause in the hall.

The politics of this is important. Labour’s relative silence on housing over the last year has enabled the Conservative side of the coalition to make the running with its social housing reforms.

Coming on top of last week’s Lib Dem conference of a policy paper calling for 300,000 homes a year and calls by Vince Cable for 100,000 affordable homes, this makes clear that there is an alternative.

The financial side of it is much less clear. The 4G auction is due to happen next year so, unless I’m missing something, by the time of the next election in 2015 George Osborne will almost certainly have spent it on other things. If you read his speech carefully (my italics added for emphasis) this point is clear:

‘Let’s use that money from the 4G sale and build over the next two years: 100,000 new homes – affordable homes to rent and to buy - creating hundreds of thousands of jobs and getting our construction industry moving again. Add to that a stamp duty holiday for first time buyers buying homes up to £250,000 and we can deliver real help for people aspiring to get on the property ladder.’

Looked at like that, today’s statement by Balls is not a spending commitment at all, more a statement of intent about what Labour’s priorities will be when there is no money around to spend and a challenge to the government to do things differently.

However, that is still important, especially when combined with the statement by Labour leader Ed Miliband yesterday that housing would be a beneficiary of a tax on bankers’ bonuses.

Balls is promising a zero-based spending review if Labour wins the next election. That could be seen as a political device to avoid having to make spending commitments now but it’s also a signal that departments will have to justify all of their spending programmes from scratch.

The statements by Balls and Miliband therefore give housing an edge in the list of priorities but they do not answer all the questions. Just to take one example, even if the 4G money is still there to spend by the next election it will not mean anything unless it is additional to, rather than instead of, any spending review allocation. If it just means the latter, that would leave Labour spending less than the coalition.

Then there’s the question of whether it’s really worth spending £500 million on another stamp duty holiday. Individual first-time buyers may benefit by up to £1,250 each but would it really do more than just bring transactions forward?

There are much bigger questions for Labour to answer on housing. Will it go for IPPR’s idea of shifting spending from housing benefit to building homes? Will it finally free local authorities from the public borrowing rules (surely a prerequsitie for a serious housing policy)? Will it use quantitative easing for housing rather than boosting bankers’ bonuses? Where does it stand on affordable rent (Martin Hildtich is reporting that the 4G programme would be a mix of shared ownership, affordable rent and social rent)?

I’m hoping we get some answers this week. But this is still a great start and a big improvement on Labour conferences gone by when the housing debate was buried away in the final session and the leadership paid lip service to what its delegates said.

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