All posts tagged: Iain Duncan Smith
The CIH says that 720,000 private rented properties in England will become unaffordable to people on benefits from this week, as the local housing allowance caps kick in. The prediction is that some people affected by the changes will be forced to migrate to low rental areas, like Margate and Hastings in the South East, creating benefit ghettoes in some of our decaying seaside resorts. I know Margate well (I grew up on the Isle of Thanet) and it already has a reputation for poverty and decay, with some of the most deprived wards in England. In comparison to the rest of the South East it is an incredibly cheap place to live. You can rent a two-bed flat for as little as £66 per week. The closure of Dreamland and the disastrous decision by the District Council to build a huge new out of town shopping centre at Westwood Cross has devastated the town centre. Margate is making huge efforts to regenerate itself and the recently opened Turner Centre is starting to have an impact, but a further influx of the poorest and most desperate will hardly raise the town’s fortunes.
I spoke about the CIH report to PRS expert David Lawrenson, the author of the top-selling UK book on property who told me:
“Obviously, the whole problem is one of housing market failure – a much wider issue. But looking at the PRS on its own, one really key issue is that private landlords don’t want to let to people on Local Housing Allowance for a number of reasons.
“A non-LHA let has a number of advantages over most LHA lets: a landlord gets rent paid in advance (not arrears), they get a deposit they can bank and earn interest on and a lot less paperwork. Also, payments are less likely to stop without warning simply because the tenant’s working circumstances have changed. They also know that under buy to let mortgage conditions, some mortgage lenders (scandalously in our view) still preclude a landlord from letting to “non working” people.
“If the government could level the playing field, they would find lots more landlords coming forward and the problem substantially resolved.”
You may recall that Iain Duncan Smith predicted a fall in private sector rents as a result of the benefit changes. That hasn’t happened so far, due primarily to the increasing demand for PRS lets from frustrated first time buyers. But 720,000 dwellings represents 20 percent of the private rented sector in England, so if all of these properties are vacated by claimants it could have a significant impact upon the housing market as a whole. The reality is likely to be more complex and will depend upon the reaction of landlords and tenants. My guess is that three things will happen. A few tenants will negotiate lower rents that meet the caps and will be able to stay put. Secondly, many tenants will be forced to move to cheaper areas (this is already happening). But remember that the PRS has increased by around 1.4 million properties over the past eight years, an increase from 12 percent to 17 percent of all homes in England, and yet rents have continued to rise. That looks like a bubble to me and all bubbles eventually burst, so my third guess is that the more astute landlords will start to offload their stock for sale, since they know that demand for their properties is going to fall in the longer term. This could have the paradoxical effect of keeping PRS rents high and lowering house prices in the short term as more properties flood the market. Of course, the bigger issue is overall supply and the availability of mortgages, but that is a subject for another time!
Writing in yesterday’s Times (paywall) Iain Duncan Smith laid the blame for the riots squarely at the door of social housing providers. He wrote:
“For years now, too many people have remained unaware of the true nature of life on some of our estates. This was because we had ghettoised many of these problems, keeping them out of sight of the middle-class majority. But last month the inner city finally came to call, and the country was shocked by what it saw.”
When is our sector going to fight back against this kind of rhetoric? Housing providers seem to have become the scapegoat for most of the perceived ills of society – welfare dependency and worklessness, crime, gangs, fecklessness, single mothers, foreigners jumping the housing queue and now rioters. But is there really a correlation between tenure and rioting? The Guardian has been trying to map the addresses of those convicted to date against the location of the riots but the results so far are inconclusive. We all know that even if someone lives in an area that is predominantly made up of social housing they could well be living in a right to buy property and be relatively well off.
However, what is clear is that 73% of the rioters who have been convicted to date had a previous criminal conviction. Astonishingly, each rioter with a criminal record had an average of fifteen convictions. Yes fifteen. I wrote in a previous blog that probably no more than 20,000 people were involved in the August riots, but these latest figures prove that the riots were predominantly a law and order issue and not a symptom of some deeper social malaise. The “thin blue line” was well and truly stretched when police lost control of the streets of Tottenham and Wood Green on the night of the 8th August. News of the police retreat spread like proverbial wildfire around the country and it was mainly a criminal underclass who responded to the temptation of free trainers and electrical goods. No more and no less.
Yet many politicians and commentators like Phillip Blond have responded to the riots with their “Broken Britain” thesis, as if these events were symptomatic of some deep and enduring malaise in our society. I profoundly disagree with this thesis for a number of reasons. First, it slurs the vast majority of law-abiding, hard working citizens. Second, it ignores the massive improvements that have taken place over the past twenty years in terms of social programmes, training and education, community engagement, empowerment and police community relations. Third, it ignores the sterling work carried out by housing providers to improve their homes and estates. And finally, for a country that is seeking to welcome millions of foreign visitors to the Olympics you could hardly come up with a more stupid branding exercise than “Broken Britain”. Time for a re-think ministers?