Friday, 27 February 2015

Negative response to affordable rent plans

Details of plans to introduce fixed-term tenancies at higher rents have met a negative response, with one Conservative council immediately ruling out ending lifetime tenancies.

Brighton and Hove issued a statement yesterday, shortly after details of the affordable rent programme were published, saying it would not end security of tenure for its tenants.

Under affordable rent, landlords would be able to charge up to 80 per cent of market rent, and tenancies could last as little as two years. Landlords will be expected to implement the new product if they want to access any of the £1.8 billion allocated for new development over the next four years.

Maria Caulfield, cabinet member for housing at Brighton Council, said: ‘We are committed to no change to security of tenure or succession rights for our council tenants and we will not introduce flexible tenancies in the city.’

Ms Caulfield said the authority would instead encourage tenants to downsize from larger homes when the time is right.

Shadow housing minister Alison Seabeck accused the government of failing to understand aspiration by allowing landlords to let homes with a minimum tenure of two years.

She said: ‘It can’t be fair that people who work hard and play by the rules are being told they may lose their home if they get a new job or get promoted at work.

‘At the same time, the Tory-led government wants to hike up rents for many new social housing tenants by thousands of pounds a year, to cover for their cuts in funding for new house building. 

‘Their new proposals not to cap higher rent levels at the same level as housing benefit caps could see social rents in London more than treble - but even that won’t fund the extra homes needed.’

The National Housing Federation questioned how the affordable rent reforms would tie in with housing benefit changes, and how effective they would be in low value housing areas.

It said plans to limit overall benefit payments to £26,000 a year would make it unlikely housing benefit would cover the 80 per cent rents. It also noted the new product would have little impact in low value areas where social rents are already near the 80 per cent level, limiting the potential for development.

However the umbrella body welcomed some ‘concessions’ in the framework document, including:

  • The retention of the current formula for setting rent increases until at least 2014/15
  • More flexibility around contracts, with no requirement for detailed agreements to be signed by 1 April
  • Confirmation that local authorities will play a key role in agreeing investment plans, but will not be able to veto them
  • Recognition of a continuing role for low-cost homeownership products.

Federation director Ruth Davison said: ‘We are disappointed that the government has not made any concessions on the issue of the benefit cap. We are also disappointed that it still looks as though the new model will fail to deliver the right number of new homes in low value areas.’

Readers' comments (15)

  • Joe Halewood

    It should come as no great surprise that a Conservative Council rejects these plans.

    What these plans mean is that new social housing could in theory be built. So out of usual Tory dogma rejecting new developments of social housing is not unusual. It also means that any increase in the rented sector stay private - again well in line with usual Tory dogma too.

    Im sure many Councils and even Tory ones dont like reducing security of tenure as they realise the impact this will have. But lets not act surprised when a Tory Council denies new social housing development and keeps any rental capacity increases with their favourite backers the private sector!

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  • Chris Webb

    Under Localism Shapps will batter them into line. If they do not comply he will simply occupy their areas and move his own people in to ensure that only his will remains. What these local Tories fail to recognise is the shape and tendency that they have appointed to lead them. Perhaps they should consider taking back control of their Party, but then would they have a Party if they ejected those whose soul purpose is the pursuit of manna. They are completely at the will of the bankers and sons of the elite, unfortunately for us.

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  • PSR. Story in the Mail today. Man removed from his council house for playing Tina Turner records non-stop.

    The editor has got his eye on you.

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  • Chris Webb

    Was he holding out for a hero - if so it is better that he has gone rather than waiting in vane, especially as this government is sacking heros and there will be no homes fit for them either.

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  • James McWilliams

    More than 70% of existing tenants need to claim housing benefit in order to afford to pay social rents. The framework document makes clear that “affordable” rented homes will be allocated in the same way as socially-rented homes are presently allocated, leading to the not-unreasonable assumption that at least 70% of tenants paying the new affordable rent will also need to claim HB. But they’ll need to claim more HB to meet the higher rents. Consequently, a large proportion of any surpluses made by participating housing providers to be re-invested in additional housing will come from the HB budget. Only in the increasingly weird world of government would this make more sense than simple capital investment.

    This isn’t, of course, the only problem. As has been pointed out by others, in low-value areas, social rents are already nudging market rents, so there is little hope of generating investment surpluses here. In high-value areas tempted housing providers would be wise to take a good look at the Rent Officers (Housing Benefit Functions) Order. If the affordable rent you set is going to be eligible for full HB, your 80 percent of the full market rent will have to fall within the bottom 30 percent of rents charged in the “broad rental market area” the property is situated in. This area is often drawn so broadly that the local housing allowance may be very considerably below the 80 percent market rent for your property. You might also get a shock to discover that, for housing benefit purposes, two children of opposite sexes will be expected to share a room until one reaches 10 or, for same sex children, until one becomes 16. If the family you allocate the house to is “under-occupying” according to this criteria, they’ll only get housing allowance for the number of rooms the Order specifies. Oh, and you will also need to factor in the possibility of a 10% benefit cut if the household is jobless for more than a year. Then there’s the median wage cap on the total of all benefits…..

    Clearly, housing providers will need to consider more than housing need when allocating affordable rented properties.

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  • I'm not an expert on this but isn't affordable rent also aimed at working people who don’t have a high income to be able to purchase a property?

    I'm 38, not married, I work, I have no children but I don't earn mega bucks and it’s a real struggle. I'm stuck in a limbo of buying and private rent.

    I have been looking into part share part buy but cannot save enough money while paying huge rents so for me the "affordable rent/intermediate rent" was my only option, pay a little less rent and be able to save towards the part rent part buys scheme.

    I don't have rich parents who can bail me out with deposits. I'm on my own and I don't want to go have a baby or have an addiction just to be able to have a "home".

    This affordable rent for people like me is a good thing, I believe. It also gives money back into the council’s budgets etc rather than them just providing housing to people who then claim from the tax payer to pay rent.

    But maybe it is more complex than I realise..?

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  • I'd love to see some stats about what the distribution of rent levels is in typical areas. (Can CIH do this - it'd make a great story)

    In places like the middle of London, rents of 80% of median market rent are just part of the standard range of rents available.

    Take somewhere like SE1 for example. For 80% of the median market rent you could (currently) rent an ex-council home which was sold and is now privately rented out.

    In fact in markets like London (and in some of the desirable parts of other cities) then I imagine renting ex-council is typically about 80% of media market rate, bearing in mind the relatively lower desirability (in market terms) of living on an estate rather than in a posh new development.

    So 80% is part of the market proper. It's not anything like affordable, and certainly not social rented (bearing in mind how affordable is used to mean a variety of homes, many of which people on social rents coudln't afford).

    I'm told there places like Burnley where council rents are already greater than 80% of market rent, but this certainly isn't the case in the places with the greatest pressure on waiting lists.

    More information please Inside Housing.....

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  • Chris Webb

    Perhaps Moggymoo - Shapps has redefined affordable to be 80% of the sort of rent you are struggling to pay currently - i.e. not affordable. This is why the affordable rent proposals are not a good thing, because they are not affordable. Shapps is explaining that if people like you can not afford to live in an area then they should move to an area that they can afford; and in the same way that tenants should have to be the primary funders of new housing through paying higher rents. Maybe you want to move, or be individually responsible for funding that used to be shared between you, the rich, and company profits, but I would guess you do not.

    The affordable rents that these replace, which were affordable, did produce a surplus - thus people did not need the tax payer to subsidise them, but in fact subsidised the tax payer. The tax payers collectively funded the socially required provisions, such as housing. Yet the new proposals would have this burdon met by the poor instead.

    If you take into account that tenants, just like you, are also tax payers then you get away from any confussion of the kind liked by Shapps which states tenants as scroungers. Under Shapps it will be he and his friends freeloading on your back, getting richer whilst you struggle to even hold onto your private let.

    Nice guy, isn't he.

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  • Nicole M

    Moggymoo, yes it is more complex. Impossible to explain in a quick comment, but I'll have a go anyway...

    It's possible the new affordable rents could help someone in your situation. However, as others have pointed out, they are not that far off market rents.

    PSR is not entirely correct in what he says... how do social rents subsidise the taxpayer, when half the people 'paying' them are on full housing benefit? And of course PSR has conveniently ignored the intial funding put into providing the homes in the first place.

    He is right though that the attitude appears to have changed regarding mixed communities, which Labour appeared to want over any other consideration. The current administration is not so content to allow people on very low incomes and/or those who are not working to be subsidised to live in the same area as those who are better off.

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  • Chris Webb

    Rosa - your last para evades the truth of what Shapps said:

    'Why should a person on benefit be able to live in an area where a working person can not'

    What both Shapps and yourself miss is that excluding benefit claimants from swathes of the land means that working people are immediately excluded too. And the absolute irony is that the working person without benefit will still not be able to afford to live in those areas.

    Therefore Shapps proposal, with your support Rosa, excludes anyone below a certain pay level from living in the 'affluent areas'. Not only is this social exclusion on a grand scale but it is self defeating as the undesirable areas will experience such high demand as to become less and less affordable. The affluent areas so cleansed may actual experience a small fall in value, adding to the good times for the higher paid.

    What a sensible notion to support!

    On the long-term subsidy Rosa - i.e the original build costs. 1) these are drastically reduced if the right to buy reciepts were credited to this debt instead of having been spent in the pockets of the higher paid. 2) should students pay the build costs for their schools and patients the build costs for their hospitals - otherwise they too owe the state for the subsidy. 3) will the rail company, utilities, and the other privatised businesses pay back the build cost of the assets they received at nil or discounted levels - of course not because the Tories would rather increase the cost of the bills upon the poor than cause companies to give up their subsidies.

    The State has provided the necessary infrastructure for the nation, to the benefit of the people and the benefit of commerce. The State has funded this from taxation. The tax payer has paid for these assets, such as housing, and pay for loans through their taxes. Tenants are tax payers too Rosa, which you conveniently forget.

    It is a fact that the amounts paid in rents last year exceeded the amount distributed in subsidy - however you look at it Rosa rent payers are subsidising the treasury already.

    Whilst we argue over how much more tenants should be taxed, the crucial point of the £1tr national debt remains. Interestingly the cost of the Trident weapons of mass destruction is also £1tr; the cost of the loans to the banks is nearly £1tr; the estimated cost of tax avoidance across the term of this government is estimated to amount to £1tr. There is the national debt possible repaid three times over, without hitting the tax payer of the tenants for a penny extra. Now consider what can be done across the entire budget, if fairness and worth was considered.

    It is not the tenant's place to pay the entire cost of social provision - that is why we have a State in the first place.

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