Panorama on subletting
04/05/2011 11:12 am
It’s good to see the issue of unlawful subletting of social housing getting some wider media coverage, with the BBC’s Panorama show looking at the issue tonight. There always seem to be a lot of unanswered questions around the subject. Lots of claims have been made about the number of homes that are unlawfully sublet, often placed alongside an equally huge figure for the number of people on housing waiting lists.
But as IH readers will know, waiting list figures aren’t always as straightforward as they seem, and you also have to wonder who the ‘unlawful’ tenants are. People who are on the waiting list anyway? People who have genuine need of social housing? And what happens to them if their home is recovered?
That isn’t to say subletting isn’t a problem, clearly homes should be allocated to people in need through the proper channels. But it isn’t as straightforward an issue as the statistics would sometimes suggest.
Another issue that tends to crop up around subletting is how hard it is to gather evidence and recover properties. Put too many barriers in place and landlords may not have the resources to do the work, but if there aren’t enough safeguards then the rights of tenants could be compromised.
It’ll be interesting to see which of these issues are tackled by Panorama, and whether the programme comes up with any answers.
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12/05/2011 8:32 am
Managing social housing stock should be looked at more like management of a company's vehicle fleet or its other assets. It is not necessary to keep the assets "fixed" to maintain the service at a satisfactory level. In fact as I have described above there are many advantages in keeping the stock moving so that as demands fluctuate the stock can be tuned to better address needs.
This requires a different approach to managing housing stock than simply playing the numbers game. Dogmatic aversion to RtB is unobjective and - for the reasons I describe - misguided.
12/05/2011 9:29 am
Gavin, I don't disagree with much of what you say. the problem though is that this is not what has happened historically, for idealogical reasons.
I disagree though with your point about the sale price being sufficient to build a new property as much of the discounted sale prices that occurred would be too low to enable this.
Society has changed over the years to the point where the majority now see it as unreasonable for councils to provide stock. Potentially, the changes to the HRA may free up councils to engage in additional building if their business plans allow it. As non-profit making bodies they can also charge lower rents which will see a reduction in the welfar benefit bill whilst providing higher standard accommodation than the provate sector. Yes, this means that private landlords would be hit but hey that's a risk i'm sure they will have accounted for in their business plan, won't they?
A reduction in private landlords may mean more houses becoming available to sell as they reduce their portfolios which will depress prices and enable more first time buyers to enter the market. Win win (apart from private landlords)?
12/05/2011 11:10 am
Matt - the market value of a home is normally significantly higher than the construction cost, so even allowing for discount to a RtB purchaser there will be a significant contribution made towards the cost of building a new house.
The very purpose of adopting a new strategy is to avoid the faults present in previous strategies. The fact that RtB revenues were not re-invested in new housing provision in the past is the fault, not the RtB policy.
RtB does not cause a supply problem, failing to build enough new homes to satisfy newly arising housing need causes the problem.
12/05/2011 11:29 am
Matt - "Society has changed over the years to the point where the majority now see it as unreasonable for councils to provide stock."
I don't agree.
Most local housing surveys I have seen ask about the public attitude towards the provision of additional affordable housing, and almost without exception there is significant support for it in principle. Our own local questionnaire which had a 74% response rate (exceptionally good for such a survey) produced overwhelming support for it.
12/05/2011 2:56 pm
Gavin, I know the difference between a market value and the construction cost which is why RTB discounts were limited to the cost floor - so that they couldn't be sold for less than they had cost to build.
However, inflation eats into this so that often the price a property was sold for was less than it would cost to build. There often wasn't sufficient to rebuild.
Nonny 11.33 I think you're being less than fair to Gavin with your comments. Things evolve over time and people have move with it.
The 'arguement' made by Gavin is largely pointless because the fact is that the funds raised from RTB weren't reinvested, The obvious consequence is of course less available council homes.
12/05/2011 6:32 pm
Matt (and the offensive person who does not even have the decency to identify him/herself)
The point about inflation is misplaced because the money would not just sit in a brown envelope waiting to be spent on building a new house. When a sale is made the funds would go into the authority's operational account and reduce the need to borrow money to meet its current outgoings. The rate for borrowing is higher than the rate of inflation, so not having to borrow offsets inflation.
It is not a pointless argument to propose something just because nobody has done this yet! It is a pointless argument to criticise a workable option just because nobody has done it that way.
My reasoning is perfectly sensible. I challenge anyone to find a flaw in the logic. Let me explain it like they do for tax self-assessment:
CASE A: NO RtB
Tenant A has lived in his council house for twenty years, since just after he was married. His children have grown up and moved out. He would like to own his own home but
i) he cannot afford to buy on the open market and
ii) he has already made the house he is living in his "family home" - so he does not want to move.
He is therefore stuck where he is and will stay there as long as he can, which is likely to be for another 40 years.
Outcome: The home is not available for let to prospective tenant B who is waiting for a council house but none are available. The council have insufficient funds to build more affordable housing so prospective tenant B remains on the waiting list.
CASE B: RtB with enforced replacement.
Tenant A buys his family home. The money is put towards the cost of a replacement property which the council has been able to start building, having projected that it would have funds coming in from RtB house sales. The council only needs to fund 10% of the cost of the new home to provide tenant B with brand new accommodation, because the cost was 90% covered by the sale.
Outcome: tenant A and tenant B are both suitably housed. The housing stock is maintained at equilibrium. One existing social tenant has been converted to owner-occupier status, and one new social tenant has been housed. Tenant A gets to own his family home so is very happy. Tenant B gets a brand new purpose-built energy efficient home to live in so is also very happy. The council have one less applicant on the waiting list at an outlay of only 10% of the cost of a new home. The ongoing maintenance cost for the council's housing stock is also reduced, so they are also happy.
I call that a win-win-win scenario.
12/05/2011 7:20 pm
Social housing fraud may be a symptom rather than the problem overall with the provision of housing. However, subletting is not that difficult to prove if you have the time to carry out the proper investigation. The main problem is that the average HO doesnt have the time to do the investigation and relies on neighbours to whistlblow.
Most subletters make sure that the rent is paid and they dont order repairs so there is little incentive to bother trying to do anything about it.
There are victims in social housing fraud, social housing tenants often forget that there are many people waiting in very poor conditions in private sector leased properties or worse still actually homeless - desperate for somewhere to call home.
If someone can pay £400 per week for what the they think is a privately rented property then they should get on with it, as there are many people who work hard and dont have £400 per week to live off, let alone pay rent.
There is clearly a problem with the provision of affordable housing but ignoring subletting is making things worse.
13/05/2011 8:42 am
Gavi, sorry to come back again but I think I've not made my point clearly enough.
What I was trying to say that when RTB was in full flow it was largely driven by the discounts on offer (up to 70% for a flat, 60% for a house). It was with this level of discount from the market value that the sale price was often below what the replacement cost would be. It's this that would hinder your proposal.
Obviously the discounts have been slashed since then and so your proposal is more liekly to work in the current climate but, in London at least, RTB is practically dead as the discounts are insufficient to enable most residents to afford even the discounted price.
My point about pointlessness is linked to the fact that there is little happening with RTB, but also because the damage has already been done. If such proposals had been in place 30 years ago then we may not be facing the shortage we have today - but they weren't and we are!
Couldn't agree more regarding the time element Sylvia. If only HOs had the resources available that the BBC employed to uncover one instance of fraud!
13/05/2011 8:53 am
RE: Anon 11:33.
You have no idea what you are talking about.
I grew up in social housing. My parents were among the first to move to Stevenage New Town and my mother lived in the same home for 53 years. I have first hand experience of the rise and fall of the social housing scene there, which was quite accurately described in "The Great Estate".
The houses there have not changed, but the people have. The one thing that has prevented the whole estate decaying in the way Thamesmead appears to have done is RtB. Many of the tenants bought their council homes and, like my parents, continued to live in them and look after them.
These were working class families who simply wanted to raise themselves out of dependency and to have a home that they could really call their own. As the tenants featured in The Great Estate said, such long-term council tenants generally regarded these homes as their own anyway - RtB allowed them to actually make it so.
It was not greed that drove this; there was no desire to take something that was not really theirs. This was a fulfilment of their lifetime aspirations, often driven by a desire to "leave something for the kids".
Some of those new owners moved on to pastures new, leaving behind affordable homes for new owners to occupy. My mother finally moved after 53 years, and her home was bought by a young couple who were born within a mile of there and wanted to live near parents and friends. That is precisely the justification given for the building of Affordable Housing in rural communities - it applies just as much in the towns. But in the towns the social housing allocation schemes take no account of local connections, family ties etc., so the only way to achieve social cohesion is by buying a starter home as this young couple did.
So, apart from the positive aspects I described earlier, RtB allows communities to evolve naturally, helps to maintain social diversity and cohesion, and it works to suppress the forces of decay that have operated in many social housing estates elsewhere and turned them into highly undesirable places for anyone to live.
Providing that social landlords are REQUIRED to maintain a balanced social housing stock, which can be achieved by enforcing a policy requiring replacement of any homes sold, RtB is a constructive scheme. It makes a positive social contribution by helping people lift themselves out of dependency.
13/05/2011 9:10 am
Matt - any contribution towards new construction is better than none, so even if a sale only contributes 50% of the cost of a replacement it is positive, because otherwise the only way to secure a new home is 100% new funding.
If that is the case, the new homes will be minimalist to the extreme, cheaply built, cramped and likely to suffer the same rapid demise of the tower blocks thrown up in haste in the 60's and 70's.
Building protected "Affordable Housing" that is restricted to remain affordable in perpetuity, which it can only do by continuing to receive subsidy, is destined to widen the gap between social housing and market housing. It will create a whole class of permanently dependent tenants who will have no chance at all of progression to owner-occupation.
RtB on the other hand bridges the gap between the two. It stitches together the social housing "market" and the open housing market, allowing people to transition from social housing to home ownership relatively easily, and all without them having to uproot themselves from friends, relations and neighbours. It cycles the stock, which is a positive thing.
All that needs to be done is to ENSURE that the social housing stock is not allowed to diminish because of it, which is perfectly feasible to do but which was not done under Thatcher or even since then under Blair/Brown.
13/05/2011 9:20 am
To bring this back to the topic of the original article - if RtB had been used by the policeman in the programme to buy his flat, he would have been perfectly entitled to let it out however he wanted.
The social landlord would have received money to allow them to provide other accommodation for prospective social tenants on the waiting list, and nobody would have been any worse off (except the makers of the programme, who would have had to find something else for their feature).
13/05/2011 12:21 pm
There is money available to deal with housing fraud, but it is being spent on providing training to frontline staff. The only problem with that is that it is not due to lack of training that the investigations dont take place its lack of time and resources. The money would be better spent buying in investigation services, pooling intelligence across the sector and providing a support/information line both to residents and staff.
The debate about RTB and what should happen to affordable housing is I believe a seperate issue. There does need to be a debate in the housing sector and the wider society as to what is the purpose of affordable housing. I do have sympathy for the view that keeping communities together and allowing individuals to flourish and improve their circumstances however this has to be balanced against the needs of those who are homeless and less economically able and the cost to everyone.
I live in social housing, I have worked in social housing, both in tenant paricipation and in housing management. I now specialise in investigating housing fraud. In my experience there is no simple solution to tackling, over-crowding, affordable homes, sustaining communites, homelessness and a whole host of other things. However as a society we should be aiming to have regular debates and trying to come up with solutions that fits the needs of most people.
13/05/2011 12:28 pm
The solution that fits the needs of most people would be for them to have access to affordable housing. As neither the Market not the Private Sector can provide the scale of housing required to make it affordable, simply because to do so means reduced unit profits, then this can only be provided by social investment.Iin short therefore, the very same actions that were taken the last time there was a housing crisis on this scale and the economy was broke are needed now - namely a programme of social house building of a size and scale sufficient to reduce unit costs such that all can afford them, and to provide all who chose to be a social tenant to be one.
Were this done then the market for this sort of sub-letting would not exist.
13/05/2011 1:45 pm
PSR - namely a programme of social house building of a size and scale sufficient to reduce unit costs such that all can afford them, and to provide all who chose to be a social tenant to be one.
Agree - there is a national crisis - there should be a dedicated Cabinet post to do just that. Yesterday, I read that repossesions have gone up by 15% so what hope they as well as the many in inadequate housing, on waiting lists. This is not the same as a bottomless hand out to everyone - those that can work must be made to do so, those that aspire to move out of social housing should be enabled to do so. At the moment, lack of fair cost rent or purchase housing is blighting opportunity for many.
Cameron needs to do another u-turn and look at the figures again. VFM wise and citizen wise, there are better options.
13/05/2011 2:49 pm
Tackling subletting is important, but I think it's a minor problem in the grand scheme of things.
If I could ask the minister for housing to do one thing it would be to look at the issue of housing as a whole. I'd like the government to produce a long-term strategy for the provision of housing across sectors, rather than looking at social housing or home ownership etc. in isolation.
We need a variety of solutions in this country: social housing; private rented housing; home ownership etc. But I'd like to the think that these solutions are just a means to an end - the end being that everyone in this country has access to a decent standard of affordable housing.
I don't see any joined-up thinking from the government when it comes to housing policy; certainly not in the same way as there is for health or education etc. And yet what is more fundamental than needing somewhere to live? It's a need that we all share; we all need somewhere to call 'home'.
I can't think of the quote off the top of my head, but I think it was Beveridge who said that the whole of society benefits when it's citizens are comfortably housed. I'd go along with that.
Inside Housing staff post
13/05/2011 4:21 pm
I agree Leon. It might be little hypocritical of me - given that IH runs lots of stories on subletting and they get lots of hits - but it does seem the issue gets more coverage than it really warrants. We've had more on it today, with the CIH setting up a goverment funded team looking at housing fraud, among other things.
That said, clearly it is a problem, and should be dealt with. I got a letter this morning complaining that although councils are taking on subletters, housing associations are doing very little. I'll try to look into this, but in the meantime, does anyone have any thoughts on that point?
14/05/2011 10:36 am
Setting up at team to look at something is the same as doing nothing. The problem is not old and it is not growing, it just needs dealing with. I am sure there will be some kind of report, possible someone will get paid a lot of money for a toolkit that no-one will use.
Its a bit like the kettle is broken so we cant have a cup of tea, lets have a meeting, consider our options, and devise an action plan. No its called pop down to the local shop and buy a kettle - this will ensure you get your tea and will save money as you wont waste time discussing it, and monitoring the action plan.
Subletting can be dealt with in the short term by ensuring that those who are doing it are investigated and evicted where appropriate. The long term solution would be as previous contributors to this discussion have indicated is to look at providing more homes and having a joined-up approach to the various housing options and needs.
On another note, some people sublet because they move on in their lives but want to keep their old homes as security if things dont work out.
However, there is another type of subletter who is using their social housing to make money and to make the lives of others miserable. Therefore in the example of the policeman in the panorama programme he was clearly able to afford to give up that home and make profit out of his other property developments. Unfortunately there are similar cases in all types of social housing and there is no redeeming feature to their actions.
17/05/2011 2:36 pm
Whilst I agree with 99% of what you say Sylvia, surely the first question, using the broken kettle analogy, is 'is it really broken' followed by 'can it be repaired.
In this failed consumerist age where housing has been deliberately made a market commodity, the real danger is falling for the 'it's broke' 'and the old ways never worked' falsehoods. Those pushing this line only offer more of the same - shorter supply and dearer options or less for your money. The rationing approach may be a short term reality, but the medium term needs to address the supply to demand deficit. That way, with the shortest delay, we can not only soon look forward to that nice cup of tea, but be secure in the knowledge that everyone will be able to afford and enjoy the tea too.