Private rented housing is “out of reach” for under 35s, says the Chartered Institute of Housing

The Chartered Institute of Housing (CIH) recently carried out research into the gap between rents in the private rented sector and what Local Housing Allowance (LHA) will pay.

LHA is based on the 30th centile of the range rents charged in the private rented sector. Except it isn’t. That was how it was supposed to be (having previously been reduced from there 50th centile). In fact, the level of payment has been frozen for three years and will be frozen until 2019/20. LHA no longer reflects in any way the reality of rents in a locality.

In Brighton and Hove the rates are £82.66 for a room in a shared house, £153.02 for a one bed flat, £192.48 for a two bed property. The average one bed flat in Brighton and Hove is now £971 per month compared to LHA of £612.08 for the same period.

In Eastbourne the rates are £67.00, £116.53 and £151.50, and in Hastings £69.77, £92.06 and £120.29. (There are higher rates for 3 and 4 properties).

It is worse for you if you are under 35 where you are restricted to claiming LHA for just a room in a shared house.

And if you think it is bad for under 35s, it is EVEN worse for those under 21 for whom the rate is zero (unless you are ‘lucky’ enough to qualify for one of several exemptions – merely being a rough sleeper is not enough).

So what has the CIH found? It has found that the gap between LHA and rents has widened to the point where private rented housing is “out of reach” for under 35s.

A couple of weeks ago I wrote how the senior civil servant responsible for housing policy at the Department for Work and Pensions, Darrell Smith, said that the government is now going to use LHA rates to set new, lower rents for specialist supported housing. Why? Because it is such a good barometer for the market? No. He said: “The one advantage of (LHA rates) is that they are already there, so it doesn’t cost the government anything to set it up. I know”, he continued, “that isn’t a great answer but that’s all I have got”.

Housing White Paper: My Reaction

social-housing-4I am a bit late in the day, but here is my response to the Government’s White Paper on housing:

There has been widespread criticism of previous announcements, and this White Paper marks a major shift in government policy. I welcome the new direction of travel, but feel that the destination will be a real disappointment to anyone who was hoping that we were to see major progress in the supply of affordable homes for rent, especially the absence of the much needed commitment to a return to council house building.

It is as if the promise of a beautiful beach holiday ends up being the seafront in Bognor Regis on a wet Tuesday afternoon in September.

I welcome the £3 billion nod in the direction of off-site construction, something I have advocated for several years and have seen working well with BHT’s partners such as QED and KSD.

I am not opposed to developments with greater density, especially in areas such as Brightton and Hove with high demand and limited land. But any increase in the density of developments must, somehow, not merely result in increased profitability of developments. It must lead to greater affordability. Quality design is a must in such developments.

I welcome the decision to abandon the Conservative Party’s manifesto commitment that 20% of all homes in new developments should be Starter Homes. This was a flagship commitment of David Cameron, in the 2015 manifesto, to build 200,000 of Starter Homes by 2020.

The thinking behind dropping this manifesto commitment must be a recognition that if a development has 20% Starter Homes, there would be no capacity for any other form of social housing.

Not to abandon the Right to Buy, and to persevere with extending the scheme (albeit extremely cautiously) to housing associations, are both Bognor Regis moments.  Worse still, the government has indicated it now wishes to extend Right to Buy to councils’ private housing companies.

Bullish statements have been made about forcing local authorities to ensure that there are plans in place, and the bizarre threat of the Chair of the Homes and Communities Agency to “cane” those that do not deliver, all sounds a bit hollow. I had hoped the government would have returned powers to local authorities, backed up by capital investment, to build new council houses.

The Green Belt is being given protection, but developments will be allowed “in exceptional circumstances”. What greater exceptional circumstances are there than a housing crisis on a scale that this country has never known. If it is true that Surrey has more land given over to golf courses than housing, then I won’t weep if some green belt is lost.

On the private rented sector, if powers are given to local authorities to impose banning orders on the worst landlords, such powers must be backed up by resources to allow councils to enforce this and for independent advice agencies to enforce the rights of tenants. Rights are only as good as the ability to enforce them. Otherwise they are hollow threats.

The ambition of the plan, and the fanfare it has been given, is not matched by planned delivery, and even though there are aspirations to build the homes the nation needs, it sounds similar to previous statements and aspirations.

As I wrote at the weekend, the private sector isn’t going to deliver the homes that are needed, social homes for rent. In 30 years I have seen housing white papers come and go. The 2016 white paper, I fear, will not live long in the memory, a bit like a damp Tuesday afternoon in September in Bognor.

What the government’s housing white paper needs to say

This could be a big week for housing, with the government publishing its long-awaited housing strategy. Today (Sunday 5th February) the government has hinted at a new emphasis on people who rent their homes.

imageI welcome what Housing Minister Gavin Barwell has said, that there will be minimum term tenancies and more homes built for rent, signaling a “change of tone” from previous Conservative Party policy. But the key issue is what sort of rental homes they will be? Will tenants have greater security of tenure and, critically, will they be truly affordable?

I have lost count of the number of announcement, housing strategies, policy documents and white papers there have been over the last 25 years. Most have delivered little. Some have been disastrous. And the housing crisis has just got worse.

Will this latest iteration be any different. Yes, if as promised there is a shift from the obsession with home ownership. As I have already said do one of the key issues is whether the promised homes for rent will be truly affordable.

If, as I suspect, the government will be looking for institutional investors (pension funds, for example) to make it happen, then we will be disappointed. Yes, pension funds are keen to invest in property. Unlike governments, pension funds take a long term view, beyond the immediate political cycle. But they are, by their very nature, looking for the best possible return. If there are rent controls, as I believe there should be, the pension funds won’t be interested.

Private landlords already make a valuable contribution to meeting housing need, but with land prices being what they are, they will not be producing any homes in the affordability bracket needed.

The average privately rented one bed flat in Brighton is now £971 per month. The most housing benefit will pay is £612 per month (the Local Housing Allowance – LHA). To make the private rented sector affordable to those on medium, low and no income, the government could either abolish the LHA, but that would cost billions of Pounds, year on year and forever. It could put a cap on the amount a landlord can charge, but then investors in the private rented market would disappear. Anyway, I cannot see any government intervening in the market in this way.

There is another way, which makes financial sense in the long term: invest and build council houses along with housing association homes. This will require upfront capital investment, in the acquisition of land, and the building of homes. A one-off subsidy in capital investment can ensure that there isn’t a need for ongoing rent subsidies through housing benefit.

I have no illusion about local councils, many of whom lack imagination and courage when it comes to modern design and construction methods. They will have to up their game considerably.

What of the right to buy? It must surely be ended. More than a third of the homes sold through the right to buy have ended up in the private rented sector with rents three of four higher than when they were in council ownership. It makes no sense in economic or housing terms, although it has proven to be political popular in spite of the negative impact it has had on the provision of homes for people in the greatest need.

So what of aspiration? Gavin Barwell has said that the government had not given up making home ownership available to all. Most people, when asked, say they would like to own their own home. But for around half the population, that aspiration is unachievable, even with the huge public subsidies on offer. A more achievable aspiration could be the provision a homes for people who need them, at rents that people can afford.

I hope that secure tenancies will be reintroduced. People need that security, as well as the flexibility that renting should offer. I disagree with Jeremy Corbyn who has been quoted as saying that the rental market was “incapable of giving people the security they need”. I disagree. People used to have much greater security of tenure, and there is no reason why that can’t happen again for those who pay their rent and don’t cause anti-social behaviour. It requires a change in the law and investment in services offering advice and representation so that tenants’ rights can be enforced. That is something the government can deliver on, and quickly.

New_Prime_Minister_Theresa_May_makes_a_speech_outside_10_Downing_Street_London_after_meeti-xlarge_trans++uWljxTX2ToqwW26CTqWzx8B_jeBzq4FpvJVTUwJgaqgTheresa May said on the steps of Downing Street that her government will help those who are “just about managing”. This housing strategy needs to go beyond that. It needs to help those who already aren’t managing. Her housing strategy will be judged on whether it addresses the issue of affordability and supply.

I am not holding my breath, but hope to be pleasantly surprised.

Nationalise land – we should have done it seventy years ago!

I have written before on this blog that my dad used to say, back in the 1970s, that the biggest mistake of the 1945 Labour Government was that it had not nationalised land. As a teenager growing up in apartheid South Africa, I had no idea what the 1945 Labour Government was, nor what nationalisation meant.

A report out this week, commissioned by 13 London councils, reports that the planning system has allowed land values in London to massively increase, and as a consequence reduce the delivery of affordable homes. House prices have almost doubled in London since 2008 and the development of affordable homes has fallen by 37%.

Developers are resisting expectations that a proportion of all new homes should be affordable. Increasingly in places like Brighton and Hove, councils, keen to see development, any development, cave in, allowing their commitment to affordable homes to be watered down.

Behind the spiralling cost of housing are a number of factors, including demand, building costs, profiteering and land costs.

An organisation like BHT would love to build homes, as we used to do, but the cost of land is beyond our reach. The price rockets the moment planning consent is given, and then developers tell councils that they can’t afford the affordable homes element that the planners have required.

I think my old dad had it right on this one. If land was in public ownership, as much land in and around Brighton is thanks to the wisdom of Herbert Carden, we could insist that the homes put on that land meet local need and would be more affordable if land and property speculators were removed from the equation.

2017: a worsening of the housing crisis

The art of prediction is little more than a guessing game. Who would have predicted just one year ago that Donald Trump would be elected President of the USA, that Britain would vote for Brexit, David Cameron would be toppled as Prime Minister little more than a year after being elected, that Leicester City would win the Premier League, or that Bake Off would move to Channel Four?

But there was a prediction I made that sadly came about – the housing crisis has worsened. It is a prediction that I make again for 2017.

The other day I received a leaflet through my door about the anticipated rise in house prices in my street. It was presented as good news. Housing is, we are told, a great investment opportunity.

img_4784But housing should be about where people live, and while some are doing very well from our over-heated housing market, more and more people cannot compete. They are experiencing increasing hardship due to the lack of affordable homes.

There are no policies emerging nationally that will turn this tide. Indeed, the continuation of the Right to Buy of council homes and its extension to housing associations will just make matters worse.

Brighton Housing Trust has had a record year for our Christmas fundraising, such is public concern about the number of people sleeping on our streets.

So my second prediction is that public concern will continue to grow but politicians at a national level will fiddle with ineffective policies while those without homes freeze.

(This item was published in the Brighton Argus on 4th January 2017)

Council housing is needed to reduce the inequality experienced by Theresa May’s “just about managing” families

New_Prime_Minister_Theresa_May_makes_a_speech_outside_10_Downing_Street_London_after_meeti-xlarge_trans++uWljxTX2ToqwW26CTqWzx8B_jeBzq4FpvJVTUwJgaqgWhen she became Prime Minister, Theresa May spoke on the steps of Downing Street of the “just about managing” families

A report published last week by the Resolution Foundation, Hanging on: The stresses and strains of Britain’s ‘just managing’ families found that “just managing” families were more than twice as likely to rent privately rather than own their own home, exactly the opposite of two decades ago.

Regarding housing costs, the report said: “The combination of rising housing costs across all tenures and the increasing concentration of low to middle income (LMI) households in the relatively more expensive private rented sector mean that the proportion of income spent on housing within the group has increased sharply over the same period – equivalent to an extra 14p on the basic rate of income tax for an LMI couple with children. Roughly 25p of every £1 of income within the group is now diverted into accommodation costs on average, with some households facing much higher ratios. Taking these housing costs into account, we found that typical incomes in the group are at a 13 year low.”

imageMy reason for quoting this is to contrast this indicator of inequality with a statement made yesterday (Sunday 2nd October) by the Housing Minister, Gavin Barwell MP.  Speaking at the Conservative Party Conference he said he wanted to see more homes “of every single kind” built but when he listed the kinds of homes he wanted built he did not mention council housing.

In fact he said that a 500,000 increase in council houses as part of an increase in 1 million homes to be built would increase inequality, and rather than solving the housing crisis, it would widen the divide in society.

He said: “If you’re going to build at the current rate … and half the people are going to go in council homes and half of them are going to own, the divide in society is only going to get wider and wider.”

The divide, Minister, is already huge and getting wider, and the dysfunctional housing market is at its core. I wrote on Friday about the reason why the number of homeless households has gone up by 10% over the last year.  Council housing is needed to reverse that trend.

And I wrote yesterday about the economic case for building lots of council houses, and referred to research that pointed to savings in the hundreds of billions over 50 years if the government was to invest in council house building.

The Resolution Foundation is clear that the high cost of housing, and rent in the private rented sector in particular, was a significant factor in the “just managing” households.

It must be clear to the Minister that the “just managing” households will probably now never own their own home – it is just too expensive – and the private rented sector, too, is testing even those who are “just managing”.

Any ideological opposition to council housing is not helpful. The Minister is right to want housing “of every single kind” but that must include council housing.

(Footnote: Previously I have been very positive about Gavin Barwell – My affection for the new Housing Minister is almost absolute! – but on his refusal to see the importance of council housing I believe he is just plain wrong).

What are we to do about the housing crisis in Brighton and Hove?

(This item first appeared in the Brighton Argus on 10th September 2016)

What are we to do about the housing crisis in Brighton? Everyone wants something done but nobody wants to be impacted by the solution. Those living in the centre see the urban fringe as the site for development, while those in Mile Oak, Ovingdean and elsewhere think otherwise.

shipping-container

Inside one of our shipping container homes

Some argue going tall is the solution, others call for greater density. At Brighton Housing Trust, we have embraced short life housing on sites temporarily derelict, such as our shipping container homes developed with our partners QED Property (see here for examples of such ideas).

There is an increasing consensus that any new homes should not be high priced and all should help to address Brighton’s housing problems. The last thing we need are more top end homes for people cashing in and moving down from London, or worse still, having second homes here.

Some blame the City Council. I certainly don’t. We are fortunate to have an all-party consensus on housing, but the powers, and finances, of the Council are extremely limited.

We need a radical approach by the City Council, but it needs central government imagination and courage. Previously I have made the suggestion that Brighton should be declared a Housing Crisis Zone with the government giving sweeping powers and resources to the Council to built social housing for rent on publicly and privately owned land.

If we had more homes with social rents, we could combat homelessness and affordability, and save a shed-load of money on the ever-increasing housing benefit bill. It seems to me to be a no-brainer!