Rents fall in areas of good housing supply

The housing crisis can be addressed if two key principles are addressed: supply and affordability. It is obvious, I know.

In the past I have, wrongly, called for an approach that based on ‘build, build, build’. No longer.  With the shortage of land in places like Brighton and Hove, it is what is built, and it must be affordable.

The phrase ‘affordable’ has been corrupted by government, which uses the phrase in the context of rented accommodation as 80% of the market. That means in this city rents of £784.80 a month for a one bed flat are regarded as ‘affordable’.  A flat costing £784.80 is more affordable than one where the rent is at the average charged (£971 per month).

Most developers are, understandable, attracted by securing the maximum return on their investment. They are risking huge sums of money, and they want a return on their investment consummate with that risk.

But that does nothing to help the housing crisis. Homes for sale in the city have long been beyond the means of many local people.  I was on BBC Radio 5 Live recently discussing the housing situation in Brighton.  On the programme was a self-employed plumber who has been struggling for years to buy his own place.  I think he said he is in his early 40s, works hard and determined.

In parts of Battersea in south London (SE11, SW11, and SW8) the number of properties available to rent has increased by 28.1% since the beginning of the year. This has led to a 6% decrease in rents being charged over the same period.

Now most of these properties are buy-to-let investments, and will beyond the means of ordinary people. But the lesson is important. If we can develop homes for rent with a mix of social and ‘affordable’ rents, then the market will begin to readjust, and the hopelessness experienced by many renters will be eased.

Will we have the fifteenth housing minister since 1997 by the end of June?

In July last year I wrote that we now have our fourteenth housing minister since 1997 and concluded that none had got the job done.  I was hoping that Gavin Barwell would be different and I have to say he did make some progress, albeit small.

With the calling of a general election for June, the chances of a fifteenth housing minister is increased.  Mr Barwell is defending a majority of 165 votes and the seat is 47th on Labour’s target list.

Far be for me to make a prediction regarding the overall election results, or the result in his Croydon Central constituency, but whatever the result, Mr. Barwell is unlikely to be the housing minister in seven weeks time. He will either lose his seat, be moved to another job if his party forms the next government, or he will be in opposition.

Discuss.

Actually please don’t!

All I will say is that housing is the issue that impacts more profoundly on the lives of so many people and I hope it takes centre stage in the election. Unless the housing crisis is tackled soon, it will remain with us for generations, long after the changes in our trading arrangements with Europe have been forgotten!

You might wish to discuss that!

What I want to see in the parties’ manifestos

The political parties are yet to publish their manifestos for the June general election. I have three simple requests to all parties for policies to be included in those manifestos:

  1. Make a commitment to building council houses, in massive numbers, as an investment for current and future generations. Abolish the Right to Buy so that these homes remain in public ownership in order that they continue, in perpetuity, to meet housing need, and not investment opportunities.
  2. Make an unequivocal commitment to end rough sleeping by the end of the 2017-2022 parliament. In a country as wealthy as the United Kingdom, it is an outrage that people are living on the streets, and their presence should shame those in a position to end rough sleeping.
  3. Put an end to benefit cuts. More than half of all voters think that benefit cuts have gone too far, according to an Ipsos Mori poll published on Thursday. Denying 18 to 21 year olds the right to claim benefit support to help towards their rents will drive young people into homelessness, into crime, and into sex work. What politician wants that as part of their legacy?

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”.

House Price Disaster Forecast

House prices will leap more than £50,000 higher by 2021 on average despite Brexit uncertainty, with the average UK house price in 2017 will be £220,000, marking a £9,000 increase compared with 2016, according to the Centre for Economics and Business Research (Cebr).

By 2021, the average home is set to be worth around £272,000, its report predicts – a £52,000 increase compared with 2017. No doubt house prices in Brighton and Hove will increase by more.

In some quarters this is seen as good news. I think it is a disaster. The housing market is completely out of control. The only ones who will be able to afford homes in Brighton and Hove will be the rich and the very rich.

As someone said to me last week, the market in Brighton is a national and an international one. Housing need is local.

Last Wednesday I spoke at the Chamber of Commerce Construction Voices event. At it I said: “With each new administration on the local council, there has been an element of ‘optimism bias’, believing that they will be the ones to turn things around. Yet many major projects have failed, since as early as the 1970s, to get off the ground. Unless we massively increase the supply of affordable homes, unless we have greater imagination and perhaps new partnerships, we will not meet the housing needs of local people, and Brighton and Hove could slip into becoming a dormitory town with the creative minds looking elsewhere to flourish and grown. How long will it be before Hastings takes over from Brighton?”

Is this the most depressing, mind-boggling, ridiculous justification ever from government?

The government announced in late 2015 that the rents that specialist supported housing services could charge and be paid for through housing benefit / Universal Credit would, from April 2019, be capped at Local Housing Allowance (LHA) rates. This move has been widely opposed because it is likely that many services would become financially unviable.

The government is currently consulting on how services can be protected and is considering a ring fenced pot to make up any shortfall. Yesterday I was at the consultation event in London looking at this very issue. I can’t say that the mood was particularly upbeat!

The problem with using LHA is that it has not kept up with the reality of local housing markets and, what is more, George Osborne froze the rate that LHA will be paid for the foreseeable future.

A small illustration: in Brighton and Hove the average one bedroom flat is currently £971 per month. LHA in the city is £612 per month.

There is an absurdity to link the payments for supported and sheltered housing tenants to LHA rates. LHA is meant to cover housing costs.  But it costs roughly the same to provide these services where ever you are in the country. As it happens, Brighton and Hove has a higher than average LHA rate, far higher than an area in the north of England yet it costs the same, for example, to maintain a lift in the north of England as it does in the south.

The LHA is a lousy guide to actual costs.

LHA was originally introduced to set the amount of housing benefit that would be paid to claimants who rented in the private rented sector. The figure was supposed to equate to the 30th centile of rents for properties in a locality.

But why is the government determined to base rents for specialist supported housing scheme on the LHA? This week we got an insight into its thinking, and I have to say it is most mind-boggling, ridiculous justifications I think I have ever heard. That view appears to be shared by the person who gave the justification.

At the National Housing Federation’s finance conference which took place in Liverpool last week, the manager for housing policy at the Department for Work and Pensions, Darrell Smith, said in response to a question as to why LHA rates are being used for setting benefit levels for supported housing, he said: “The one advantage of (LHA rates) is that they are already there, so it doesn’t cost government anything to set it up. I know that isn’t a great answer, but that’s all I have got.”

If that is the way that government is developing its strategy for those very services that support the most vulnerable members of our society, what hope is there?

Housing in Hastings: Difficulty in accessing the private rented sector

(This is the second in five posts regarding housing in Hastings based on a briefing paper prepared by my colleague Sue Hennell. Yesterday I wrote about Universal credit and how the six week wait for the first payment was causing problems for people trying to get accommodation in the private rented sector)

There are a number of reasons why there is more difficulty in accessing private rented accommodation in Hastings at this time.

The Local Housing Allowance Levels have not kept pace with rent increases:  The average monthly rent for a single room in a shared house in Hastings is £360 per calendar month and the Local Housing Allowance is £279, the shortfall per month is £81. For a tenant who is in receipt of Job Seekers Allowance at the rate of £57.90 (under 25s) or £73.10 (over 25s) per week this would mean using £18.69 per week to just cover their rent.  For a one bed room flat, the average rent is £426 per calendar month and the Local Housing Allowance is £368.20, the shortfall being £57.80 per month.  It is the same for families:

Number of bedrooms

Local Housing Allowance Average rent price in Hastings* Median rent price in Hastings*

2 bed

£521.26 £738.00 £693.00
3 bed £693.12 £890.00

£850.00

4 bed £847.69 £1,009.00

£936.00

*taken from Hastings Market Rent Summary (home.co.uk)

Reluctance to house people on benefits: Private sector landlords have always been reluctant to take tenants in receipt of Local Housing Allowance but it would appear they are even more reluctant with housing costs payments under Universal Credit. BHT’s Housing Access Project undertook a ‘secret shopping’ exercise with 25 local letting agents in Hastings in August 2016 and 75% said that they would not take on tenants in receipt of the Local Housing Allowance (this was before the full roll out of Universal Credit)  and the rest responded that they might possibly do so.

Rent in advance: Those private sector landlords that will take tenants in receipt of the above benefits require rent in advance, 6 weeks rent in advance, deposits, guarantors and fees. Whilst it is possible to get the rent in advance and deposit for one month via different routes (e.g. Hastings Borough Council) the 6 weeks rent in advance and access to guarantors is more difficult for people who are poor and/or claiming benefits.

Rental increases following welcomed improvements: Hastings introduced selective licensing for certain areas in order to address poor standards of housing. Whilst this is really good news some private sector landlord cannot afford to upgrade their properties so have pulled out of the market and where properties have been renovated rents have increased.

The question I asked yesterday was where will people live if social housing is not keeping up with need and private landlords are less willing to rent to claimants? I add a further point today: where will people live if they simply cannot afford the high cost of rents?

We are a nation in the midst of the worst housing crisis in living memory, if not ever. And it will only get worse.

If you are facing eviction due to rent arrears, get advice early from one of BHT’s Advice Centres in Hastings, Eastbourne and Brighton, the CAB or another advice centre.

Here are details of the BHT Advice Centres:

Brighton

Eastbourne

Hastings