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.

Is it right and is it possible to ban tenants from smoking in social housing accommodation?

I hate smoking. Always have.  Back in the late 1980s I was regarded as being completely unreasonable if I asked that just one colleague smoked at a time in a staff meeting held in a small room.  It was about individual freedom of choice, I was told, although no consideration was given to my freedom to choose not to work in a smoke-filled environment.

How things have changed.

However, the proposal from Professor John Middleton from the Faculty of Public Health, who has said that tenants moving into social housing should have a no smoking clause in their tenancy agreement. His intentions are very worthy – to protect children from second-hand smoke.

There will, inevitably, be the freedom of choice argument against Prof. Middleton’s proposal. There is also the legality.  Without primary legislation, I cannot see how such a clause in a tenancy agreement can be enforced.  Smoking might be disgusting, it might be anti-social, it might har, the smoker and those around them, it might be inconsiderate.  But it is not illegal to smoke …. Unfortunately.  Policing what a tenant does, beyond the legal terms of the tenancy agreement and the law, is not the role of landlords.

But good on Prof, Middleton for raising the debate.

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.

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).

Footballers go where government and housing associations fail to tread

I was asked this morning on Twitter what I thought of the news that three former professional footballers, Rio Ferdinand, Mark Noble and Bobby Zamora, are leading an initiative to build 1,300 homes in a rundown area near Luton

img_4495They have set up the Legacy Foundation and plan to build a series of social and private rented developments.

They, of course, follow in the footsteps of Gary Neville and Ryan Giggs, but I understand that the Neville/Giggs scheme is to build two luxury skyscrapers and a five star hotel, not social housing.

It is not the first time that the rich and super rich have used their huge fortunes to address social inequality and provide housing. The social housing movement goes back well over 100 years to people like William Sutton (who founded the original and very successful parcel delivery company in London and then left money in his will to build homes for poor people in London), philanthropists like the Rowntree familiy, and many others.

The legacy of these philanthropists are housing associations. Unfortunately, many of today’s housing associations have betrayed the legacy of their founders and are now doing less and less development for poor people. Shared ownership products, homes for outright sale, and other more expensive homes have become the norm, and they price out poor and even middle earning people in some expensive housing areas like Brighton.

What particularly impresses me about Ferdinand, Noble and Zamora is that they intend to focus on social and affordable housing. Each development will have between 45% and 50% social and affordable housing, much greater than we see in many developments.

They are putting in their own money as well as working with private investors.

So what do I think? It is a shame that it is necessary to rewind the clock by more than 100 years where we need philanthropists, albeit former footballers, for stepping in where the government and housing associations fail to tread.

The Housing and Planning Bill, to be debated in Parliament this week, is a huge opportunity missed

The Housing and Planning Bill is to have its Second Reading in the House of Commons this week. The Bill has three policy objectives:

  • To get the nation building homes faster
  • To help more people buy their own home
  • To ensure the way housing is managed is fair and fit for the future

These objectives can be divided into a primary objective, building homes faster, and two secondary objectives, home ownership and future management arrangements. Neither of the ‘secondary’ objectives will make any contribution whatsoever to alleviating the crisis in supply nor that of affordability. They could even exacerbate the current crisis.

I wish that the two secondary objectives could be replaced by a new one, that of providing homes that are truly affordable.

There are measures in the Bill that I welcome such as tackling rogue landlords and letting agents, as well as the introduction of a brownfield register.

The extension of Right to Buy to housing associations will see the loss of homes for rent – at least until they return in the private rented sector charging rents at three or four times current social rents. Four out of ten council houses sold through Right to Buy are now in the private rented sector. Under the proposals in the Bill, any replacement homes will unlikely be for rent, thereby further depleting the availability of homes for those who cannot compete in the housing market.

Pay to Stay (where households with incomes of £40,000 in London and £30,000 elsewhere will be expected to pay market rents) will make some rents unaffordable. Pay to Stay will also provide a perverse incentive that could see individual tenants deciding not to work additional hours because their household income would take them over the threshold where they will be required to pay market or near market rents.

Reform of Section 106 will see the loss of the requirement that up to 40% of homes in new developments must be for social housing (to rent or shared ownership). This requirement will be replaced by a requirement to have 30% being starter homes and no requirement for any homes to rent.

Starter homes will be sold with a discount, at huge cost to the public purse but without the benefit of building additional homes and certainly not ones that can be rented at levels that can be afforded.

I have no issue whatsoever about people aspiring to own their own home. I own mine. But I fear what will happen to the tens of thousands of households in the south east who will never be able to afford to buy, even with the subsidy being offered by government. I wouldn’t have any problem with this policy if, and it is a big if, there was an adequate number of homes for rent at rates that people can afford.

The consequence of this ill-conceived Bill will be further house price inflation (fueled by the subsidies available for starter homes), making home ownership even more unaffordable for those not eligible for starter homes subsidies.

The homes that are most needed, homes for rent by those who already cannot compete in the housing market, will not be provided.

The Housing and Planning Bill is a huge opportunity missed. It will stand in its shortsightedness alongside the economically illiterate decision of the 1980s that saw the introduction of private finance for the development of social housing and the transfer of government subsidy from capital investment to endless revenue support.

Social housing lost through the Right to Buy might not be replaced by social housing …. if they are replaced at all

Anyone who reads this blog regularly will know that I am no fan of the Right to Buy, and strongly opposed to extending it to housing associations.

In my post yesterday I wrote that the Right to Buy “does nothing to meet housing need, doesn’t help those in the private rented sector, and denies tax payers a proper return on our investment.” Rents for former council homes now in the private rented sector (4 of every 10 homes is now rented out privately) are three or four times higher than the rents charged when they were let by councils.

The government has long promised a one for one replacement of all homes sold through Right to Buy. To date the replacement ratio is nineteen homes sold for each new one built.

Now it seems that it might be even worse. Those homes that are built to replace social rented homes that have been sold might not even need to be for rent. The excellent Heather Spurr from Inside Housing has quoted a spokesperson for the DCLG who confirmed that the type of ‘affordable housing’ would be decided by ‘local areas’. No one has said what a local area will be and, according to Heather Spurr, “affordable housing can include low-cost homes for sale for buyers whose needs are not met by the market. Starter Homes – properties sold at a 20% discount to first-time buyers under 40 years of age – will also be counted as ‘affordable’ under proposed changes to planning guidance.”

I have asked in the past, and I ask again, who will house the poor and who will house the growing number of middle income households who cannot afford to buy, and who are being priced out of areas like Brighton and Hove?