Theresa May’s Housing Summit looks likely to be more of the same old same old ….

Yesterday (17 October 2017) Theresa May held a housing summit at No 10 Downing Street. Those in attendance included the Chartered Institute of Housing, the Local Government Association, the National Housing Federation, the Housebuilders Federation and larger housing associations.

They said that the Prime Minister was in “listening mode”.

While Mrs May said she could not guarantee that all suggestions would be £80, she’s reported to say that there is a collective will government to do more to increase housebuilding.

David Montague, the chief executive of one of the largest housing association groups, L&Q, said: “It was an honest discussion about what needs to be done: what the barriers were, how we can work together to overcome those barriers, the importance of flexibility, the importance of partnership, the importance of investment in skills, the importance of delivering land.”

And here is the crucial bit, with my emphasis.  He said: “We’re speaking a common language now and that hasn’t always been the way. This is a Tory government. They want to give voters what they say voters want, which is to own their own home, and the conversation starts and ends with homeownership, but there is a complete understanding that not everybody can afford their own home so we’ve got to invest across all tenures if we’re going to build more homes.”

I despair.  Mrs May recently announced a £10 billion boost for the Help to Buy scheme – public subsidy for private ownership.  The modest £2 billion for social and ‘affordable’ housing will see just 5,000 homes built per annum.  We need homes for rent at social rent levels. And what we get is more of the same old same old. This won’t help to achieve “a country that works for everyone”.

Tackling the housing crisis, and the need to build homes that people can afford to rent, feels further away today than ever.

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More confusion in housing policy at the heart of government

There is a complete contradiction in the government rent policy for housing associations.

The background is that George Osborne, when Chancellor, tore up a previous agreement that allowed rent increases bed on the retail price index +0.5%, replacing it with a 1% year on year reduction until 2020. The only real winner was not tenants but the Treasury.

The government subsequently announced that rents in social housing will capped at Local Housing Allowance (LHA) levels. The original design of LHA was to reflect the market, being set at the 30th centile for private sector rents charged in a locality. However, the freeze means that there is no longer any correlation between actual rents and what people can claim in housing benefit.

Most recently, the government announced the rent settlement for the five years from April 2020. Once again will be allowed to rise by RPI +1%. This news has understandably been welcomed by landlords.

However, the government has left the LHA freeze in place. This means that tenants will have to make up the difference between LHA and the increasing rents where rents are higher than LHA.

Fortunately this will not apply in my own organisation, BHT, as we are committed to charging core rents within LHA levels.

The government must lift the LHA freeze and increase it so that it accurately reflects changes in the market.

This is yet another example of confused government policy which causes hardship amongst the poorest of the poor, or it will do unless the government thinks through its housing policies and acts now.

My reaction to Theresa May’s speech to the Conservative Party Conference

At the Conservative Party Conference today (4th October 2017), Theresa May said whether someone hopes to buy their own home or has been waiting for a council home “help is on the way”.

She said that the government will invest an additional £2bn in affordable housing, taking the government’s affordable housing budget to £9 bn.

She said that the government “will encourage councils as well as housing associations” and she promised to provide certainty over future rent levels.
We’ve been waiting a long time for that certainty. What a shame Sajid Javid didn’t provide it two weeks ago at the NHF conference and what a shame that Mrs May didn’t give it today.

She said: “In those parts of the country where need is greatest we will allow social rented housing to be built, at well below market levels, getting the government back into the business of building houses.”

David Orr, chief executive of the National Housing Federation, described it as a “watershed moment for the nation”.

I hope so. When Mrs May previously spoke about sub market rents she meant rents at 80% of the market.

In Brighton and Hove that equates to rents of c£750 per month for a on bed flat, unaffordable for those on benefits who can receive £612 per month, and then only if they are over 35 years of age.

The ongoing freeze of Local Housing Allowance – the amount people can get towards their housing costs – means that rents become more unaffordable with every passing month, including so-called affordable rents.

Mrs May promised homes with social rents. I hope she has been properly briefed and that we will in fact get such homes.

£9 billion is a lot, but much of it goes towards Help to Buy which doesn’t stimulate supply but rather fuels housing price inflation.

Those benefiting from Help to Buy are already the better off, not those in the most acute need.

We need social rents, within Local Housing Allowance and even below that so people on low incomes do not have to rely on housing benefit. We need a massive programme of council house building, equivalent to what Harold MacMillan achieved when he was Prime Minister, and we need clear action on homelessness and rough sleeping. She was silent on this.

For today I will give Mrs May the benefit of the doubt. The devil is in the detail. I hope this is truly a watershed moment. The next few days will tell us whether it is, and I reserve judgment until we have seen the detail.

Am I alone in being bitterly disappointed by Sajid Javid’s speech at the National Housing Federation’s conference?

Rt. Hon. Sajid Javid MP

Sajid Javid, the Secretary of State for Communities and Local Government, spoke yesterday (19th September 2017) at the annual conference of the National Housing Federation. In brief, he spoke about the importance of housing associations and promised to forward a green paper on social housing in England which will be a “wide-ranging, top-to-bottom review of the issues facing the sector, the green paper will be the most substantial report of its kind for a generation. It will kick off a nationwide conversation on social housing.”

Hello? Where have you been, Mr Javid? Have you not been listening? There has been a conversation about social housing, and housing in general, going on for a number of years and it goes something like this:

  • There are not enough homes
  • There are not enough new homes being build
  • The homes that are being built are not affordable for ordinary people
  • Rents in the private rented sector are increasingly unaffordable
  • The freeze of Local Housing Allowance means those on benefit can’t afford even the cheapest private rented accommodation
  • There has been a massive increase in homeless households since 2010/11
  • Rough sleeping numbers have increased by 146% since 2010/11
  • The benefit cap is causing homelessness
  • Universal Credit is seeing tenants getting into arrears, 77% for the first time
  • The threatened LHA cap has seen the development of new specialist supported housing grind to a halt
  • Grenfell Tower

Mr Javid, you are the Secretary of State with responsibility for housing. Your party has been in government since 2010. Surely you must have been thinking about these issues since then? Surely you must have some idea of what the current situation is? Surely you must have some idea of what needs to be done? We need more than platitudes.

Of course the government hasn’t stood idly by since 2010. It has been active in welfare reform, although we are yet to see the benefits promised while the hardship being caused is obvious to all to see and the consequences are being felt by tenants and landlords alike.

Mr Javid, you recognised that “businesses need to know that economic regulations aren’t going to dramatically change without warning.” Do you mean regulations dramatically changing such as the decision taken by your government in 2015 to tear up the rent settlement between government and housing associations and to impose a 1% year on year reduction in rents we can charge?

Mr Javid, you said: “They (businesses) need a stable, predictable base on which to build – literally, in your case! And of course lenders need to know that a company is a reliable investment prospect before they’ll put up any money.”

So, why, Mr Javid, did you fail to make the announcement on rents that we have long been promised? You said: “Right now, you’re trying to make long-term investment decisions without knowing what your rental return is going to be after 2020. It’s not ideal, of course I get that. You need certainty and you need clarity and you need them sooner rather than later. That’s why I’ve been pushing right across government, as hard as I can, to confirm the future formula for social housing rents. I would have liked to stand here today and tell you exactly what it is going to be. Unfortunately, I have to tell you, the t’s are still being crossed and the i’s dotted. But I can promise you this: an announcement will be made very, very soon.”

We don’t need more conversations. We need action. We need homes, and those homes must have social rents. The hopes and aspirations of hundreds of thousands of households depend on this announcement. Please don’t let them down, Mr Javid.

(You can read the whole of Mr Javid’s speech here.)

When is a social housing programme not a social housing programme?

We all know the housing market is completely overheated. Most people on below and average incomes are really struggling to make ends meet. More and more young people are relying on the Bank of Mum and Dad just to pay the rent, and others are maxing out credit card to avoid going into arrears.

For many years, governments of all persuasions have stepped in to build low cost housing for those who could not compete in the housing market. Under the Conservative Prime Minister Harold Macmillan up to 400,000 council houses were build each year. These were not the years of plenty as Britain was still recovering from the 1939-45 world war.

From The Independent 14/09/2017

So here we are again, with a housing crisis every bit as bad as at any time in living memory. What does the government do? It’s spends four times as much subsiding housing for the better off, with just 21% of government investment going to provide housing for those on the lowest income.

The Chartered Institute of Housing has revealed that £32 billion helps middle and high earning households get on the housing ladder. Some of these households are not those described by Theresa May as the “just about coping”. Some are doing very nicely, thank you very much, benefiting from government subsidy.

Meanwhile, according to the National Audit Office this week (13th September 2017), there has been a 60% increase in households in temporary and permanent accommodation since 2010/11. That is 77,000 households including 120,000 children. But they are the poor and they don’t really matter in our wonderful property-owning democracy.

The future of specialist supported housing is at risk: is it recklessness, incompetence or deliberate design by government?

What motivates someone to take a successful government-funded project that prevents homelessness, reduces hospital admissions, reduces crime and makes a return of more than £4 for every £1 invested, and in its place create a crisis that is seeing services closing and 85% of new schemes being abandoned?  This is what is happening with specialist supported housing.

Is it recklessness, incompetence or deliberate design?

Today, Inside Housing is reporting that “housing associations have slashed the number of supported housing homes they plan to build by 85%, as uncertainty around government reforms to the sector stymie development”.

The National Housing Federation (NHF) has said this is due to uncertainty over the introduction of the Local Housing Allowance (LHA) cap, something I have often written about on this blog since the cap was first announced by George Osborn in his last Autumn Statement, examples are here, here and here.  The uncertainty created by government is unacceptable.  A Green Paper on the future of supported housing was promised in the spring but we are still waiting.

The NHF has surveyed 69 housing associations which together provide a third of all supported.  These associations had previously planned to build 8,800 units of supported housing accommodation but this pipeline has reduced to just 1,350.

At the heart of the government-created crisis is the decision to base the cap on LHA which both the Communities and Local Government Committee and the Work and Pensions Committee in parliament has said is not “a competent starting point” because it is based on the private rented market.  I have written about this here: Is this the most depressing, mind-boggling, ridiculous justification ever from government?

David Orr, chief executive of the NHF, said: “Housing associations know first-hand that the proposed funding model will not work – a view backed by a joint select committee – and yet government has failed to heed warnings.  With social care in crisis, the role supported housing plays in alleviating pressures on the NHS is ever more important. These changes have not even come in yet and they have taken 7,000 homes for vulnerable people out of the pipeline.

“The proposed changes in funding bear no relation to the real cost of providing this type of housing. It is time government put supported housing on a secure and sustainable footing.”

A government-designed system that is creating homelessness and forcing people to use food banks

Research published by Sheffield Hallam University on behalf of the Residential Landlord Association shows that landlords are, increasingly, refusing to let their properties to those under 35. There are a number of reasons for this, not least that the landlord might not get paid on time or at all.

32% of landlords (of the 1,996 questioned) have said that that they have actively reduced lettings to those under 35.

The situation is more acute for those under 35 in receipt of housing benefit or universal credit. Two-thirds of landlords say they are unwilling to let to this group because of a higher risk of rent arrears as payments are delayed through administrative delays and payments are made to the tenant rather than direct to the landlord.

We used to have a system that almost used to work but then some idiot decided that a higher priority would be to prepare claimants for the reality of work by mirroring the conditions of those in work. He (it was a ‘he’) then introduced a system that has been so poor in its design and execution that people are becoming homeless and others reliant on food banks to survive. It takes some sort of genius to drive people into destitution because of his own arrogant, self-belief.

I’m not going to name this person. Choose any name. It could be Iain, perhaps Duncan, or even Mr Smith. Whatever works for you.

Alan Ward, chair of the Residents Landlord Association, said: “We have already held constructive talks with the Government about this and we will keep the situation under review, but there is a need for policymakers to engage further with landlords to consider what more action can be taken to address this decline. Without this many under-35s are likely to struggle to access any accommodation” (my emphasis)

So where will those under 35 live? I challenge any of my Conservative friends, and I have quite a few, to tell me.

And while they are about it, will they say, hand on heart, that they are proud of what the welfare reform agenda is delivering, that it is a strong and stable system…..

And please don’t come up with the twaddle about rescuing the economy crashed by the former government or that there is no magic money tree. There is money there. There wasn’t a problem when the government needed £1 billion for its friends in the DUP.

One simple measure the government could do, and it will cost next to nothing, is to continue making payments direct to landlords. That might, just might, improve confidence.