In the end, the only surprise was that so many people were surprised by the lack of new ideas in the government's housing strategy.
Coalition ministers have said so little about housing since the general election 18 months ago that any sort of statement was bound to capture media attention. But, in truth, what few solutions the government has to the perennial problem of Britain's dysfunctional housing market had already dribbled out to little acclaim in the sector or elsewhere.
Yes we have so-called 'affordable' renting (where new tenants pay up to 80% of market rents) and the new homes bonus (which tries to induce local authorities to grant planning permission for new homes with the promise of extra council tax).
Now the government has followed its predecessor by attempting to bolster the house building industry with yet another scheme to help first-time buyers acquire mortgages. Alongside the mortgage indemnity scheme, it is providing money to kickstart stalled development schemes. Sorry, but haven't we been here before in the immediate aftermath of the credit crunch?
The strategy tries to score political points by highlighting failures of the last government. But the mortgage scheme and other support for house builders would have sat comfortably in Labour's housing strategy (in as much as it had one), along with tackling empty homes, indentifying public land for development and encouraging institutional investors to fund private rented housing.
Where the coalition government differs greatly from Labour is in its approach to social rented housing. In a nutshell, it doesn't plan to build anymore and wants to sell off some existing homes by reviving the right to buy scheme with more generous discounts.
Not only does the return of RTB threaten the plans of local authorities ahead of next April's dismantling of the housing revenue account system, but it means that, unless the homes sold are replaced, councils and housing associations will have even fewer properties to offer to households on waiting lists.
To some extent, the Tories appear to have learnt from their mistakes in the Thatcher era and, this time, are promising that any homes sold will be replaced on a one-to-one basis. But it is hard to see how the numbers stack up when councils have debts to pay off and the Treasury is demanding 75% of sales receipts.
Furthermore, any new homes built will almost certainly be for affordable, not social, renting. The strategy makes it clear that affordable renting is here to stay with private firms keen to grab a share of the spoils. What is more, landlords are being encouraged to target homes at people looking for work or already in jobs, providing they do not earn too much.
Where this leaves people in need that cannot show they are in a position to work is anyone's guess. A cash-strapped government has made it clear that what little public subsidy there is will be targeted at homeowners with the reformed welfare system left to pick up the bill when people without jobs are required to pay near-market rents because there are no social rented homes remaining.
The strategy, in as much as there is one, seems little more than a series of sticking plaster solutions. Those hoping for a long-term vision must wait a while longer.
Tuesday, 22 November 2011
Tuesday, 5 July 2011
Clearly we need to see through housing associations
Ever since MPs were caught claiming money for duck houses, dodgy DVDs and second homes they didn't need, transparency has been the watchword of the day in government. Last month, housing minister Grant Shapps called on housing associations to throw open their books for inspection by residents and the general public - otherwise they might be forced to do so using Freedom of Information (FOI) legislation.
During a press briefing prior to his question-and-answer session at the Chartered Institute of Housing's annual conference, Shapps made it clear that he wasn't only looking to catch out associations that pay their chief executives too much.
He wants residents to keep an eye on all major expenditure, as a way of controlling what is spent. If there was dissent from residents over the sums associations plan to spend on schemes or projects, he argued, then suddenly they not seem quite so important.
It is hard to argue against transparency. Earlier this year, the Home Group became the first association to publish details of all expenditure over £500 and others may well follow suit. But is the government really right to threaten associations with FOI legislation if they refuse to comply?
Yes, associations do receive public money to help fund housing developments, but these sums are dwindling as the government prepares to fund affordable house building through higher rents and increased borrowing (by associations). By agreeing to charge higher rents for new homes and a proportion of re-lets, associations are in some ways moving closer to the position of private landlords.
Basically, the government can't have it both ways. If housing associations are required to pay greater heed to the market when it comes to letting homes and raising money from the money markets, they can't really be expected to comply with FOI rules in the same way as public sector bodies.
On the other hand, they will find it increasingly difficult to avoid greater transparency on a voluntary basis, which is what Grant Shapps probably had in mind when he made his proposal.
During a press briefing prior to his question-and-answer session at the Chartered Institute of Housing's annual conference, Shapps made it clear that he wasn't only looking to catch out associations that pay their chief executives too much.
He wants residents to keep an eye on all major expenditure, as a way of controlling what is spent. If there was dissent from residents over the sums associations plan to spend on schemes or projects, he argued, then suddenly they not seem quite so important.
It is hard to argue against transparency. Earlier this year, the Home Group became the first association to publish details of all expenditure over £500 and others may well follow suit. But is the government really right to threaten associations with FOI legislation if they refuse to comply?
Yes, associations do receive public money to help fund housing developments, but these sums are dwindling as the government prepares to fund affordable house building through higher rents and increased borrowing (by associations). By agreeing to charge higher rents for new homes and a proportion of re-lets, associations are in some ways moving closer to the position of private landlords.
Basically, the government can't have it both ways. If housing associations are required to pay greater heed to the market when it comes to letting homes and raising money from the money markets, they can't really be expected to comply with FOI rules in the same way as public sector bodies.
On the other hand, they will find it increasingly difficult to avoid greater transparency on a voluntary basis, which is what Grant Shapps probably had in mind when he made his proposal.
Thursday, 26 May 2011
Give the mortgage rescuers some credit
On the face of it, it's easy to criticise the mortgage rescue scheme introduced by Labour in 2009. At first, there were a limited number of takers, with local authorities only helping a fraction of the households that came forward with difficulties.
Now the National Audit Office has weighed in by pointing out that only 2,600 households were helped to avoid repossession, instead of an expected 6,000, while the cost to the Exchequer was £240m compared with the forecast £205m.
The main reason for this is that, where households qualified for assistance, most opted for the more expensive option of selling their home to a housing association and becoming tenants rather than the cheaper option of an equity loan from the government. In other words, at the height of the credit crunch and recession, they opted out of home ownership. Hardly a surprise really.
Yes, the mortgage scheme may have been inefficient and, yes, the last government probably got its sums wrong. But let's look at the whole thing in perspective.
In spite of the terrible consequences of banks offering mortgages to people that could not afford them, the number of repossessions was far lower than forecast by the Council for Mortgage Lenders, and lower than during the housing market collapse of the early 1990s.
In November 2008, the CML predicted that repossessions would reach 75,000 the following year (a similar number to 1991). In the event, 47,900 homes were repossessed in 2009 and a further 36,300 in 2010. This was not only due to the mortgage rescue scheme, but other efforts to dissuade lenders from turfing families out of their homes, for which the last government deserves praise.
Strangely enough, nobody from Labour came forward this week to defend the scheme or the previous government's efforts to reduce repossessions. Are they so keen to wash their hands of Gordon Brown and his legacy that they are unwilling to snatch even a little credit when it's due?
Now the National Audit Office has weighed in by pointing out that only 2,600 households were helped to avoid repossession, instead of an expected 6,000, while the cost to the Exchequer was £240m compared with the forecast £205m.
The main reason for this is that, where households qualified for assistance, most opted for the more expensive option of selling their home to a housing association and becoming tenants rather than the cheaper option of an equity loan from the government. In other words, at the height of the credit crunch and recession, they opted out of home ownership. Hardly a surprise really.
Yes, the mortgage scheme may have been inefficient and, yes, the last government probably got its sums wrong. But let's look at the whole thing in perspective.
In spite of the terrible consequences of banks offering mortgages to people that could not afford them, the number of repossessions was far lower than forecast by the Council for Mortgage Lenders, and lower than during the housing market collapse of the early 1990s.
In November 2008, the CML predicted that repossessions would reach 75,000 the following year (a similar number to 1991). In the event, 47,900 homes were repossessed in 2009 and a further 36,300 in 2010. This was not only due to the mortgage rescue scheme, but other efforts to dissuade lenders from turfing families out of their homes, for which the last government deserves praise.
Strangely enough, nobody from Labour came forward this week to defend the scheme or the previous government's efforts to reduce repossessions. Are they so keen to wash their hands of Gordon Brown and his legacy that they are unwilling to snatch even a little credit when it's due?
Wednesday, 18 May 2011
Exactly who is going to benefit from these cuts?
Governments of all colours should start to feel uncomfortable when they are accused of neglecting the vulnerable. For Conservatives of a certain age, it is not exactly a new experience but, for most Liberal Democrats, one assumes we have reached a slightly worrying phase that may leave them wondering exactly why they went into politics in the first place.
OK, so welfare reform was never going to be easy. But nearly a year after Work and Pensions Secretary Iain Duncan Smith embarked on his mission to make work pay by punishing those that can't find jobs (or in a few cases don't want to), pressure on ministers to justify their actions is starting to mount.
First there was the flurry of criticism surrounding new caps on housing benefit for tenants in private rented accommodation that even managed to anger London Mayor Boris Johnson. Then came the climbdown over plans to penalise people on job seeker's allowance by cutting their housing benefit if they did not find work after one year.
Now Liberal Democrats are criticising the proposed overall benefits caps that would mean an individual household could not claim more than £26,000 per year from 2013. Finally, the National Housing Federation has joined disability groups in attacking planned under-occupancy rules that may mean people with disabilities who have had adaptations made to their home are forced to move to smaller properties.
During the next few years, housing associations will witness the effects of benefit cuts and other welfare changes first hand. According to the NHF, association tenants will lose an average of £14 per week, or £728 per year. Not only will households struggle to make ends meet on less money but, as landlords, associations will be charged with chasing rent arrears (which are almost certain to increase) and deciding when, as a last resort, families should be evicted.
It is not a pleasant prospect, which makes the lobbying that is going on present during the passage of the Welfare Reform Bill especially vital. For if housing professionals don't join MPs in pressing for changes soon, it may be too late to protect those that are least able to cope with the fallout from an economic crisis for which they, of all people, were not responsible.
OK, so welfare reform was never going to be easy. But nearly a year after Work and Pensions Secretary Iain Duncan Smith embarked on his mission to make work pay by punishing those that can't find jobs (or in a few cases don't want to), pressure on ministers to justify their actions is starting to mount.
First there was the flurry of criticism surrounding new caps on housing benefit for tenants in private rented accommodation that even managed to anger London Mayor Boris Johnson. Then came the climbdown over plans to penalise people on job seeker's allowance by cutting their housing benefit if they did not find work after one year.
Now Liberal Democrats are criticising the proposed overall benefits caps that would mean an individual household could not claim more than £26,000 per year from 2013. Finally, the National Housing Federation has joined disability groups in attacking planned under-occupancy rules that may mean people with disabilities who have had adaptations made to their home are forced to move to smaller properties.
During the next few years, housing associations will witness the effects of benefit cuts and other welfare changes first hand. According to the NHF, association tenants will lose an average of £14 per week, or £728 per year. Not only will households struggle to make ends meet on less money but, as landlords, associations will be charged with chasing rent arrears (which are almost certain to increase) and deciding when, as a last resort, families should be evicted.
It is not a pleasant prospect, which makes the lobbying that is going on present during the passage of the Welfare Reform Bill especially vital. For if housing professionals don't join MPs in pressing for changes soon, it may be too late to protect those that are least able to cope with the fallout from an economic crisis for which they, of all people, were not responsible.
Thursday, 5 May 2011
It may not be worth joining the queue for social housing.
Amazing. You wait years for a programme about council housing to be shown on TV, and then two come along at once. Following last month's excellent history of council housing on BBC 4, this week we had Panorama on the acute shortage of social housing and the way that some people with homes cheat by sub-letting them at a hefty profit.
The difficulties facing families looking for a reasonably-sized council or housing association property is not exactly news. However, it clearly demonstrates how Labour failed miserably to ensure that sufficient new council homes were built during the 13 years it was in power.
What was illuminating is how councils such as Portsmouth actively dissuade families and individuals with little chance of getting a home from remaining on the waiting list, so reducing the figures by thousands. If other authorities are doing the same thing (and why wouldn't they?), the estimate of how many people are waiting for social housing may in fact be an underestimate.
The unlawful subletting of council and housing association properties is, of course, a major issue that most social landlords are addressing and probably requires even greater scrutiny. But of greater concern at present is how the shortage of social or affordable housing is going to be tackled when so little government money is being spent on new homes.
Earlier this week, the deadline passed for housing associations to bid for grants from the Homes and Communities Agency to help them fund new homes that will be let at up to 80% of market rents. So-called 'affordable renting' is now the only game in town so far as government-funded house building is concerned. This means people that can only afford cheaper, social, rents will have to make do with existing homes that are re-let, assuming landlords are not tempted to increase rents on these properties as well.
At the same time, some councils have told housing associations they will not support bids to build homes for affordable renting in their area, especially if the people moving into them are offered fixed-term tenancies lasting as little as two years.
It is not an encouraging picture. In some ways, it might seem reasonable that families who can afford higher rents (and only require state-subsidised housing for a few years) pay more and accept a fixed-term tenancy. But there is no indication of where the next generation of social housing is going to come from, or who is going to house the most needy as the supply of existing homes slowly dwindles.
Programmes such as Panorama can help by bringing the issue to public attention, but whether anyone from the coalition government or the Department for Communities and Local Goverment was watching and is willing to take action remains doubtful.
The difficulties facing families looking for a reasonably-sized council or housing association property is not exactly news. However, it clearly demonstrates how Labour failed miserably to ensure that sufficient new council homes were built during the 13 years it was in power.
What was illuminating is how councils such as Portsmouth actively dissuade families and individuals with little chance of getting a home from remaining on the waiting list, so reducing the figures by thousands. If other authorities are doing the same thing (and why wouldn't they?), the estimate of how many people are waiting for social housing may in fact be an underestimate.
The unlawful subletting of council and housing association properties is, of course, a major issue that most social landlords are addressing and probably requires even greater scrutiny. But of greater concern at present is how the shortage of social or affordable housing is going to be tackled when so little government money is being spent on new homes.
Earlier this week, the deadline passed for housing associations to bid for grants from the Homes and Communities Agency to help them fund new homes that will be let at up to 80% of market rents. So-called 'affordable renting' is now the only game in town so far as government-funded house building is concerned. This means people that can only afford cheaper, social, rents will have to make do with existing homes that are re-let, assuming landlords are not tempted to increase rents on these properties as well.
At the same time, some councils have told housing associations they will not support bids to build homes for affordable renting in their area, especially if the people moving into them are offered fixed-term tenancies lasting as little as two years.
It is not an encouraging picture. In some ways, it might seem reasonable that families who can afford higher rents (and only require state-subsidised housing for a few years) pay more and accept a fixed-term tenancy. But there is no indication of where the next generation of social housing is going to come from, or who is going to house the most needy as the supply of existing homes slowly dwindles.
Programmes such as Panorama can help by bringing the issue to public attention, but whether anyone from the coalition government or the Department for Communities and Local Goverment was watching and is willing to take action remains doubtful.
Monday, 11 April 2011
Why tenants should not bank on making money from cashback scheme
It was a story guaranteed to give social housing a rare bit of publicity in the mainstream media. Council and housing association tenants that carry out repairs to their homes (or pay someone else to do it) are to be entitled to compensation under a new scheme known as 'tenant cashback'.
According to housing minister Grant Shapps, households could even make money out of the scheme by pocketing any savings and putting it towards a deposit on a home. Landlords might also save money, he added, while local contractors would enjoy a bonanza from all the extra business.
'Tenant cashback' is, of course, part of the government's drive for localism and community empowerment. It also allows ministers to give social landlords a gentle slap on the wrist by suggesting they don't keep homes in proper condition or, when they do, they spend too much money.
All of which slightly ignores the fact that councils and housing associations normally strive to negotiate the most economical price for repairs, sometimes by working as part of consortia. Quite how an individual tenant is going to get a better deal on their own, or by joining forces with a few neighbours, is hard to see.
Furthermore, if a tenant carries work themselves that turns out to be substandard, who is going to shoulder responsibility? It will be cold comfort for tenants waiting to move into a home to be told that major repairs are needed because the former occupant did not employ reputable contractors while at the same time claiming money from the council or housing association.
No, the fact is that, in the vast majority of instances, tenants would prefer to call their landlord and get them to carry out any repairs as quickly as possible. If they are not satisfied with their landlord's response, or the standard of work carried out, they should of course complain until the work is done properly.
It was left to the Chartered Institute of Housing to point out that council tenants have had the right since 1985 to call in their own contractors if a local authority does not repair their home fast enough. By 1989, 71 claims had been agreed, after which the government stopped collecting data. It wouldn't be a surprise if interest in 'tenant cashback' wanes even faster.
According to housing minister Grant Shapps, households could even make money out of the scheme by pocketing any savings and putting it towards a deposit on a home. Landlords might also save money, he added, while local contractors would enjoy a bonanza from all the extra business.
'Tenant cashback' is, of course, part of the government's drive for localism and community empowerment. It also allows ministers to give social landlords a gentle slap on the wrist by suggesting they don't keep homes in proper condition or, when they do, they spend too much money.
All of which slightly ignores the fact that councils and housing associations normally strive to negotiate the most economical price for repairs, sometimes by working as part of consortia. Quite how an individual tenant is going to get a better deal on their own, or by joining forces with a few neighbours, is hard to see.
Furthermore, if a tenant carries work themselves that turns out to be substandard, who is going to shoulder responsibility? It will be cold comfort for tenants waiting to move into a home to be told that major repairs are needed because the former occupant did not employ reputable contractors while at the same time claiming money from the council or housing association.
No, the fact is that, in the vast majority of instances, tenants would prefer to call their landlord and get them to carry out any repairs as quickly as possible. If they are not satisfied with their landlord's response, or the standard of work carried out, they should of course complain until the work is done properly.
It was left to the Chartered Institute of Housing to point out that council tenants have had the right since 1985 to call in their own contractors if a local authority does not repair their home fast enough. By 1989, 71 claims had been agreed, after which the government stopped collecting data. It wouldn't be a surprise if interest in 'tenant cashback' wanes even faster.
Wednesday, 30 March 2011
Can housing associations save public services?
First the good news: housing associations are making more money. Nobody in social housing talks about recording a profit, of course, because that is not what social landlords were put on earth to do. But the bald facts show that associations' total surplus in 2010 after tax was £609m - up £406m on the previous year. Even associations set up following the transfer of ex-council homes chipped in for the first time, reporting a modest surplus of £56m. Normally they record deficits.
There was some criticism in 2009, when the sector's overall surplus fell from £319m to £203m. Associations should be capable of better, said finance directors, especially as turnover was rising. Last year's more impressive result came in spite of the fact that sales of homes (either outright or part-sales through shared ownership schemes) have not recovered to pre-credit crunch levels.
The Tenant Services Authority's analysis of housing association accounts, published on the same day as the Budget, shows surpluses from the sales of 'fixed assets' down 40% on 2008. But the TSA praised associations for controlling management and repair costs better, while the sums paid in impairment charges where associations have to write down the value of land they own fell by £20m.
But why, you might say, is all of this important? Historically, associations have ploughed surpluses back into not just housing but into other activities that benefit communities, including health and training. With councils reeling from government cuts, associations might be the best bet we have to ensure community services are not completely decimated over the next few years.
Liverpool Mutual Homes, the largest housing association in the city, has set up a £700,000 social dividend fund that offers grants to community groups for social enterprises and other projects. It would be surprising if other associations did not do the same thing, so proving that social landlords were part of the 'big society' long before anyone at Conservative Central Office came up with the idea.
Whatever happens, there will be far more money flowing through associations' balance sheets in the years to come as they raise rents for new, and some existing, homes to as much as 80% of market rates. While they will be expected to use much of the extra proceeds to fund borrowing for further development, there is no reason why some money could not be set aside to fund community services.
With the future of associations' charitable status being questioned in some quarters, what better way to show that they have not lost touch with their local communities and vulnerable people in particular?
There was some criticism in 2009, when the sector's overall surplus fell from £319m to £203m. Associations should be capable of better, said finance directors, especially as turnover was rising. Last year's more impressive result came in spite of the fact that sales of homes (either outright or part-sales through shared ownership schemes) have not recovered to pre-credit crunch levels.
The Tenant Services Authority's analysis of housing association accounts, published on the same day as the Budget, shows surpluses from the sales of 'fixed assets' down 40% on 2008. But the TSA praised associations for controlling management and repair costs better, while the sums paid in impairment charges where associations have to write down the value of land they own fell by £20m.
But why, you might say, is all of this important? Historically, associations have ploughed surpluses back into not just housing but into other activities that benefit communities, including health and training. With councils reeling from government cuts, associations might be the best bet we have to ensure community services are not completely decimated over the next few years.
Liverpool Mutual Homes, the largest housing association in the city, has set up a £700,000 social dividend fund that offers grants to community groups for social enterprises and other projects. It would be surprising if other associations did not do the same thing, so proving that social landlords were part of the 'big society' long before anyone at Conservative Central Office came up with the idea.
Whatever happens, there will be far more money flowing through associations' balance sheets in the years to come as they raise rents for new, and some existing, homes to as much as 80% of market rates. While they will be expected to use much of the extra proceeds to fund borrowing for further development, there is no reason why some money could not be set aside to fund community services.
With the future of associations' charitable status being questioned in some quarters, what better way to show that they have not lost touch with their local communities and vulnerable people in particular?
Thursday, 17 March 2011
Homelessness falls, or is it going up?
Every three months, the government reveals how many people in England are classed as homeless. Publication of the quarterly statistics is largely ignored by the media, which is generally only interested in how much houses cost rather than how many people can't afford to buy, or rent, one.
The latest figures, for the period to December 2010, make slightly confused reading. On one hand, the number of households living in temporary accommodation fell to 48,010 and is 10% lower than during the same period in 2009
At the same time, local authorities are dealing with more cases of homelessness and, in nearly half of them, accepting they must do something about it. Just over 26,000 households made applications to local authorities between October and December - 42% of which were accepted as priority cases where the council must provide assistance. The total number of applications was up 23% on the corresponding quarter in 2009.
The number of homelessness cases where local authorities are under a legal duty to provide assistance had been declining since 2003, before starting to rise early last year. The government says it has now stabilised at about 11,300 cases per quarter, but it is too early to say whether the number will rise again, or start falling.
All of which begs the question, has the credit crunch and recession resulted in more homelessness or not? Given that the economic crisis was largely caused by reckless bank lending for mortgages and had a major knock-on effect on housing, one might easily expect the situation to be worse than it is.
According to the government figures, most people become homeless because of breakdowns in family relationships, with just 3% of current cases caused by mortgage arrears. During the recession of the early 1990s, the number of cases involving households with mortgage problems peaked at 12%.
More worrying at present is what happens to people requiring temporary housing. Under Labour, the use of bed and breakfast accommodation for families with children fell dramatically. Yet during the final quarter of last year, 660 families with children were in B&B compared with 400 at the end of 2009.
While this is just 2% of the 36,230 families with children in all types of temporary accommodation, it is a worrying trend that needs to be reversed immediately to avoid the problem of homelessness becoming far more visible to society as a whole.
The latest figures, for the period to December 2010, make slightly confused reading. On one hand, the number of households living in temporary accommodation fell to 48,010 and is 10% lower than during the same period in 2009
At the same time, local authorities are dealing with more cases of homelessness and, in nearly half of them, accepting they must do something about it. Just over 26,000 households made applications to local authorities between October and December - 42% of which were accepted as priority cases where the council must provide assistance. The total number of applications was up 23% on the corresponding quarter in 2009.
The number of homelessness cases where local authorities are under a legal duty to provide assistance had been declining since 2003, before starting to rise early last year. The government says it has now stabilised at about 11,300 cases per quarter, but it is too early to say whether the number will rise again, or start falling.
All of which begs the question, has the credit crunch and recession resulted in more homelessness or not? Given that the economic crisis was largely caused by reckless bank lending for mortgages and had a major knock-on effect on housing, one might easily expect the situation to be worse than it is.
According to the government figures, most people become homeless because of breakdowns in family relationships, with just 3% of current cases caused by mortgage arrears. During the recession of the early 1990s, the number of cases involving households with mortgage problems peaked at 12%.
More worrying at present is what happens to people requiring temporary housing. Under Labour, the use of bed and breakfast accommodation for families with children fell dramatically. Yet during the final quarter of last year, 660 families with children were in B&B compared with 400 at the end of 2009.
While this is just 2% of the 36,230 families with children in all types of temporary accommodation, it is a worrying trend that needs to be reversed immediately to avoid the problem of homelessness becoming far more visible to society as a whole.
Thursday, 10 March 2011
Why housing has to keep the right company
These are difficult times for companies set up by local authorities to manage and, in theory, improve their council housing.
Arm's length management organisations (almos) first appeared on the scene nearly 10 years ago, primarily to attract government money for bringing homes up to the decent homes standard. An admirable aim and one for which Labour probably isn't given proper credit, the standard usually involved installing new kitchens and bathrooms in what were often rundown flats and houses.
Almos were the main alternative to councils transferring their homes to a housing association (which could then raise money for the work via private borrowing). However, they would not have been necessary in the first place if Labour had stubbornly refused to give money directly to local authority housing departments.
A decade or so later, many of the 60 councils with almos have started to question whether they are really necessary, especially where decent homes work is complete. A few councils have gone so far as to abolish their almos and take management work in-house again.
In the meantime, the coalition government has annoyed councils that went to the lengths of creating an almo by suggesting that, when it comes to claiming grants for outstanding decent homes work, an almo is no longer necessary. Last month, the Homes and Communities Agency gave £379m of the £1.6bn it was handing out in grants to non-almo authorities. At the same time, 11 councils with almos that bid for money received nothing.
But that does not mean almos have no future whatsoever. Next month, in East Kent, a so-called 'super-almo' will start managing 18,000 homes owned by four district councils, including Canterbury and Dover. All four have completed their decent homes work, and so the motive now is saving money, not raising grants from the government.
The 'super-almo' model appears to be in line with the government's policy of councils sharing services and so cutting overheads. East Kent Housing, as it was named by tenants, aims to save £2.5m during the next three to five years.
Whether it will be first and last of its kind remains to be seen, but those that have waved the almo banner so enthusiastically since 2002 will be hoping that it represents a way of making sure they are still around for a few years yet.
Arm's length management organisations (almos) first appeared on the scene nearly 10 years ago, primarily to attract government money for bringing homes up to the decent homes standard. An admirable aim and one for which Labour probably isn't given proper credit, the standard usually involved installing new kitchens and bathrooms in what were often rundown flats and houses.
Almos were the main alternative to councils transferring their homes to a housing association (which could then raise money for the work via private borrowing). However, they would not have been necessary in the first place if Labour had stubbornly refused to give money directly to local authority housing departments.
A decade or so later, many of the 60 councils with almos have started to question whether they are really necessary, especially where decent homes work is complete. A few councils have gone so far as to abolish their almos and take management work in-house again.
In the meantime, the coalition government has annoyed councils that went to the lengths of creating an almo by suggesting that, when it comes to claiming grants for outstanding decent homes work, an almo is no longer necessary. Last month, the Homes and Communities Agency gave £379m of the £1.6bn it was handing out in grants to non-almo authorities. At the same time, 11 councils with almos that bid for money received nothing.
But that does not mean almos have no future whatsoever. Next month, in East Kent, a so-called 'super-almo' will start managing 18,000 homes owned by four district councils, including Canterbury and Dover. All four have completed their decent homes work, and so the motive now is saving money, not raising grants from the government.
The 'super-almo' model appears to be in line with the government's policy of councils sharing services and so cutting overheads. East Kent Housing, as it was named by tenants, aims to save £2.5m during the next three to five years.
Whether it will be first and last of its kind remains to be seen, but those that have waved the almo banner so enthusiastically since 2002 will be hoping that it represents a way of making sure they are still around for a few years yet.
Wednesday, 2 March 2011
A listening government?
Whisper it quietly but, just occasionally, the coalition government listens to criticism over housing. Last month, it backed down over plans that would have meant people claiming job seeker's allowance saw 10% of their housing benefit deducted it they did not find a job within a year.
Now it looks as if plans to radically change the terms under which families rent social housing are being quietly revised. Last year, you may recall, there was a huge fuss when David Cameron questioned whether, in future, council tenants should automatically get a home for life.
By the time proposals were published a few months later, social landlords were given the option of letting homes to new tenants for as little as two years, but there was no requirement. This week it was revealed that most councils and housing associations have no intention of offering such short tenancies.
As a result, the government now says that, while two-year tenancies remain an option, it expects tenancies will be for longer in most cases, especially where households include children or vulnerable people. Common sense, you might say?
Well, organisations such as the Chartered Institute of Housing are continuing to lobby for a minimum fixed term of five years. Others will say that is too short. The point is that, so long as it is left to the discretion of social landlords, it seems unlikely that any changes will be as Draconian as first seemed.
Some would argue that a council home should always be for life. But the fact is that social landlords offer a range of accommodation and will increasingly do so, especially if it becomes the norm to let newly-built properties at 80% of market rents.
In many cases, mobility has to be encouraged. Getting the balance right is going to be tricky, but at least the government appears to be leaving decisions to those that, in the main, understand and respect the needs of families on the housing waiting list.
Now it looks as if plans to radically change the terms under which families rent social housing are being quietly revised. Last year, you may recall, there was a huge fuss when David Cameron questioned whether, in future, council tenants should automatically get a home for life.
By the time proposals were published a few months later, social landlords were given the option of letting homes to new tenants for as little as two years, but there was no requirement. This week it was revealed that most councils and housing associations have no intention of offering such short tenancies.
As a result, the government now says that, while two-year tenancies remain an option, it expects tenancies will be for longer in most cases, especially where households include children or vulnerable people. Common sense, you might say?
Well, organisations such as the Chartered Institute of Housing are continuing to lobby for a minimum fixed term of five years. Others will say that is too short. The point is that, so long as it is left to the discretion of social landlords, it seems unlikely that any changes will be as Draconian as first seemed.
Some would argue that a council home should always be for life. But the fact is that social landlords offer a range of accommodation and will increasingly do so, especially if it becomes the norm to let newly-built properties at 80% of market rents.
In many cases, mobility has to be encouraged. Getting the balance right is going to be tricky, but at least the government appears to be leaving decisions to those that, in the main, understand and respect the needs of families on the housing waiting list.
Wednesday, 23 February 2011
Affordable renting that only the jobless can afford
The government has a problem when it comes to house building. It desperately wants to see more so-called 'affordable' homes built by housing associations, private builders and even local authorities, but it hasn't got much money to pay for it.
The solution it has come up with is called affordable renting. In future, most households moving into new housing association properties (as well as some existing homes) will pay higher rents. The extra money raised will be used to fund borrowing, so that associations can build additional homes without being as dependent on government grant.
But what exactly is affordable renting, and who exactly will be able to afford it? In the prospectus for its 2011/15 affordable homes programme, the Homes and Communities Agency describes affordable rent as a form of social housing. Except it's not.
Associations will be able to charge up to 80% of market rents and, given that the idea is to raise money, will have every incentive to do so. Higher rents can be charged on new homes and existing ones when they are relet to different families (but not when tenants who currently pay social rents remain in the same home).
In some areas, particularly London and Southeast England, affordable rents could be as much as £200 per week higher than social rents. The only constraint will be the housing benefit system. If associations charge rents that exceed the maximum that qualifies for local housing allowance, they risk not picking up the full sum from households on housing benefit.
For in many cases, it will be housing benefit that funds affordable renting, not individuals. Crazy as it sounds, the government is cutting the amount it invests in affordable housing through grants, and then picking up the majority of the bill when households move into homes where rents are significantly higher.
The problem for housing associations in the north and midlands is that, in some areas, the difference between social and market rents is negligible. But even they hope to find some areas where they can use affordable renting to raise money.
The difficulty for individual households, especially in the south, will be affording the higher rents assuming they are not on housing benefit. Will they really seek jobs if it might mean finding somewhere new to live and whatever happened to the idea of making work pay?
Meanwhile, the government has made it clear that it will only provide grants to build new social housing in exceptional circumstances. As increasing numbers of homes are switched to affordable renting as they are relet, we could end up with situations where families pay vastly different rents for neighbouring properties that are virtually identical. Then again, will tenants really mind if the government is footing the bill?
The solution it has come up with is called affordable renting. In future, most households moving into new housing association properties (as well as some existing homes) will pay higher rents. The extra money raised will be used to fund borrowing, so that associations can build additional homes without being as dependent on government grant.
But what exactly is affordable renting, and who exactly will be able to afford it? In the prospectus for its 2011/15 affordable homes programme, the Homes and Communities Agency describes affordable rent as a form of social housing. Except it's not.
Associations will be able to charge up to 80% of market rents and, given that the idea is to raise money, will have every incentive to do so. Higher rents can be charged on new homes and existing ones when they are relet to different families (but not when tenants who currently pay social rents remain in the same home).
In some areas, particularly London and Southeast England, affordable rents could be as much as £200 per week higher than social rents. The only constraint will be the housing benefit system. If associations charge rents that exceed the maximum that qualifies for local housing allowance, they risk not picking up the full sum from households on housing benefit.
For in many cases, it will be housing benefit that funds affordable renting, not individuals. Crazy as it sounds, the government is cutting the amount it invests in affordable housing through grants, and then picking up the majority of the bill when households move into homes where rents are significantly higher.
The problem for housing associations in the north and midlands is that, in some areas, the difference between social and market rents is negligible. But even they hope to find some areas where they can use affordable renting to raise money.
The difficulty for individual households, especially in the south, will be affording the higher rents assuming they are not on housing benefit. Will they really seek jobs if it might mean finding somewhere new to live and whatever happened to the idea of making work pay?
Meanwhile, the government has made it clear that it will only provide grants to build new social housing in exceptional circumstances. As increasing numbers of homes are switched to affordable renting as they are relet, we could end up with situations where families pay vastly different rents for neighbouring properties that are virtually identical. Then again, will tenants really mind if the government is footing the bill?
Friday, 11 February 2011
Little comfort from being in the big society
Scarcely a day seems to go by without someone mentioning the big society. Regardless of whether you think it's a cloak for cutting public spending or a panacea for improving community services, David Cameron's project is virtually impossible to ignore as politicians and others vie to declare themselves true believers.
This week housing minister Grant Shapps declared that some of the best examples of people being part of the big society can be found on council estates. But before social landlords get too excited, he wasn't exactly praising them.
Instead, Shapps seemed to be doing the precise opposite, as he bemoaned the fact that just 2% of council homes are managed directly by tenants. An otherwise cashstrapped government has found £8m so that tenants panels can be set up to hold landlords to account by demanding faster repairs and other service improvements. If necessary, they could demand to take over the running of their homes under what in future will be called the 'right to manage'.
Council tenants have had the right to take over local housing services since 2008. The fact that there are so few tenant management organisations suggests that either tenants are generally happy with the service they receive or, in all likelihood, they can't be bothered taking on a direct role in improving things.
At the same time, councils and housing associations have been falling over themselves to show they believe in proper tenant consultation and empowerment. Not all achieve it, that's true. But surely there are better ways of spending £8m, particularly in the current spending climate?
Prior to last year's comprehensive spending review, housing associations claimed they were examples of the big society in action through the work they do at community level - not all of it directly related to housing. But now the National Housing Federation is warning that the £435m housing associations spend each year on education, health and other community projects, many delivered through voluntary groups, may be a victim of budget cuts.
So where does that leave households that depend on social housing and associated services? It is all very well being able to set up a panel and even sit on a management committee, but ultimately most people would probably prefer that what little money is about was spent on better homes and services.
This week housing minister Grant Shapps declared that some of the best examples of people being part of the big society can be found on council estates. But before social landlords get too excited, he wasn't exactly praising them.
Instead, Shapps seemed to be doing the precise opposite, as he bemoaned the fact that just 2% of council homes are managed directly by tenants. An otherwise cashstrapped government has found £8m so that tenants panels can be set up to hold landlords to account by demanding faster repairs and other service improvements. If necessary, they could demand to take over the running of their homes under what in future will be called the 'right to manage'.
Council tenants have had the right to take over local housing services since 2008. The fact that there are so few tenant management organisations suggests that either tenants are generally happy with the service they receive or, in all likelihood, they can't be bothered taking on a direct role in improving things.
At the same time, councils and housing associations have been falling over themselves to show they believe in proper tenant consultation and empowerment. Not all achieve it, that's true. But surely there are better ways of spending £8m, particularly in the current spending climate?
Prior to last year's comprehensive spending review, housing associations claimed they were examples of the big society in action through the work they do at community level - not all of it directly related to housing. But now the National Housing Federation is warning that the £435m housing associations spend each year on education, health and other community projects, many delivered through voluntary groups, may be a victim of budget cuts.
So where does that leave households that depend on social housing and associated services? It is all very well being able to set up a panel and even sit on a management committee, but ultimately most people would probably prefer that what little money is about was spent on better homes and services.
Friday, 4 February 2011
It's crunch time for council housing
Listen hard, and you will hear the sound of number-crunching among councils across England. Strangely enough, this is not due to the massive cuts in public expenditure being demanded by government, but rather the result of accountants mulling over the terms under which their local authorities are likely to leave the national housing finance system in just over a year's time.
To explain briefly, 171 English authorities that still own council homes are currently part of the housing revenue account (HRA) subsidy system and pool their rent income and other receipts. The government redistributes the money among councils, with any that is left over being gratefully claimed by the Treasury.
Labour spent the best part of 10 years deliberating over how to reform, or most likely scrap, this system. In March last year, less than two months before the general election, it finally came up with firm proposals and presented councils with figures showing how they would fare if they kept their own money following a one-off resettlement of historic debt between themselves and the government.
Thankfully, the coalition government agreed in principle to continue this process, with 2012/13 identified as the year in which the HRA subsidy system would disappear. It has taken another few months for the new government to revise last year's figures but, in spite of the tough economic climate, it appears on the face of it that any extra pain for councils will not be too great.
The Department for Communities and Local Government has come up with a valuation figure for each local authority's housing stock based upon the rent income it can expect to raise over the next 30 years and how much it is likely to need to spend on maintaining its properties. Other factors have also been built in, including a projected loss of homes (and rent income) due to right to buy (RTB) sales.
Prior to D-day in April 2012, this valuation figure will be compared with the notional debt each council is in theory paying off under the current system. Providing the valuation figure is higher, the council will make a one-off payment to the government. If it is lower, mainly because the council has larger historic debt and is in a weaker position to maintain its housing, money will flow the other way.
According to this week's figures, a total of £19bn will change hands in order to get what is called 'self-financing' underway. The government, meanwhile, will accrue £6.7bn more from councils than it hands out - £1.8bn more than was forecast last March.
The vast majority of councils (136) will either take on new debt or add to their existing debt. But in the long run, they may consider it is a price worth paying to avoid having to continue pooling rent receipts. There are still obstacles to overcome. Councils are angry that the new government plans to continue clawing back 75% of receipts from RTB sales. They are also concerned about caps on borrowing and the possibility that the debt resettlement may be reopened in the future.
But on the whole, it seems to be full steam ahead. Whereas Labour was offering councils the opportunity to leave the HRA subsidy system, the coalition government has gone as far as drafting legislation to abolish it and included this in the Localism Bill.
From April 2012, councils will be out on their own so far as housing finance is concerned. Whether that means that the big hand of central government is finally lifted from local authorities remains to be seen.
To explain briefly, 171 English authorities that still own council homes are currently part of the housing revenue account (HRA) subsidy system and pool their rent income and other receipts. The government redistributes the money among councils, with any that is left over being gratefully claimed by the Treasury.
Labour spent the best part of 10 years deliberating over how to reform, or most likely scrap, this system. In March last year, less than two months before the general election, it finally came up with firm proposals and presented councils with figures showing how they would fare if they kept their own money following a one-off resettlement of historic debt between themselves and the government.
Thankfully, the coalition government agreed in principle to continue this process, with 2012/13 identified as the year in which the HRA subsidy system would disappear. It has taken another few months for the new government to revise last year's figures but, in spite of the tough economic climate, it appears on the face of it that any extra pain for councils will not be too great.
The Department for Communities and Local Government has come up with a valuation figure for each local authority's housing stock based upon the rent income it can expect to raise over the next 30 years and how much it is likely to need to spend on maintaining its properties. Other factors have also been built in, including a projected loss of homes (and rent income) due to right to buy (RTB) sales.
Prior to D-day in April 2012, this valuation figure will be compared with the notional debt each council is in theory paying off under the current system. Providing the valuation figure is higher, the council will make a one-off payment to the government. If it is lower, mainly because the council has larger historic debt and is in a weaker position to maintain its housing, money will flow the other way.
According to this week's figures, a total of £19bn will change hands in order to get what is called 'self-financing' underway. The government, meanwhile, will accrue £6.7bn more from councils than it hands out - £1.8bn more than was forecast last March.
The vast majority of councils (136) will either take on new debt or add to their existing debt. But in the long run, they may consider it is a price worth paying to avoid having to continue pooling rent receipts. There are still obstacles to overcome. Councils are angry that the new government plans to continue clawing back 75% of receipts from RTB sales. They are also concerned about caps on borrowing and the possibility that the debt resettlement may be reopened in the future.
But on the whole, it seems to be full steam ahead. Whereas Labour was offering councils the opportunity to leave the HRA subsidy system, the coalition government has gone as far as drafting legislation to abolish it and included this in the Localism Bill.
From April 2012, councils will be out on their own so far as housing finance is concerned. Whether that means that the big hand of central government is finally lifted from local authorities remains to be seen.
Wednesday, 26 January 2011
We can't have it both ways over bank lending
The news that large mortgages are becoming harder to find for first-time buyers will hardly come as a surprise. According to a new survey, published as part of the Chartered Institute of Housing's UK Housing Review for 2010/11, the number of loans requiring borrowers to find a deposit of 10% or less fell from 245,000 in 2006 to 28,000 in 2009.
In other words, mortgages of 90% or more (including 100% mortgages) are becoming scarcer and scarcer. Instead, on average, first-time buyers need a 30% deposit before they can buy a home.
Yes, this may be bad news for some households hoping to become home owners, but we shouldn't we also applaud banks for resisting the temptation to return to the reckless lending that led to the credit crunch and recession? Personally, I find it incredible that any bank will offer a 100% mortgage following events of recent years.
The solution, surely, is not only to build more homes that can be sold at affordable prices (so bringing down the cost of the deposit), but also to promote private renting at market prices along with intermediate renting by housing associations - both of which are, in fairness, advocated by the CIH.
The problem, of course, is that housing finance depends upon individuals and organisations spending money they don't have - at least in the short term. A few years ago, the government was complaining that housing associations do not 'sweat their assets' enough (in other words, borrow more from private lenders). Within months, as borrowing became riskier, many associations were applauding themselves for not taking the government's advice.
Local authorities would love to become larger borrowers, but the government is reluctant to allow this as it suggests public sector borrowing is out of control.
Until we decide exactly who should be borrowing what (and from whom) it is hard to see how the housing finance system will make much sense to anyone or work effectively to the general good.
In other words, mortgages of 90% or more (including 100% mortgages) are becoming scarcer and scarcer. Instead, on average, first-time buyers need a 30% deposit before they can buy a home.
Yes, this may be bad news for some households hoping to become home owners, but we shouldn't we also applaud banks for resisting the temptation to return to the reckless lending that led to the credit crunch and recession? Personally, I find it incredible that any bank will offer a 100% mortgage following events of recent years.
The solution, surely, is not only to build more homes that can be sold at affordable prices (so bringing down the cost of the deposit), but also to promote private renting at market prices along with intermediate renting by housing associations - both of which are, in fairness, advocated by the CIH.
The problem, of course, is that housing finance depends upon individuals and organisations spending money they don't have - at least in the short term. A few years ago, the government was complaining that housing associations do not 'sweat their assets' enough (in other words, borrow more from private lenders). Within months, as borrowing became riskier, many associations were applauding themselves for not taking the government's advice.
Local authorities would love to become larger borrowers, but the government is reluctant to allow this as it suggests public sector borrowing is out of control.
Until we decide exactly who should be borrowing what (and from whom) it is hard to see how the housing finance system will make much sense to anyone or work effectively to the general good.
Monday, 17 January 2011
Yes. There is a crisis in social housing.
Unusually, I woke up on Saturday morning to hear the BBC's Breakfast programme running a story about social housing. Spurred by newish local authority figures showing that more than 11,000 households joined housing waiting lists in the third quarter of last year, the BBC had assembled an impressive roster of figures, all of whom agreed there is too little social housing.
Even housing minister Grant Shapps was persuaded to utter the word 'crisis', although that is far easier when you've been in government for less than a year. David Orr, chief executive of the National Housing Federation, had left his tie at home as if to demonstrate that it was Saturday, but otherwise explained decisively where the fault lay.
For, without wishing to let Shapps or his party completely off the hook, there is little doubt that Labour's failure to build sufficient social or low-cost housing in the years prior to the credit crunch and recession has mostly created the situation we are in now.
The last set of English local authority housing statistics showed there were 1.75m households awaiting a council or housing association home last April and it will be a major surprise if that figure does not rise by April 2011.
At the same time, government figures in December showed that councils are dealing with more cases of homelessness, and predicted that, shortly, there will be more families living in temporary accommodation.
So where do we go from here? Grant Shapps may be a fairly media-friendly politician but, in truth, it is hard to find anyone in the housing sector that believes the coalition government sees housing as a priority, or that it has credible plans to boost the amount of social or affordable housing available.
Too much depends on the market, or even the whim of local people. There is the 'new homes bonus', which essentially consists of bribing councils to approve development in return for extra council tax, along with the 'right to build', encouraging communities to come up with their own local housing schemes. Neither is likely to result in a significant increase in social housing.
Instead, much rests upon whether housing associations (in the first instance) opt to provide new homes at higher (or what the government calls 'affordable') rents with shorter-term tenancies. If they do, the proceeds could be used to pay for further housing. We will know by April whether this option has many takers, but don't hold your breath for quick results. In the meantime, numbers waiting for social housing can only increase.
Even housing minister Grant Shapps was persuaded to utter the word 'crisis', although that is far easier when you've been in government for less than a year. David Orr, chief executive of the National Housing Federation, had left his tie at home as if to demonstrate that it was Saturday, but otherwise explained decisively where the fault lay.
For, without wishing to let Shapps or his party completely off the hook, there is little doubt that Labour's failure to build sufficient social or low-cost housing in the years prior to the credit crunch and recession has mostly created the situation we are in now.
The last set of English local authority housing statistics showed there were 1.75m households awaiting a council or housing association home last April and it will be a major surprise if that figure does not rise by April 2011.
At the same time, government figures in December showed that councils are dealing with more cases of homelessness, and predicted that, shortly, there will be more families living in temporary accommodation.
So where do we go from here? Grant Shapps may be a fairly media-friendly politician but, in truth, it is hard to find anyone in the housing sector that believes the coalition government sees housing as a priority, or that it has credible plans to boost the amount of social or affordable housing available.
Too much depends on the market, or even the whim of local people. There is the 'new homes bonus', which essentially consists of bribing councils to approve development in return for extra council tax, along with the 'right to build', encouraging communities to come up with their own local housing schemes. Neither is likely to result in a significant increase in social housing.
Instead, much rests upon whether housing associations (in the first instance) opt to provide new homes at higher (or what the government calls 'affordable') rents with shorter-term tenancies. If they do, the proceeds could be used to pay for further housing. We will know by April whether this option has many takers, but don't hold your breath for quick results. In the meantime, numbers waiting for social housing can only increase.
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