Beyond Decent Homes - Communities and Local Government Committee Contents


Examination of Witnesses (Question Numbers 146-159)

MR DAVID ORR, MR ANDY DOYLEND AND MR BRUCE MOORE

9 NOVEMBER 2009

  Q146 Chair: Can I just start off, are housing associations going to hit the 2010 deadline for decent homes?

  Mr Moore: Hanover already does meet the Decent Homes Standard.

  Mr Doylend: With one or two outriders and stragglers, substantively yes.

  Q147  Mr Slaughter: You have had an easier job on the whole because with a lot of housing associations the stock is newer and therefore it is not such a challenge as bringing council stock up to scratch. I noticed the old housing associations—Peabody and those whose stock dates from late 19th century or early 20th century—in order to meet standards they are either selling off stock or raising money by other means. What are the problems that RSLs are having in meeting Decent Homes?

  Mr Orr: I think you are right to say that in some respects it has been easier for housing associations than for others because much of the stock is newer and built to better quality as well and is better maintained during the lifetime of that stock. The second batch, of course, housing associations created as a result of LSVT where the objective was to create a mechanism for investing to meet the Decent Homes Standard and that process has worked; in the main it has delivered the promises that were made. Then there are of course the older organisations, many of whom have had to do a more fundamental restructuring of their stock to be able to meet these standards. There is a kind of complicated relationship between the cost of the works and the rent that they are presently charged where particularly Peabody but others of that kind of association have historically had lower rents which has meant that they had less income to be able to meet the Decent Homes Standard. As you know, there has been no direct government subsidy for housing associations to meet the Decent Homes Standard at all.

  Q148  Mr Slaughter: Have most associations had to put their rents up? Presumably that is something which, given the relatively high rent that a lot of associations charge, that presumably is unpopular with tenants.

  Mr Orr: In the main housing association rents have been controlled since 2001 as a result of the rent convergence regime so there has been very little real flexibility for housing associations to do that.

  Q149  Mr Slaughter: How are they doing it? Are they doing it by a combination of rent rises when they can?

  Mr Orr: They are doing it by a combination of rent rises where they can but effective outside management and from time to time that has involved a small proportion of sales to be able to release some of the equity to allow the investment in Decent Homes.

  Q150  Mr Slaughter: With Peabody it is up to ten per cent of stock[1], and good quality stock at that. Is that something that you are concerned about, which you have made representations about or for which you think there should be alternatives?

  Mr Orr: In respect of Peabody I think they should have been allowed to put their rents up more because they are below average and I think that would have allowed them to do more without having to sell. I think there is a huge amount of trapped equity in social housing generally, a point that other of your witnesses have made, and I do think it is rational for us to look at what a sensible asset management strategy should look like and I do not think that an occasional sale is bad because sometimes it does allow the release of equity to do good things like meet the Decent Homes Standards or even stimulate additional new build.

  Q151  Mr Slaughter: An occasional sale is different from selling ten per cent of your stock.

  Mr Orr: I think Peabody would not have wanted to sell ten per cent of their stock and they would have preferred to have been allowed to put their rents up to an average, one that was consistent with the average for the areas they work in.

  Q152  Mr Slaughter: Bearing that in mind and that the definition of Decent Homes may change or may expand, do you favour any change? Do you think it has gone as far as it should go and do you wish it left to individual associations to set their own criteria or do you wish to see more government intervention?

  Mr Orr: We would like to see the Decent Homes Standard retained as an absolute minimum; we would like to see more flexibility for individual associations to be able to negotiate standards appropriate to those places in conjunction with our tenants. I do think that that is consistent with an agenda which is about engaging tenants far more in the decision making about their homes and communities. So I think we are not in favour of a recast centrally imposed Decent Homes standard partly because so much of what we would have to talk about is about environmental retrofitting and that is such a big issue that I think a kind of recast Decent Homes standard is not the way to go about doing that.

  Q153  Chair: If it is not a standard imposed by government across the piece, what would be the point of having specifically enhanced Decent Homes standards negotiated locally?

  Mr Orr: My colleagues may want to answer for their own organisations, but in brief there comes a point where I think it is right that tenants should have a choice for themselves about whether they would rather see the available investment in improving the public realm and enhancing public safety or having more kitchens and bathrooms. The difficulty about a centrally imposed standard is that it takes away that local determination.

  Mr Moore: Just concurring with what David said, I think having a base standard that everyone should meet but then actually reflecting the differences. You asked previous witnesses to explain what their plus factor is on their Decent Homes and in effect what we are saying is that Decent Homes as strictly construed is a very low standard and each association, each council should be able to then determine how much further they go according to their local circumstances and according to the property type because what might work and be a good cost effective solution on one property type may not be as applicable for elsewhere or the type of tenant that lives in that property as well, so different issues for an older person's association in terms of frailty requirements et cetera may have a different requirement to add onto that base standard. We still strongly think there should be a base standard but then the scrutiny should be: what and why are you applying those plus factors rather than different plus factors?

  Q154  Andrew George: To what extent do you and the members of the Federation say that the Decent Homes standard is diverting you from perhaps other objectives within the organisation itself, whether it be overcrowding or dealing with waiting lists and transfers and other issues which you may consider more preferable priorities? Do you believe that the emphasis on Decent Homes standards is not diverting you from those other objectives?

  Mr Doylend: Generally no. The Decent Homes standards is such a level that actually most landlords would want to maintain up to that standard as a minimum anyway. Building on what my colleague has said, most of us have local standards that we go well beyond so that local choice is already there. Going forward, however, it is what is built into business plans in perpetuity, and that is maintaining Decent Homes and a bit above, compared to an imposed revised standard and how do we pay for that.

  Q155  Alison Seabeck: Hanover, you run a co-payment scheme. I am reading it as you doing the basics and where you want to enhance it you can agree with individual tenants to do that rather than take David's approach that there should be flexibility and everything should be blanket done across a group of properties. How does that work and does it actually produce equities or some tenants feeling that others are doing better than they are?

  Mr Moore: We are about to broaden out our initial pilot of a co-payment approach. The co-payment works on the basis that if we are still not satisfied in terms of the replacement cycles for our kitchens and bathrooms it is a priority for our tenants and a large number of our tenants are already putting new kitchens or adaptations to their bathrooms for themselves. Our view is that we should be helping and encouraging others to do that. We are proposing that if somebody's bathroom or kitchen is due to be replaced within five years we would meet 80 per cent of the cost, five to ten years, 60 per cent and ten to 15 years 40 per cent to help meet and incentivise that process of tenants who have resources putting those into play. However, we are not saying that those who cannot afford to put their own resources into play go without; we are still having a base standard and each year we are reducing the wait for that replacement and that will still carry on. For the whole of our tenants we are reducing the wait but for those who have resources we think it is right that we should incentivise those to do that. We have a number of people who are moving into our properties who were previously home owners and they clearly have assets of some form and we think it is an important process to actually unlock some of that equity which otherwise the sector does not see. That is why we are doing it.

  Q156  Alison Seabeck: How cost effective is that? There has to be further bureaucracy for your administrative staff in monitoring all this.

  Mr Moore: We are thinking that as an era of choice develops that rather than saying that this estate needs everything to be done we look at each property, so actually our asset management is at a per property and per resident base rather than "this estate requires" and everything is done. So that does not change that. We are trying to reduce the bureaucracy involved in this process by saying that because we are not meeting the full amount of cost actually our tenants really do not do things to destroy their properties wilfully, they actually probably put more value into the property than the proportion we are sharing. We do not put too many burdens of bureaucracy in their way. We are paying 80 per cent in a five year time gap and certainly the kitchens and bathrooms I have seen improved have been of a far higher standard than we would normally be putting in.

  Q157  Alison Seabeck: David, is this a model that can be rolled out elsewhere to enhance Decent Homes?

  Mr Orr: I think it is a very interesting model and I think it could be, but not as a requirement. I think it is one of these things where the best solutions are ones that are worked up locally by individual organisations with their tenants. It may well work very well for Hanover; it may well work for others. However, there is an extremely important point here about the relationship between rent in particular and then the heating and energy costs. We are trapped in a system at present where it would be possible to invest and improve the environmental quality of some of our rented homes but all the costs at present falls on the landlord although all of the benefits rest with the tenant. There is no argument at all about the tenant having a benefit from that, but it means that in practice we cannot access resources that would allow that investment to happen.

  Q158  Alison Seabeck: Have you done any work with your tenants or has the NHF done any work on how you might take that forward in terms of sharing some of that burden of the tenants and the net gains?

  Mr Orr: We have had some discussions with tenants and some modelling of how that might work. Indeed we commissioned a report which we referred to in our evidence (and which the Committee is welcome to have copies of if it wishes) about how some of that might work. There is evidence that tenants accept the logic of saying that if you have a £5 a week energy saving it is worth paying £3 a week to get that.

  Q159  Mr Betts: We talked about doing things locally that meet the circumstances, and equally we have a national challenge on the emissions of CO2 and the whole issue of climate change. Do you think therefore there ought to be a mandatory national standard in terms of thermal efficiency of properties which every organisation has to meet by a given date?

  Mr Moore: I think we do, yes. I think there should be a base standard but I think setting that too high could actually perversely result in misapplied public funds. There comes a point at which a certain type of property, so if you take a single brick property that does not have a cavity wall to be filled, et cetera, there is only so much you can do to improve that property and going to hit an ever higher standard on that property you can be paying a disproportionate amount to do that. I think it is actually saying having a base standard but beyond that it is about the scope for improvement and the relative payback, as David was saying, on that investment and is it worthwhile and how that can be shared. Otherwise what will happen is that more and more properties will be simply saying they cannot meet that standard, they cannot co-invest in it and we will lose stock from the sector. I think there is a balance to be struck.

  Mr Orr: I think having a mandatory standard is a sensible approach in theory providing there is a proper understanding of how that mandatory standard will be paid for. There is no point in imposing a standard which is unattainable within a given rent envelope. We live in an environment where government now controls the rents that housing associations charge; if you have that rent that is the maximum of the income that you have available, so unless we can find a sensible way of paying for what would be quite significant investment costs then the mandatory standard would be meaningless really. One of the advantages of the Decent Homes standard is that it did create some very interesting thinking about how meeting the standard might be paid for—the LSVT programme, the introduction of ALMOs—and these have contributed but there were costs to government associated with doing that and there is no way that we are going to be able to meet the retrofitting challenge without accepting that there will need to be some investment by government.

  Mr Doylend: If you just have a standard for the sector what you will end up with, as my colleague said, is properties just being sold from the sector. They still exist; the problem does not go away. Then you get into the thorny issue of do you have legislation that means it is for everyone, is it the same for private sector or resold and how do you enforce that? Somebody has already raised the point about leaseholders not being able to afford some of these things; they certainly will not be able to afford the retrofit. We have an experiment going at the moment in Norfolk called Greening the Box where we have a pair of semi-detached houses, one we have used a lot of new modern green technology to reduce running costs and we have very much focussed on that and we have reduced the carbon emissions; next door we have done very much more bog standard, more insulation rather than looking for solar panels and such like. We are in the process now of monitoring which of those has lower running costs, which has better carbon emissions. The shocking fact when you look at the price of the two is that the one where you have used modern technology is three or four times the price in terms of retrofit.



1   Peabody submitted a memorandum to the Committee clarifying that they have only sold 4% of their total stock. The full text can be found in BDH 57. Back


 
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