Localism Bill

Memorandum submitted by Moat (L 62)

About Moat

Moat is a housing association providing affordable homes in thriving communities for people in the South East of England. For over forty years, we have delivered high quality general needs homes for affordable rent, supported accommodation and tenancy support services. We also have a strong affordable home ownership and key worker housing offer.

Moat is one of the Homes and Communities Agency’s development partners and is also the appointed HomeBuy Agent in Essex, Kent and Sussex. Employing 430 people, we provide excellent customer service to the residents of our 20,000 affordable rented and shared ownership homes.

Executive summary

1. We thank the Committee for the opportunity to contribute evidence to this important process. In this submission, we focus specifically on the areas of tenancy strategies and flexible tenancies, under Part 6, Chapter 2 of the Bill.

2. While we welcome the principles of transparency and collaboration which underpin the introduction of local tenancy strategies, it is our view that these principles could be potentially compromised by the wording of the Bill.

3. It is our view that the wording relating to tenancy strategies – Clause 126, Subsection (1) – is overly prescriptive, and has the potential to impact on the independence of housing associations to set their own targets.

4. Regarding flexible tenancies, we believe that the flexibility to set rent levels would be more constructive than length of tenure.

5. As a result, we propose an alternative model that resolves this policy tension – focussing on the flexibility to charge residents full market rent under certain conditions.

Submission

6. We would like to focus on two key areas under Part 6, Chapter 2 of the Bill, dealing with:

a. Tenancy strategies, and;

b. Flexible tenancies.

Tenancy strategies

Part 6, Chapter 2, Clause 126

7. We have previously welcomed the principles underpinning the introduction of tenancy strategies, such as increased collaboration and transparency between local authorities and registered social landlords (RSLs).

8. However, we are concerned about the wording of Clause 126, Subsection (1), which states that:

(1) A local housing authority in England must prepare and publish a strategy (a "tenancy strategy") setting out the matters to which the registered providers of social housing in its district are to have regard in formulating policies relating to

(a) the kinds of tenancies they grant,

(b) the circumstances in which they will grant a tenancy of a particular kind,

(c) where they grant tenancies for a term certain, the lengths of the terms, and

(d) the circumstances in which they will grant a further tenancy on the coming to an end of an existing tenancy.

9. It is our view that the terms dictated in this subsection are narrow, overly prescriptive, and have the potential to impact on the independence of housing associations to set their own targets.

10. We believe that this wording contradicts previous Government statements, as well as the overall policy direction towards increased flexibility and collaboration between local authorities and RSLs. The Local decisions: a fairer future for social housing consultation paper clearly outlined that:

We want social landlords to enjoy very substantial freedoms on the types of tenancy they provide, and to avoid creating bureaucratic structures which restrict their ability to respond creatively and sensibly to the particular needs of local communities and particular circumstances. [1]

11. We therefore urge the committee to revisit the wording of the legislation.

Flexible tenancies

Part 6, Chapter 2, Clauses 130 and 131

12. We have previously argued in our response to the Local decisions: a fairer future for social housing consultation that flexibility on setting rent levels would be more constructive than length of tenure. (Our reasons are outlined in Appendix 1). Resulting from this conclusion, we have proposed an alternative model that resolves this policy tension.

13. It is clear that the principle of tenure flexibility has been established under Clause 130.

In outlining our alternative model, we do not propose to transform the current Bill, but rather, incrementally add to it.

14. We propose that the alternative model – to supplement flexibility provisions outlined in Clause 130, could work as follows:

Review of rent affordability

15. A duty is placed on the landlord to conduct a review of rent affordability against the income of residents every two years.

New full-rent category

16. Where a resident’s circumstances have financially improved and they exceed the maximum income threshold for affordable housing subsidy for two reviews in succession, they are to be re-categorised as full-rent residents. The landlord would then be given the flexibility to increase their rent to full market levels accordingly.

17. As a sub-point, we recognise that it may be appropriate to ease people into their new full-rent circumstances. We therefore accept that an escalating rent increase may be required, set at approximately 90% of market rent for a set period of time.

Encourage shared ownership

18. When a resident is moved onto the new full-rent category, we would look to offer the opportunity to move to shared ownership – with the normal rent discounts that apply within this model.

19. This point serves to minimise the risk of the perverse policy outcome of a resident being disincentivised from actively seeking to increase their income – as may be the case if they face eviction once their circumstances improve. It is also consistent with the principles of mobility and aspiration as outlined by the Minister for Housing in the statement that social housing ‘should act as a springboard to help individuals make a better life for themselves.’ [2]

20. It is our view that shared ownership ought to be encouraged further given the problematic nature of access to the housing market, especially for first time buyers. Shared ownership is a mature and proven intermediate product with a role to play in helping lower and middle income working households onto the housing market.

Re-investment of additional income

21. Given that a lack of capital is currently one of the greatest challenges facing affordable house building, we propose to ring-fence the expected additional income derived through the alternative model, in order to re-invest it into new social housing.

22. The alternative model above need not replace the tenure length provisions outlined in Clause 130, as it is possible to run the two models collaboratively.

23. The important consideration regarding our alternative model is that the flexibility to charge full market rent would only be unlocked as an option once the qualifying conditions have been satisfied.

24. The legislation needs to be clear that the principle of flexibility must be bound by certain safeguards. In order to unlock the flexibility to charge a resident full market rent, the following qualifying conditions would have to be met:

25. A resident must have had at least two rent affordability reviews over a minimum period of four years;

26. It must have been determined that a resident is above the maximum threshold for affordable rent subsidy for two reviews in succession.

Appendix 1

Flexibility based on rent levels vis-à-vis length of tenure

In our response to the Local decisions: a fairer future for social housing consultation, we outlined some concerns with proposals to inject flexibility into tenancies based on length of tenure. In particular, we focused on the potentially detrimental impact on:

- the question of aspiration;

- the principle that mixed communities are desirable, and;

- the way that residents view their homes.

The following is an extract from our consultation response which sets out our grounds for concern.

Impact on aspiration

We are concerned by the prospect that people whose circumstances improve financially could be asked to vacate their home in as little as two years. This seems inconsistent with Government emphasis identifying mobility and aspiration as primary objectives for reform.

Under proposals, there is the likelihood that a resident may feel disincentivised to improve their financial situation if it is likely to place them at risk of eviction. Clearly, this is an unintended consequence of the proposed measures, but it is one that bears consideration and re-design.

Impact on mixed communities

We are committed to the creation of mixed communities, with a variability of incomes, tenures and social circumstances. We believe that these communities are not only desirable, but essential to the creation of liveable, vibrant cities and urban centres. We also note that the HCA lists mixed communities as one of its key development objectives.

We are greatly concerned by the prospect that people whose circumstances improve could be asked to leave their homes – and therefore, in all likelihood, their communities. We believe that this potential erosion of mixed communities would constitute a perverse policy impact.

Stop-gap thinking

Fixed-term tenancies will not encourage residents to settle into their area or contribute to the local community.

As a landlord, we have reservations about constructing an image of our homes as short-term, temporary housing measures. Our experience suggests that a resident who views their home as being ‘for the long-term’ is also significantly more likely to take better care of the property, and invest more time and energy into the community in which they live.

Based on the above, we have concluded that flexibility on setting rent levels would be significantly more constructive than length of tenure.

February 2011


[1] CLG , ‘ Local decisions: a fairer future for social housing’, consultation document , Nov 2010, p. 22 , pgph.2.17.

[2] CLG , ‘ Local decisions: a fairer future for social housing’, consultation document , Nov 2010, p. 5.