Housing and Planning Bill

Written evidence submitted by the Southwark Group of Tenants Organisations (HPB 152)

Southwark Group of Tenants Organisation

1. Southwark Group of Tenants Organisation (SGTO) represents tenants and residents groups within the London Borough of Southwark. We are a non-political organisation and do not align to any political viewpoint.

Housing and planning Bill

The SGTO has lobbied for the following amendments to the Pay to Stay Element of the Bill during its stage in the committee.

CHAPTER 4

HIGH INCOME SOCIAL TENANTS: MANDATORY RENTS

First Amendment

In Clause 74 at the end insert:

"(6) The regulations may require that a registered provider of social housing must set higher rents for high income social tenants and registered providers shall have the discretion to set the rates based on local conditions and shall have regard to guidance given by the Secretary of State."

Explanation

This amendment is to give registered providers discretion to set the mandatory rents for higher income tenants taking account of local conditions.

Second Amendment

In Clause 75 replace 1(a) and 1(b) with:

(1) " Rent regulations-

(a) Must permit registered providers to define what is "high income" based on local conditions for the purpose of this Chapter, and

(b) Make provision about how a person’s income is to be calculated."

Explanation

This amendment is to give registered providers discretion to define high income taking account of local conditions.

Affordable Housing

When David Cameron launched the Conservative Manifesto a commitment was made that the sold council houses would be "replaced in the same area with normal affordable housing". The suggested amendment asks for this commitment to be honoured.

Concerns on the Proposal to Sell Vacant High Value Council Houses

The Government is proposing that councils should be required to sell about 15,000 high value council houses each year as they become empty. This is to fund the Government’s flagship commitment to extend the right to buy to housing association tenants . http://www.24dash.com/news/housing/2015-04-14-Tory-Party-manifesto-in-their-own-words

A number of concerns have been raised about the sale of high value council houses.

· The sale of 15,000 council houses a year will, at least initially, reduce the capacity of councils to house people on council waiting lists. About 15,000 houses represents 18% of the 83,000 council houses that became empty and were let to new council tenants in England in 2013/14 – a significant proportion. https://www.gov.uk/government/statistical-data-sets/live-tables-on-rents-lettings-and-tenancies

· Some councils may have to sell far more than the average of 18% of the council houses that become empty each year. An analysis by Shelter suggests that in Kensington and Chelsea 97% of council housing will be high value and have to be sold, in Westminster 76%, in St Albans 60% and in Southwark 30%. https://england.shelter.org.uk/professional_resources/policy_and_research/policy_library/policy_library_folder/report_the_forced_council_home_sell-off

· Past performance casts doubt on the Prime Minister’s statement that each council house sold off would be "replaced in the same area with normal affordable housing".

Past Performance on Replacing Sold Council Houses

In March 2012 the Government guaranteed that "every additional home sold under Right to Buy will be replaced by a new home for affordable rent" on a national basis. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/5937/2102589.pdf

The actual performance on building replacement houses has been as follows.

Year

2012/13

2013/14

2014/15

Total

Council Houses Sold Under Right to Buy

5,944

11,261

12,305

29,510

Council houses started

473

961

1,903

3,337

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/406192/LT_691.xlsx

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/406195/LT_693.xlsx

Greg Clark MP has interpreted these as follows: "Nationally, of the 3,054 additional sales made in the first year, 3,337 new properties have been started within two years, and councils have three years to be able to build-a rate of more than one for one." http://www.publications.parliament.uk/pa/cm201516/cmhansrd/chan62.pdf

He appears to have compared part of the sales in one year (2012/13) with the building in three years.

The Institute Fiscal Studies has interpreted the same figures as a replacement rate of around one in ten, not allowing for properties in the pipeline, saying "the record on delivering this weaker commitment has been less than impressive". http://www.ifs.org.uk/uploads/publications/bns/BN171.pdf

Past performance on replacing sold council houses suggests that a guarantee that is not enshrined in legislation may not be delivered.

Enshrining in Legislation the Conservative Commitment that Each Council House Sold is Replaced

1. When David Cameron launched the Conservative Manifesto, the accompanying Conservative Press Notice said that expensive council houses: "will be sold off and replaced in the same area with normal affordable housing as they fall vacant. *** After funding replacement affordable housing on a one for one basis, the surplus proceeds will be used to fund the extension of right to buy".

2. The Housing Bill is silent on the replacement of the sold council houses. It just says that councils must give money from the sales proceeds to the Government to fund the housing association right to buy. There is no mention of replacing the sold council houses with affordable homes in the same area.

3. However, Zac Goldsmith MP has said that he will table an amendment asking for "a binding guarantee that London will see a net gain in affordable housing as a consequence of this policy" (Hansard, 2 November 2015, column 751). http://www.publications.parliament.uk/pa/cm201516/cmhansrd/chan62.pdf

4. It is important that any amendment refers to "affordable housing", which is defined in Annexe 2 of the National Planning Policy Framework, and does not just refer to low–cost market housing, which is a less clear concept. The National Planning Policy Framework states: "Homes that do not meet the above definition of affordable housing, such as "low cost market" housing, may not be considered as affordable housing for planning purposes." https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/6077/2116950.pdf

5. The following amendment gives legal force to the promises made in the Conservative Manifesto and accompanying documents. It does not ask for any change in policy. It just asks for the Conservative Manifesto commitment to be honoured.

Amendment

6. In clause 62(2) at the end, insert :

"and such costs and deductions shall include (i) the repayment of capital debt held against the high value properties sold and (ii) the cost of replacing the high value properties: a. on a one for one basis (with one replacement house being counted as replacing only one sold property),

b. with affordable homes (at no more than 80% of market rent or price), and c. within the same area."

Conclusion: An Alternative Way to Fund the Right to Buy

7. It may be that the Government will resist this amendment because the sale of the high value council houses will not be sufficient to fund everything that the Government has said it will fund.

8. An alternative way of funding the housing association right to buy may be desirable.

9. Indeed, the Conservative led Local Government Association has said that "We want to work with the Government to find an alternative method for funding the extension of the Right to Buy". http://www.local.gov.uk/web/guest/briefings-and-responses/-/journal_content/56/10180/7529077/ARTICLE

10. One alternative would be the equity loans proposed by Lord Bob Kerslake, former Head of the Civil Service, and by Boris Johnson MP, Mayor of London. http://www.insidehousing.co.uk/kerslake-significant-concern-in-lords-over-right-to-buy/7010421.article

11. An equity loan, as the Chancellor, George Osborne, pointed out, won’t hit the deficit "because it’s a financial transaction, with the taxpayer making an investment and getting a return". https://www.gov.uk/government/speeches/budget-2013-chancellors-statement

December 2015

Prepared 14th December 2015