Housing and Planning Bill

Written evidence submitted by Palm Housing Co-operative  (HPB 18)

1.0   Summary

1.1   Palm is a fully mutual housing Cooperative, comprising 27 homes in Waterloo on London’s South Bank, which range from one and two bedroom flats to 3 and 4 bedroom houses.

1.2 We have been in existence for 21 years and are part of the Coin Street Community Builders scheme whose aim when it was set up 30 years ago was to build and sustain a community in the area, as its name suggests. The proposed legislation, specifically relating to Pay to Stay and Right to Buy, will, we believe, bring many difficulties to our community and specifically to our Cooperative.

1.3 I will outline those difficulties and give our views on their impacts, for both individuals and for our cooperative, looking at them from a community and financial perspective.

2.0   Pay to Stay

2.1   A three bedroom family house in our Co-op currently costs £195 per week. The lowest three bedroom house market rent that I can currently find in our area is £710 per week, and that is for a much smaller home. This equates to £37000 per year and the Bill talks of a threshold of £40000 at which tenants will have to Pay to Stay. Even allowing for tapering it is clear that people would have to be on a much higher income for market rents to become remotely tenable.

2.2 When a vacancy arises in our Co-op we allocate our homes according to certain criteria, such as housing need and a need to live in the locality. At the letting stage we verify that applicants are not on high incomes, but we have never suggested to prospective tenants that, should their incomes rise, then they would have to pay a market rent. In effect this would be like telling people that they shouldn’t aspire to higher incomes because if they do they would either have to move out – though to where we couldn’t say – or be faced with a very high rent increase that amounts to a heavy tax on their income. As I’ve pointed out in 3.1 the latter option is not a realistic one.

2.3 The proposed legislation says that the threshold at which there should be a market rent or proportion thereof will be £40000 and it will be based on the two highest earners within a household. In our cooperative there are many tenants on very low incomes but equally there are many households whose incomes have risen in the 21 years that they have been living here. These are not ‘high earners’ but people who work for the NHS as midwives and mental health practitioners, or for the Civil Service or within the Police Service. Where their partners or grown-up children work and their equally modest incomes are added on, the combined income level rises above the threshold. Are we to tell these people, who contribute so much to local essential services, and who have built their whole lives in our area, that in effect they would have to leave?

2.4 It is worth bearing in mind that two nurses sharing a home on the basic starting salary of £21000 would be above the threshold. We need such key workers in our area.

2.5   Having a mix of different types of people is one of the essential components of a successful cooperative. Stability is another. The number of transfers we have into and out of our homes is relatively low. This has meant that we could bring together all our different skills and backgrounds and we have been able to establish a stable basis from which to run our homes for the benefit of us all, with no special favour given to anybody.

2.6 Not only do we endanger the stability of our community if people feel they can no longer afford to stay in their homes; it also brings some very significant financial problems. Any void takes a significant amount of time to fill, even though we approach this issue with great efficiency. There are also additional refurbishment costs at the time of a re-let. In a cooperative of just 27 homes this creates a large hole in our income.

2.7 In order to administer a Pay to Stay scheme we would have to have in place a system that scrutinises each other’s incomes. Tenants would have to know what their neighbours earn. We consider this a major invasion of privacy and a breeding ground for very difficult neighbour relations and conflicts.

2.8 The administration of such a scheme would cost us money no matter how we were to execute it, and as a very efficient organisation that is successful in keeping its costs down, again we feel that it would place a disproportional burden on us.

2.9 Having a member pay a different rent from that of their neighbour for identical properties with identical levels of service would be highly divisive, especially when it comes to such things as refurbishment, with those paying higher rents perhaps believing they had the right to preferential treatment

2.10 As cooperative members our tenants, regardless of their incomes, have put huge amounts of time into sharing the running of the Co-op. We all value these contributions. It seems grossly unfair either to the tenants if they then have to pay a very large increase on their rents, or to the Co-op if the tenants were to leave resulting in the Co-op losing the good work that they do.

2.11 Tenants approaching retirement age who may be above the proposed threshold would be faced with the decision as to whether to leave or else try to pay the heavily increased rents for a few years knowing that their rents will reduce again post-retirement when their income reduces. Under such circumstances, they might well choose to stay but in the meantime will have had to find a disproportionately large increase in their rents.

3.0   Right to Buy

3.1   Coin Street Community Builders was formed at a time when the residential population of Waterloo had massively reduced. The campaign to build social housing using cooperatives as the basis for tenure has been recognised and celebrated all over the world. "What a fantastic achievement", I remember some visitors from Korea commenting when they came into our homes.

3.2 As the years have passed we have realised that the next generation of our families, as they reach adulthood and have children of their own, have nowhere remotely close to our area that they have any chance of moving into, such is the level of rents in the private sector and the difficulty in obtaining social housing. There is hardly any new social housing being built locally, and a good deal of what does exist has already been sold off, with much of it now rented out by private landlords at rents this next generation certainly can’t afford.

3.3 If we were made to sell off any of our 27 homes this would mean that there would be even fewer low rent homes for people to move into.

3.4 A three bedroom terrace house within Palm would probably be worth £2 million on the open market, primarily because of its location near the river. Whilst Right to Buy would give tenants a discount the cost would still be well outside the reach of our tenants. However, there would no doubt be the potential for dubious private financing schemes to be put before individuals to tempt them into a highly profitable venture, which clearly is not the intention of Right to Buy. Whilst I don’t believe any of our members would be tempted in this way, I don’t believe we should allow any opportunities for what could be a highly disruptive negative force.

4.0 Suggested amendment to the Bill

4.1 Our cooperative is against the principles of Pay to Stay and Right to Buy in the Social Housing Sector in general as many of the arguments I have set out above also apply to housing associations that are not cooperatives. However, we would suggest the following amendment.

"That the legislation does not apply to homes in the Cooperative Sector".

November 2015

Prepared 10th November 2015