Housing and Planning Bill

Written evidence submitted by Councillor Philip Glanville, Cabinet Member for Housing, Hackney Council (HPB 29)

Dear Chair of the Bill Committee,

Housing & Planning Bill Committee

Thank you for your invitation to submit evidence to the Housing and Planning Bill committee. I am the Hackney Council Cabinet member, with the responsibility for all issues relating to housing in the London borough of Hackney.

Hackney Council currently owns and manages 22,382 rented properties and 8,518 leaseholder and freeholder properties within the borough. The council has a waiting list of 11,036 households and over 2,000 homeless households living in temporary accommodation within Hackney, elsewhere in London and in some instances regrettably outside of London. Based on lower super output area scores Hackney is the 11th most deprived local authority in England.

The Council will be reducing Council rents by 1% a year for the next four years foll o wing the Chan cellor s summer budget , and this will result in an estimated cumulative £100m loss after 7 years and £725m over the next 30 years for the Council’s housing revenue account. Resources which could have been spent improving services, undertaking repairs to stock and building new homes.

The proposal to introduce forced Council house sales, is in an environment where the Council is seeing increasing homelessness, increasing temporary accommodation costs, overcrowding with the potential for stock and income reductions, increased rent collection costs (through pay to stay). It is in this context that the Council, is seeking to take forward its housing regeneration programme and is proposing a range of exemptions to the proposed forced Council housing sales regime.

The Council’s submission focuses on four areas contained in the Bill.

1. Forced sale of Council homes

2. Housing Association RTB

3. High income social tenants (aka pay to stay)

4. Measures to improve the private rented sector

1. Forced sale of Council housing

The forced sale of high value council homes and particularly those homes on newly built regeneration estates could mean that the council will have to sell on the open market, newly built homes which have been designated for social rent and shared ownership as soon or even prior to their completion. These disposals would be in the context where the Council has made long term commitments to tenants to stay in an area whose homes have been previously demolished.

These forced sales would take place in an environment where the number of households in temporary accommodation are, and will be steadily increasing. The Council believes the sale of higher value Council homes will result in steadily increasing homeless temporary accommodation costs, due to a steadily declining number of available lettings (and in the longer term a reduced number of housing association nominations due to housing association tenants exercising their right to buy) available to households residing in temporary accommodation.

Although we do not have key details of how the new policy will operate, based on the limited information available, we currently estimate that nearly 700 ‘higher value’ council homes could be sold in the first five years of the policy being introduced. We further estimate that the cost of the policy in terms of the use of additional use of temporary accommodation could be £17m over ten years in Hackney alone, 69% of which would be paid by DWP though Housing Benefit, and 31% by the Council.

In the longer run, this policy has the potential to wreck the mixed communities in Hackney, which the Council has worked so hard to support, and on which Hackney and the capital’s economic success depends.

Hackney has an excellent track record in achieving housing delivery and is currently undertaking a major programme of redevelopment and regeneration across a number of housing estates and sites in order to improve local residents’ homes and provide additional housing to help meet current and future housing needs.

The Council’s 2,760-home, 18-site programme is already in its fifth year, and has a proven track record of delivery, unmatched by any other authority. So far, 201 new Council homes for social renting have been built, as well as 20 for shared ownership/equity, and 42 for private sale, with an estimated further 300 properties on site on the next twelve months.

In summary the forced sale of Council homes would result in : -

· Increased homeless temporary accommodation costs – due to declining Council voids and in the longer term steadily reducing Housing Association nominations

· Increasingly economically polarised communities and further increasing the 17% of neighbourhoods which were classified as highly deprived In Hackney in 2015.

· Scope for areas of the borough to be severely denuded of social rented housing.

· A reduction in the level of HRA borrowing headroom due to the disposal of stock which could adversely impact on the funding of the councils future housing regeneration program

· An overall reduction in the value of the HRA asset base which could result in increased council risk

We believe the Bill and the subsequent regulations should be amended to take in to account the following

· Local authorities are exempted from having to dispose of stock where the number of households in temporary accommodation exceeds the number of annual lettings available to a Council.

· Clause 69 of the Bill should be amended to provide scope for l ocal authorities to be exempted from a high value property sales programme where they have a long term, identifiable self-financing housing capital development programme.

· Local authorities are exempted from property sales where their current annual RTB sales exceed 10% of their available annual lettings.

· Local authorities are exempted from a property sales programme when they are located in an area of acute housing str ess as defined by overcrowding, homelessness acceptances, high and increasing levels of household in temporary accommodation .

· A ll local authority new build properties built within the last ten years are exempted and exempted from any high value property formula .

· All current and future local authority voids on designated and proposed regeneration estates are exempted .

· Properties wh ere a compulsory purchase order (CPO ) has been agreed or is i n the process of being designated or where Demolition Notices are in force are exempted.

· Specific property bed sizes are exempted where the number of households in temporary accommodation requiring that size exceed the number of available lettings in that bed size within a local authority area or the local authority area is expecting acute housing stress.

· Local authorities where an authorit y’s Strategic Housing Market Assessment (SHMA) defined housing need exceeds projected lettings and new supply

· Local a uthorities where the affordable housing programme grant funded projected new homes delivery (f rom housing associations ) is less than 50% of the authority’s lettings over the period of the grant progarmme.

In addition the Council would recommend that:-

· In the context of 68 of the Bill(as defined by explanatory note para 357)Any lost homes must be replaced, like for like (particularly with respect to affordability and location)

2. Housing Association RTB

Hackney Council has a deep, positive and constructive relationship with the over 50 housing associations working in Hackney. We take the view the view that housing associations are significant and long-term partners working with the council not only to address housing need but also a range of other issues such as the support that some housing associations provide to Hackney residents who are workless.

However the Council is extremely disappointed that housing associations working in the Hackney (and elsewhere) were given just over one week and many felt pressurised by the government to commit to the NHF deal on right to buy. This pressure is particularly significant in the context where the ONS very shortly afterwards recommended that housing associations should be redesignated as public bodies.

We believe the statements made by Ministers represent a longer-term aspiration to largely de-regulate housing associations. The council is extremely concerned that the Secretary of State’s proposed deregulation commitment to the NHF and in response to the Office of National Statistics (ONS) will impact adversely on all Council’s existing rehousing nomination rights to housing associations. Unless mitigation and safeguards are put in place this will of course place further pressure on the Council and undermine a range of Council statutory housing commitments resulting in quite possibly, legal challenge but also investigation by the Ombudsman with respect to the length of time homeless households stay in temporary accommodation prior to receiving an offer of appropriate accommodation.


Aside from the above the Council is acutely concerned that recent statements by the Mayor of London and the recent proposed amendment (to clause  67, page 28 line 7 tabled on 3rd November 2015) of the Housing & Planning Bill by Mr Zac Goldsmith MP, will result in only shared ownership homes being built by housing associations under the direction of the Mayor of London as replacement homes for those which are sold by Housing Associations under right to buy and that these homes will be built almost exclusively in outer London areas. This will result in a narrowing of the housing association ‘offer’ to prospective tenants as well as increasing pressure on housing associations to shift the location of council nomination rights (which are previously exclusively within the London Borough of Hackney) to out of area properties in other parts of London.

3. High income social tenants (aka pay to stay)

Hackney Council’s ambition is that no one in the borough is left behind in a borough comprises mixed and varied communities. We support aspirations to home ownership through the provision of shared ownership, with priority given to social housing tenants . T hrough initiatives such as its Ways into Work scheme, the promotion of apprenticeship and traineeship schemes and our Hackney 100 scheme we are working to build capacity in individuals and families to support them and take advantage of education, skills training and help to find jobs.

However, the way pay to stay is structured and through the level of what is seen as a household ‘higher income’, we firmly believe will act as a significant disin centive to work and aspiration. Indeed the policy is contradictory in terms of its wider objectives, it is based on removing subsidy from so called high earners, but the tenants affected are more likely to exercise the RTB, which will entitle them to a significantly hig her subsidy in the form of a discount

To reach a market rent a Council tenant who currently pays £434 a month rent for a two bedroom property will see their rent increase by nearly 300 % to £ 1, 7 00 per month. For a rent of this level to be ‘affordable’ the household would have to be on an income of some £ 51,000 p.a.

The Council estimates that there are 725 h ouseholds with income at £ 40,000   in social housing in Hackney, 200 of whom (we estimate) are Council tenants.

In summary the Council would observe

 

· Despite being the 11 th most deprived authority in the country Hackney still has amongst the most expensive house prices in the country, having increased by 72% over the past five years. Average house prices at £ 526,000 are way beyond the reach of most first time buyers and far beyond the reach of average earners who are on an average income of £ 33,400 pa.

· Private rented sector rents have increased 27% since 2011, and are an average of £ 1,70 0 per month (compared to a London average of £ 1,400) .

· In London , h ouseholds on low to moderate incomes will be targeted by the policy, these are the same households who are also be likely to be targeted by any changes in family tax credits.

 

· Pay to stay takes away a tenant s and potentially their children’s ability to save for a deposit if they wish to access owner occupation .

· We believe there are other differential rent models based on income usually based around 33 % of an income being allocated to housing costs are worthy of investigation , such as the New Era example or ‘Living rents’ approach as proposed by the J oseph R owntree F oundation, which we believe local Councils should have the scope to explore and not be directed by a nationally set rent figure and tapers .

  

· A dditional income from higher rents should be retained by the Council for investment in new homes .

 

· T he scheme as it is currently proposed is highly likely to be complex, costly and bureaucratic to set up and administer. 

In addition the Council would recommend that:-

· The removal of Clause 79 (1) from the Bill – requiring a local authority to make a payment to the Secretary of State with respect to additional pay to stay income, with a replacement clause to respect to reflect the retention of any additional pay to stay income by the local authority.

· Clause 74 (2) of the Bill is amended to reflect that rents should be no more than 33% of a persons income.

4. Measures to improve the private rented sector

In 2014, the Council began a comprehensive assessment of the private rented sector ‘offer’ in the borough, in response to an unprecedented doubling in the size of the sector over the past ten years. An estimated one third of the borough’s households now live in the PRS; a higher proportion than owner-occupiers. We have taken a cross-disciplinary approach to making improvements in the sector that seeks to engage all the key stakeholders.

In February 2015, we held our first ‘PRS awareness month’, which involved:

· The culmination of a major stakeholder engagement project, involving renters, landlords, lettings agents, public and voluntary agencies, businesses and employers. This included a widely publicised online survey, focus groups and interviews.

· A publicity and poster campaign throughout the borough, promoting the rights and responsibilities of renters, landlords and lettings agents.

Amongst the Councils other activities over the past year:

· The publication of a guide for renters

· A regular, well-attended, Landlords’ Forum

· Promotion of the London Landlord Accreditation Scheme and London Rental Standard

· Working with Trading Standards to set up and enforce the lettings agent redress scheme and transparency over agents’ fees

· Regular meetings and liaison with renters’ groups and landlord bodies

· Developing a Council lettings agency

· An investigation and recommendations by the Council’s Scrutiny Commission

In the context of the above the Council would be supportive of the landlord banning orders, the establishment of rogue landlord and lettings agent database, rent payment order and codification of the steps to recover abandoned properties measures contained within the Bill.

However I would like to flag up a number of other steps we have raised previously with the Minister and Secretary of State in our ‘10 steps publication to a better private renting for tenants and landlords’ publication, which we believe could provide the basis for a step change to improve outcomes for both tenants and landlords in the PRS.

Specifically, inflation capped rents, which would result in benefits for both tenants and landlords. Inflation capped rents would ensure continuity of income for landlords as well as predictability and stability for tenants, and would invloce savding on the DWPs overall housing benfit expednire. A significant proportion of the local Councillors' case work in Hackney (and indeed across London) is spent advising PRS tenants who have experienced very short notice, steep increases in their rent

The second issue is the importance of changing the existing tenancy regime. Longer tenancies which would give more stability for families particularly those with children living in the private rented sector and the introduction of a national kite mark would help tenants identify the good quality PRS accommodation within the sector and by default help them avoid poorer quality accommodation. And finally, the Council believes it would be beneficial and welcomed by many of the good landlords in the sector if there was further cost transparency, particularly with respect to landlords publishing all of the information with respect to the related costs of property a tenant rents in order that tenants have a better appreciation of the costs related to the property they rent from landlord.


I believe if the government took steps to include the above measures in the secondary regulations that will follow the bill this would be to the benefit to tenants as well as landlords working within the sector.

November 2015

Prepared 17th November 2015