Housing and Planning Bill

Written evidence submitted by Pearman St Cooperative Ltd (HPB 43)

1.0 Purpose of this submission

1.1 This submission is to put forward our view that all housing co-operatives should be exempted from Right to Buy and Pay to Stay.

2.0 Summary

2.1 Pearman Street Co-operative Ltd is a fully mutual housing co-operative in Waterloo, London. It comprises 27 units, ranging from one bedsit to two four-bedroom houses. It has been in existence since 1980, as a response to the local authority's intention to demolish the whole of Pearman Street, and was set up to give some local residents an alternative to buying because buying was not financially possible.

2.2 Our co-operative is self-managed, highly efficient and without debt. Our rent arrears, standing at less than 1% are among the lowest of any housing co-operative in the country. A 1.5 million pound housing grant was to refurbish 21 flats in Pearman Street and to build 6 new houses in Morley Street. We have no outstanding loans to Lambeth Council. Our properties are maintained in excellent condition.

2.3 We were registered under the Industrial and Provident Societies Act 1965 on 13 October 1976 (no 21760R) and we are a registered housing association (no C2412).

2.4 We house key workers, professionals, trades people, others in local employment and the unemployed. For every second unit which becomes vacant, and in compliance with policy, we accept applicants who are at the top of the council's housing list. We are a community which has grown up over nearly 40 years and which is extremely stable and static.

2.5 The Government's Pay to Stay and Right to Buy policies would, we argue, lead to the eventual demise of our housing co-op.

3.0 The Prime Minister's Stance in 2012.

3.1 It is important to note that the Prime Minister said in 2012 of the Co-operative Movement: -

"Co-operation and mutuality is an idea whose time has come back."

In a speech in London to the John Lewis Partnership, he said the issue was one he had "long cared about".

"...and for me, the Co-operative Model represents an enormously exciting possibility for public service reform and the fight against poverty and social breakdown."

"A co-op is part of the society it serves."

3.2 With this in mind, it would be contrary to common sense to place an institution like ours, which serves our community, prevents social breakdown, supports those in poverty, the aged and the unemployed, and is a well-functioning and cohesive community, in such jeopardy.

4.0 Mutuality

4.1 Pearman St Co-operative Ltd is fully mutual. Our member/tenants 'own' their co-op by virtue of buying £1 shares in a Limited Company. We are on the register of Friendly Societies and are subject to their rules and legal processes. We have all entered into legally binding contracts and did not ever envisage a time when the Government would or could change the law to override our legal agreements to effectively change our status as 'owners' of our homes. Therefore, we do not believe the Government can truly justify changing the law to impose Pay to Stay or Right to Buy.

5.0 Pay to Stay

5.1 The criteria which Pearman Street Co-operative Ltd operates in the Lettings Policy are: housing need, low income and local connections. These are applied without exception. The knowledge of how co-operatives function and the willingness to participate is vital. During the course of their tenancies, naturally, some tenants have increased their income. Many of these tenants have been, or still are, the backbone of the co-op, without whom it could not exist, since they have, for nearly 40 years, developed the knowledge and expertise to manage what is a complex organisation, governed and influenced by constantly changing legislation. Despite its small size, a strong and static Management Committee is able to address this complexity successfully and efficiently. Pay to Stay would force out the very member/tenants on whom the co-op depends.

5.2 The average rent in Waterloo is £875 per week. A 3-bedroom house attracts a rent upward of £4,500 per month. We have long-term member/tenants who have retired on professional pensions and households with double earners none of whom could ever aspire to such rents and would be forced out of London. The massive hike in rents London-wide prevents many children from leaving home to live independently. Several of our tenants have been in this position for many years in order to support each other. Pay to Stay would be a disaster for them as children would be forced to leave home and move away from their roots in order to enable the parents, who are the member/tenants, to remain in their home.

5.3 We believe that the Pay to Stay policy would actually be in direct conflict with the Government's belief in the incentive to work. For example, member/tenants in a double-income household faced with the option of earning more and paying market rents or not working so many hours would, by anybody's calculations, be far better off doing the latter. Thus, the threshold of £40,000 per household is, we argue, completely unrealistic, given that a person working for 40 hours per week on the London Living Wage of £9.30 per hour would earn £19,344. Therefore, only those couples living on the very basic income would be exempt from the 80% market rent surcharge. Where does Mr Cameron think all of these people are going to live? Are we looking at families crowding into multiple unregulated occupancies as they did in the 50s? Given that mistakes have already been made by the Government, and very recently evidenced by incorrect and damaging calculations made for police budgets, suggests that a rethink of this totally unrealistic threshold must be necessary as it presents a completely untrue picture of the costs of living in London.

5.4 We maintain that enforced exposure of member/tenants' earnings is a breach of Human Rights and could well be against the Data Protection Act, since all such information would need to be shared with the Management Committee. Calculating rent on the basis of the previous year's income is dangerous and risky as it would not take into consideration a sudden drop in earnings due to redundancy, retirement or illness which would put member/tenants into an impossible situation if they have to continue paying the inflated rate.

5.5 Administering Pay to Stay would be complex and time-consuming. Given that our co-op is managed by its member/tenants, costly provision would need to be made to employ a professional to do this. A small co-op such as ours would find this difficult to manage.

6.0 Right to Buy

6.1 It would be highly unlikely that any of our member/tenants would ever be in the position to buy their homes. Given the market rent in Waterloo, even the smallest unit would cost upward of £330,000 with the discount. If our co-op operated the Right to Buy it would seriously damage the viability of the rest of the co-op, disrupting our community and exposing the co-op to logistical difficulties. In the past, several member/tenants have left and moved elsewhere in order to buy, with the result that the housing stock and stability of the co-op has been maintained.

7.0 Proposed Amendments

7.1 We propose the following amendments: -

Housing co-operatives should be exempted from both Pay to Stay and Right to Buy legislation

but should that fail, then:

The threshold of £40,000 should be raised substantially, and to a realistic level, as decreed by independent financial experts.

November 2015

Prepared 17th November 2015