Housing and Planning Bill

Written evidence submitted by Finsbury Park Housing Co-operative (HPB 45)

1.0   Summary

1.1 Finsbury Park Housing Co-op is a fully mutual housing co-operative, comprising 35 homes in North Islington, which range from one, two and three bedroom flats to a 4 bedroom house.

1.2 We became registered with the Register of Friendly Societies in October 1977 (No. 22007R) using the Model Rules of 1975. We were set up to provide accommodation for local single people and childless couples who were homeless or in unaffordable and precarious private sector accommodation and had no access to local authority accommodation, or sufficient funds for a mortgage. A significant proportion of our members are low skilled with educational disadvantage or in key worker professions. Our intention was to build and sustain a local community and we have done this successfully over a 40 year period, but the proposed legislation on Pay to Stay and Right to Buy will bring many difficulties for us.

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

1.4 Housing Co-ops, such as Finsbury Park Housing Co-op, are the embodiment of the Big Society. Housing co-operatives have formed local communities with solid foundations, giving opportunities for the acquisition and sharing of skills and experience; enabling people to find and keep employment and thus lessening reliance on the welfare state.

2.0   Pay to Stay

2.1   A three bedroom family home in our Co-op currently costs £160 per week. The lowest three bedroom market rent that we can currently find in our area is £450 per week, and that is for a much smaller home. This equates to £23,400 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 to be able to afford market rents.

2.2 When a vacancy arises in our Co-op we allocate a property according to our criteria, based on housing need and a need to live in the locality. We feel it would be intrusive and off-putting to potential tenants to means test people’s income. Over the last 40 years our operation has been geared to accommodate people on low incomes. It would be a deterrent for prospective tenants if they thought that future rents would be beyond their means and would deter them from applying for housing.

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 many of our tenants tell us that they struggle on very low incomes, but equally there may be households whose incomes have risen in the 40 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, teachers and key workers. We would be reluctant to see people forced out of the area when they have done so much for local essential services.

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 Whenever new lettings take place, we are bound to spend a significant amount of money in order to maintain the quality of our homes. For a small organisation, this places a severe financial burden on us. The loss of tenant members endangers the continuity, skills exchange and community spirit within the organisation.

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. 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.

2.8 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 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 to the tenants if they then have to pay a very large increase on their rents, and to the Co-op if the tenants were to leave resulting in the Co-op losing the good work that they do.

2.10 Over the years, as people have done voluntary work for the organisation, they have acquired skills and competencies which have enabled them to find work and to move on from welfare benefits. However, higher mandatory rents will reverse this process, act as a disincentive to those who would aspire to better careers and force people back onto welfare benefits.

2.11 In FPHC, the majority of our tenants are at or approaching retirement age. Those 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. Should they decide to stay and pay higher rents, this will preclude them from making adequate provisions for their pension funds; and they will suffer later when rent increases come along. They may be forced out of their accommodation at the very time when they need stability and security in their final years.

3.0   Right to Buy

3.1 Finsbury Park Housing Co-operative was formed at a time when there were a large number of empty properties in North Islington and large numbers of people who were homeless or living in insecure private rented accommodation. Over the last 40 years, we have built a successful organisation and provided good quality, affordable accommodation for local people in housing need. As time has passed, North Islington has been transformed to a mainly affluent area and house prices are now even further out of reach to ordinary local people.

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 35 homes this would mean that there would be even fewer affordable homes for people to move into.

3.4 A one bedroom flat in North Islington, now a desirable location, would currently be valued in excess of £300,000 and whilst Right to Buy would give tenants a discount, the cost would still be well outside their reach.

4.0 Suggested amendment to the Bill

4.1 Our co-operative is concerned that we should not be treated like housing associations, we have different functions. And we therefore request that we should be exempted from the forthcoming legislation within the proposed Housing and Planning Bill and would suggest the following amendment.

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

November 2015

Prepared 17th November 2015