Housing and Planning Bill

Written evidence submitted by Vine Housing Co-operative (HPB 55)

1.0   Purpose of This Submission

1.1   This submission forwards the views of Vine Housing Co-operative regarding the Housing and Planning Bill relating to Part 4: Social Housing in England.

2.0 Summary

2.1 Vine Housing Co-operative is a long-established fully mutual housing-co-operative owning and managing 50 flats and houses in Vauxhall, South London. We are registered social landlords with the Homes and Communities Agency and the Financial Conduct Authority. We have managed ourselves autonomously since 1983, and subsequent to completing the rehabilitation of our properties enabled through Housing Association Grants (withdrawn in the early 1990s), we have not received any housing subsidy from national or local government.

2.2 We are very concerned about the proposed changes for social housing providers in the forthcoming Bill, in particular with the ‘right to buy’ and ‘pay to stay’ chapters. As a small-scale, highly cost-effective, community-enhancing social housing provider with no immediate prospects for expansion, we are especially concerned that these provisions will be costly to administer while having highly negative impacts on our members and our local community without bringing any wider social benefits.

3.0 Part 4 Social Housing in England, Chapter 1


3.1 We understand that there will be discretion for fully mutual housing co-ops to exempt themselves from the right to buy. (Brandon Lewis MP, 2nd November, Hansard column 826). However, it is not clear how this discretion might be exercised and in particular what the effects of a potential ‘portable discount’ might be for small-scale housing providers in general and housing co-operatives in particular.

3.2 Like many other co-ops, we have not been able to develop new units for many years as there is no longer any public funding available to us, nor do we have access to sufficient assets to develop affordable properties. In addition, in our case there is no land available for small-scale development of social housing in the immediate area, and current planning restrictions prevent us from reconfiguring existing housing stock. Any funds acquired through right to buy provisions would be useless to us. The Co-operative would shrink in size while acquiring further administrative and financial responsibilities.

3.3 Any right to buy provision would be a disastrous measure for our small Co-op, even though very few of our members are likely to have the means to take advantage of it. We would therefore argue for an amendment which ensures that fully mutual co-operatives are completely exempt from the right to buy.


4.0 Part 4 Social Housing in England, Chapter 4


4.1 It is proposed that social landlords must implement a ‘pay to stay’ policy by charging market rents for households earning above £40,000 (in London) a year. We object to this on a number of grounds.

4.2 The proposal goes against the ethos of housing co-operatives and is in contravention of our Rules, as approved by the National Housing Federation, which require us to treat all our members equitably.

4.3 We would agree with the NHF submission that, like Housing Associations, we are constituted as a private, autonomous, social enterprise and should be able to determine rents and other internal policies according to our particular situation, within the regulation provided by the Financial Conduct Authority and the Homes and Community Agency, and not as directly dictated by Government. We have successfully and prudently managed ourselves for more than 30 years and because of our commitment to co-operative values, we have kept our rents low, reducing public costs of housing benefits, ameliorating housing need and providing a valuable social asset to the local area.

4.4 This proposal would be very costly to administer in a number of respects:

4.4.1 A system to monitor the incomes of members would be required even if no households fall above the threshold in any one year.

4.4.2 We are unable to increase our rents to cover any administration costs which are not recoverable from charging market rents because we are obliged (by measures announced in the Government budget in July) to reduce our rents by 1% per year until 2019. We are also unable to make further efficiencies, as a great deal of the administration of our Co-op is carried out by our members voluntarily. Thus our rents are significantly lower than those of other providers.

4.4.3 We would be obliged to buy in external services to administer the scheme as we lack the capacity to do so and we would need to preserve members’ confidentiality. We estimate that this would double our current administrative costs.

4.4.4 The number of households crossing the threshold is likely to vary widely from year to year, and thus planning for such costs will be challenging.

4.4.5 It is very likely that rent arrears will significantly increase, and the Co-op will be obliged to take costly legal action against members including evictions. The law relating to tenancies in fully mutual co-operatives after the Mexfield case is particularly complex, and therefore costs of such actions can already be very high.

4.4.6 We have estimated that in our case it is unlikely that any market rents collected from households exceeding the threshold will be sufficient to meet administrative and legal costs in every financial year.

4.4.7 The proposal to taper incomes and/or rents would only exacerbate the costliness of administering the scheme while reducing the income available from it, although it could offer some amelioration of its negative effects on our members.

4.5 If at any point market rents were to exceed administrative costs, under the proposals, this surplus could only be used to build new homes. As stated above in section 3.2, in the highly unlikely event that enough funds were raised for this purpose, there are no existing opportunities for Vine Co-operative to develop new properties. Thus the proposal would not succeed in its aim of providing more social housing.

4.6 It is estimated that households must earn at least £82,226 (in 2013) to afford market rents in London (House of Commons Briefing Paper 06804, ‘Social housing: ‘pay to stay’ at market rents’), and this is probably an underestimate for our area, currently suffering from a rapidly growing luxury housing market. It was reported in the Landlord Today (5th November) that in London a household income of at least £140,000 a year is needed to buy a flat and an eye-watering £275,000 for a detached house, again an underestimate for the Vauxhall area. ‘Pay to stay’ will therefore drive out those few members who have achieved some financial stability (often only temporarily) but who cannot afford local market rents or to buy a home.

4.7 We rely on our members to participate in managing our housing. As a consequence we keep our rents low in return for contributions of unpaid work. Consultation with our members indicates that if any of our members were required to pay a market rent they are likely to feel they should no longer be required to contribute as much of their time and energy to the co-op, which could seriously compromise our ability to fulfil our obligations as social landlords.

4.8 There are a number of specific deleterious situations which will arise if this proposal is implemented.

4.8.1 Vine Co-op includes several households with a number of adults living together who each have independent finances. It is possible that from time to time, the two highest salaries would exceed the £40,000 threshold and therefore the rent for the unit would be charged at market rent, penalising all living in the household. In one specific case, a co-op household of six adults includes two people with disabilities and a pensioner.

4.8.2 It is clear from consultations with our members, that in households which might from time to time exceed the threshold, individuals are very likely to reduce their earnings by giving up their employment or reducing their working hours. The measure would thus act as a disincentive to work and an incentive to claim benefits.

4.8.3 Self-employed members have expressed concerns about how wide variations in earnings from year to year, and the time lags between declaring and settling tax affairs, might lead to being obliged to pay market rents some time after their incomes have fallen below the threshold. This will lead to significant uncertainties, and such members are more likely to be unable to sustain their businesses.

4.8.4 Couples and parents living with adult children will be particularly vulnerable. Members who may be affected have suggested that if their households exceed the threshold, even for a short period, one member is likely to have to leave and set up a separate household. Given the lack of alternative affordable housing and the high levels of local market rents in this part of London, they will have to move very far away from their partner or parent and the family unit will be split up.

4.8.5 Adult children and working mothers will be in a particularly difficult position, as their earnings may tip the family over the threshold from time to time, but not be enough to set up an independent household anywhere else.

4.8.6 Any of our members who live in households which fall above the threshold from time to time, and who wish to stay in the homes they worked so hard to create and maintain, are very unlikely to be able to afford market rents in this area, and thus severe hardship, family break-up, homelessness and mental illness are the likely outcomes.

4.9 Many of our members have lived in our area for more than 20 years and have created a very strong community. This results in co-op members initiating and contributing to the local area by maintaining our community gardens, the trees and plants in our streets, organising local social and cultural events, and sustaining our local community centre, which benefits our neighbours as well as ourselves. Pricing out those members who have contributed voluntarily to community building will reduce the local quality of life and local infrastructures for all.

4.10 Consequently, this measure will diminish and divide our co-op, while failing to achieve any positive social benefit. We pride ourselves on the diversity of our members, including their income levels. It is the social mix of our community (including those living around us in other forms of housing) that has made our locality such a lively and desirable area. It is iniquitous that our members could be priced out of the social housing and the associated thriving community they brought into being and continue to maintain.

4.11 This measure is likely to exacerbate problems of homelessness more generally. To have obtained any form of social housing (including Vine Co-operative), tenants must be in housing need. Removing social housing from their grasp because of small and temporary improvements in their circumstances is very likely to make them vulnerable to housing need again. We are therefore opposed to this proposal in its entirety and submit that it should be removed.

4.12 If pay to stay is not removed completely, the threshold set for ‘High Income Social Tenants’ at £40,000 for London should be amended to more closely reflect the realities of market rents with differentiated thresholds for inner and outer London. The figure of at least £82,000 for Inner London (or as appropriate for other areas), as indicated above in section 4.6, should be implemented.

4.13 If pay to stay is not removed completely, there should be greater flexibility in the use made by social landlords for any funds raised. For small-scale providers, this should include spending on improvements and repairs to existing properties and energy-generating or energy-saving measures.

4.14 We submit that small-scale social housing providers including co-operatives face particular challenges in implementing ‘pay to stay’ and there will be few if any wider social benefits to justify the administrative and social burden it will entail. Therefore we would argue that the bill should be amended to exempt all social landlords managing less than 100 units, and all fully mutual housing co-operatives.

November 2015

Prepared 17th November 2015