Labour Research April 2016


Government plans persist in avoiding home truths

Affordable social housing is becoming an ever more distant dream for many, thanks to Conservative plans.

The Tories seem intent on forging ahead with plans that will rip up Britain’s social housing. Announcing the publication of the Housing and Planning Bill last October, housing minister Brandon Lewis said the legislation represented the start of “a national crusade to transform generation rent into generation buy”. 

But housing experts say the Bill could put an end to affordable social housing, and that plans to build more housing are unlikely to benefit those in most need. 

The changes, which will apply to local authorities in England, will also drastically curtail the ability of local authorities to manage and retain their existing housing stock, and to take planning decisions to ensure the development of affordable local housing. 

The Bill includes measures to extend Right to Buy to housing association tenants, force councils to sell off “high value” properties, increase rents on higher earners and scrap lifetime tenancies. Local councils will also be required to hand over the extra funds generated to central government. The Bill was in the House of Lords Committee stage as Labour Research went to press.

A letter to The Guardian in February signed by 73 academics involved in housing, planning and urban policy warned that the proposals would “fuel rising housing costs, diminish local government resources, fatally undermine alternatives to market-based housing provision and ultimately increase the displacement of vulnerable communities and elevate eviction rates”. 

A series of protest activities against the Bill have taken place, including local marches and lobbies of Parliament organised by the Kill the Housing Bill — Secure Housing for All campaign, supported by several national unions and local branches, as well as tenants groups and campaign groups including Defend Council Housing. And thousands took part in a national demonstration against the Bill on 13 March in central London.

Assistant general secretary of the Unite general union Steve Turner told Labour Research that the Bill “is set to make the housing crisis much, much worse by further eroding the amount of social housing available for rent, eroding security of tenancy across the sector and through cruel and counter-productive measures such as ‘Pay to Stay’.” (Pay to Stay will see an increase in rent for higher earners in council homes so people pay closer to the market rate). 

“Unite — alongside other trade unions, housing campaigners and experts, and even some employers — are opposed to this Bill for these reasons,” Turner said.

Public services union UNISON says that further social housing sales could also impact on the jobs of union members working in the housing sector, while public service staff shortages will be exacerbated as more workers are priced out of high-cost areas. The union has been lobbying parliamentarians, and submitting recommendations to improve the Bill as it goes through Parliament. 

Housing bill’s impact on council tenants

Forced sale of council homes: local authorities will be obliged to sell “high value” council homes as soon as they next become vacant. 

Local authorities will be required to remit the funds generated from the sale of these homes to central government to subsidise “Right to Buy” in housing associations. 

The plan to extend the “Right to Buy” for housing association tenants was announced by the government prior to the Bill, and a framework to enable this was agreed with the National Housing Federation, representing housing associations. 

Pay to stay: families or households in council housing with a household income of more than £30,000 (or £40,000 in London) will have their rents increased to market rates. Again, local authorities will not be able to retain the extra funds generated but will be required to remit the money to central government to contribute to “deficit reduction”. 

Pay to Stay will be voluntary for housing associations and they will be able to reinvest the funds generated in new housing. 

Ending lifetime tenancies: councils will now have to offer fixed-term tenancies of between two and five years to new tenants. Councils would review whether to renew the tenancy or regain possession towards the end of the fixed term. This would apply to all new council tenancies, including those inheriting a tenancy following the death of parents.

End of secure tenancies

In a change described as “noxious” by Gary Doolan, political officer of the GMB general union, an amendment to the Bill, tabled as it was going through the House of Commons in December 2015, requires councils to offer fixed-term tenancies of between two and five years, thus phasing out lifetime tenancies.

A briefing by UNISON on the Bill says that with private rental tenancies typically six months or a year in length, the change will mean that “there is no secure option for people who are unable to buy their own home”. 

Right to Buy

The ending of secure tenancies could also lead to more council homes being sold off, as tenants will be more inclined to seek to exercise their Right to Buy before their tenancies run out. Last year, eligibility for Right to Buy was reduced from five years into a tenancy to three years. 

Close to two million council homes have been sold off since the Housing Act implementing the statutory Right to Buy was passed under the Thatcher government in 1980. While this fuelled a boom in home ownership, rocketing house prices now mean that levels of home ownership in the UK are now at their lowest levels in 30 years. House prices are now, on average, almost seven times people’s incomes.

Overall, between 1980 and 2015, just 345,000 homes were built by councils to replace the 1.88 million council homes sold in that period, according to the National Housing Federation. And a study by Inside Housing magazine last year found that around 38% of properties bought under Right to Buy were now being rented out in the private sector, at up to seven times the cost of average social rents.

Housing shortage

According to housing charity Shelter, the number of families with children renting privately has doubled in the last decade, with many “increasingly trapped in unstable and expensive private renting”. Furthermore, 50,000 homeless people and families are stuck in temporary accommodation, including hostels and B&Bs.

Shelter says that around 250,000 homes of all types need to be built each year to address the housing shortage. But around half this number is being built.In a briefing on the Bill, Shelter warns that the plans could lead to a further net loss of affordable housing. It estimates that selling off “high value” council homes alone could lead to 113,000 being lost in total, with 19,000 likely to be sold off by 2020. It also says that the government plan to define “high value” as relative to regional house prices will lead to the impact falling on areas that are prosperous in relation to their surrounding region. This means that council housing will become more concentrated in “poorer” areas. 

Pay to Stay

Pay to Stay could also force many on modest incomes to move to cheaper areas, and could discourage some from seeking to increase their earnings or find work. A report for the Local Government Association by estate agents Savills indicates that 214,000 households will be affected, and that in London, most of the 27,000 households concerned will be unable to afford to rent privately or buy in the same area. 

Half of those affected in London, the south-east and east of England would not be able to afford to pay market rents or take up a Right to Buy offer.

The GMB’s Gary Doolan told Labour Research that the government’s reforms amounted to “social cleansing”, with London likely to become more like Paris or New York where only the rich are able to live close to the centre. Doolan said the GMB has been campaigning in communities to raise awareness of the Bill and its implications, with many council residents “shocked” when they find out what it could mean for them. 

The government made a concession on Pay to Stay in March, indicating that rent increases would be tapered for incomes above the threshold, with full market rents likely to be payable once household incomes reach £50,000. 

Starter homes

The government’s plan to give greater resources for starter homes has also been met with strong criticism and warnings that the price caps of £450,000 in London and £250,000 elsewhere in England for the starter homes are set too high. This, combined with the proposal to widen the definition of “affordable housing” to include starter homes, is likely to have the perverse effect of actually putting affordable housing further out of reach for many people. 

Under existing so-called Section 106 obligations, local authorities are able to ensure that affordable low-rent homes are built as part of any large scheme in order for planning permission to be granted. But, under the government’s plan, this subsidy must now be diverted to fund starter homes instead. 

Shelter research has found that the average starter home will be unaffordable to families on middle incomes in the majority (58%) of areas by 2020. A family on the new National Living Wage would not be able to afford a starter home in 98% of the country. 

The UNISON briefing says that the scheme “will only help those who are already able to buy their own home or who are on higher incomes as it will require people to be earning at least £76,000 a year in London, and £50,000 elsewhere, pricing them way beyond the reach of nurses, teaching assistants, and school cleaners”.

Section 106 obligations currently deliver around a third of all affordable homes each year, according to Shelter. This supply will be put at risk by the government’s proposals the charity says. It estimates that 85,000 affordable homes that could have been built between now and 2020 will now not be as a result. 

Combining this figure with around 76,000 housing association properties it estimates will be sold through tenants exercising their Right to Buy, and the high-value properties councils will be forced to sell off, Shelter says that around 180,000 affordable properties could be lost in the next five years.