Lewisham councillors received a presentation on Monday 10th October from five of the borough’s housing providers about their response to the changes in the rules around provision of social housing put forward by the government. The housing providers present were Affinity Sutton, Family Mosaic, Hyde Housing, Hexagon and London & Quadrant, and the evening was introduced and put into context by Lewisham’s Head of Strategic Housing. I live tweeted the event on #lewishamhousing.
The social housing and housing support system will be substantially changed by the Localism Bill which is shortly to receive Royal Assent. Broadly speaking, changes include a move to move from lifetime tenancies to flexible fixed term tenancies for all social housing, a rise in the rent cap for new tenances to 80% of market rents and a tightening of the criteria for Local Housing Allowances and Housing Benefit. Government capital funding for building new stock is being sharply reduced, but in turn, social landlords will have greater freedom to borrow against their rents to fund new builds.
The national context for this, of course, is that there is rising demand for housing and not enough supply, and whilst mortgage rates are low at the moment, a focus on affordabilty by risk-averse lenders is resulting in a sluggish market in sales. This in turn puts greater pressure on the private rented sector where rents are rising, with knock-on social consequenes.
In Lewisham, the context is a rising population (forecast to be 290,000 by 2020, up from 266,500 now), a stagnant but long housing waiting list and insufficient new supply. Interestingly figures were presented at the meeting showing that the share of the population in social housing or owner/occupiers is falling, with a commensurate rise in private renting. With the average house price in Lewisham being nearly 11 times the medium salary, this perhaps seems less surprising.
So, with a lot of demand about, but less government cash to fund, and perhaps limited land identified to allow, new housing, what is the response of the major housing providers in the borough (the “RSLs”)?
Firstly, though they’re not very keen on the changes (who would want less money to fund their major activity?), they accept that it is a continuation of the trend of the previous government’s policy, and also the only game in town (though, they have been, and still are, collectively lobbying the government for improvements).
Secondly, as organisations with a charitable or social mission. they are committed to mitigating the impact of the changes on current and new tenants as far as possible. This is largely expressed as a desire to keep the increase in rents as close to their targets for what is affordable as much as possible (as opposed the generally higher ‘affordable rent’ target given by the government – the 80% of market rents), and also to allow exisiting tenants to roll-over their new five-year tenancies as far as possible.
The new regime for calculating rents coupled with the above misson can have some perverse effects. For example, rents for 3 or 4-bed houses may become lower than for 2-bed flats: Hexagon gave an example of how the ‘affordable rent for a 2-bed flat could become £165.48 per week, whereas that for a 3-bed property could become £162.07 per week. The focus on affordability may also mean that the social housing providers may actually need to attract higher earning families to fill all their stock.
Thirdly, the RSLs will try to subsidise their social rented properties with income from private sales – they already do this to some extent with their current schemes, but building properties for sale will be a greater part of the mix in their future schemes. Though this will still increase the local supply, it does diminish the future income streams from rents which are supposed, under the new rules, to be available to support borrowing for new social housing schemes.
All in all, though the new freedoms for housing providers under the Bill are welcome, the impact on growth of the borough’s stock of good housing is not. Furthermore, they changes do nothing to ease the problem of housing costs for everyone – whether renting privately or socially – being too high, and may in fact, within London at least, make it worse.
In fact, the changes in the rules in the Biill though important are cosmetic compared to the problem of high housing costs – the need for social housing, affordability, mobility and so on – and lack of supply is the cause: not enough good quality housing has been built by either the private or public sectors for many decades. There has been a ‘market failure’ when it comes to housing and successive governments have been too timid to address it.
This may be the moment, however, for the government to shed its timidity. It is rightly getting to grips with the revenue deficit, but still has a substantial commitment to captial expenditure; with the mood music turning to economic stimulus by accelerating capital projects… why not fund the construction of more housing?
We don’t have to emulate past governments faced with a housing crisis – whether it’s Homes for Heros, villa conservativsm, garden cities, new towns – but we can learn from past architectural and planning mistakes. And Keynesians should be happy, as should businesses, and others should applaud the liberating consequences of good housing instead of market failure.
We don’t have to trample all over the green belt, but we do have to get serious about density and height where it can be sustained. We should also demand better standards of housing – larger rooms, thicker internal walls, higher environmental standards – and perhaps be slightly less wedded to our unenvironmentally friendly Victorian and Edwardian terraces.
It will be difficult to achieve, perhaps even requiring social change, but it will be worth it (even the Dailiy Mail headlines about house prices). The housing problem is becoming a crisis, and the coming crisis will be acute, perhaps even with some unpalatable consequences.