A House Divided

Are you upset, angry and depressed? I hope so. After 10 months, we seem to be back at square one with a punitive lockdown that will hit the poor and the badly housed the hardest, stuck with a useless government that has failed at every step.

I imagine that most people who work in housing care about inequality. I have always believed that disparities in income, health and mortality can be reduced if you live in a safe, affordable home.

Over Christmas, I watched It’s a Wonderful Life for the umpteenth time and was struck again by George Bailey’s speech to the directors of the Building and Loan, when he tells them that good housing makes people better customers and better citizens and that the “rabble” living in the villainous Mr Potter’s slums “do most of the working and paying and living and dying in this community”.

It's a Wonderful Life has some lessons for the UK as it deals with the pandemic (picture: Alamy)

It seems nothing changes. During this pandemic it is the same people – the badly housed, the poor, the disconnected – who have been doing most of the dying, and suffering most of the pain.

The rise in inequality over the past year has been confirmed by the latest study from the Institute of Fiscal Studies.

COVID-19 has exacerbated inequalities between the high and low-paid and between graduates and non-graduates. The self-employed have suffered more than those with safe jobs. Pupils in private schools are forging ahead. Deaths from COVID-19 among some Black groups have been twice those among white British people. Above all, mortality rates from COVID-19 are twice as high in the most deprived areas as in the least deprived between March and July last year. That relates directly to bad housing.

Another study by the Health Foundation finds that bad housing has hampered people’s ability to shield from the virus and that London’s shared housing led to an exodus from the capital that spread the virus across the country. As I wrote here back in June, bad housing kills.

Since day one of this pandemic I have been concerned about the wider impacts of lockdowns and the growing divide between the rich and the poor. Lockdowns should be a last resort, yet they have become the weapon of choice for this failing government.

What happened to our £22bn world-beating test and trace? What happened to the Nightingale hospitals that were supposed to protect the NHS from being swamped? Why has so much money been wasted on contracts with corporate buddies? As an island nation we could have done more to suppress the virus, as New Zealand and Taiwan have done.

But it seems to me that all the decisions and the cheerleading for tougher restrictions have come from those who are well-housed and well-off in safe jobs, with scant regard for those who are most affected.

It will be some time before we fully understand the surges in domestic violence, suicides, deaths from cancelled operations and treatments, and the mental health impacts. Yet government should aim to balance all these wider impacts in their policy decisions, but this they have utterly failed to do.

Residents in social housing face a double whammy, disproportionately dying and suffering both as a result of the virus and the impacts of lockdowns.

I do not think I have ever despised any government more in my lifetime. Even Margaret Thatcher, whatever her faults, a competent politician and a scientist, would not have presided over such chaos.

When this is all over, we need to see two major events. First, the mother and father of all public inquiries so that the guilty can be named and brought to account. Second, a recognition that bad housing has underpinned much of the harm that has been caused by this virus.

We need a year-zero reform of housing policy, so that we can stop building some of the smallest and shoddiest homes in Europe, so that we can reform planning policy to release more land for new homes, so that assets can be distributed more fairly between rich and poor and between old and young, and so that everyone can have access to a safe and affordable home that meets their needs. Let your anger make it happen.

(This piece first appeared in Inside Housing on the 7th January 2020)

On strike!

Across the country, students are rebelling against high rents and lack of tuition. Over 20 universities are now affected.

This week I received an email from University of London students who are organising a rent strike, angered by rising rents, arbitrary quarantine measures, poor maintenance (“urine-stained shower curtains, mould, toilets shut for months, and forcing entire floors to share 4 or 5 toilets”) and a lack of tuition during the pandemic.

Many students feel they’re being treated as cash cows by universities that increasingly resemble hard-nosed commercial enterprises, often paying their vice-chancellors huge salaries: the president of Imperial College is receiving over half a million pounds annually.

This isn’t new. Between 1972 and 1985, students at the University of Sussex went on rent strike several times to protest at rent rises and the construction of new accommodation without consultation (my daughter went there, I can vouch for some of the awful stuff they put up). In the 1970s, dozens of universities were hit by rent strikes, and student protestors achieved some success in limiting rent rises or changing policies.  

(This doesn’t quite chime with my experience as a student in the seventies. We had local authority grants to cover fees, rent and most living expenses. Perhaps we didn’t realise how lucky we were!)

More recently, in 2016, over 1,000 students at University College London went on rent strike and won over £1.5 million in concessions in the form of rent cuts, compensation and bursaries.

Beyond the university sector, there’s a powerful history of rent strikes in the UK. In Glasgow during World War One, there was an influx of workers, mostly women, into the munitions factories and shipyards, and private landlords tried to hike rents by up to 25% to profit from the rising demand for space.

Women workers formed the Glasgow Women’s Housing Association and organised a rent strike that was supported by 25,000 tenants. The protests spread across the country to Northampton, Birmingham, London, and Birkenhead where one protest banner read, “Father is fighting in Flanders, We are fighting the landlords here”.

In November 1915, the government, scared about the impact upon wartime production, caved in and passed the Rents and Mortgage Interest Restriction Act, which limited rent increases and the amount of mortgage interest that could be charged. The rent strikes were partly responsible for the Addison Act of 1919 which promised “Homes fit for Heroes”.

The 1915 Act was the first time that rents had been controlled in the UK. It was meant to be a temporary measure but the pressure from activists, and the threat of future rent strikes, was such that some of its measures were not repealed until 1988, during Margaret Thatcher’s premiership.

During the twenties and thirties, the militancy continued with rent strikes across the country to protest about rent levels and poor conditions. These actions undoubtedly had an impact upon government pledges to build more council houses. 

In 1958, tenants in St Pancras borough went on a rent strike to protest about rising rents. There were marches, a 16,000-person-strong petition, and riots, until the strike was defeated with mass evictions and the Public Order Act was invoked, banning all further protests.

More recently, Ted Heath’s Housing Finance Act of 1972 sought to increase council rents by making them closer to private rents. It was met with protests and rent strikes across the country. Nearly 50 councils refused to implement the Act, but the one that held out the longest was the Urban District Council of Clay Cross in Derbyshire where 11 Labour councillors refused to increase average rents of £1 and 12 shillings a week by £1 a week.

Tenants organised a rent strike and the district auditor was sent in, but the council refused to co-operate. A year later, all 11 councillors, including two of Dennis Skinner’s brothers, were found guilty of ‘negligence and misconduct’, fined a total of £6,985 plus £2,000 costs and disqualified from office. They were bankrupted.

Lord Denning, in confirming their disqualification from office, declared “They are disqualified. They must stand down…I trust there are good men in Clay Cross ready to take over”. There were. A year later, by-elections returned ten out of 11 councillors who pledged to continue the resistance! But that same year Clay Cross UDC ceased to exist as it was merged into North East Derbyshire council under local government re-organisation. The new council complied with the law.

The 1972 protests had an echo in the rate capping protests in 1985 when 15 councils refused to set a legal rate, caving in one by one until only Liverpool and Lambeth were left.

Are there any lessons for our sector in this brief history of rent strikes? I think so. One lesson is that tenant militancy can produce results. In some respects, going on rent strike is the ultimate manifestation of tenant involvement and activism. In the past, it’s led to government putting more money into council housebuilding.

But the recent housing White Paper also has a heavy emphasis on treating residents with fairness and respect. The way that rents are set is at the core of fairness and respect, and there’s a danger that some of the recent changes in rent policy have deviated from both principles.

To my eye, charging “Affordable” rents of over £400 a week is neither fair nor respectful and I’m surprised that there haven’t been more protests, especially when tenants living in identical neighbouring properties are being charged widely differing amounts. Once the rent is set, increases are capped, of course, but tenants have no say in the rent that they’re charged at the outset.

Rent strikes have had a patchy record of success, but there’s little doubt that they’ve pushed though changes in national and local housing policies.

As a sector, I’m fairly sure that we’d not wish our residents to withhold their rent, so the lesson is that rents and the way that they’re set should be kept under close review. Any changes need to be incremental, proportionate and grounded in a sense of fairness. 

(This blog was first published by the Housing Quality Network on 10th December 2020)

On Panorama: put the social back into shared ownership

When I started out as a housing consultant over ten years ago, I was invited to lunch by a local chief executive. I thought he was going to offer me some work, but instead he offered me some advice. Specialise in service charges, he said, the sector desperately needs help and you will make lots of money. Regrettably, I did not follow his advice (it would have bored me to death, frankly) but I know that he was probably right.

The problem of service charges was at the heart of last week’s edition of Panorama on shared ownership. It told the tale of several owners who had seen their charges soar within a few years, in one case up from £2,300 to £4,400 annually within the space of four years. Another was angry that they could not afford to buy their home outright because property prices in London had soared. One shared owner in the Cotswolds complained about being charged to extend her short lease of 80 years. There were also complaints about the cladding scandal and shoddy newbuilds.

(I have some personal experience of the latter point as my daughter has a newbuild shared ownership flat in South London that has been beset by defects.)

As a product, there are clearly some concerns about shared ownership, which I discuss below, but the problem with this programme was that, like much journalism these days, it sought to make wider points about a subject from a series of anecdotes. The programme mentioned that a recent Nat Fed survey (quoted by Kate Henderson) had found 21% of shared owners were dissatisfied, which implies that 79% were, if not satisfied, at least not dissatisfied. In fact, Kate mentioned that 60% were satisfied overall, which is not a great result, but it does not prove a widespread failure of the product itself.

Some parts of the programme were also downright misleading. In one segment, a large London provider had bought a block with a 999-year lease and was criticised for offering only 125- year leases – but surely the model lease recommends 99 or 125 years? Even if the provider owned the freehold of the block they would not offer more than 125 years, surely? As for the shared owner in the Cotswolds who complained about having to pay to extend her lease, this is based on a standard formula applied to all leaseholders, on the basis that any lease under 80 years starts to fall in value.

Coming back to service charges, I think my first challenge to landlords, as a leaseholder, would be to determine if owners are being treated on a level playing field with tenants in similar properties. I can remember the debate in the eighties about the unfairness of council estate tenants paying twice for street lighting and pavements through both their rent and their rates, when private owners only paid through the rates. I am fairly sure that some service charge departments are under-resourced and lacking in knowledge and skills, and do not fully appreciate the impact of their deliberations upon people with limited incomes. They obviously need some consultancy help!

But what the programme did expose, for me at least, is that shared ownership has an identity crisis. It is neither fish nor fowl. It comes under the heading of social housing and yet owners are largely left to their own devices and treated as if they were commercial buyers. Landlords often know less about their shared owners than they do about other tenants, something I wrote about here. There is also clearly a sense of unfairness that you could own, for example, 30% of the property and be responsible for 100% of repairs, as well as a lack of clarity about what happens to the rent that is being charged on the unsold equity.

What many of these owners seemed to have a gripe about was that their landlords treated them as if they were buyers in the private market, rather than applicants for a social housing product. They wanted landlords to be more open upfront about the pitfalls of their lease and to be more transparent about service charges, rather than expecting purchasers to understand all the legal intricacies (many lenders and lawyers do not fully understand the product for heaven’s sake!). I think it was therefore wrong for the Nat Fed to place the blame on solicitors.

With the government set to re-launch the shared ownership model and allow initial sales of 10%, the complaints we saw in Panorama are bound to rise. If it is to be re-launched, it does need to be made simpler and more understandable to buyers, lenders, and lawyers alike.

But if you go back to the legislation, Section 70 of the 2008 Housing and Regeneration Act defines shared ownership as, “accommodation…made available in accordance with rules designed to ensure that it is made available to people whose needs are not adequately served by the commercial housing market”.

So, I think we also need to bring shared ownership firmly back under the “social” umbrella and treat buyers with greater openness, fairness, and respect (as the Housing White Paper requires), rather than as outright commercial punters to whom caveat emptor applies. The sector might shift fewer “units” (I hate that term) as a result, but it would add to the sum of human happiness, and that is what we are here for, I hope?

(This blog was first published by the Housing Quality Network on 3rd December 2020)

Feeding the housebuilders

It seems to me that Homes England maintains a fairly low profile – but they are one of the biggest beasts in the housing world, with assets of around £17bn.

They published their annual report on 5 November. It is a mammoth 173 pages and makes for heavy reading, with 85 pages devoted to the annual accounts.

To begin with, they funded 40,452 housing completions in 2019/20 (slightly ahead of their target), of which 16,863 were affordable rent and a pitiful 1,478 social rent. Funding affordable housing is obviously one of their primary roles.

But I was mainly interested in looking at the details of Help to Buy. As you will know, the equity loans that support house purchases under Help to Buy sit on the Homes England balance sheet. In fact, a staggering £14bn in equity loans is now sitting on Homes England’s balance sheet – around 80% of its net assets.

To pursue Help to Buy you need a 5% deposit, and the government will give you a 20% equity loan (40% in London). The remaining 75% has to come from a mortgage or your own savings. Because the loan is set as a percentage of the value of the property, it can go up or down in value dependent upon house prices.

In 2013 there were 19,700 loans provided to house buyers in England. Last year this had risen to 51,500. In total, 272,811 households have bought homes with a Help to Buy equity loan and so far 49,000 of them (18%) have repaid the money, paying back almost £2.5bn on £2.25bn of loans, so an effective profit of around £2.25m for the government due to rising house prices. But the latest accounts state that the loan book of £14bn could drop in value by up to £4.3bn next year if the housing market falls off a cliff. So, the government has taken a giant punt on the housing market, effectively with our money!

Readers of this blog will know that there has been a great deal of criticism of Help to Buy, not least from the National Audit Office and the Commons’ Public Accounts Committee. Between them they accepted that there had been some boost to supply, but found that the scheme inflated house prices, that most buyers (63%) could have bought without the equity loan, and that people earning more than £80,000 a year had seen the most benefit. The NAO concluded that the price of new built homes rose 41% between 2013 and the end of 2018, above the prices of existing properties. This is the so-called “new-build premium”, which has been artificially created despite the often shoddy quality of new homes.

When Help to Buy started in 2013 it was seen as a short-term fix to prop up the housing market, yet, despite all the criticism, it is being extended to 2023, albeit restricted to first-time buyers and with lower regional price caps. But these range from £186,000 in the North East to £600,000 in London. Should the state (aka you and I as taxpayers) really be subsidising someone to buy a £600,000 property? In my view, no.

But the problem is that many of the largest housebuilders are now completely dependent upon Help to Buy – in recent times, 50% of Persimmon’s sales were with Help to Buy. Pre- Covid, many of the largest housebuilders were posting huge profits (£1.04bn at Persimmon, £901m at Barratts, and £821m at Taylor Wimpey, for example.) Many were paying out dividends to shareholders and also paying lip-smacking levels of remuneration to senior staff. A quick look at Taylor Wimpey’s results for 2019, for instance, shows that the chief executive had a package of £3.03m in total, and two of its directors received well over £1m. All this was funded with the support of the taxpayer. It puts our annual hand-wringing over CEO pay into perspective.

It is true that profits have fallen back as a result of the pandemic, but they are bound to pick up again once construction starts in earnest and the various vaccines take effect. As HQN CEO Alistair McIntosh has pointed out in one of his excellent recent podcasts, we have effectively nationalised some of the largest housebuilders. They are well and truly glued to the teats of the nanny state and show no desire to let go.

Yet, at the other end of the scale and unable to compete with the big boys, record numbers of smaller housebuilders are going bust: 368 in 2019 according to this report, compared with 312 in 2018, and 207 in 2016. This is despite the hollow pledge in the Planning White Paper to encourage and support smaller housebuilders.

Imagine, for a moment, if that £14bn of equity loan sitting on the Homes England balance sheet had been used to fund social rented housing. If you assumed £50,000 investment for each newbuild, that would have produced 280,000 new, high-quality homes – hugely outstripping the paltry 1,478 that were funded last year. The housebuilders would argue that the equity loans are paid back and are not the same as social housing grant for new rented homes. But, as the SHOUT campaign has consistently argued, this form of investment makes sense in the long run and would produce more benefit than the money wasted on Help to Buy. We all know that social housing pays for itself many times over; that it creates jobs, boosts the economy, and eases pressure on the private market, so allowing house prices and rents to become more affordable over time. It repays the taxpayer handsomely and, above all, it benefits the people who need it most, rather than those earning the most.

Artificial interventions in the housing market rarely turn out well: they usually lead to unfairness and inflate house prices. MIRAS springs to mind. It is time that Help to Buy was scrapped.