Tory welfare reform (sic) makes social housing financially toxic

The last 5 years has seen the social housing model under concerted attack yet resistance to it  has seen campaigns run by a combination of Neville Chamberlain and a mute Gerald Ratner. They have been either white flag appeasement of failure to counter the nonsense that social housing is crap and the product of last choice.

The last 6 weeks and the election campaign has seen so much hyperbole over ‘housing’ being on the political agenda when social housing has not been there.  The inability to afford home ownership has been there but that is not a social housing issue.  The often absurd high level of private renting has been there, but again not a social housing issue.  The direct antithesis of any social housing campaign has been there in the right to buy proposals for housing associations yet this is by accident not any design of any social housing campaign

All that has been there in tiny part has been the glimmer of acknowledgement that as home ownership is out of reach of the voters children or even grandchildren, and as privately renting is also unaffordable, the British public are – as a matter of there being no other alternative – actually looking at the possibility of social housing, the proverbial housing of last choice.

Social housing should not be perceived as the housing of last resort yet is perceived that way and because housing people have (a) appeased government after government for decades and been suitably humble in whatever scraps thrown their way – the Chamberlain effect; and (b) failed to promote the huge benefits of social housing, or the mute Ratner effect.

Of course the perennially deluded ‘housing people’ as David Orr calls them – as even he as head of the National Housing Federation knows that social housing is NOT a sector – take every opportunity to say housing is on the agenda.  They hope to convince themselves presumably because they want to convince themselves that social housing is on the agenda but as explained above it clearly is not on the political agenda.

Cast your mind back 5 years to the day of the last general election and let’s look at some generic issues

The social housing tenant who was unemployed or sick or disabled or in low paid employment received full housing benefit.  Yet today the bedroom tax reduces that if the property is under occupied and the benefit cap reduces it when fully occupied.

A much higher percentage of social tenants need to claim housing benefit and largely because private rented housing does not cater for the unemployed or ‘other inactive’ such as those sick or disabled and unable to work that this coalition chooses to stigmatise with the all embracing label of workless.

Given over 70% of social housing tenants claim HB this is a major financial attack on the social housing model and all sold to the electorate with superficial pithy spin such as the bedroom tax only replicates what exists in private renting housing.

Let’s examine that point.  This week I was speaking with the directors of a social landlord about the impacts of the overall (housing) benefit cap.  This is a LSVT landlord that is one who took over the former council housing stock of which 15% has gone under the right to buy and like many LSVTs the stock is heavily concentrated in the same estates.

Many of their bedroom tax affected households are the middle-aged couples who have been there 25 years or more and the kids have flown the coop leaving mum and dad alone in the 3 bed family home – still the family home where the children and grandchildren congregate for Mum’s Sunday dinner and the grandchildren get spoiled.  Now lets look at the figures!!

This being in the North the monthly social rent is £400 or just over £90 per week.  Yet Mum and Dad only get £300 in HB as they are deemed to under occupy by two bedrooms and so the bedroom tax takes £100 off the HB. So Mum and Dad needs to find £100 per month to top up the rent

This being in the North and in the immediate vicinity of exactly the same privately rented housing (the 15% RTBs) they could move next door and pay £425 per month to a private landlord and be almost £1000 per year better off! Mum and Dad would receive £395 pre month in LHA as that is the 1 person / couple rate and so would only need to top up the rent by £30 per month.  Yes they would pay £70 per month or £840 per year less in rent!

The private landlord owner of this former RTB would love such tenants too as they will be there permanently and will be ideal tenants all landlords want.  This is especially the case financially because of the overall (housing) benefit cap policy that with the planned reductions incentivises private landlords to deliberately under occupy 3 bed private rented properties right across the North and in all areas outside of London.

Many of the local free newspapers in Merseyside have had adverts or come with flyers inside from private landlords seeking the Mums and Dads in the social rented 3 bed home hit by the 25% bedroom tax deductions as above as the bedroom tax does not apply to privately rented. The reduced OHBC will FORCE private landlords to evict any tenants fully occupying their 3 beds if ‘workless’ and deliberately under occupy them with these Mums and Dads.

It is the only way these privately rented 3 bed homes are financially viable in low rent areas all across the North and in all other areas where social and private rent levels are broadly aligned. In the above actual example we see Mum & Dad now paying £100 per month top up and the 1 bedroom LHA rate being £395 per month.  So any private property that is £494 per month or less is a financially better option than social housing and because of the 15% RTB in the same area there are plenty of exactly similar homes to move to.

Mum can still go and check on Mrs Jones down the street to see if she’s ok and Dad can still embellish his stories of his football prowess to all his friends who are still in the immediate area. In other words nothing changes in their lives except they live at number 32 instead of number 26…and they are £840 per year better off…so they can sneak Milky Bars to the grandchildren more frequently!

The Tory policies of bedroom tax and benefit cap mean that Mum and Dad are much better off financially in privately rented housing than in social housing.

The old notion of security of tenure that social housing brings is also defeated and shows just how radical these policies are for social landlords.  With over 90% of private landlords having 5 or fewer properties over 90% of private landlords would bite their hands off to have Mum and Dad as their tenants.  This is guaranteed 52 weeks of the year income and tenants who are A1 in terms of risk as they are unlikely to trash the property or be holding late night parties or have a cannabis farm in the loft.  Instead of the private landlord’s business model being based on rent 46 weeks of the year it is a whopping 13% higher each and every year at 52 weeks!

The numbers used above will resonate loudly with social landlords in the North West, in the North East, across much of Yorkshire and Humber and much of the East and West Midlands and in Scotland and in Wales.  But of course because housing policy and response and any challenge to it always comes from London which accounts for just 17% of social housing and has radically perverse housing conditions to the other 83% of the UK such as private rents 4 or 5 times social rent, these realistic threats gain no traction.

Because there is no lobby or other organisation which unifies the 5 out of every 6 social landlords who are NOT in London these arguments are never heard.  Because the media focuses upon London’s truly perverse housing conditions and assumes they are replicated nationwide (outside of the mythical oop North where every household keep whippets and wears flat caps) these arguments are not heard, not raised and never challenged.

The Chamberlains and Ratners are very much alive in social housing outside of London – that would be the 83% of all social housing that nobody ever talks about and the 83% of the country where, by and large, the vast majority of private landlords are not the proverbial Rachmannesque London private landlord, but middle Englanders with a handful of properties used as equity for their pensions that RTB and especially buy to let allows to multiply like flies around….

The coalition has massively undermined the financial sustainability of the social landlord and the reduced OHBC policy will hammer that home.  The breadcrumbs thrown and eagerly snapped up by social landlords such as the affordable (sic) rent policy is dead as a dodo.  The mindnumbingly stupid social landlords who rushed into this get-rich-quick-back-of-a-fag-packet scheme not only find their ordinary 3 bed social rent properties financially toxic as they can’t afford to fully occupy, the AR properties are radioactive due to the OHBC and oh dear what are social landlords to do about their borrowings on them!!!

Housing think and (in)actions by response to Tory welfare reform (sic) is now a combination of Chamberlain, Ratner and Shapps (or any other snake oil salesman!)

So when all the deluded hyperbole of housing being an election issue has died down lets hope ‘housing people’ don’t focus on the comparatively insignificant RTB for HAs (remembering HAs are just 53% of all social landlords) and let’s hope they focus on challenging the really significant financial threats to the sustainability of the social housing model.

Sorry reader, it appears that delusion is viral and I have caught it with that last comment!






3 thoughts on “Tory welfare reform (sic) makes social housing financially toxic

  1. I did reply to a post by Shelter, who were promoting ‘affordable homes’? I asked them, what about council/social housing, as ‘affordable homes’ normally relates to ‘homes-to-buy’. I never received a reply. At the moment in Manchester, the council has twice, wasted money on trying to remove homeless people. Who are protesting outside the town hall, about the council handling of the bed-room tax situation and homelessness.

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