“We are working with the National Housing Federation … to encourage longer-term tenancies in private rental homes delivered by housing associations …
… We will be speaking to the Local Government Association about local authorities’ appetite to do the same, where they are delivering market private rented housing through local housing companies.“
What the Tories are saying at paragraph 4.35 on page 62 of the Housing White Paper and not wrapping up in any coded language is … council and housing association landlords can charge full private market rents in their properties if they offer tenancies of more than 12 months in new build properties.
This is the definitive end of any properties ever being built by councils and housing associations for social rent. It is the death of social housing as we know it as no council or housing association will ever build new properties for social rent.
Liverpool City Council, which has no council housing, set up such a local housing company late last year to provide privately rented housing and other councils will follow as sure as night follows day if they haven’t already. This is thus not pie in the sky, it is already well advanced.
Let us look at the official average rent levels released in December 2016 by the DCLG and what this means in terms of filthy lucre for what we laughingly call social landlords.
Table 1 – Official average rent levels in the English regions.
- What housing association will develop new housing to rent out a 4 bed property at £126 per week when they can get £226 per week for the same property?
- That’s £5217 more pa that the housing association can stiff the tenant for!
- What council will build a new 3 bed property to rent at £94 when they can rent it out for £173 per week instead?
- That’s £4,122 more pa that the council (private) landlord can stiff the tenant for!
Table 2 – Official average rent levels in London.
What housing association is going to build a new 4 bed property to rent at £160 per week when they can get £363 per week instead. Yes that is a whopping £10,585 more per year in rent that they can stiff the tenant for!
Without a shadow of a doubt social housing is dead and you can see its death is with the full complicity and collusion of what we falsely call social landlords in both housing associations and councils chasing the filthy lucre.
The real question is not rhetorical at all – Will those who finance these new build deals insist that a full market rent is charged on them? – to which the answer must be 100% yes!
The returns on investment are in many cases double at full market rent than at the social rent level so its a case of we will advance you the money to build new housing only if you charge full market rent.
Today’s Tory white paper is the death of the social housing model and the death of the social rent model, the death of security of tenure that the social housing model has always had at its core and the death of social purpose that all social (sic) landlords claim is in their DNA.
Here is page 62 in the white paper.
Here are the official rent figures for the English regions and London released by the DCLG – the government department responsible for housing – in December 2016.
Note: To arrive at the full market rent (FMR) figures in my Tables 1 and 2 above I have used the affordable rent figures to equate to 80% of FMR in the regions and 65% of FMR in London.
To Damian Green Minister DWP & Philip Hammond Chancellor – You do realise the impact on the housing benefit bill this means all new build properties from councils and housing associations will increase to the LHA level that is 23.47% higher on average then the HB rate paid now to councils and HA landlords?
To anyone who support the 1948 Welfare State – You do realise that 20% of it has now gone as the slaying of the giant of squalor it created in council housing that became known as the social housing model has now gone. Pity all you activists and demonstrators against the NHS cuts and Education cuts don’t and won’t demonstrate against this!
To everyone – where will your children an grandchildren live? Yes think about that one…!
Off to bang my head against nearest brick wall reader …
UPDATE Wed 8 Feb 10.50am
Its been argued that the Housing White Paper also says new build properties by LA’s will be forced to be sold to pay for RTB. Yet below is part of an Inside Housing article today to show why this will not happen …
In short all councils will only build for the private rented market and so avoid this forced sale risk. And as I said earlier these private “Local Housing Companies” or LHCs set up by councils will only be lent the money to build only IF they develop for private rent given the more than 100% increase in return on that investment!