Social landlords to more than double rent in the housing white paper

“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.

hwp-regional-rents

Rhetorical questions:

  1. 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?
    1. That’s £5217 more pa that the housing association can stiff the tenant for!
  2. What council will build a new 3 bed property to rent at £94 when they can rent it out for £173 per week instead?
    1. That’s £4,122 more pa that the council (private) landlord can stiff the tenant for!

Table 2 – Official average rent levels in London.

hwp-london-rents

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.

___________________________________________

Sources:

Here is page 62 in the white paper.

hwp4-35

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.

average-rent-srs-201516a

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.

UPDATE

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 …

hwp-no-rtb-for-private-lhcs

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!

 

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18 thoughts on “Social landlords to more than double rent in the housing white paper

  1. Joe. Housing associations are already able to build homes for private rent, just like for private sale. This white paper changes nothing. In fact I’m not sure how DCLG has managed to stretch such a lot of nothing over 100 pages. More housing associations and private builders alike should build more for private rent and less for private sale – counter-cyclical, better for tenants than BTL/accidental landlords, and no incentive to landbank.

    1. I didn’t know that, as where I live would be tenants cannot apply directly to HAs but have to go through the “Locata” system where they are given a priority banding and then able to bid for council and social properties. I personally languished for 20years in this system, all the while HB lining the pocket of a private landlord, before finally obtaining a one-bed flat 2 years ago once the kids had grown up! (Council, rent £115pw). But I digress. The real concern is that Councils are being encouraged to build to rent privately, by which am I right in assuming means ‘available to anyone’? How does this fit in with their obligation to house those in need?

      1. Direct development grant has diminished a lot in recent decades. They need to build for private sale or private rent in order to cross-subsidise their affordable rented homes.

        This kind of multi-tenure building is exactly what we need to solve the housing crisis in the long term. I was bitterly disappointed that the housing white paper did not allow councils to borrow money to fund development so they could easily use this cross-subsidy model too.

      2. Agree with LAs not being allowed to borrow, yet (a) that is a Labour policy, and (b) all such properties ran risk of forced sale to pay for HA RTB tenants discount.

      3. I think that is the same system in most areas, now. I know my HA which is a huge one. Told me they have absolutely no control over who lives in their properties. It’s decided by the council. If you are in a low band, you have no chance, whatsoever. They told me they get about 120 bids on every bungalow. Even, if it’s been adapted. I think the old system was much better. My HA also told me, they would not be building any social housing at all.

  2. The real sting is at the end “Further to this we will consider what more we can do to support families already renting privately, WHILE ENCOURAGING CONTINUED INVESTMENT IN THE SECTOR”. So the real aim is encouraging investment in the private rental sector – surprise, surprise!

  3. Meanwhile, if they really want to support families already renting privately then consider the devastating impact of the benefits cap, the LHA rates etc. and go back to proper council housing, instead of using people’s basic needs as a money-maker for commercial enterprise.

  4. I have just emailed my HA as they are blurbing on about a merger so they can build more housing, and am questioning them on whether this has come about so they can do more private rents. Looking forward to their response

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