On The Street

The government has a glorious vision that they will end rough sleeping, a praiseworthy aim that no-one can in good conscience take issue with. The Prime Minister, no less, states in the introduction to their new vision document that,

It is an affront to this country that last winter, one of the coldest on record, there were people still sleeping rough on our streets. While the temperature dropped below freezing, many were making do with doorways and cardboard boxes for beds. In a civilised society, this is totally unacceptable.

How right you are, Mr. Cameron! Moreover, he goes on to say that,

...tackling rough sleeping is not just about providing homes. It is about dealing with the wider causes of homelessness, from family breakdown and mental illness to drug addiction and alcoholism. This is a complex, multi-faceted problem.

Again, very true and reassuring to hear that at the highest level the government understand the complicated nature of the problem. If only this understanding was matched with some idea of the solutions. Set out in the vision document are six cross-departmental commitments to end homelessness. Before I get to them, here are seven actions the government is taking or has taken that are directly relevant to the number of people without homes. None of these are mentioned in the vision document:

1. Radically altering the nature of social housing tenure. Currently mean weekly rent in the social rented sector is £75, less than half the private sector level of £156. The government is introducing a new tenure called 'affordable rent', which by default will be set at 80% of private rent (although theoretically there will be flexibility to set it lower). New and moving tenants will be presented with this exciting new tenure, plus existing tenants may be encouraged to switch. 'Affordable rent' tenancies will also be fixed term by default; currently social renting offers a tenancy for life or until the tenant no longer wants it. All this amounts to making social renting much more expensive and less secure.
   
   
2. Cutting housing benefit in a number of ways (including capping, indexing to a measure of inflation that doesn't including housing costs, and calculating local housing allowance with reference to the cheapest 30% of properties rather than 50%), such that it won't be enough to cover either 'affordable rent' or private rent in many places. This is expected to reduce the government's spending on housing benefit by £1.8 billion. The Chartered Institute of Housing calculated that the changes could price private tenants on housing benefit out of, well, Britain.
   
   
3. Weakening the duty on Local Authorities to help the homeless. Currently if you are homeless and ask your Local Authority for help, they can offer you private rented accommodation but you do not have to accept it. Under the Localism Bill proposals, if you did not accept the private rented option, the Local Authority wouldn't have to help you any further. The devil is in the detail here; how suitable does the offer need to be? What if it is too far from your job, or your child's school? Private rental is also insecure, with assured shorthold tenancies rarely lasting beyond 6 months, prone to volatile rent, and of poorer quality than other tenures.
   
   
4. Cutting Local Authority funding, which impacts both on housing departments and on charities that rely on public sector grants, which form between them the front line of help for the homeless.
   
   
5. Reforming the planning system through the Localism Bill, to remove regional housing targets and introduce confusing new ways of involving neighbourhoods (whatever they turn out to me). The Chief Executive of Taylor Wimpey, one of the UK's biggest house builders, said this of the proposals:
   
   ...can I tell you my great fear? In three years’ time, it all stops. We are operating currently on existing consent and on land banks. We need a flow of consent coming through the process to maintain and grow business. I fear that we will reach a point, in about three years’ time, when what we have currently on the stocks runs out, where in fact we have not got that supply coming through. That is the big challenge. That is the sort of transition [...] which so badly needs to be addressed.
   
   House builders obviously have a bit of a vested interest here, but he also has a good point. There is a shortage of housing in the UK and uncertainty about the planning system will only delay the building of anything.
   
   
6. Cutting the National Affordable Homes Programme from £8.4 billion (2008-11) to £4.5 billion (2010-13, notice the overlap) and stating that it will only be spent on the new 'affordable rent' tenure. This housing will not meet the needs of the most vulnerable and impoverished people, by definition those who are most at risk of homelessness.
   
   
7. Rejecting the conclusions of the Rugg Review, which called for regulation of the private rented section to deal with abusive landlords and substandard accommodation. The review proposed a light-touch system of regulation designed to stabilise the sector and encourage investment. The sector was supportive, but the government labelled it red tape and that was that.

As a result of this combination of policies, affordable housing will become scarcer, private renting remain insecure, social and private rents will rise, and housing benefit will reduce, whilst the Local Authority safety net weakens. The implications are worrying, and the Department of Communities and Local Government is well aware of it. The six-month-old letter recently leaked baldly states that just the changes to benefits will generate more than £270 million of additional costs to Local Authorities and cause 40,000 households to become homeless.

Wait a moment, didn't the Prime Minister say he really wanted to end rough sleeping? Let's look at the government's six commitments to do so.

1. 'Helping people off the streets' by providing £20 million for a Homelessness Transition Fund. If that much money could end homelessness, surely there would be no-one sleeping rough at the moment. It will go to Homeless Link,a body representing organisations that work with the homeless and be spent on grants to pilot new ways of working.
   
   
2. 'Helping people access healthcare' by, well, I can't really tell. The verbs used are 'highlight', 'support', and 'work with'. I've used such phraseology before and know what they equate to - very little. The government is trying to devolve healthcare commissioning to the local level, so how can they ensure the health needs of the homeless are fully met in every locality?
   
   
3. 'Helping people into work' by using the Work Programme. However effective the new private-sector led approach might be, it will be impeded by the fact that there are currently 2.6 million more unskilled workers than jobs. If there aren't enough private sector jobs, what then?
   
   
4. 'Reducing bureaucratic burdens' by reducing guidance and local authority reporting requirements. I genuinely don't understand how this will this tackle homelessness. Ironically, it might make it harder to calculate the level of homelessness nationally. Notably, there's also no mention in the report of how CLG will even monitor whether their pledge is being met.
   
   
5. 'Increasing local control over investment in services' by analysing the costs of homelessness. That one just sounds like a non sequetur. Community-based budgets are also referenced, but it seems quite a heroic assumption that giving the community greater control over Local Authority money will automatically result in better services for the homeless. The government has also removed the ringfence on homelessness grant, leaving Local Authorities free to spend it on whatever their councillors might choose. Call me unduly cynical, but the homeless are not a big local election voting demographic. It's worthy of note that taking away the ringfence on the Supporting People budget (which also assists the vulnerable) has resulted in it being dramatically cut by many Local Authorities.
   
   
6. 'Devolving responsibility for tackling homelessness' by giving the Mayor of London unspecified new responsibilities and £34 million to try and cushion the seismic impact benefit changes will have in London.
   

That final so-called commitment is the real key to this. The government has made a grand statement about ending rough sleeping, something that no government has managed even in times of economic growth and increasing public spending, then dumped the responsibility for actually doing it onto Local Authorities. Whilst making unprecedented cuts to their budgets. Nice work, Mr. Shapps. Is it really credible to presume the measures that form this vision will more-than-counterbalance the huge negative effects of other policies?

The above might give you the idea that I am doubtful that rough sleeping will cease to exist over the next four years. Meanwhile, the Mayor of London has pledged to end rough sleeping in the capital by 2012. According to figures from the charity Crisis, 3975 people slept rough at some point in London during 2010/11, an increase of 8 per cent on the previous year's total of 3673 and of more than a thousand since 2005/06. The cuts to housing benefit have yet to be implemented. Five and a half months to go, Boris. Good luck.

Actually ending rough sleeping would be a strikingly impressive thing to do. However the government's policies are already increasing homelessness, and by their own admission will continue to do so. Far from articulating ways to solve the problem, they are making it dramatically worse. Their whole vision for ending rough sleeping is thus just an empty promise and a waste of words. I can only hope that the members of parliament who signed their names to this incredibly hypocritical document are eventually held to account for it.

Youthful high spirits

As a distraction from the scary labour market, I've been considering the housing market prospects for me and the rest of today's youth. This is akin to distracting yourself from an earthquake by setting off a small nuclear bomb.

I recently came across an article in the Independent's money section about a young woman called Eloise wanting to buy her own home. Eloise earns £22,350 and has savings of £1,000. She would like to buy a two bedroom flat in London, or maybe Bristol, and wants her financial decisions to be ethical, although I'm not quite sure what that means in this context.

I'm sorry Eloise, but I read this article and burst out laughing. SERIOUSLY? You really think that on those wages and with such paltry savings that you can afford to buy so much as a shed? Wake up and smell the coffee. In Cambridge, which is cheaper than London, I would need to earn £40,000 and have a £50,000 deposit in order to buy a two bedroom flat.

My generation, the twentisomethings renting at the moment and thinking it might be nice to buy one day - we are screwed.

We rent poor quality homes at at high cost, and are treated badly by rental agents and landlords because they can. They will continue to do so, and rents will rise with demand.

We struggle to save for the 25% deposits needed to buy a home. Low interest rates erode the value of our ISAs and our jobs look insecure, if we're lucky enough to find and keep one. Rates are expected to stay low for the next two years.

We attempt to repay our student loans, whilst glowering at our parents who got their degrees with no fees and generous grants. The interest rates of these loans are going up to 4.4% in September from the current 0%, and that's before the student loan company is privatised (as announced in the June budget).

We can't get social housing, because there isn't enough to go around and established families get precedence, reasonably enough. Funding for building more has been slashed and burned, and targets torn up.

We can't get mortgages, as we're seen as too much of a credit risk and don't have vast deposits. Introducing caps on mortgages has been suggested and returning to the era of easy mortgages would be highly unwise, given that unwise lending caused the downturn in the first place.

We can't find housing that fits our needs, because developers are building tiny rabbit hutch flats to store us in, and we're priced out of the few decent-sized houses that exist. UK new builds are the smallest Europe, reports the Commission for Achitecture and the Built Environment. Even the Daily Fail says so!

We simply can't afford to buy, as the gap between wages and property prices continues to gape wider and wider and youth unemployment rises inexorably.

I am not particularly happy about this, and doubt that anyone else in my demographic group is thrilled either. I certainly don't consider myself entitled to own a palace at the age of 25, but do think it reasonable to have a well-maintained home that I can feel secure in for more than six months.

The likely result of the coalition's so-called housing policy is this: the house price bubble will return in South, pushing up rents further. This is at a time when housing benefit has been capped and other benefits decoupled from housing cost inflation. Homelessness will increase. Mortgage availability, especially for first time buyers, is not about to get better. Employment prospects are poor and taxes rising. Last year, 75% of new housing starts had some form of government subsidy. Despite this, very low number of houses were actually delivered. With this support severely cut, the number of new houses built is already falling and will fall further. So prices will continue to rise, supply will continue to lag, ad nauseam, until the whole East of England falls into the sea in 2054.

Things aren't completely hopeless, though. Here are my suggestions for improving the state of the housing market.

1. If the coalition aren't going to have a housing policy, they should get rid of the post of Housing Minister. This accords with their drive to get rid of bureaucratic non-jobs.
   
   
2. Tenancy law needs to be reformed to make private rental more humane. Look how Germany and much of the rest of continental Europe manage it: longer tenancies, more rights for tenants to match their responsibilities, less of an assumption that home ownership must always take precedence. Implementing the recommendations of the Rugg Review would be a start.
   
   
3. Second homes & buy-to-let should be penalised through the tax system, rather than supported. This may seem unfair to those just trying to invest for their retirement and so forth, but I believe it is necessary. It surely isn't justifiable to have millions of homes standing empty, when so many people are homeless, overcrowded, or housed unsafely.
   
   
4. The planning system is in need of reform, as it cannot achieve what it needs to in the 21st century. However, reform needs to happen in a measured way with full consultation with actual planners, rather than abolishing bits at random and expecting Local Authorities to keep calm and bugger on somehow. (There will doubtless be a future post on planning and its current state of chaos.)
   
   
5. The government needs to investigate and regulate oligopolistic behaviour in big developers and house-builders, including land-banking, with the aim of introducing a bit more competition into this sector. Other countries manage to build more and quicker, in part thanks to a much more dynamic and competitive building sector.
   
   
6. It would be helpful to streamline compulsory purchase powers, which assist Local Authorities in building their own social housing by letting them grab unused land. The major cost of social development is the land, as the public sector is priced out by developers who can realistically expect 25%+ profit margins.
   
   
7. The UK needs a culture change from the tired old adversarial planning system. I'm sure that more competition in the building sector would help with this. We might then be able to follow the Netherlands' good example and try public & private sector joint ventures to build new homes.
   
   
8. Everyone needs to think differently about housing. A roof over your head is a right first and foremost, and an investment second. Likewise, we should stop thinking of a home as synonymous with ownership. If private rental was reformed and social housing more widely available, views should evolve accordingly.
   
   
9. The planning system should make room for different kinds of homes as well as different tenures - canal boats, caravans, yurts, treehouses, old train carriages, hobbit holes, etc. Not everyone wants to live in a brick box, and it certainly isn't positive for the environment to force everyone to do so.
   

My current preference is for a yurt, after staying in one for a weekend's holiday. It would certainly cost quite a bit less than that elusive two bedroom flat.

Why does this government have a Housing Minister?

The June Budget announced a number of changes to Housing Benefit, aiming to save £1.8 billion from the £21 billion a year spent on it. Yes, that's twenty-one billion pounds every year, between 4.7 million claimants. Why so high, you might wonder. That would be because it rose with housing costs, which have vastly inflated in recent decades as supply fell further and further behind demand. To reduce this burden on the public purse, say the coalition, we will make these changes:

1. Capping Housing Benefit payments to £250 a week for a one-bedroom flat, £290 for a two bed, £340 for a three bed and £400 a week for a four-bedroom property. This is a maximum, not the amount that most people will get. For much of the UK, the caps are reasonable (at the moment anyway), but in almost all of London rents are far higher than that.
   
   
2. Changing the way that payments are calculated, using the lowest 30% of rents rather than 50% as is currently the case. This amounts to an absolute cut in Housing Benefit.
   
   
3. Adjusting Housing Benefit to inflation using the Consumer Price Index rather than the Retail Price Index. The difference - the former doesn't include housing costs, which have caused the Retail Price Index to be consistently higher. Levels of Housing Benefit will no longer have any connection to rises in actual rents.
   
   
4. Cutting Housing Benefit by 10% for people on Job Seekers Allowance for more than 12 months. Presumably to 'encourage' them to find employment.

The more that I think about these changes, the more outrageously regressive I find them. The reason that the government pays Housing Benefit is that in the UK we supposedly believe that shelter is a human right. The proposed reforms will cause Housing Benefit to trail further and further behind housing costs. It will no longer be a safety net. Homelessness is going to rise, and fast.

If people can't get into social housing, and Housing Benefit isn't sufficient for them to afford private rental, what are they supposed to do? Where are they supposed to go? In effect, those entitled to Housing Benefit (working on a low income, unemployed, retired, or unable to work) will be priced entirely out of the South-East of the United Kingdom.

I am not exaggerating. The Chartered Institute of Housing calculates that these reforms will price Housing Benefit claimants out of all private housing within a decade. They are so concerned that they've started a campaign against the changes.

The National Housing Federation calculates that just the proposal to cut Housing Benefit by 10% for people on Job Seeker's Allowance for more than a year will cause 202,000 people to face almost inevitable homelessness.

And what is the response to this from our Housing Minister, Grant Shapps?

I refer you to the excellent theyworkforyou.com, which keeps track of what our representatives in parliament are talking to each other about.

The Labour MP for Westminster asked Mr Shapps What discussions he has had with the Secretary of State for Work and Pensions on the effect on housing and levels of homelessness of the proposed reduction in housing benefit levels?

His response is that he has set up a cross-ministerial working group and has increased the existing discretionary fund to tackle homelessness.

That is a shockingly brief, offhand, weak, and ineffectual answer. It is clear that the Housing Minister has no conception of the disasterous effects that Housing Benefit reforms will have. Those on low incomes will be excluded from London and much of the South-East, effectively forced to migrate North-West, where lower employment and economic stagnation have kept house prices low. Keyworkers like nurses, carers and firefighters will be priced out of half the country.

Has there been any consultation on these changes? No.

Has the government conducted an assessment of the impacts? No. I can't find it, and I've got a lot of experience locating things on government websites. In any case, the month between election and budget was insufficient to properly examine the impacts of huge changes like this.

Undoubtedly the Housing Benefit system inherited by the coalition was in need of reform, to reduce costs and make it fairer. These reforms, however, will penalise the most vulnerable people in society, worsen poverty, and further entrench regional wealth disparities. They mark a return to Victorian notions of the undeserving poor, who are merely lazy rather than trapped by economic circumstances. The changes will increase the number of homeless people and drive others to crime in order to pay their rent.

4.7 million people are going to struggle to keep a roof over their heads. I am enraged that a Housing Minister who claims to be a long-term campaigner for the homeless is so unconcerned about this that he thinks setting up a working group is an adequate response.

Why does this government have a housing minister? I honestly don't know. At the moment the post looks like a complete waste of public money.

Landlord of the manor

The private rental sector is the black sheep of housing.

It is seen as a last resort for those who can't afford to buy and aren't needy enough, or just too far down the lengthy waiting list, for social housing. There are good reasons for this perception. According to the last English House Condition Survey, 45% of private rented home fail to meet the Decent Homes standard. Compare that to social and owner-occupied homes:

This survey also reveals that privately rented homes have the highest incidence of serious hazards, damp problems and need for urgent repairs. Noticing a pattern?

Closer to home, 10.7% of Cambridge's privately rented stock is classified as unfit for human habitation. I certainly wouldn't recommend the last place I lived in as a residence suitable for any mammal. Amphibians, yes.

13% of UK households were private renters in 2008, and the recession is increasing this. Owner-occupation is falling as new mortgages are harder to get and unemployment increases arrears amongst existing loans. Geographically, private renting is more popular in economically successful areas with high house prices. London and Cambridge are the examples that I'm familiar with; both have more than 20% of households renting privately. Although the sector is diverse, it's fairly youthful. The proportion of 25-29 year olds in private rented accommodation has nearly doubled over the past 14 years, from 19 per cent in 1993 to 36 per cent in 2007.

What are the coalition's policies on private renting?

Although the government don't seem to care about housing as a whole, they go out their way to be particularly uncaring about private tenants. To wit, No More Red Tape for Private Landlords.

Quote from our Housing Minister:

With the vast majority of England's three million private tenants happy with the service they receive, I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords.

I could not disagree more. This announcement rejects a review into the sector, which recommended more regulation. What particularly astounds me is that even landlords groups welcomed the review and the light touch regulation proposed.

The private rental sector includes the most vulnerable households, is almost entirely unregulated, and contains much of the worst quality, most dangerous housing in the country. Yet its apparently burdened with red tape!

Another recent release from CLG on this topic gave More power to councils to solve local problems with shared houses.

The implication here is that, as a house-sharer, I am automatically a social problem. Thank you, Mr. Shapps. I'm sure my household of professional females is bringing the neighbourhood right down.

This is a classic example of trying to solve the wrong problem. Rather than regulating shared houses, think about why they exist in the first place. Because other options are unaffordable. And why are they rented on short leases? Because tenants are not given any other choice. An assured shorthold tenancy of six months is what you are given when you rent a property. Take it or leave it. And considering the poor quality of much rental property, is it any wonder that a lot of people move on once the lease is up?

I can't help thinking that if the allegedly needless red tape dismissed in the first announcement was introduced, the seemingly needful red tape in the second announcement would not need to be!

It will not surprise you to learn that my personal experiences of private renting have not been positive.

I've lived in an informally sublet room found on gumtree, when I needed somewhere to live quickly in order to start a new job. I had no written contract and no right to ask for one. My rent was increased without notice and I had no way to challenge it. When I moved out, one of my housemates kept my security deposit. Repeated requests resulted in some of it being sent, but the rest was deducted because another housemate had apparently left without paying his rent. That's not what a security deposit is for, and moreover my housemate had given me no reason to assume that their story was even true. My attempts to get the remaining amount (several hundred pounds) back were fruitless, as the ex-housemate had not provided a forwarding address. Without that, according the Citizens Advice Bureau, there was absolutely nothing I could do.

I've lived in a shared house managed by the most incompetent rental agency in the world. They were unable to perform even the most elementary repairs. A leaky shower made the whole house damp, leaving my housemates & I constantly prey to colds and infections. It was still not fixed after three years. When the gas boiler depressurised I was told to deal with it myself, despite the manual saying 'consult a qualified engineer'. The fridge-freezer broke and we were without a replacement for a month. There is no legal recourse in these situations. Moreover, once the standard 6 month assured shorthold tenancy ends, the rental agency has the right to give you notice to leave at any time with no need for a reason. They abused this power punitively in response to questions on seemingly unfair contractual terms.

The most secure I have ever felt whilst renting was when I shared a flat owned by a friend, and that was because I knew where her parents lived in case she ran off with my money. Even in better rental situations, there is still a huge sense of insecurity, no freedom to change anything about your home, and many responsibilities with few rights in return.

I am also well aware that my position is a privileged one. I've got a job and can now afford to rent in a more formal way. The most vulnerable private renters rely on housing benefit and have kids to support.

What effects will the Age of Austerity have on the private rented sector?

Housing ownership and social housing are going to get less accessible, as I will describe in subsequent posts. This will push more people into private rental and drive up rents. With no sign of regulation and rising demand, quality is likely to deteriorate and overcrowding increase. This will be worst in areas that already have tight rental markets, like Cambridge and London. It's bad, and looks like it isn't going to get any better.

I will eventually finish my barrage of criticism and start suggesting some possible solutions to these problems, incidentally. Although the situation is pretty dire, it's not hopeless. For more commentary on the exciting experience of being a private tenant in the UK, I thoroughly recommend Rentergirl's blog.

In other news, the latest earth-shattering announcement from CLG: The internet age will help end the town hall 'non-job'. Yes ladies and gentlemen, in this new age of coalition government, Local Authorities will have to post their job vacancies on this innovation called the internet. Vive la revolution!

...Except Local Authorities are all doing this already - that's how I found my job more than two years ago. Moreover, given the scale of cuts, most won't be doing any recruiting until about 2018. I think Eric Pickles MP may have published a piece from the Taxpayer's Alliance by mistake. If he's trying to make a serious point about there being unnecessary jobs within local government, he's doing it wrong.