Chair of Portsmouth Labour Party’s Housing Policy Forum Cal Corkery asks why a housing association operating locally is ignoring the council’s Tenancy Strategy. Additional reporting by Sarah Cheverton.
On 14th February, Southern Housing Group, a major national housing association, were advertising four 1 bedroom flats in Portsmouth on Rightmove. The rent on these properties ranged from £460pcm to £670pcm, described as an ‘affordable rent’.
‘Affordable rent’ refers to rents charged at 80% of the market rate, and were introduced by the government in 2010. The policy allows landlords to offer less secure tenancies than are available to social housing tenants. The problem is, homelessness charity Shelter reports, that ‘rents in social rented homes … are typically about 50% of market rents, with life-long tenancies. So social rented homes are – for low income families – much more affordable than Affordable Rent and much more secure.’
Clause 150 of the Localism Act 2011 compels every local housing authority in the UK to publish a tenancy strategy, which all local providers of social housing must observe. Section VI of Portsmouth City Council’s Tenancy Strategy states that providers must ensure ‘Homes remain affordable and do not exceed Local Housing Allowance (LHA) levels’.
The LHA rate in each area is used to work out how much housing benefit is received by tenants in homes rented from a private landlord. The LHA for a 1 bedroom property in Portsmouth is £504.57 pcm.
Three of the four local properties advertised on Rightmove by Southern Housing Group exceed the LHA and, as such, fail to comply with the Portsmouth Tenancy Strategy. The most expensive property is £165.43 pcm more than the LHA rate.
But perhaps even more significant is why these properties are being advertised on Rightmove by a housing association at all. Wouldn’t we expect all housing association properties to be allocated by the council to those in most housing need? After all, this is what happens with almost all other social and (genuinely) affordable rent stock in Portsmouth.
The Rightmove adverts state that, in order to apply for any of these properties, the prospective tenant must be in employment and earning above a certain salary threshold. The £670 flat in Portsea is only available to those earning at least £20,099 which equates to over £10 an hour (see image below).
While providing housing at sub-market rents to people in work is an admirable and necessary objective, there is currently a major shortage of local social housing supply. It is concerning that not all housing association properties are being let to those in most housing need.
By 27th February, three of the four 1 bedroom properties previously listed were still vacant. Perhaps they still are – you can find out here. Meanwhile, there are local single people and couples sleeping rough in temperatures below zero as blizzards sweep the country.
This cannot be right.
I first contacted Portsmouth City Council about this issue in December 2017. I am still awaiting a substantive response. I’ll let you know if I receive one.
What’s going on with our housing associations?
Editor in Chief, Sarah Cheverton looks at the impact of austerity and welfare benefit reform on housing associations in Portsmouth.
Housing associations have long been part of a vital safety net that prevents people from falling into homelessness by providing social housing.
Shelter, a national homelessness charity, defines social housing as:
[Homes] let at low rents on a secure basis to those who are most in need or struggling with their housing costs. Normally councils and not-for-profit organisations (such as housing associations) are the ones to provide social housing.
Social housing has been hit hard by a national crisis in accommodation, as demand dramatically outweighs the amount of social housing available, not just in Portsmouth, but across the UK. Shelter reports that there are more than 1.8 million households in the country waiting for a social home – an increase of 81% since 1997 – and two thirds of households on the waiting list have been waiting for more than a year.
So what has led to this shortage of social housing and what have housing associations got to do with it?
Because fewer homes are being built – particularly those planned for social housing – there are fewer properties for housing associations to offer to low income, vulnerable residents. According to The Times, in 2011, before government cuts to housing for social rent came into effect, construction work was started on 36,000 such houses, but by 2016 this had dropped to 4,775.
The Times report continues:
In 2012, government funding to build social housing was cut by 60 per cent, damaging the associations’ ability to provide homes.
Funding fell from £11.4 billion in 2009 to £5.3 billion in 2015. The government said it would no longer fund socially rented homes.
Then George Osborne, who was chancellor at the time, imposed a 1 per cent annual rent cut for four years, only a year after committing to a decade of inflation-linked rises. Therefore many of the associations were suddenly without the state-funded income on which they had depended.
This led to the organisations becoming much more commercial. Many now fund social housing from the profits of building homes for sale at market rates.
This shifting focus from low rents for those who most need them to a more competitive, marketised approach is affecting more and more housing associations, including Southern Housing Group, as Cal Corkery’s article above highlights.
S&C asked Southern Housing Group (SHG) for a statement on the rents being advertised on RightMove. Chris Harris, Group Customer Services Director at SHG told us:
Southern Housing Group offers property to buy and rent across a range of tenures. The properties advertised on Rightmove in Portsmouth are offered at intermediate rent, this tenure is discounted to about 80% of the market rent and designed to help customers with a household income of less than £60,000 save money for a deposit to buy a home. As intermediate rent is not a social rent tenure it’s not linked to the LHA, and the properties aren’t offered through the local authority’s waiting list.
At the moment 72% of our stock is offered at social rent (including specific housing for older people and those with support needs). A proportion of our newly built homes are available at social rent levels, but to finance these homes and continue to offer our customers the services, support and opportunities they need, we create more homes in other tenures.
Being a business with social objectives means we invest every penny and more into good quality homes, and services for people in housing need. Over the last year we made a surplus of £62m and invested £114m in existing and new homes.
Like many other housing associations, SHG are funding social housing by letting out a proportion of their stock at more lucrative rents, aimed at working people earning higher wages. These ‘intermediate’ rates are below the market rate, but still higher than many can afford.
James Francis, Group Finance Director for Southern Housing Group, emphasises that while housing associations may be forced into taking a more commercial focus, unlike private landlords, a strong social mission remains at the heart of what they do.
Every pound we earn in rent is spent making our residents’ lives better; last year we spent 57p of each rent pound on services and running the business, 31p on repairing, maintenance and improving homes – with the remaining 12p our cash surplus. We treat that ‘extra’ money as seed capital that initiates our future investment into new homes: we invest in new stock, meaning we can extend our social value to more customers.
But, the very existence of ‘intermediate’ rents that are conditional on earning a certain amount means housing associations have been forced to depart from their original social mission by the funding cuts to social housing from central government.
In 2017, Chief Executive of Southern Housing Group, Tom Dacey, called on government to ‘re-balance funding towards new affordable housing’ in an article for Inside Housing. He urged that ‘affordable rent’ must be affordable for all, not just those in employment, adding that ‘the term “affordable housing” itself has fallen into disrepute since 2010, and now has no useful meaning at all.’
The impact of the housing crisis has combined with austerity and welfare reform to hurt the most vulnerable in our society. Shelter reports that, as a result of the dramatic reduction in social housing, more people are renting from private landlords ‘with soaring rents, hidden fees and eviction a constant worry.’ In addition, more than one third of private rented homes in England fail to meet the Decent Homes Standard.
Arguably the gravest outcome of the housing crisis is homelessness, which Shelter reports has risen to more than 50,000 a year. In Portsmouth, the number of people sleeping in the street has grown in recent years.
With property developers actively avoiding their responsibility to provide ‘affordable housing’ in Portsmouth, it is hard to see how many local working people can avoid the more expensive rents of private housing. It is even harder to see how we can combat the rising levels of homelessness in the city by providing homes in which vulnerable people can begin to rebuild their lives.
Chief Executive of Southern Housing Group, Tom Dacey asks:
Are we in a position where housing associations cannot afford to house the poorest in society, whether on benefits or low incomes? If we can’t, who will come to the rescue? Is there nothing that can be done about this until we miraculously emerge from austerity?
The answer is, of course, that political will is needed to refocus priorities and finances.
S&C contacted Conservative Councillor Jennie Brent, Cabinet Member for Housing for Portsmouth City Council, for her comments on this problem. We will report back if we receive a reply.
The original version of Cal Corkery’s article was published on Facebook on 14th February.
Photography by Sarah Cheverton