Nineteen eighty seven was International Year of Shelter for the Homeless. What was the government’s response to attempts to draw attention to the plight of those without anywhere decent to live? It published a Housing Bill which it claims will “revitalise housing in England and Wales” by reversing the decline of rented housing and improving its quality; giving council tenants greater choice through the “right” to choose another landlord; and by directing money more accurately at the most acute problems.
But rhetoric aside, what will the government’s Bill do for the homeless? Nothing — they are not even mentioned in the proposed legislation. What will it do for tenants? Nothing — except make them liable to higher rents and harassment by landlords. What will the Housing Bill do for landlords? Plenty — they will be able to raise rents and evict tenants more easily as a result of “deregulation”. What will the proposals do for the Tory party? They hope that it will aid their political fortunes by increasing the number of “owner-occupiers” — considered to be more likely to vote Conservative than council tenants. They also see the new measures as a means of reducing the powers of local authorities who are regarded as a potential source of opposition to central government power.
What is in the Housing Bill?
There are 22 million tenants in Britain, the majority of whom rent their homes from local authorities. Council housing is far from ideal. At its worst it is typified by vast rundown estates and bleak high-rise or deck-access flats. Much local authority housing is “unfit” and in need of major repairs, renovation and. in some cases, demolition and rebuilding. Furthermore local authority housing managers have been guilty of racism in housing allocation practices and inhumanity in their treatment of the homeless.
Nevertheless it is also true that at its best, and for those who can get it. council housing has also been a means for workers to obtain low cost housing — a pitifully small step in the direction of recognising people’s need for warm, dry, decent homes. But even that tiny glimmer of recognition of the importance of collective provision is now under attack. The government’s main purpose in this legislation is the continued encouragement of home “ownership” and the removal from local authorities of the responsibility for housing. They aim to achieve these objectives in a number of ways:
- Offering council tenants further inducements to buy their homes while at the same time discouraging local authorities from building any new homes for rent through new arrangements for housing finance (see below).
- Setting up Housing Action Trusts (HATs) in certain inner city areas which will compulsorily take over all local authority tenancies in a designated area. Housing Action Trusts will be run by boards appointed (not elected) by the Secretary of State and unaccountable to either tenants or the local electorate.
- The “Pick-a-Landlord” scheme — yet another Tory con-trick which uses the hijacked language of rights, freedom and choice. Under the proposals council tenants will be given the “right” to transfer their tenancy to a landlord of their choice — a tenants’ co-op, housing association or private landlord. Once the tenancy has been transferred — and it won’t be a case of individual houses or flats being transferred to new landlords but whole estates — it will not be able to be returned to the local authority.
Implications of the Housing Bill
The housing pressure group, Shelter, has said that the Bill will mean “a future where anyone who cannot afford to buy will find it almost impossible to find a decent home”. There will be fewer council houses to rent — some will be sold off to tenants, others will pass to new landlords under the “Pick-a-Landlord” scheme. The remaining council houses will either be those that are in such poor condition that no-one wants to buy them even at hugely discounted prices or so expensive as a result of higher local authority rents (see below on Housing Finance) that workers on low incomes will not be able to afford to live in them. Some of the worst council houses will become “dump” estates for the homeless and “problem” families for whom local authorities will still have responsibility under the Homeless Persons Act.
Housing Associations have, until now, had a policy of providing good quality housing for people on low incomes or with special needs. Under the government’s proposals. Housing Associations are intended to have an increased role in the provision of housing. However, they will also be forced to change their priorities and policies in order to fit in with the demands of that new role (see inset on Housing Associations). Firstly, they will be forced to raise their rents; secondly, they will be obliged to restrict the number of low income tenants in any development. In other words they will end up behaving in much the same way as any other large institutional landlord — providing housing for those who can pay rather than for those on low incomes or with special needs.
The removal of Rent Act protection and the establishment of new kinds of tenancies in the private rented sector (see below) is also likely to mean higher rents, harassment by landlords, illegal evictions and the selling of rented property by speculators at huge profits.
Meeting Housing Needs
The Housing Bill will be a disaster for all those workers who cannot afford to “buy” their homes and especially for the homeless. For years people have been talking about a “housing crisis” in terms of the scale of homelessness and unfit, decaying housing stock. We should not be surprised that a government which barely disguises the fact that it panders to the interests of those with wealth and power at the expense of those with neither, should propose this Bill as an answer to that “housing crisis”. It is, however, particularly sickening that it also hypocritically uses the language of “freedom of choice” in order to sell its proposals to workers who, in reality, have very little freedom or choice. For the majority are forced to “choose” to buy houses they cannot afford knowing that if they default on the mortgage “their” home will be repossessed by the bank or building society from whom they borrowed the money. Tenants are now to be given the “right” to choose a new landlord. In fact it will be the landlord who chooses them — or rather their homes — where he or she thinks they will prove to be a profitable investment. In most cases council estates will be attractive to new landlords for their land or for the sales potential of suitably gentrified houses. Council tenants’ “freedom” to transfer to a new landlord may turn out to be freedom to be winkled out by landlords who want to sell their homes without the negative asset of a sitting tenant.
Clean, dry, warm, decent housing is a fundamental human need. Capitalism has never placed that need very high up its list of priorities. This Housing Bill makes that sad fact abundantly clear.
The government is proposing to change the way that Local Authorities manage their housing budgets by establishing an accounting measure called “ring-fencing”. What this will mean is that councils will no longer be allowed to subsidise local authority rents using money from the general rates fund. If this happens there will have so be huge increases in council rents in order to compensate for the shortfall caused by the withdrawal of subsidies,
The continuation of the right so buy council homes at substantial discounts will exacerbate the tendency towards higher rents, since local authorities will no longer be able to limit she discount available to take account of building or renovation costs incurred on the property since 1974, as at present. The abolition of the ‘cost floor rule”, as it’s known, will mean that the council could build a house for £40,000 one day and the tenant could buy it the next for just £16,000 (a discount of 60 per cent). Obviously this will be a major disincentive to councils building new houses But it will also mean that the remaining local authority tenants who cannot afford or do not want to buy their homes will have to pay higher rents to subsidise the cost of houses sold under the new system as a result of the way that council house costs and rents are pooled.
Housing Associations currently finance their projects by taking out loans from either the local authority or the government-funded Housing Corporation. Rents are fixed at “fair rent” level by the Rent Officer but are subsidised by grants which cover 85 per cent or more of the shortfall between cost and what can be raised by means of a “fair rent”.
Cuts in the Housing Corporation’s budget and in local authority expenditure have already reduced the money available for grants to Housing Associations. Under the government’s latest proposals, grants to Housing Associations will be reduced — probably to a maximum of 50 per cent of the cost of house building or renovation schemes. The balance will have to be raised on the private money markets.
But for Housing Associations to be an attractive proposition for private investors they will have to expand — more properties mean more assets and more security for investors’ money — and they will also have to increase their rents to ensure that investors get a return on their capital.
The Private Rented Sector
Under ihe new legislation Rent Act protection will be abolished on all new lettings. Instead landlords will be able to let property using two kinds of tenancies:
Assured Tenancies — first introduced in 1980 for newly built properties owned by landlords registered by the government. The Housing Bill will extend the range of properties for which assured tenancies will be permitted which will mean more rights for landlords to set rent levels and determine the terms and conditions of tenancies. Tenants’ rights will be correspondingly reduced.
Shorthold Tenancies — will last from between six months and five years. At the end of the agreed period the landlord will automatically regain possession of the property. Although tenants will still be able to get their rent registered by a rent officer the level will be determined in accordance with “the market” rather than a “fair rent’’ and so is likely to be higher.
Although housing benefits will still be available to help those on low incomes there is likely to be an upper limit set for rents in each area above which housing benefit will not be payable, in order to deter people on low incomes from moving into high-rent property, even where that is all that is available.