Council housing / social housing is deader than the deadest Dodo due to Tories

There never will be any such thing as truly affordable rented housing in England ever again.

Council housing or social housing – call it what you will – is as dead as a Dodo thanks to Conservative housing and housing benefit policy since May 2010.

Social housing is deader then the deaderest Dodo, its deader than a Norwegian Blue parrot pining for the fjords, in fact it’s so dead that the Tories are not even calling it in for a work capability assessment …

Sarcasm aside and before you believe that to be a polemical diatribe or abject scaremongering or some harking back to a perceived golden age or any other such perception ask yourself the following questions.

  1. Why would local councils build housing for an average yearly social rent of £5,070 when they can convert existing housing to realise an affordable (sic) rental income of £7,944 per year and 57% more?

  2. Why would a local council build new housing build for a social rent of £5,070 when they can build for an AR rent income of the same £7,944 per year?

  3. Why would a local council without any housing stock borrow to build new housing for a rental return of £5,070 per property when they can set up a Local Housing Company or LHC (as over 50% of English councils have) to get at least a £7,944 rental return or even an average rental of full market rent of an average £9,995 per year?

  4. Why would housing associations build to get a yearly rental return of £5,502 (the HA social rent average) when they can convert existing stock to achieve a £7,944 rental return?

  5. Why would housing associations take the much greater financial risk of building new housing to rent at £5,502 per year when they can get a £7,944 yearly return and 44.4% more?

  6. Why would housing associations build any ‘social’ housing when they can easily set up a wholly owned private landlord subsidiary and get an average £9,995 yearly return on investment rather than a £5,502 or £7,944 return?

Have you quietly answered them without saying oh shit?  i very very much doubt it. Council housing and social housing is dead as the Tories have bought off (a) councils even Labour-run ones with or without existing housing; and have also bought off (b) housing associations by allowing them to charge and receive much higher returns by renting their properties at the AR rent level or the full market rent level rather than the social rent level.

All of the above is happening right now and has been for a few years and the average figures I quote above are actual official figures released in January or February 2018 for the actual position as at 31 March 2017.

Those 6 questions all amount to the same basic question of why would any council, council landlord or housing association landlord ever charge the traditional social rent levels of £5070 and £5,502 respectively when they can charge either the average affordable rent level of £7,944 or even the full market rent level of £9,995 per year?

Increases in rental return / return on investment see:

  • Council social rent to affordable rent being a 57% increase

  • Council social rent to full market rent being a 97% increase

  • HA social rent to affordable rent is a 44% increase

  • HA social rent to full market rent is a 82% increase

These figures are contained in the English Housing Survey published by the government’s housing department (MHCLG) in January 2018 and also conformed by the two Statistical Data Returns (SDR) for housing associations and councils published in January and February by the UK social housing regulator.

For councils setting up Local Housing Companies (LHCs) see Inside Housing reports from November and December 2017 here, here and my post back in February 2017 here.

For even Labour-run councils being bought off by the 30 pieces of Tory silver here’s a link to Liverpool City Council’s new LHC whose lowest rents will be the affordable rent variety as well as some at full market rent and also outright sale and shared ownership.

ethical housing company

Note too the big banner ETHICAL headline that is claimed and how these properties will be developed for foster carers, disabled households and other worthy causes yet nothing about the distinctly unethical and unedifying reality of a Labour-run council charging these worthy tenants so much more in rent!

I understand why Liverpool and all other councils have adopted this LHC model and they say with much validity it is the only one that is permissible by the Tory government. Yet it also means that anyone who is say waiting for a Labour government to deliver Corbyn and McDonnell’s council housing bonanza (curiously not shared by John Healey Labour’s housing minister) is going to be disappointed as that wont happen.

The current Tories have essentially bought off all local councils with the LHC model and no council will borrow to build for rents that are 57% or 97% less than they could get! Council Housing and/or Social Housing is as dead as the deadest Dodo!

For housing associations setting up wholly owned private landlord companies (the HA version of the council LHC) look no further than Bamboo Lettings LLP here – a fully private landlord wholly owned by the former council landlords of Wirral, St Helens and Warrington now called Magenta (Wirral) and Torus (St Helens and Warrington) who are now letting councils houses at full market rent and operating a No DSS policy as rent levels are way in excess of private landlord housing benefit levels (LHA) and of course also have huge added fees on top.

I can provide many more examples of all of the above ‘models’ of housing operated by what we misname social landlords right across England. There is nothing social about them at all and they are distinctly asocial and all willing to take the Tory 30 pieces of silver and shaft the tenant with their feudal practices and operations.

Structural Feudalism

One in every six households in the UK lives in a council or housing association property and each and every year under the Tories has seen every one of them pay more and more in rent than inflation. Average rent increases have been 26.2% for housing association and 31.6% for council properties since the Tories took office in May 2010 and by 31 March 2017. Inflation was 16.6% in that time.

We have also seen 8.6% of housing association properties become rented at this 44% higher level since 2012 and 52% of those and 102,004 of them were let at an average of £5,502 per year to the existing tenant who left on a Sunday and the new tenant the next day was charged £7,944 and 44% more for the exact same property the next day.

We also see housing associations now charging 44% more for sheltered housing properties too. The social purpose of these Private Registered Providers to give them their correct name sees dear old Mrs Jones kick the bucket and dear old Mrs Smith gets her property at a 44% higher rent the next week!

Imagine is a private landlord upped a pensioners rent by 44% and the outcry that would have – that is what housing associations have done yet nobody realises that is what these social (sic) landlords have been doing and are doing!

The number and percentage of former social rent properties now being charged at 44% and 57% more in rent is increasing by the day and they will never return to their lower social rent levels and a level at which they are last broke even if not generated a small surplus for their social (sic) landlord owners. That is a huge structural problem for the UK economy as when a higher percentage of income has to be spent on rent there is less that can be spent on non-rent expenditure items such as food, heating or new white goods, holidays or new cars and so on; and less that can be saved towards a mortgage deposit too.

The Tory ideology on housing is we want more home ownership and more to be part of the property owning democracy yet that is all talk. The reality is home ownership has fallen from 68.2% to 62.4% and the same Tories have policies which prevent those wanting to buy such as average 26.2% / 31.6% social rent increases and its affordable (sic) rent policy that sees rent increase by 44% and 57% overnight – the more you pay out in rent the less you can save for a mortgage.

The Tories in reality have created the biggest structural barrier to anyone getting on the proverbial housing ladder with their rent and housing policies.

The Tory policy is and has been aided and abetted by the misnamed social landlords who are only too happy to get the huge inflation-busting rent increases and consign would be home owners to a life of renting and at ever-increasing rents in social housing – and they have gotten away with it because all of the focus on housing policy has been on the private rented market driven by a London-fixated housing and national media commentariat.

Terms such as “affordable rent” despite being a 44% or 57% rent increase are seen as still being 25% less than private rent levels and therefore 44% and 57% rent increases in social (sic) housing are acceptable!

I’ll leave the comment there for now and instead leave you with some graphs and charts that proves all of the comment above and which shows none of it is scaremongering at all.

PS – If you do find anyone who believes we will ever see council housing / social housing again or if you read yet another article from a housing audience which says we will or says that social landlords are social and have social purpose and social ethos then take pity on the fools and smile and mention how nice the weather is.

__________________________________________________

rent inflation 2010 to 2017

avg house price increases after inflation jan 2007 to jan 2017

If average house prices from May 2010 had increased by 16.6% inflation

Tory percentage home ownership fall by region

The Tory record on home ownership rates 2010 – 2017 in English regions

english housing regions owned percentage

Actual regional home ownership rates 2010 – 2017 – Look how atypical London is!

mortgage-savills

Work out % of household income mortgage deposit is now compared to 2010 !!

conversions

Those 102,004 conversions by those nice riddled with social purpose housing associations that means in 16/17 £249 million more in rent and £185 million coming from increased Housing Benefit – another Tory ‘welfare reform!’

8point6 per cent

Look how quickly the affordable (sic) rent policy has changed the face of that central pillar of the 1948 Welfare State called council / social housing!  Oh and how housing associations shaft Dear Old Mrs Smith with a 44% rent increase overnight!

Below is the relevant bit of a written statement made last week by Dominic Raab the housing minister and issued the day before Good Friday …. shhhhhh don’t tell anyone!

sneak raab

You want to see a projection based on the sneaked out inflation-busting social rent policy of Dominic Raab the Tory housing minister for council tenants?  Tip: You may want to notice how much more benefit claimants will have to find each week from subsistence level social security benefit income just to make the rent.

la cpi rent hb and bedroom tax

You what?  You though housing benefit paid all the rent for those in social housing?  Just another myth that people hold unfortunately and here is a table of facts from the EHS and SHBE official sources

rent and hb srs 2010 to 2017

You notice how the percentage amount of HB has gone down?  No its not bedroom tax and overall benefit cap which collectively accounts for about 40% of the HB fall in paying rent and the other 60% comes from those nice ‘social’ landlords imposing inflation busting rent increases … that nobody bothers to notice as they are fixated on those nasty private landlords … y’know the ones whose rents have increased by far LESS than those ‘nastier’ landlords who have the temerity to call themselves social!

Sorry reader.  You have read all these damn pesky facts and yet as the period of Tory housing rule reveals nobody cares … its only ‘social’ tenants after all that are being shafted … and they are all sub-human shirkers and scroungers anyway aren’t they?  they must be the media has told us that repeatedly since 2010 (and for 30 years before) and those lovely nice social housing people have never countered that have they!?

Well these nice social landlords full of social purpose wouldn’t want to draw attention to their cash cows would they….!!

 

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