Ipswich Unemployed Action.

Campaigning for Unemployed Rights.

The End of Social Housing. From ‘Excuse Me Whilst I Step Outside’.

with 22 comments

 

This very important article is from ‘Excuse Me Whilst I Step Outside’.

It should have maximum circulation.

This will affect the unemployed worst of all.

 

What happens to social housing in London will come to East Anglia.

End of social housing graphic

Grant freeze marks death of social housing

29/10/2010

The graphic is from this week’s edition of the housing trade mag, not some alarmist leftist publication. It refers to the end of public subsidy for the capital costs of building social housing. If the Tories really mean what they say, we’re in uncharted waters.

Housing finance is notoriously difficult and dull, so let’s strip it back to its essentials: to cover the costs of building houses you can either pay a lot upfront to cover the initial costs or borrow that money and pay the loan off by hiring it out on a periodic basis. The smaller amount of money you sink into the scheme upfront the higher the periodic charge. This is not rocket science.

Since the late 1980s, we’ve not had 100% capital subsidy for social housing – indeed, housing associations have bid for funding partly on the basis of how little capital monies they need to deliver any given project. Naturally, the first result of this system was to send rents – the ‘periodic charge’ – through the roof in the early 1990s.& high rents do tend to produce very high Housing Benefit bills.

So a decade or so ago the government introduced a system of ‘target rents’ which apply to both council and housing association rented stock. Basically, this system sets the rent of any given socially rented property, new or existing, in accordance with a formula based on the size and value of the property and relative local manual wage rates. So this reined in the tendency to produce low capital subsidy/high rent schemes.

The Tories have decided to rip this system up: they want rents to be capped at 80% of the local market rate for all incoming tenants, even those going into existing social housing, which has enjoyed past capital subsidy. This is laughably called ‘affordable‘. Public capital subsidy is being reduced to more or less nothing. The promised 150,000 new ‘affordable’ social tenancies are supposedly going to be financed primarily from either these higher rental streams or via loans mobilised by big housing associations on existing stock where previous capital subsidy means the debt is now largely paid off.

Wake up at the back there – I know this is boring and detailed and rather more than you perhaps want to know. So let me put this in context: this means that rents for a two bedded socially rented property in Islington would rise from £91pw to £232pw: a three bed social rented house in Cambridge would go up from £93pw to £128pw. I can only assume that the application of the word ‘affordable’ to such rents is some kind of sick joke.

& what’s more this means that the Housing Benefit bill is going to go up, not down. The housing associations’ trade body is saying that, in Hackney, you’d have to earn £54,000 to escape HB eligibility and be in a position to keep the bulk of your additional salary and be better off in work.

For all the dull, grey complexity of housing finance it really is that simple: higher rents= deeper benefit traps for wider numbers of people. No amount of huffing and puffing about a Universal Credit is going to change that.

Nor is this simply a problem for the minority of the population who live in social housing. House prices are now such that it is increasingly difficult for people to get their foot on the ladder. A new report from the Home Builders Federation puts this pretty graphically:

“…the average first time buyer (FTB) would have to save every single penny of their earnings for more than two years to have a chance of getting a foot on the housing ladder. In London it would take three years.

Even over five years, young people have to save almost half of their take home pay every month to save a deposit for a house, with some areas even higher.”

 

 

So rents matter: even if you’re in the 70% of people who are currently home owners your children are probably not going to be any time soon if they live in London and the SE.

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Written by Andrew Coates

October 30, 2010 at 2:47 pm

22 Responses

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  1. It’s good that some people are slowly but surely waking up to this. The Housing Benefit Scheme and Social Housing are being DELIBERATELY undermined to bring them down – look at ALL the players! This is a long-term strategy; learn to look further ahead than the end of next week – there will be NO Social Housing. The Housing stock is becoming concentrated into fewer and fewer hands – there will be NO Private Property either for the Proletriat. Extortionately priced rented property will be the ONLY option. We are heading back to the days of the Feudal Landlord.

    Lord Peter Rackman

    October 30, 2010 at 4:08 pm

    • Addendum: the definitive explanation of the impact of the Housing Benefit changes, found in possibly the most unlikely place on earth for sensible comment, CIF.

      1. Local Housing Allowance capped at the 30th percentile rent in every local housing market area (i.e. the level which allows – in theory – 30% of houses in the area to be afforded)…

      2. …except in London, where the cap has been set significantly below this level (£250/week for 1 beds, £400/week for 4 beds)

      3. A further 10% cut will be applied to those who have been unemployed for 1 year or more, to punish them for the crime of living during a recession

      4. Housing Benefit capped at the 4-bed house rate to punish large families

      More here:

      http://www.guardian.co.uk/politics/davehillblog/2010/oct/28/boris-honson-housing-benefit-social-cleansing?showallcomments=true#comment-8163794

      Andrew Coates

      October 31, 2010 at 10:28 am

      • spot on, single people are going to be turfed onto the streets, the UK will resemble a 3rd world country. I hope that they leave the gas on with a lighted match on the way out 🙂

        The A Team

        October 31, 2010 at 5:27 pm

  2. It’s always a good idea to concentrate the poor into the one geographical area; that way you can cripple their infrastructure, deprive them of resources, starve them, exterminate them…

    Joseph Vissarionovich Stalin

    October 31, 2010 at 10:42 am

  3. Too right, Andrew, A lot of people are going to find themselves because of this. What happens when say a single person with no dependants i.e “not a priority” to be re-housed finds their Housing Benefit slashed that and they find that they can no longer afford the rent? OK, they move out, but to where? What about little things like 2 months deposit for another let? Why not impose rent caps? That way people would be able to remain in their homes, is that too simple or is their another agenda at work here. Its sad to see Nazis – because thats what they are Fascists through and through – salivating over the thought that people make be turfed out of their homes and left to die freezing and starving on the streets because they reckon that over the long-term they *might* be able to make a quick buck on the property market. What a shower of s*hite!

    Johnny Storm

    October 31, 2010 at 2:13 pm

  4. …going to find themselves made homeless because of this…

    Johnny Storm

    October 31, 2010 at 2:16 pm

  5. Andy,Of course rent will go up in Islington and Hackney. If council house rent goes up other rents will follow and Labour councils willhike up council rent to make the government look bad as James and I have pointed out. http://ariversideview.wordpress.com/2010/10/26/an-answer-to-james-question/

    ariversideview

    October 31, 2010 at 7:18 pm

    • Maybe I mis-heard, but didn’t Gideon Osborne say that social housing rents are to rise to 80% of the “market value”.

      A Penthouse View

      October 31, 2010 at 7:54 pm

    • And this “higher rents for new tenants but no rises for existing tenants” is a load of baloney; it’s a Trojan Horse to increase rents across the board. When this is introduced someone is going to say:”Why should the Smiths in an identical property to the Jones be paying twice as much rent – is that fair?” And once “life-long” tenancies are replaced with short-term contracts wont all tenants be find themselves being classed as “new” tenants?

      A Penthouse View

      October 31, 2010 at 8:06 pm

  6. The solution to this man-made housing “crisis” is simple – nationalise all private property – with no compensation – problem solved.

    Miile Tant

    October 31, 2010 at 8:49 pm

  7. All things should be privatised including all housing, the BBc and the NHS.

    Worship Thatcher

    October 31, 2010 at 9:06 pm

    • Indeed, including this website.

      Denis Thatcher

      October 31, 2010 at 9:33 pm

  8. Afterall “affordable” simply means that “someone will be able to afford it”. With all the millionaires and billionaires in the country and worldwide… even some of the most expensive properties are indeed affordable.

    This is misleading especially in housing terms. Places like Ipswich are full of new development of “affordable” homes and apartments/flats but with the uni sticking freehold and renting rates higher… most of these properties are out of reach of the majority.

    There is luxury accommodation and then there is affordable accommodation. The former is a deluxe version if you like and the latter is the bare standard.

    Affordable accommodation is likely to be rather cheap flatpack kitchen units, standard “white goods”, a refurbished second-user sofa and very basic low-range facilities in the bathroom. This by no means, however, is cheap – just more “affordable” than the luxury places.

    This is a bit of a cheek really…

    Luxury accommodation has become the de facto standard. This is an issue considering the majority of people cannot afford it (regardless if in work, out of work and if self-paid or via benefits). They promote “affordable” homes/apartments/flats when such type are in the majority of all properties combined! (i.e. there are far more affordable places and neglected homes than luxury apartments in the UK)

    Luxury accommodation, however, whilst allowing your imagination to run wild… is obviously going to be of a better standard!!

    I have to say though there really isn’t much price difference between the typical affordable flat and the start price range of a luxury apartment these days.

    You could be looking as little as £50-£100 pcm difference. Obviously this varies depending on the local housing market.

    Work Programme

    November 1, 2010 at 9:19 am

    • “Afterall “affordable” simply means that “someone will be able to afford it”.” Exactly, it’s like the oft-quoted “graduate job”, “X amount of graduates get a graduate job”. A graduate job is just a job that a graduate is doing.

      Denis Thatcher (deceased)

      November 1, 2010 at 11:48 am

  9. I think the term ‘affordable housing’ means housing that is within the poorest’s budget

    ariversideview

    November 1, 2010 at 2:29 pm

    • How about affordable homes for first time buyers?

      Work Programme

      November 1, 2010 at 2:47 pm

      • You are not a Sold-to-Renter by any chance, Work Programme lol

        Coldberry

        November 1, 2010 at 6:33 pm

    • yeah, you sound like a disgruntled sold-to-renter who sold an over-priced property at what you thought was the peak in the property market hoping for a quick crash so that you could pick up a cheap property at someone’s else’s expense.
      Now you are stuck in private rented accommodation posing as a “first time buyer” or “saver” seizing on every piece of negative economic news as if heralds an economic meltdown which will lead to a crash in properties prices. You even go as far to suggest the scrapping of all housing benefits even though you accept that this will lead to untold misery and mass homelessness so that you can make a quick buck.

      Tired of Waiting

      November 2, 2010 at 4:55 pm

      • haha, you couldn’t be more wrong.

        You see that is the downside with prejudice and therefore Racism etc.

        Even being on an unemployment website normally gives the hint about the probability of owning property.

        I am simply stating that in housing marketing terminology, affordable doesn’t mean the dictionary definition.

        Whereas “Social Housing” (Government ownership) is less expensive to rent than “affordable housing”.

        Work Programme

        November 2, 2010 at 5:57 pm

      • That was a linguistic sleight of hand on Gideon Osborne’s part when he promised to raze to the ground “Social Housing” in order to make way for more “affordable housing”. And there were we thinking that they were the same thing. Anyone know if “compassion” is in Georgie Porgie’s dictionary?

        Derren Brown

        November 2, 2010 at 6:14 pm

  10. […] The End of Social Housing. From ‘Excuse Me Whilst I Step Outside’. […]

  11. Westminster council may give employed housing priority

    People in employment could be given priority in getting a council house over those who are unemployed, Westminster council has said.

    The Conservative-run council said the policy was designed “to reward those who are in jobs”.

    But Labour councillor Guthrie McKie said: “To discriminate against people for being unemployed is disgusting.”

    A decision on the proposals will be made in February. If approved, plans will be implemented by April.

    The council said the proposal was “designed to recognise positive contributions to society, reward those who are in jobs and to encourage those who are not currently employed to seek work”.

    ‘Political ideology’

    Under the council’s plans, working households will be defined as those where the main applicant or their partner are in work, have a permanent or temporary contract or are self-employed.

    People who would be prioritised must have been working for a minimum of two years.

    But Mr McKie said: “I don’t think its a good policy.

    “There should be a level playing field. We are in a climate of unemployment increasing.

    “This policy is driven by political ideology, not the need to resolve problems with social cohesion in the region.”

    Westminster cabinet member for housing, Councillor Philippa Roe, said: “We want to introduce a system which is fairer to local people and rewards those in employment.

    http://www.bbc.co.uk/news/uk-england-london-12309895

    BBC

    January 29, 2011 at 6:22 pm


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