Housing Association Residents Action (HARA) response to ‘Rents for Social Housing from 2020 – 2021.’
Housing Association Residents Action (HARA) is an independent organisation of residents of a number of different housing associations including Notting Hill Genesis, Peabody, Hyde, One Housing, Network Homes, and Metropolitan.
While we welcome the consultation on the issue of rents for housing associations residents, we are very concerned that the consultation document appears to have omitted reference to fundamental principles of international human rights law and the requirements of domestic equality legislation. We submit that it should be withdrawn and these defects remedied before it is re-issued.
We deal with these issues before turning to the questions relevant to housing association residents.
1. The failure to take into account international human rights law.
Nowhere does the consultation document mention the right to housing under international human rights instruments. But we suggest that the consultation document fails a number of tests laid out regarding strategy, which must cover the issue of rents. For example the latest report from the UN Special Rapporteur on Adequate Housing (1) asks amongst its conclusions:
‘Does the strategy include reasonable goals and timelines that are based on human rights indicators and subject to rigorous monitoring and enforcement?’ We suggest that there are no such goals or timelines in the consultation or the associated documents – indeed there is no evidence of any strategy at all, apart from balancing costs of new home construction against the cost in Housing Benefit or Universal Credit – neither of which are human rights criteria.
‘Is the strategy comprehensive, including all dimensions of the right to housing and addressing all relevant issues, policies, groups and regions? Does it engage all levels and spheres of government?’ There is no evidence that such a comprehensive strategy exists – there is certainly no evidence of it in the consultation document. This issue also touches on the failure to abide by the Public Sector Equality Duty to which we now turn.
2. The apparent failure to carry out any impact assessment under the Equality Act 2010
The consultation document does not appear to contain a reference to any form of Public Sector Equality Duty under section 149 of the Equality Act 2010. Indeed the only assessment of impact included in the report is a cost benefit analysis of the provision of additional housing against the cost of Housing Benefit (2). The consultation and associated documents appear to have failed to ‘have due regard to the need to’ eliminate conduct that is prohibited under the Act.
As housing associations are excluded from Freedom of Information legislation we, as representatives of housing association residents, cannot estimate the impact. However from our contact with housing association residents, it is our view that the proposals presented may impact on some residents with ‘protected characteristics’ under the Act – age, disability, race, religion, sex.
We suggest that – absent any evidence that there is a strategy based human rights consideration or that an appropriate impact assessment was made – the consultation document itself is seriously flawed and should be withdrawn and reissued with these defects remedied.
Turning to the questions relevant to housing association residents:
Question 3: Do you agree with the proposal to permit registered providers to increase rents by up to CPI+1% each year?
No. The reasons are as follows:
-The very high rent increases already suffered by housing associations residents. To give one London borough (not in Central London) as an example: between 2002 and 2017, the borough’s housing association tenants’ average weekly rents rose from £69.22 to £128.74 (3) – an increase of over 85%. Although of course those trapped in the Affordable Rent Programme would have paid much more after 2011. Over roughly the same time frame in London the increase in median equivalised household disposable incomes (before housing costs) was around 10% (from £486 to £536 per week) (4).
-There has been considerable concern about the stagnation in wages and salaries (including the potentially adverse impact of Brexit). Above-inflation rent rises were conceived of in order to leverage bank debt to build high cost housing. Tenants’ rent revenue subsidises housing association building programmes, in place of government investment (5). So the poorest in society, who have gained no benefit from the asset bubble in housing, pay society’s way out of the affordable housing crisis. We suggest that it is completely inappropriate for the government to increase rents to pay for the construction of types of housing which will be largely out of reach for those who pay increased rent.
For example, the Institute of Fiscal Studies warns of wage stagnation; it quotes the Office of Budget Responsibility which expects real earnings to grow by only 0.7% per year:
‘The Office for Budget Responsibility (2018) expects Brexit-related uncertainty together with longer running weakness in productivity to result in average annual real earnings growth between 2017–18 and 2022–23 of just 0.7% per year…it would represent slower growth than that seen over the five years of the recovery thus far. This would suggest a continuation of the weakness in living standards growth seen over the past decade (6).’
We believe that all households must be able to pay their rent or mortgage without cutting back on other essentials, getting into debt, being trapped in unemployment and benefit/poverty traps or worse still, losing their homes.
- The Jospeh Rowntree Trust has clearly stated that increase social rents (affordable rents) are increasing poverty amongst social tenants: ‘[S]ince 2010/11 there has been a rise in the proportion of those in the social rented sector spending [more than a third] of their income (including Housing Benefit) [on housing costs]. This is due to the introduction in 2010/11 of affordable rent in England which allowed social landlords to charge up to 80% of market rent for new tenancies; far more than was previously the case for most social rents (7).’
Ensuring housing association tenants’ can afford their housing costs over the long term, means that rents must be strictly controlled with rent and service charge increases at no more than levels of inflation or rises in average earnings, whichever is lower. Above-inflation rises are compounded over time, and represent a clear attack on tenants’ financial wellbeing.
Increasing rents – as suggested in the consultation document – would increase poverty and force more residents who are tenants into the benefit/poverty trap, thanks to the government’s proposals in this consultation. This is morally wrong, it ignores human rights requirements and housing association residents will, quite rightly, resist it strongly.
4. Question 4: Do you agree with the proposed direction as it relates to social rent properties?
No. The reasons are as follows:
–Rents should be determined in relation to the running costs of social housing tenants’ homes and social infrastructure such as tenants’ halls on estates (in the past, they were set at a level that covered management, maintenance and pooled historic costs). It is unreasonable that they reflect market values in any way or are raised to provide collateral to allow housing associations to borrow more to build market or 80% market housing, which is out of reach in many areas to average and low income households. Rents should be agreed with tenants on an annual basis with full transparency on what rents are being spent on. Rent income from tenants must be ring fenced for the management, maintenance and historic cost of their housing. This will prevent rent revenue being diverted into speculation by housing associations wanting to grow at any cost.
-Rents should be set at social rent levels. In order that housing association tenants can afford their housing, rents should should be linked to low household incomes. We suggest a level of 30% of mean net incomes for the lowest quartile of households. Rents should be similar for similar sizes of properties across a social landlord boundary area, be they old or new, existing let or re-let homes. The current situation where much higher rents are being charged in terms of re-lets and letting of new properties is unfair and divisive – particularly in London given the wide differences in actual or potential costs between existing tenancies (based in the ending of convergence in 2015) and relets or new homes based on ‘target’/‘affordable’/‘intermediate’/etc. rents. Such a policy introduces huge variations by region and type of household in the proportion of people experiencing housing-induced poverty or homelessness.
Question 5: Do you agree with the proposed direction as it relates to affordable rent properties, including the proposal relating to the re-setting of affordable rent? Question 6: Do you agree with the proposed arrangements for making exemptions from the rent standard on financial grounds?
No. The reasons are as follows:
Direct funding for new social rented homes should instead be targeted to local authority and community-based organisations like Community Land Trusts or Housing Co-operatives. Housing Associations have proved to be unreliable and have largely failed in their social purpose. For example their own statistics show that only 10% of the homes constructed by housing association in 2017/2018 were social rent homes (8).
-We note that even with apparent statutory rental decreases under the Welfare Reform and Work Act 2016 (-1%) that housing associations surpluses are still at £3.5 billion as of December 2017 (9).
Question 7: Do you have any other comments on the proposed direction (including the draft Policy Statement)?
-The current model exhibited in this consultation has shown to be seriously flawed. It is predicated on the view that housing associations should self-fund new development. This is not a strategy for dealing with the housing crisis, it is a political ideology.
-This policy has led to the extraordinary situation in which housing associations are selling existing social rent housing in order to pay for constructions of new out-of-reach (non social rent) homes. It has led to the exploitation of all residents of housing associations through increasing demands for rent increases, increase in services charges, and the increase of Qualifying Long Term Agreements on repairs which have proved to be costly mistakes. Housing associations have enthusiastically carried out the Government’s ‘conversion policy’ (increasing social rent homes to unaffordable ‘affordable’ rent) further depleting social rent housing when it is desperately needed.
Worst of all, this model means housing associations, which were once charitable organisations, channel funds to financial institutions and banks who profit from providing loans. This fuels the rising costs of market/or 80% market homes and ensures it is less and less feasible for housing associations to build social rent homes that households on low or average incomes can afford to live in.
This model is broken and must end.
HARA. November 2018
(1) Report of the Special Rapporteur on adequate housing as a component of the right to an adequate standard of living, and on the right to non-discrimination in this context. UN General Assembly. 26 February-23 March 2018.
(2) Annex B: assessment of impact
(3) https://www.gov.uk/government/statistical-data-sets/live-tables-on-rents-lettings-and-tenancies (see table 704 Barking and Dagenham)
(5) House of Commons Briefing Paper Number 05933, 7 May 2015, Affordable Rents, England
(6) Living standards, poverty and inequality in the UK: 2018. IFS. June 2018
(7) UK Poverty 2017. Joseph Rowntree Trust. December 2017
(8) How many homes did housing associations deliver in 2017/18? NHF. June 2018