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Buying a House Takes More Than Hard Work and Willpower – Contrary to Government Belief

Alice Belotti speaking at Cambridge House's Housing Conference, May 2016

Alice Belotti speaking at Cambridge House’s ‘Can We Afford To Lose Council Housing?’ conference in May 2016

Home repossession, evictions, and homelessness are on the rise. At the same time, the lack of decent, affordable, and stable accommodation causes huge strains in people’s lives. But what will the government’s ‘landmark’ Housing and Planning Act 2016 do to tackle these problems?

The housing crisis we are experiencing is made up of three interlinked components: a lack of supply where there is more demand; soaring rents and housing prices; and unaffordable home prices for lower-income households, leading to a rapid expansion in private renting. These components play out differently in various local markets, with huge regional variations. But the depth of the current crisis is experienced by people living in London and the South East.

Private renting and affordability

Through the Act, the government is committed to exposing rogue landlords; but this is not enough, as they are a small part of the problem. What really plagues the housing sector are high rents and a lack of security. Private renting has grown rapidly over the last 15 years. More and more people – especially families with children – are living in private rented accommodation.

Yet private rents have been rising, especially in London and the South East, where rents amount for no less than 50 per cent of median gross monthly salary. Young couples are finding it a struggle to have kids while renting; many young people also have no option but to share a house with others (up by 70 per cent since 2011) or live with their parents. Their savings towards a step up on the property ladder are eaten by the extortionate rents set by a self-regulating market.

https://pixabay.com/en/london-building-panorama-947381/

Image Credit: Pixabay

Homeownership and affordability

And although the government may hope to help first-time buyers through Starter Homes, the scheme misses those on average income and below. The government’s new flagship policy will offer a 20 per cent discount to first-time buyers who are between the age of 23-40; but a 20 per cent discount will still be out of reach for those in need of an affordable home, given that Starter Homes could cost up to £450,000 in London, and £250,000 in the rest of the country. To discourage buy-to-lets and property speculation, Starter Home buyers will also be forced to repay a percentage of the discount if their home is sold or let within 20 years of the purchase. (However, if property prices continue to grow at today’s pace, it will not take much to pay back the discount early.)

Social housing provision

There was a time, only fifty years ago, when housing was seen as a basic right, and social housing was growing fast. Under both Labour and Conservative governments, the race was to build council homes. Five decades later, the Housing and Planning Act 2016 may be signaling the end of social housing as we know it, according to Lord Kerslake, former Head of the Civil Service. Social rented housing will be lost as a result of policies such as the new Right to Buy and the forced sale of councils’ ‘higher’ value voids. Estate demolition and rebuilding is also displacing large communities and gradually eroding the social housing stock.

In theory, housing associations and local authorities should build one-to-one (or two-to-one) replacement homes for any home lost through the above policies. But the new homes will not have to be like-for-like, and it is not clear where the money for local authorities will come from. The result will be a net loss of social housing. The 1 per cent rent reduction also means that the much-needed new social rented housing will not materialise.

And in light of new unexpected budget pressures, the majority of social landlords are drastically scaling back on development programmes, while others are deciding to build less social housing, and instead build more private homes for sale. Local authorities will have the duty to provide at least 20 per cent Starter Homes in any new development, which will count as affordable housing for planning purposes. A recent survey by Inside Housing of 97 English councils reveals that a third of them will see their affordable housing requirements completely taken by Starter Homes, not social renting.

The Chartered Institute of Housing also estimate that around 350,000 social rented homes be lost by 2020 through affordable rents and Right to Buy sales, high value sales, and demolitions of former council estates, whilst only 3,500 new homes will be built. Meanwhile, the housing benefit bill has risen from £11bn in 2000-01 to £25bn in 2015-16 to subsidise private landlords, rather than to support social landlords.

What’s the solution?

The government’s new housing agenda is all about home-ownership and incredibly penalising towards social housing and its tenants. The government’s policy, however, is based on the wrong assumption that home-ownership is possible for everyone through hard work and willpower. What it can be said it ignores is the fact that social housing provides a decent and affordable option for people who need it. So, if anything, we need to build more social housing, devise better and easier ways for people to access affordable housing, and revitalise low-demand areas to bring empty homes back into use.

https://pixabay.com/en/london-flats-urban-architecture-448552/

Image credit: Pixabay

In the absence of government funding, more responsibility rests on local authorities and housing associations to sustain social housing. Local authorities have the ability to borrow towards their assets and build more homes. There are interesting models of cross-subsidy of social rented housing which are being tested out by housing associations that want to remain a viable business while enhancing their social commitment. At the same time, devolution in the North could re-balance regional differences and uncover creative, innovative ways to improve the economic and housing fortunes of older industrial cities and regions.


Alice Belotti, research assistant at LSE’s Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD) and an expert on estate regeneration, recently took part in our Housing Crisis Conference. The Conference brought together council tenants, politicians and housing and legal experts to discuss the impact of the housing crisis and possible solutions. Find below Alice’s informative article on the Housing and Planning Act.

Article originally posted on the LSE BLOG – http://blogs.lse.ac.uk/politicsandpolicy/homeownership-in-housing-and-planning-act/

What’s a Mayor to do about the housing crisis?

Welcome to The CH@T ~ Broadcasting straight from Cambridge House, we’re asking: what’s going on with housing in London? How can a new Mayor tackle the housing crisis?

Tackling some of the toughest issues facing society today, The CH@T brings you insights and stories straight from the frontline of social action in the UK. From our base in Camberwell, we’re taking the big questions to the grassroots to get to the bottom of the biggest social issues facing London and the UK today.

Photo Credit: Dave Kleinschmidt via Flickr

The CH@T premieres with a series of episodes focusing the housing crisis in London, chatting with experts in housing, gentrification, and the legal system to get to the bottom of one of the biggest issues on the agenda.

In our premiere, we’re busting a few big myths about the housing crisis, hearing about who’s being hit hardest, and – most importantly –  finding out what Londoners can do in the coming mayoral elections to help protect Londoners from losing their homes.

Listen in to our chat with Research and Knowledge Exchange Coordinator, Dr Hannah White, about a research project she recently completed into housing in South London. In late 2015, Dr White explored the reality of the housing crisis for Londoners by shadowing the Lambeth County Court Duty Scheme, which provides free legal advice for people with issues with their housing, speaking with people facing eviction from their homes to hear their stories, find out why people are facing such challenges, and to inform recommendations for policymakers to help people hold on to their homes.

housing crisis, mayoral election, podcast,

Photo Credit: Garry Knight via Flickr

If you enjoy it, drop us a comment or, even better, give us a review on iTunes – get in there quick and get a shout-out on the next episode of The CH@T.

You can support Cambridge House’s work tackling poverty and social injustice by heading to our JustGiving page.

  • To read Dr White’s research in full, click here
  • To learn more about our Research and Knowledge Exchange Activities, click here
  • To learn more about our Law Centre and what we do to help people protect their homes, click here

Can the Supreme Court stop austerity hitting the vulnerable hardest?

Credit to Rob Young. Used under Attribution 2.0 Generic (CC BY 2.0)

The Supreme Court

Last month the Supreme Court delivered a land mark ruling in homelessness law. The case of Mr Kanu, demonstrates how far some cash strapped Council’s had squeezed the definition of vulnerability in order to avoid treating those with a physical disability or mental health issues as having priority need. With a further 12 billion in benefit cuts on the horizon, widening inequality and rising homelessness we ask: can we rely on the law to protect our most vulnerable?

Under the Cameron administration, homelessness has now reached crisis point. Crisis and Shelter, report that rough sleeping has increased by 37% over the last three years, and last year more than 130,000 people approached their local authority as homeless (equivalent to the population of Cambridge).

Under the Housing Act 1996, local authorities have a duty to ensure accommodation for people who are homeless and in ‘priority need’. However housing shortages and spending restrictions have meant that the definition of ‘priority need’ had become the critical factor in determining who is entitled.

From 1998 a precedent referred to as the ‘Pereira Test’ had been used to assess an individual’s circumstances. Lady Brenda Hale, Deputy President of the Supreme Court, summed this up: “We had reached the point where decision–makers were saying, of people who clearly had serious mental or physical disabilities, that ‘you are not vulnerable, because you are no more vulnerable than the usual run of street homeless people in our locality’”.

Last month’s judgement throws the state’s failure to protect its most vulnerable citizens into stark relief. In early 2011, an eviction notice was served to Mr Patrick Kanu (the successful appellant) and his family. Mr Kanu was already facing debilitating health issues, including mental health concerns. He initially sought support, but was rejected by the local authority. Later that year, Mr Kanu applied again when facing street homelessness. The Local Authority refused his application on the basis that he was not considered “in priority need”.

Mr Kanu approached Cambridge House, who provided Mr Kanu, with legal advice and representation.  By this time, Mr Kanu’s health was seriously deteriorating, suffering from chronic pain, hepatitis B, and levels of hypertension flagged by his GP as “dangerous”. Even more troublingly, Mr Kanu was experiencing severe mental health issues, including bouts of psychosis, attempted self-harm (often only prevented by Mr Kanu’s wife), and suicidal thoughts. Despite the Local Authority’s own Medical Assessment Service recommending his categorisation as in “priority need”, it decided that he was not sufficiently ‘vulnerable’ to be eligible for housing. The reason given was that Mr Kanu could cope with the effects of homelessness and in any event because he was married his wife could assist him.

The Housing Act 1996 states that Local Authorities have a duty to ensure that vulnerable homeless people who are not intentionally homeless are supported into housing. In Mr Kanu’s case this vulnerability was clearly significant. Yet, it was only after four years and against a backdrop of increasingly severe health issues that Mr Kanu’s won his appeal in the Supreme Court.  Sadly, the extent of Mr Kanu’s vulnerability became clear shortly after the Supreme Court judgement. Only 3 days later, Mr Kanu died aged 48 provoking the question: ‘How vulnerable is vulnerable enough?’

Under the new ruling, the Supreme Court has done away with the previous case law, including the Pereira Test, and specifically rejected some of the expressions used in homelessness cases such as “street homelessness” and “fend for oneself”. They have also abolished the use of statistics (a particularly blunt way of establishing ‘ordinary’ levels of vulnerability), and re-established the intended meaning of a “person who is vulnerable” under the Housing Act 1996. Critically, as Lady Hale commented, this means that vulnerability will now be established in comparison “with ordinary people generally”, not “ordinary homeless people”.

Despite the positive precedent established on May 13th, as local authorities brace themselves for the £12bn in welfare cuts stories like Mr Kanu’s are likely to become more rather than less common. The disturbing possibility is that, in the face of single-minded austerity, the law will not protect the most vulnerable. Either the government must accept the cost of caring or the stark reality of the cost of cutting – for our most vulnerable the threat of deprivation and destitution.

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