Threats to @ExeterCouncil’s @ECC_Housing #SocialHousing stock

Back in January 2012, members of Exeter City Council’s Scrutiny Committee: Community approved a report outlining the Business Case for “self-financing” of the Housing Revenue Account [HRA].

The HRA Business Plan 2012-2042  demonstrated that the Housing Revenue Account would generate a surplus, year on year, as a result of the low cost of managing and maintaining our housing stock. This surplus will continue to be used as a contribution tothe housing capital programme and obtaining additional Council housing at a social rent.

As a result, ECC undertook a £57m loan to *buy* its own housing stock and manage it through the HRA without government interference

However, the Housing and Planning Bill currently progressing Parliament – it’s going through the  through House of Lords – next up is committee stage in the House of Lords on 09/02/16- contains numerous threats to social housing contained within the provisions. A  few of those concerns are highlighted here:

Reduction of Social Rents
On the face of it, the Chancellor’s offer of a 1% reduction of their rent year on year is a great offer for tenants in ECC’s 5000+ social housing properties.

But it’s not that simple.

In 2012, ECC took out a £57m loan over 50 years to buy its own housing stock under a scheme called “self-financial” of the ring-fence Housing Revenue Account [HRA]. To get this loan, councils had to come up with a 30 year business case and in return local authorities would receive all their rent income and be free to spend it as they wished on their housing stock.

To make things easier, the Chancellor *guaranteed* that rents could rise at 1% over CPI for 10 years. He chnaged his mind after 3 – and that change of mind will cost ECC around £8m over the coming 4 years.

Now that reduction in the HRA will have serious implications:
– emergency work [such as the £2m to tackle with damp ingress caused by 2014 autumn storms] will be harder to fund
– reactive repairs will take longer do do
– routine refurbishment of kitchens and bathrooms will be scaled back
– routine maintenance will take longer to do

But most importantly, ECC’s ablilty to progress its Council Own Build programme will be scaled back.

In past 5 years, ECC have built over 40 council houses – all at environmental friendly Passivhaus standard which reduces utility costs for residents, with 26 more planned to be built next to Rennes House and a £10m programme to deliver an innovative Extracare facility – a Passivhaus care home for 53 elderly people who have to deal with dementia

A report on the effects on this 1% cut is due at a forthcoming Scrutiny meeting

Social Housng to Starter Homes
Currently ECC has a robust policy for each and every development providing 10+ units [it used to be 3 but Tory Govt changed that]. The developer needs to deliver 35% of the housing stock as *affordable* housing as part of their s106 developer contribution towards planning obligations to obtain planning consent.

Developers often try overstate their costs and understate their profits to show that it would be unprofitable to provide such affordable housing. ECC vigorously enforce this provision – either turning down a planning application because of it; or getting independent verification of a developer’s business plan – which resulted in £1m being given as a commutable sum to build social housing off-site.

As a result of the above, ECC have negotiated over 800 affordable homes – mostly for social rent [50% of market rent, rather than unaffordable *affordable* rent = 80% of market rent] – in past 10 years, with around 2000 more currently being built or in the pipeline, having received outline or full planning permission.

All this is put under threat as a clause in Bill aims to remove the s106 obligation for developers to provide social housing for rent. Instead, they would have to provide some houses – termed starter homes – at 80% of market sale price as Tories roll out their home-ownership ideology.

So they would be sold to first-time buyers, under 40 that can afford a deposit and pay the mortgage. And since the developers control the sale price of the market – and also the supply of housing – they can ensure that prices remain high, and therefore 80% of that is also unafforrdable.

Research by Shelter shows that the Starter Homes programme will not help the majority of people on the new National Living Wage or average wages into home-ownership in England by 2020. It won’t even help many people on higher than average wages in many areas of England. The only group it appears to help on a significant scale will be those already earning high salaries who should be able to afford on the open market without Government assistance.

Worrying, these starter homes don’t stay starter homes – they become a private asset for the individual that bought it, and can be sold on at what the market can bear after 5 years.

Worrying, these starter homes don’t stay starter homes – they become a private asset for the individual that bought it, and can be sold on at what the market can bear after 5 years.

Shelter have prepared a report on the subject: Starter Homes

High Value Assets
This is still an outline plan – out to consultation – so details are sketchy and changeable

In the 2015 Queen’s Speech, the government confirmed its plan to force councils to sell their low rent homes in the most high value areas.

The forced sell-off of high value council assets will fundamentally undermine councils’ existing building and estate regeneration plans, and introduce new unanticipated inefficiencies and costs.

And any money received from this sell-out (of ECC assets, bought with that £57m loan) wouldn’t be re-invested in new property in Exeter, it would be used to fund Right to Buy discounts for housing association properties [itself a very controversial policy] anywhere in the country.

These plans may be modified – and instead of forcing the sale of these high value assets, the Govt are considering changing councils a levy on them.

We still don’t know what makes a property a high value asset – and until the Govt comes up with a definition, it’s hard to know what the impact on ECC stock will be – and what the cost of this policy will be to ECC.

Shelter have prepared a report on the subject: The forced council house sell off

Rents for High Income Social Housing Tenants
When ECC introduced its flexible tenancy scheme, it decided that anyone earning over £60k would need to pay a market rent rather than a reduced social rent.

The Govt are planning to make this upper limit £30k – that’s the equivalent of 2 adults working full-time on just over statutory National Minimum Wage – under a scheme called Pay To Stay.

Oh, and the difference in rent between social and market rent will go, not to ECC who own the properties, but to central Government.

Again this policy is out for consultation – and here’s a response from Shelter

Commons Library Research Briefing

LGA Briefing:

LGIU Briefing:

Defend Council Housing Briefing:

Debates in House of Commons
Part 1 [05/01/16]
Part 2 [12/01/16]

Guardian Government criticised for holding housing bill debate lasting until 2am [06 January 2016]

Guardian: Our last chance to restrain the housing bill is with the Lords[26 January 2016]


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