Achim von Malotki

Masters Dissertation

King’s College 2015

Extracts from Sense of Belonging in an inner London, social-housing-

dominated Neighbourhood on the Verge of ‘urban Regeneration’

With special consideration of

Tenures and the Housing Market in light of current

housing policy pledges

Part 1The Survey: Summary Description of Samples

But for PLACE-MAKING it is not just the space between buildings that matters…

Neighbourhood perception regarding key topics by all participants

Church Street is ….

Household income of persons indicating Income

Housing tenure comparison between wider public sample and Futures Plan-participants

Anticipation scores regarding the future of the neighbourhood by all participants in survey

Colouring of bars: BLUE: commonly perceived as positiveRED: negativeGREY: neutral

Anticipations in a nutshell

• Anticipations of rising property prices and rents score highest, followed by items depicting mainly environmental improvements.

• Note the discrepancy of anticipations between “local environment will be improved” scoring highly and the anticipation “will be area that people like myself can afford” second from bottom.

• Chances of staying in the area, especially for young people growing up in it, are considered as problematic.

Problem perception: "How much are the following issues a problem in the Church Street area?" Average score out of a scale of 4

Attitudes and anticipations comparison between Futures Plan participants and the wider public sample

The following slide needs a little explanation…

• Respondents were asked to assess the Church Street ward as they view it at present using present tense for each item. In another set of questions they were asked about its future. The wording of future-related items was identical with those for the present, the only difference being that the verbs were in the future tense.

• This allowed to analyse the score differences between the two sets of questions - between how respondents rate characteristics of the neighbourhood as anticipated for the future compared to how they perceive these to apply at present.

• A negative score indicates that a particular item is anticipated to apply less or be occurring less in future than at present. A positive score the opposite. Obviously, with the item ‘where a lot of people have difficulty finding a job’, this would be a favourableanticipation regarding this particular problem.

Score differences of anticipated characteristics of Church Street compared with those perceived as existing

In a nutshell…

• Significant differences in income, socio-economic status and educational attainment between Futures Plan participants and locals sampled from the wider public.

• Nevertheless, with regards to attitudes, problem perception and anticipation of the neighbourhood’s future, there is a striking degree of consonance between the wider public sample and FP participants.

• Prevailing pattern seems to be one of more pronounced scepticismamong FP participants - surprising insofar as these could arguably afford to be less concerned with affordability and money matters due to their higher socio-economic position and higher incomes overall.

• Surprising also because they could arguably be expected to be less sceptical with regards to the neighbourhood’s future as they participate in shaping it.

Average scores across household income categories and tenure types for key items related to affordability

Affordability concerns and anticipation of displacement

appear greatest not in the three lowest income categories, but eminently in the middle ones.

Summary of survey findings1. Ethno-religious diversity appears to be appreciated primarily as an asset,

however is seen to be negatively affected by neighbourhood change.

2. The view that more higher-income people would be good for the neighbourhood seems to be far from universally shared; particularly those most engaged with the neighbourhood tend to disagree.

3. If urban development aimed at more income mix means that more affluent people will move in, the life and prospects for low-income families are seen as coming under strain.

4. Participants expect that neighbourhood change towards more income mix will ‘lift’ existing residents by ‘lifting’ the neighbourhood, particularly by anticipating that it will be easier for people to find employment.

5. There are serious concerns regarding affordability and anticipation of displacement particularly by those not shielded by a secure tenure (which currently the majority of those in the lowest income groups have).

6. Given the observed consonance of attitudes, anticipations, problem awareness and their scepticism, in functional terms the FP participants represent the neighbourhood population rather well.

Part 2 Tenure Analysis

Of the ward’s 4,719 residential properties CityWest Homes alone managed 3,030 or 64.2% at the end of 2014. These are divided into two ‘villages’ within the ward: Church Street and Lisson Green.

Tenure status of CWH-managed properties in the Church Street ward 2014 in comparison with 2011 (in brackets)

The state of tenancies in 2011

• When the Futures Plan was conceived, the properties CWH manages in the ward had been overwhelmingly tenanted, with only 27% leaseholders, far lower than the 44% in Westminster overall at the time.

• Buyers in the more affluent areas (e.g. Marylebone, St. John’s Wood) had stayed put as owner-occupiers rather than becoming absentee landlords.

• By contrast, in the Church Street ward the majority of lessee homes was let to other people.

What has changed since 2011, when the Futures Plan was conceived?

• Within just three years 259 council homes for rent have been lost – more than the Futures Plan will deliver as ‘affordable’ homes.

• Meanwhile in Westminster overall there has been hardly any shift at all, with the latest figures showing 45.1 percent leaseholders, 54.9 percent tenants. Neither has there been much change in the adjacent management ‘villages’ of Marylebone and St John’s Wood where the share of leaseholds was already high in 2011.

• The number of leaseholds particularly in the Church Street ‘village’ within the Church Street ward shot up, increasing its share by 10 percentage points –almost closing the gap to the Westminster average.

With the rapid price increases seen particularly in the inner London housing market, the turnover-rate of privatised homes - originally allocated on grounds of need - may well accelerate, both by selling and letting formerly publicly owned homes privately –

BUT not to those unable to meet their needs on the housing market.

Tenure change through Right to Buy

• Coalition government ‘reinvigorated’ Right to Buy by increasing discounts on the sale price to tenants to up to 70%, or £102,700 in London, to incentivise sales.

• Right to Buy open to abuse: private companies have been offering cash incentives (up to £100,000) to tenants to move out so that the property can be rented out privately at market rates. Locations in Church Street featured prominently among those targeted by such practices in a BBC-broadcast.

• Recipients of means-tested benefits like Housing Benefit are not excluded from exercising their statutory Right to Buy. In Westminster 22 % of Right to Buy sales to people in receipt of housing benefit at time of application. Remember that Housing Benefit is means-tested and the maximum of savings allowed for claiming it is around £16,000.

The Right to Buy in urban regeneration areas

• Large numbers of tenants in London exercise their Right to Buy where and when a regeneration scheme is announced (Association of London Government 2003: 4).

• Anticipation matters: if an area is destined to receive inward investment and a rise in its popularity is expected, sitting tenants will be encouraged to buy, causing what is termed ‘in-situ change’ of the neighbourhood.

• In housing economics it is well established that any investment that will make the area ‘nicer’ – be it amenities and attributes like a much embellished public realm – will be capitalised by the housing market into house prices or private market rents.

• Particularly in times of a febrile housing market it may take not more than just anticipation of these things to come to cause this effect.

Look who’s keen…

• The assumption that Right to Buy would permanently expand homeownership - with it all its supposed social and financial benefits - may simply not materialise if formerly publicly owned (hence non-commodity) housing enters the private rental sector through the commodification process.

• Private sector tenants are more transient than council tenants and owner occupiers – hence community stability and sustainability may be negatively impacted.

• They also tend to spend a large part of their income on rents, increasingly commonly above 50%, so their purchasing power may be limited even if they have comparatively high incomes.

Part 3House Price Analysis with price-paid Land Registry

Dataset

Number of cases (homes) each year:

Median house prices in comparison since 1999 (from 1999 to 2011 two-year-intervals, since 2011 annually; YTD: ‘year to date’)

Development of median house prices (index 1999=100)

Conclusions from house price data analysis

• In comparison with 1999 and relative to the original investment made, ex-council homes in the Church Street ward offered the highest returns in 2014 of all categories.

• Homes in the Church Street ward overall (that include ex-council properties) start to outperform in relative terms both Westminster & Camden and London overall early on, from 2001 consistently until 2014.

• No particular effect due to the inception of the Futures Plan, which would have left its mark since 2011, is perceptible.

• Substantial profit to be made when former publicly owned dwellings, purchased at a discount, are resold on the open market. Not only does the discount benefit the buyer, but homes are commonly also undervalued.

What does this mean for local residents?

• Estimated mean annual household income for Church Street is £31,134, the

median annual household income merely £19,572 (GLA Household Income

Estimates 2014).

• House prices in Church Street, including those formerly part of the publicly

owned stock, are out of reach for but a few of the ward’s residents.

• Ratio of ex-council homes prices for 2014 versus local annual household income

would be 13.4, with regards to the median annual household income a

staggering 21.3. For homes overall in Church Street the ratios would obviously

be higher still.

In other words:

If they do not already own a home, the vast majority of Church Street

residents has effectively been priced out of their own neighbourhood.

Remember: the median price of £417,500…

Conclusion:The privatisation of the social housing stock will change from Right to Buy to a policy of stealth: this will – and is intended to - alter the social make up of neighbourhoods, particularly in central London.

…. and then think of the Conservative Party manifesto pledge to extend the Right to Buy to HA tenants, paid for by forcing local authorities to sell off properties that fall within the most expensive third of all properties in their area as they become vacant. Note that Greater London is viewed as baseline local authority, not Westminster (Inside Housing, 14.4.2015).

Prices above which council-owned stock has to be sold (Inside Housing, ibid):

Policy aim: closing the ‘rent gap’What is the rent gap?• Difference between value of (disinvested council) housing stock and

the potential stock value that would take account of the highly valued land it sits on.

• Neoliberal (market-dominated) policy thinking (prominently Alex Morton, the Prime Minister’s housing advisor) wants to close rent gaps in inner London. This is done by:Privatisation and commodification of hitherto publicly owned

housing stock in areas of high land value.Creation of a housing market where it had previously been

subdued due to publicly owned housing stock being allocated to low-income residents at sub-market rents.

If local authorities support the aim of yielding maximum returns from valuable land, this land may remain publicly owned but the the housing stock on it is gradually transferred into the property market through Right to Buy.

The Conservative Manifesto pledge appears to go further and could entail that councils lose freeholds on properties.

Identifying areas for rent gap closure

ZOOPLA’s property heat map:

The rent gap is closed when those green areas in central London turn RED

Exclusionary displacement

What does it mean?

• A household very similar to that of a former council tenant whose flat has been sold, will be excluded from living where it would otherwise have lived.

• The household is generally excluded from areas where the housing stock has been commodified.

• The displacement is not physical, but economic.

• Following the general rule that land value falls with distance from the city centre, only low-value areas (think Barking & Dagenham or the banlieue of French cities) would remain for the displaced.

Private sector rents in Church Street 2012(well below Westminster average):

Median rent for a 1-bedroom flat: £375 per week.Median rent for a 2-bedroom flat: £594 p/w.

When commercial landlords snap up properties that once

were publicly owned it’s not just ownership that changes:

• The neighbourhood will change as well if homes are let at high rents to a transient population. Two thirds of private renters in London reside in their homes for less than three years.

• Recent government legislation explicitly allowed short-term lets in the private rental sector.

• High population churn will lead to greater numbers of people not rooted and not participating in the neighbourhood.

If WCC is forced to sell council homes not in Church Street but in

more expensive wards, this would lead to a further residualisation

of social housing in Church Street:

Only the most needy and vulnerable, those in highest priority need

(often with significant long-term health problems) will have a

chance to be housed in the remnants of the social housing stock.