Local decisions: a fairer future for social housing

Neil McDonaldDirector – Housing Standards, Homelessness & Support

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Drivers of change

• Localism

• Fairness

• Flexibility

• Reduce dependency

• Better use of resources

• Protect the vulnerable

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Case for reform

Waiting Lists

• 1.8 million households on waiting lists

• There are around 50,000 households living in temporary accommodation in England

Unemployment

• Fewer than half of social tenants of working age are in work

Overcrowding

• A quarter of a million social homes are overcrowded, while over 400,000 are under-occupied

Mobility

• Fewer than 5% of social sector households move within the social sector each year compared to almost a quarter of private renters

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Number of local authority lettings made in the social rented sector, England, 1988/89-2008/09

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

1988/89 1990/91 1992/93 1994/95 1996/97 1998/99 2000/01 2002/03 2004/05 2006/07 2008/09

All lettings

New lettings

Existing lettings (internal transfers)

Declining supply of lets

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Tenure

• New local authority flexible tenancy: minimum two years.

• The existing tenants rights protected

• Flexible tenants get RTB & right to exchange

• Right to one succession for partners; landlords can give additional succession rights

• LAs to publish a strategic policy on tenancies

• Secretary of State to direct on the tenancy standard

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Tenure – key issues

• Tenancy strategies and tenancy policies

• Basis for renewal or non-renewal of fixed term tenancies

• Minimum terms and local discretion

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Affordable rent

• Affordable Rent set at up to 80% of local market rents

• Local Authorities will continue to have a role in nominations

• Tenancies reviewed after a min 2 years

• Affordable rent tenants will be eligible to apply for housing benefit.

• Written Statement on 9 December

• DCLG and HCA will be setting out further details on affordable rent early next year.

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Social Housing Allocations

Local authorities to determine who should qualify for housing waiting lists.

Rules on eligibility set centrally.

Existing tenants not in housing need - out of the allocation rules.

Protection for the vulnerable provided by the statutory ‘reasonable preference’ criteria

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Homelessness

• New flexibility to end the main homelessness duty with a PRS offer

• Applicant consent not required

• Minimum 12 month fixed term tenancy

• Must be suitable

• Right of review /appeal

• Duty recurs if unintentionally homeless within 2 years

• LAs can still end duty with social housing

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Empty Homes

The New Homes Bonus

• Inclusion of empty homes to give LAs incentive to bring home back into use.

• Removes one of the arguments against new housing – that local authorities should first fill empty homes before building new.

£100m capital to tackle empty homes

• Providing renovation works and management support to bring over 3,000 empty homes back into use.

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Reform of social housing regulation

• The TSA will be abolished and its functions transferred to the HCA

• Stronger mechanisms for tenants to hold landlords to account and drive up service delivery

• Local mechanisms will be used to address routine problems

• Regulation will in future be refocused on:

• proactive economic regulation• reactive consumer regulation – setting clear standards and

responding to serious failures against them

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Council housing finance

• HRA Subsidy replaced with a 'self-financing' system from 2012

• Need for annual subsidy ended by one-off reallocation of housing debt between councils

• In future, councils fund own stock from own rents

• All councils get more to spend on services than under current system

• Policy document in early new year setting out detailed policy and financial parameters

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Affordable rent – resources

•Most challenging CSR settlement in living memory

•Despite this, we will still invest over £6.5bn in housing over the CSR period, including over £2bn to make homes decent and £4.5bn to fund new affordable homes

•That covers existing commitments under the NAHP and new approvals under affordable rent.

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The former and the new models

Social Rent

• Rents at c 50% of market rent

•Life time tenancies

• Grant at c£80k per unit

•Limited use of existing assets

Affordable Rent

•Rents at up to 80% of market rent

• Fixed term tenancies

• Grant as part of wider subsidy

• Asset Management strategies involving conversion of voids and sales.

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Affordable Rent

•Affordable rent may be charged at up to 80% of local market rents

•Independent valuation based on method recognised by RICS

•Uprated at RPI+1/2% for the period of a tenancy

•Available to providers who commit to reinvest extra revenues in new supply

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•Associations will co-operate with local authorities in their strategic housing role to allocate affordable rent properties.

•Affordable rent properties will be allocated in the same way that social rent properties are now

•Framework already allows for a good deal of local discretion

•Opportunity to support diverse range of people on waiting lists,

•What responds best to local needs and suits local circumstances?

Who is affordable rent for?

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The complete affordable housing package

The settlement for affordable housing also includes:

Low Cost Home Ownership;

Places for Change;

Mortgage Rescue; and

Empty Homes;

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Next steps

•HCA will issue the Affordable Rent prospectus during January

•Providers prepare proposals January to March

•April 2011 – new programme starts

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Conclusion

Change was inevitable

This model is about unlocking providers’ potential and local initiative

Email address: AffordableRent@communities.gsi.gov.uk