ARCH Tenant Group. London Monday 22 February 2016

Transcription

1 ARCH Tenant Group London Monday 22 February 2016

2 Legislative update: * Welfare Reform & Work Bill * Housing & Planning Bill John Bibby ARCH CEO

3 Impact on council housing Welfare Reform & Work Bill Mandatory reductions in social rents Welfare Reform Housing & Planning Bill Sale of high value voids RTB levy Pay to Stay Mandatory 2-5 year fixed term tenancies

4 Parliamentary procedure & timetable House of Commons First reading Second reading Committee stage Report Stage Third Reading House of Lords First reading Second reading Committee stage Housing & Planning Bill 1 March 2016 Report Stage Third Reading Amendments Ping Pong - Welfare Reform & Work Bill 23 February 2016 Royal Assent Commencement

5 Social Rent Reductions Welfare Reform & Work Bill

6 The Social Rent Reductions Welfare Reform & Work Bill Cl Existing rents to be reduced by 1% each year from 2016/17 to 2019/20 to save money on housing benefit bill Ministers have signalled return to CPI & 1% after 4 years Applies to social & affordable rents SoS power to exempt specified tenants & accommodation Ministers have signalled 1 year exemption for supported housing* SoS power to exempt LA facing serious financial difficulties Voids may be let at (adjusted) target rent Expected Royal Assent to Bill by commencement of new rent year Most councils planning for across the board rent reductions from April 2016*

7 Social Rent Reductions - impact Councils will lose 2.4 billion in rent by 2020 And 30 billion more over 22 years if CPI + 1% reinstated after billion wiped off the value of council housing stock case for reopening the self-financing settlement? 20,000 fewer council homes will be built

8 ARCH Response ARCH Tenants Group prefers investment to rent cut ARCH Submission to Commons Committee stage urging withdrawal of rent reduction clauses Successful in lobbying DCLG to allow rents on voids currently below target rent to be moved to adjusted target rent when void. (Government amendment to the Bill) Mandatory 1% rent reduction still included in the Bill 1 year Exception for supported housing Latest update on ARCH website:

9 Sale of high value stock & RTB levy Housing & Planning Bill

10 Forced Sales - the Manifesto We will extend the Right to Buy to tenants in housing associations to enable more people to buy a home of their own. We will fund the replacement of properties sold under the extended Right to Buy by requiring local authorities to manage their assets more efficiently, with the most expensive properties sold off and replaced as they fall vacant.

11 The accompanying details Councils will be required to sell homes that rank among the most expensive third of all properties of that type in their area as they become vacant. Estimated that 210,000 homes meet this criterion, of which 15,000 would be sold each year at an average price of 300,000 yielding 4.5 billion a year. After paying off outstanding debt, this would be used to fund extension of RTB and replacement of sold homes (RTB and council) and to establish a Brownfield Regeneration Fund. Sold council homes would be replaced in the same area with normal affordable housing.

12 Forced sale thresholds & areas (likely to change?)

13 Issues & problems Are there really 210,000 council homes above these price thresholds? Where are they? How quickly are they likely to fall vacant? How quickly could they be sold, at what price and who would buy them? Where could replacement homes be built? What sort of affordable housing? How quickly? How much would the replacements cost, compared with the sales receipts? What other problems would forced sale and replacement cause?

14 Percentage of homes above regional thresholds

15 Stock turnover rates Conservative manifesto assumes that 7% of high value stock will become vacant each year This reflects the national average of new lettings as a proportion of the stock, but wide regional variation with lower rates where prices are higher higher value stock has lower rates than LA average should be looking at vacancies net of transfers 3 3.5% is a better guess at the likely vacancy rate

16 Turnover of social housing

17 ARCH Survey Sent to all English councils with housing including those with ALMOs Based on 55 returns Wide variation in impact % of stock above thresholds varies from 0 for the majority to over 40% Areas hardest hit central London, London fringes, university towns in middle England Average void rate 3.5% Total receipt 1 billion Much closer to Savills prediction than Conservative manifesto But HA discounts may cost 1.5 billion a year

18 Wider impact Loss of lettings will impact on councils capacity to meet homelessness responsibilities, including 6-week limit on B&B Households displaced into private renting may increase benefits bill Loss of rent income will add to problems caused by 1% rent reduction Local replacement likely to be difficult because land is in short supply or too expensive; replacement further away will undermine employment, disrupt family and support networks Reduced transfer opportunities for existing tenants

19 Housing & Planning Bill 2015 Part 4: Social Housing in England Ch 1 Implementing the Right to Buy on a Voluntary Basis Ch2 Vacant High Value Local Authority Housing Implementing RTB for housing association tenants SoS power to make grants in respect of discounts HCA to monitor compliance No explicit sanctions for non-compliance SoS power to deregulate HAs by regulation Levy likely to come in part year 2016/17? SoS required to consult

20 Vacant High Value LA Housing New general duty on councils to consider disposal of highvalue HRA stock SoS may make determination requiring payment by a local authority (RTB levy) Payment based on an estimate of high value stock becoming vacant in a year less certain specified deductions Requirement to consult with councils on levy Formula based RTB levy payment means councils may choose not to sell certain vacant properties if they can find the money elsewhere. Payment may be reduced by agreement with Secretary of State to allow for provision of replacement housing Any agreement in London must allow for 2 for 1 replacement with affordable housing

21 Matters yet to be determined High value thresholds and areas Vacancies to be exempted internal transfers? Vacant properties to be exempted newbuild, regeneration, specially adapted? Admin allowances re sales, Outstanding debt on sold properties Arrangements for replacement

22 ARCH Response Councils and tenants have borne the financial impact of council RTB, unfair that they should now be expected to fund extension to housing association tenants Councils should be consulted on the HA development programme they are being compelled to fund Any council homes sold must be replaced locally Lobbied Government, CLG Committee, met John Healey MP, Lord Best. Met Local Government Association, Chartered Institute of Housing, National Housing Federation Developed lobbying strategy with National Federation of Almos Submission to Public Bill committee in Commons Joint representations to Lords in advance of Committee Stage on Lords: CLG Select Committee Report:

23 Pay to Stay Housing & Planning Bill

24 Pay to Stay Currently a discretionary Scheme Summer Budget announcement Pay to Stay Consultation October 2015 Housing & Planning Bill 2015 Implications ARCH response

25 Discretionary Scheme DCLG consultation High Income Social Tenants: pay to stay (June 2012) 2013 Budget announcement Government will shortly take steps towards allowing social landlords to charge market rents to tenants with income of over 60,000 Guidance on rents for social housing (May 2014).LAs should be able to charge those in social housing with high incomes a fairer level of rent to stay in their homes This would help them make best use of social housing. It would give them additional income to invest in new social housing

26 Discretionary Scheme Household: Tenant(s) on tenancy agreement & any named spouse, civil partner or partner resident in accommodation Income: Taxable income in the tax year ending in the financial year prior to the..rent year in question Taxable income received in the 2013/14 tax year would guide the rent payable in the 2015/16 rent setting year where a household was above the 60,000 threshold Where household is subject to a sudden and ongoing loss of income we would expect authorities to reconsider the rent that household is being charged and amend if appropriate Where more than 2 incomes within the household the two highest incomes only to be taken into account

27 Discretionary Scheme 2012 consultation estimated between 11,000 and 21,000 social housing tenants (LA and RP) had a household income of 60,000 or more* Sledgehammer to crack a nut? Unclear how many, if any, landlords have implemented a discretionary Pay to Stay Scheme *HIST summary of responses DCLG July 2013

28 Summer Budget 2015 Discretionary Pay to Stay Scheme would be made compulsory (in England) for all social landlords New, lower, income thresholds would be introduced: 40,000pa household income in London 30,000pa elsewhere Rent charged to be market rent or near market rent Stock retained councils to pay over any additional rental income to the Exchequer contributing to the deficit reduction Housing associations will be able to retain any additional rental income to reinvest in housing

29 Pay to Stay consultation (Oct 2015) Summary: Issued 9 October, ended 20 November Pay to Stay to be implemented from April 2017 Consultation to help inform the detailed design of the policy in relation to work incentives and administration N.B. Not on the principle of the Scheme or on minimum thresholds Starting assumption is that policy will operate in broadly the same way as current discretionary scheme (but with much lower income threshold) Hints at some form of tapered rent as income rises Crucially DCLG to ensure design of policy is able to deliver Budget savings

30 Pay to Stay consultation (Oct 2015) Summary: LAs will be allowed to recover reasonable administrative costs before paying over any additional rental income to Government Types & level of costs will be prescribed Expectation is that LAs already have systems and processes in place that could be modified to operate Pay to Stay..???? HAs will retain any additional rental income to invest in new housing but will be expected to absorb the administrative costs (NB Pay to Stay for HAs now to be voluntary not compulsory)

31 Pay to Stay consultation (Oct 2015) Consultation invited views only on 2 questions: 1. How income thresholds should operate beyond the minimum threshold? e.g. use of simple taper/multiple thresholds that increase rent as income increases; and Whether the starting threshold should be set in relation to eligibility for Housing Benefit? 2. Based on the current systems and powers that Local Authorities have, what is the estimate of the administrative costs and what are the factors that drive these costs?

32 Pay to Stay consultation (Oct 2015) Summer Budget estimated introduction of compulsory Pay to Stay would generate 240m pa for the Exchequer by 20/21 Impact Assessment for -1% rent reduction says Pay to Stay will create additional rental income of hundreds of millions of pounds per year to support housing association business plans Press release issued with Pay to Stay consultation paper estimates more than 340,000 social housing tenants have incomes in excess of 30,000pa Pay to Stay consultation paper claims higher income social tenants benefit from taxpayer-funded subsidies of up to 3,500 per year.

33 Housing & Planning Bill 2015 Chapter 4: High Income Social Tenants: Mandatory Rents Gives SoS wide ranging powers to issue Rent Regulations Regs may require rent: To be equal to the market rate To be a proportion of the market rate To be determined by reference to other factors Regs may provide for rent to be different: For people with different incomes, or For social housing in different areas

34 Housing & Planning Bill 2015 Regs may: Define high income Make provision about how a person s income is to be calculated Regs may define high income in different ways for different areas

35 Housing & Planning Bill 2015 Regs may give power to require tenants to provide information or evidence for purposes of assessment under the Scheme Regs may require LA/HA to charge a market rent if tenant fails to comply with requirement to provide information Bill gives HMRC power to disclose information for purposes of assessment under Pay to Stay

36 Housing & Planning Bill 2015 Regs may require a LA to make a payment to SoS in respect of any estimated increase in rental income Regs may provide for assumptions to be made in making a calculation of such payment, whether or not those assumptions are, or are likely to be, borne out by events Similar to payments for high value voids formula based

37 Implications Likely to affect significant number of tenants: 1 in 10 (1 in 4 working households) and higher in some areas Likely to mean significant increases in rents for working households Introduction of compulsory Pay to Stay will generate over 1 billion* from LAs over 4 years from 2017/18 to 2020/21 for the Exchequer: 17/18 = 365m 18/19 = 185m 19/20 = 245m 20/21 = 240m NB: these figures since revised upwards in DCLG Impact Assessment (* Source: Pg 74 Summer Budget)

38 Implications (DCLG Impact Assessment ) Estimates 350,000 social rented tenants with incomes over 30,000pa Estimated caseload by 2017/18: LA = 200,000 households HA = 240,000 households Estimated admin costs: Transitional costs circa 45million Annual admin costs circa 28million Potential additional rental income by 2020/21: LA = 0.51billion pa HA = 0.54billion pa Potential tapers: 80% market rent for earnings 30k to 40K (40k to 50K in London) 100% market rent for earnings over 40k ( 50k in London)

39 Implications (DCLG Impact Assessment ) Caseload (2017/18) Initial LA caseload 130,000 As earnings increase households will break through the threshold and be added to the higher income cohort Estimated additional households by 2017/18: 70,000 Total caseload of 200,000 Rental Impact (2017/18) Potential total additional rental income : 0.64billion Average rent increase of 3,200pa for 200,000 tenants = 59.17p Behavioural impact 0.64billion rental income will be reduced as a result of behavioural impact by 0.27billion Equivalent to 84,375 tenants moving out or taking up the RTB to avoid paying higher rent

40 Implications National Living Wage of 7.20 per hour from April 2016 Hardworking dual earning household both working 40 hours per week earning NLW of 7.20 will have gross annual earnings just 48 short of 30,000 threshold (40hrs x 7.20 x 52 = 14,976pa x 2 = 29,952pa) National Living Wage to rise to over 9.00 per hour by 2020 Combined impact of Budget changes mean typical renting household - dual earning family with 2 children each working 35 hrs pw on NLW will have a net (cash) income of 33,730 by end of this parliament* * Source Table 1.8 pg Budget

41 Implications Policy will increase administrative burdens Market rent valuations Identifying households above minimum threshold Applying tapers (if required) Adjusting rents and tenancy agreements Rent recovery & debts Managing changed circumstances & fluctuating income Tenant enquiries, complaints, appeals Costs could outweigh additional rental income generated in some districts. Could create disincentive to work as tenants choose not to increase working hours or take better paid employment Impact on mixed and sustainable communities as more economically active tenants are forced to commit more of their income to pay higher rents or move to avoid paying higher rent. Increased RTB * Source Table 1.8 pg Budget

42 ARCH Response The policy as set out in the Summer Budget statement would be unlikely to deliver the public expenditure savings assumed by the Government In a significant number of local authority areas it is unlikely that the additional income collectable would justify the additional costs of administering a Pay to Stay scheme. We would prefer to see the proposed higher earning income thresholds raised so that rent increases are only required of those tenants better able to afford them. A single threshold for England outside London is inappropriate and the scheme should provide for local thresholds set according to local housing market conditions.

43 ARCH Response We do not believe that dual earning households on National Living Wage can credibly be described as high-income The thresholds set for each area should also be no less than the income necessary to access owner-occupation in the same area We see no justification for requiring the additional income raised from councils operating the Pay to Stay scheme to be paid to central government we would be happy to accept arrangements through which Government could be reassured that the additional income would be used to support much-needed housing investment before allowing it to be retained.

44 Mandatory fixed term tenancies Housing & Planning Bill

45 Review of lifetime tenancies 2015 Budget: The Government will review the use of lifetime tenancies in social housing to limit their use and ensure households are offered tenancies that match their needs and ensure the best use is made of social housing (Summer Budget para 1.155)

46 Review of lifetime tenancies Not a review ending secure lifetime tenancies No consultation Not included in the Housing & Planning Bill as introduced at First Reading Only introduced into the Bill late in the Commons Committee Stage. Bill requires: Councils to issue fixed term tenancies for all new tenancies Fixed term tenancies between 2 & 5 years for new tenants Limited discretion to continue to give lifetime tenancies Existing tenants with lifetime tenancies forced to move because of regeneration etc Changes to succession rights: No change for spouses or partners Restricting additional succession rights to fixed term tenancy for other household members.

47 ARCH response Delete clause 113 pending proper public consultation If not withdrawn exempt existing tenants if they are requesting transfer to alternative accommodation e.g. those affected by the bedroom tax, moving to sheltered or supported accommodation etc

48 ARCH response to the Bill Joint Briefing with NFA for Lords: Meeting with Lord Best & other peers A number of amendments have been tabled by peers: Part 4 due for discussion in Lords Committee 3 March onwards

49 Q&A