Aug 10th 2013, 10:29
The evidence is mounting that the government has not fully thought through its proposals for rent convergence. First, the Department for Communities & Local Government wrote to various housing bodies to say that rent convergence would come to an end and that when they said rents would increase by consumer prices index plus 1% that is what they meant. Second, they told me that the new rent policy would be implemented through guidance and enforced through rent rebate subsidy limitation – meaning that all housing associations and those local authorities with rents below the rent limit could legally avoid following the guidance if they had good reason – for example to maintain viability, achieve decent homes or develop necessary new housing. Third, they told ‘Inside Housing’ that they were talking to local authorities with problems and would be flexible. Fourth, the Treasury tells the ‘Local Government Chronicle’ last week that ‘ministers are preparing to take a hard line on enforcing the rent policy as the Treasury is concerned that councils will refuse to comply. This includes the option of central regulation of council rents for the refuseniks’. No mention is made of the position for housing associations.
So – what legal status will the government’s rent policy have, and how will it be enforced? We are still awaiting a convincing answer and in the meantime the best advice may be to increase rents by as much as possible in 2014.
I will continue to make enquiries and will keep people informed through my blog and the ‘AWICS Housing News’.
Recently I have been working on my book on ‘Welfare Reform: The Implications for Housing and Local Government’. It went to the printers today and copies should be with us in about a week. It runs to 100 pages, is fully up to date and contains the following sections: Introduction and Overview of Welfare Reform; Under-Occupation Penalty (Bedroom Tax); Total Benefits Cap; Universal Credit; Other Welfare Benefits; Discretionary Housing Payments and Other Welfare Support; The Impact of Welfare Reform on Claimants, Landlords and Local Authorities; Case Study: Impact Housing Association; Specific Implications in Scotland and Wales; Practical Steps to Manage the effects of the Reforms; and Potential Future Reforms. Details will be posted on our website during the week, but if you would like to order a copy in the meantime please email me at Adrian.email@example.com . The price is £30 plus £3.25 postage and packing.
The book accompanies our seminar on ‘Welfare Reform: The Implications for Housing and Local Government’ that will be held in London on 9th October. For details please see https://awics.co.uk/welfareseminar.asp
Last night I chaired Impact Housing Association’s August board meeting that was held at our headquarters at Nook Street in Workington. The main items on our agenda were risk management, consultation with our tenants about next year’s rent increase and the agenda for our board conference that we hold each autumn.
The main items that we plan to discuss at the conference are development, welfare reform and how to increase the number of volunteers with whom we work. All of these are strategic issues that I am sure are faced by all housing associations.
Much of my time at the moment is being spent in preparing for this autumn’s seminars on Value for Money, Welfare Reform and Local Authority Housing Finance. They are all proving popular and I am looking forward to meeting the delegates at all the sessions.
The August edition of the ‘Public Services News’ is published today. It contains articles on the comprehensive spending review, government investment in infrastructure, the campaign for better disabled access at Penrith railway station, personal independence payments and CIPFA. It can be freely downloaded from: https://awics.co.uk/PublicServicesNews.asp
We have also published two briefing papers this week:
Both can be freely downloaded from: https://awics.co.uk/Housing.asp
Following the government’s surprise announcement that rent convergence is to be ended I wrote to Communities & Local Government to ask whether the government intended to introduce the policy through legislation or guidance and, if guidance was to be used, how the guidance would be enforced. I am grateful to Communities & Local Government for their response that is as follows:
“We are intending to bring in a regulatory limit for annual rent increases (for both social rent and affordable rent) of consumer prices index plus 1% from April 2015 until March 2025… Our current intention is that this is applied through guidance and the limit on housing benefit expenditure as currently.
“Our intention is that, for social rented sector tenants, the housing component of Universal Credit will build on the support currently provided by the housing benefit system and be based on actual rents. We are considering how to proceed with a housing benefit expenditure control mechanism in universal Credit and will set out further details in due course.”
The government therefore intends, following consultation, to replace the current policy of limiting rent increases to Retail Price Index plus 0.5% plus £2 a week with a policy of limiting rent increases to Consumer Price Index plus 1% enforced through the rent rebate subsidy limitation mechanism. This method of enforcement obviously only applies to local authorities but does not appear to prevent those authorities whose rents are below the formula from ignoring the guidance and continuing to increase their rents towards formula rent as originally planned. Without any sanctions there also appears to be nothing to stop housing associations from increasing their rents to formula rents plus 5%. The policy change may not be as disadvantageous to local authorities and social landlords as was first thought!
Impact Housing Association, of which I am Chair, has just been awarded funding for three extra care elderly schemes at Brampton, Penrith and Whitehaven. The Penrith scheme, for example, will cost £2.9million and provide 28 extra-care homes for older and disabled people. The Homes & Communities Agency is to provide £420,000 in funding with Cumbria County Council providing £500,000 and Eden District Council £250,000. Impact Housing Association is to provide £1.7million through loans and its own resources. Construction will be carried out by Atkinson’s – a locally based builder – thus maximising the local economic benefits.
August is usually the time when I put together the material for our autumn seminars. This year the subjects are:
Details can be found at: https://awics.co.uk/England.asp
Last week I chaired the Impact Housing Association Board meeting that was held at the Old Brewery Student Halls in Carlisle. The main items on the agenda were to consider our future housing development programme and how to improve services for tenants and communities. Despite the reductions in social housing grant, we have continued to develop new homes in Cumbria and North Lancashire using innovative funding mechanisms and our own resources and will continue to do so.
The Old Brewery Student Halls offer excellent accommodation for students in Carlisle. More information can be found on the Impact Housing website at http://www.impacthousing.org.uk/student-accommodation-carlisle
This week I have been assisting the Cumbria Rural Housing Trust in preparing a paper for the Cumbria Local Enterprise Partnership on the importance of social housing in rural Cumbria. New homes are needed, not only to house people, but also to develop the economy. New homes help to develop the economy not only through boosting the construction industry but also by providing homes for the employees that are needed by rural businesses.
I have also drafted the examination papers for the Chartered Institute of Public Finance & Accountancy’s Certificate in International Public Financial Management examinations that will be held in December 2013. This qualification is much sought after internationally, especially in the developing world.
This month’s ‘AWICS’ Housing News is published today. It includes articles on: The End of Rent Convergence, Self-Financing Budgets and Business Plans, Housing Capital Programmes in English Local Authorities, Impact Housing Association and the Homes and Communities Agency’s proposals for regulation, National Housing Federation Leaseholder and Tenant Service Charges Conference, Scotland ends Right to Buy, Regeneration in Leeds, Liberal Democrat Plans to build up to 25,000 new homes, Greenwich Council procures £269million redevelopment programme, Southwark Borough Council rejects selling stock in favour of building and Suffolk Housing buys more affordable homes. A copy can be freely downloaded from https://awics.co.uk/HousingNews.asp
AWICS has also published a briefing paper on accounting for self-financing that can be freely downloaded from https://awics.co.uk/accountingsf.asp