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Blog 20th February 2020

Feb 20th, 22:55

Blog 20th February 2020

In this blog, I refer to: Service Charges, Immigration, Priti Patel, Home Office, European Union, Freedom of Movement, Herne Hill, Lambeth, Homes England, Greater London Authority, Berlin, Luxembourg, Local Authority Housing Finance, Training and Seminars.

On Tuesday, I was in London presenting our seminar ‘All You Want to Know about Service Charges in Social Housing’. The session was fully booked, and I enjoyed meeting the delegates.

The delegates said that the information provided was very relevant, the quality of the presentation was good and that the training met their needs fully. They described the seminar as useful, clear, interesting, practical and valuable. Individual comments included:

  • Very interesting and relevant.
  • Enjoyable day. Good engagement from the group. Well-paced and interesting throughout.
  • Very knowledgeable and useful to clarify setting and details.
  • Good course. Has provided some direction where we need to be heading.
  • Very informative and Adrian is very knowledgeable. Will definitely help improve income from service charges.

flats_1

Council Flats in Wigan. Service Charges can be significant in flats.

The next session will be held in Leeds on 2nd June 2020 and there are still some places available. For further information or to make a booking, please click here.

The session is also available as in-house training. For further information, please click here.

On Wednesday, Priti Patel, the Home Secretary, launched a new points-based immigration system that she said would open the United Kingdom to the brightest and the best from around the world. The new system, that takes effect from January 2021, will end free movement and will assign points for specific skills, qualifications, salaries or professions and visas will only be awarded to those who gain enough points.

The points threshold will be set to allow into Britain the people who the government wish to attract while excluding others. Skilled workers will need to meet several criteria, including specific skills and the ability to speak English. All applicants will be required to have a job offer and the minimum salary threshold will be set at £25,600.

The government estimates that 70% of the existing European Union workforce would not meet the requirements of the skilled worker route. Most commentators have focused on this aspect of the policy with many arguing that its main weakness is that it would deny many businesses – including those in the farming, tourism, health and social care sectors - the staff that they need.

My concern is different. I think the government knows exactly who will carry out low paid and low skilled jobs. It appears to me that if companies can offer skilled and well paid jobs to English-speaking foreigners but must reserve unskilled and low paid jobs for British workers, increasing numbers of British workers will be forced into low paid unskilled work.

Priti Patel said that:

“We will attract the brightest and the best from around the globe, boosting the economy and our communities, and unleash this country’s full potential.”

So, when it comes to skilled jobs, the strategy is to encourage applicants from English speaking foreign countries (presumably mainly the United States) without seeking to create similar opportunities for British people in those countries.

And, when it comes to unskilled jobs, the strategy is to use British workers. The government has already said that there are nine million economically inactive people (mainly pensioners and disabled people) who could take these jobs. Young people, newly entering the job market, will also find fewer opportunities for skilled and well-paid work and so will be forced to take unskilled and low-paid work. Fewer British people will need qualifications, delivering a saving in the government’s education budget.

This approach will also increase inequalities between those with well-paid skilled jobs and those with lower-paid less skilled jobs.

And, with ‘Freedom of Movement’ gone, British people will no longer be able to seek opportunities for themselves in European Union countries. They will be trapped in Brexit Britain.

People picking fruit. British agriculture offers many low paid jobs that are often taken by migrant workers.

This week I have been doing some analysis of rents in the Herne Hill area of Lambeth. According to my research, average rents for one-bed flats are £269 / week; for two-bed flats are £415 / week and for three-bed flats are £527 / week. These are significantly higher than the Local Housing Allowance for the Inner Southeast London Broad Rental Market Area that covers Herne Hill. The Local Housing Allowance one-bed rate is £217 / week, the two-bed rate is £281 / week and the three-bed rate is £341 / week. This means that the Local Housing Allowance meets only 81% of rent in a one-bed flat, 68% in a two-bed flat and 65% in a three-bed flat; and that people who are dependent on the Local Housing Allowance are not able to afford to live in Herne Hill.

Social rents in Herne Hill for a one-bed flat are £111 / week, for a two-bed flat are £138 / week and for a three-bed flat are £155 / week. Significantly lower than market rents or the Local Housing Allowance.

Yet last week it was announced that Only 4% of the homes funded by the government’s Shared Ownership and Affordable Homes Programme since 2016 were for social rent. Of the 90,323 homes funded through the programme since 2016, just 3,583 were for social rent. Meanwhile, 47,047 (52%) of the homes built through the government’s flagship grant programme were for affordable rent, while 39,693 (44%) were for affordable homeownership, most of which were for shared ownership.

This does not include grant that is released by the Greater London Authority, or that released by Homes England as part of its strategic partnership initiative. However, I would question whether the government has got its housing priorities right.

Meanwhile, in Berlin a five-year rent freeze has been agreed, more than six months after they were proposed by the left-leaning administration. The rent freeze is likely to come into force by the end of February.

In Luxembourg, it has been a legal requirement since 2006 for landlords to charge no more than 5% of invested capital in rent. Furnished homes cannot be priced at more than twice the 5% amount. However, there is now evidence that many tenants do not understand the cap and many landlords ignore the law and charge more than the 5% cap, resulting in tenants paying what seems like a market-value rent but which, in reality, is above the legal threshold.

One of the objectives of the 5% law is to encourage landlords to carry out renovation works or modernise an old property, making it a better place for the tenant to live and giving the landlord a higher monthly income. This is particularly relevant to old properties where landlords nonetheless regularly increase the rent.

Communes across Luxembourg have rent committees that decide if the landlord was right to increase rent or if the tenant was correct in asking for a reduction. The committees consist of assessors who take the final decision if both sides cannot agree. But even if tenants are aware of their rights, going to a rent committee can be a lengthy process.

Some take it further and stand before the courts. In 2018, 1,804 cases regarding rental agreements were brought before the Justice of the Peace. One prominent case was in 2014 when tenant Fred Heyar took his landlord to court claiming the rent was too high. Heyar was paying €600 per month for a 16 square metre studio in Bettembourg. The case took seven years to hear but the court eventually ruled in Heyar's favour and ordered the rent to be lowered to €250 per month. Another case is currently ongoing at Luxembourg's Peace Tribunal after a tenant in Limpertsberg claimed his monthly rent was too high based on the 5% cap.

There are now calls from Parliamentarians in Luxembourg for more transparency around landlords’ costs and rent calculations. It is being proposed that the amount of money a landlord has invested in a rental property should be written into tenancy agreements to make a legal cap on rents more transparent.

High rents are clearly a problem in many countries and different approaches are being taken in different places.

Our next seminar ‘All You Want to Know about Local Authority Housing Finance’ will be held in London on 17th March 2020. This is a very useful introduction to, and overview of, local authority housing finance. For more information or to book a place, please click here.

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