The draft of the Strategic Housing Management Assessment (SHMA) by Swindon Borough Council (November 2011) gives the latest snapshot of the housing crisis in Swindon. There’s a lot of it – 216 pages. Here are some initial comments.

Is it accurate to use the term crisis? The draft document says that “There is a significant unmet need for affordable rented housing from single people and couples.” The shortage of “affordable housing” remains consistent at over 800 units too few each year. The shortage is also reflected in the increase in the number of households on the Council’s waiting list. In January of this year there were 5,512 individuals/families on Bands A (“urgent need) and B (“in need”) of the waiting list. There were 949 on Bands A and B on the transfer list, giving an overall figure of 6,451. This compares with the previous year’s figure of 6,166 made up of 4,901 on the waiting list and 1,265 on the transfer list. In addition in January of this year there were 5,291 on Band C, considered “in low need” and 1,293 on band D considered “not currently eligible”.

The crisis is also reflected in the difficulties that people who might want to buy a house have, given the price of homes as compared with their level of income, despite a significant decrease in prices of roughly 20% at the bottom end of the market. To gain a mortgage the average person in Swindon requires 6.4 times their income. If there is more than one earner in the household the ratio is still 5:1. The SHMA estimates that 35% of first time buyers are priced out of the market for a lower quartile (cheapest) priced flat, 55% for a lower quartile terraced house, and almost 64% for a semi (assuming a mortgage based on three times salary).

“Affordable housing”

According to the Council over the last 4 years 342 “affordable housing” units per year have been produced, but this includes “shared ownership” (part rent part-buy) and what is termed “intermediate rent” (between ‘social’ and market rent) for ‘key workers’. In 2009/10 only 46 shared ownership homes were sold whilst 155 were built. The ‘intermediate rent’ level is only £6 a week lower than market rates (for a two bedroom property), so its no surprise that the lowest level of demand comes from ‘key workers’, so much so that it is suggested that the Council would either have to widen the definition of ‘key workers’ or change the designation of these units to ‘general needs’.

Private rental has increased enormously as a result of the shortage of ‘social housing’. The latest figures from the Department of Communities and Local Government shows that there are 3.6 million households in the private rented sector as compared to 3.8 million in the social rented sector. According to findings in the English Housing Survey, more than half of private renters – 1.9 million – were aged under-35 with 16 per cent – 582,000 – aged 16 to 24.

The number of private renters in Swindon was estimated at 5,636 in 2010. Government policy will put some of these people under pressure which may well impact on the Council. The SHMA explains that government ‘reform’ of Housing Benefit will link increases in the Local Housing Allowance to the Consumer Price Index rather than the Retail Price Index, leading to a decline in its value. This will affect approximately 250 current claimants “in addition to limiting access to self-contained accommodation in this sector for future households”.

From January this year there has been a change in the arrangements for Housing Benefit for the Shared Accommodation Rate. Previously a single person under 25 would get a lower rate based on an estimate of a room in shared accommodation. This lower rate has now been extended to single people under 35, which will probably inhibit people living in self-contained accommodation. Those in such accommodation may have to find shared accommodation and this may have an impact on the waiting list.

“In the longer term, reforms to Housing Benefit are likely to further reduce rates as a result of linking increases in Local Housing Allowance to the Consumer Price Index rather than the Retail price Index, and increasing the age from 25 to 35 for single people claiming to the rate for a room. It is estimated that this will affect approximately 250 current claimants in addition to limiting access to self-contained accommodation in this sector for future single households. In addition, approximately 900 claimants in Swindon will be affected by the ending of LHA payments of up to £15 per week above the actual rent, with 700 losing more than £5 per week.”

Moreover “As some vulnerable people may not be suitable for sharing a house in the private sector, if a social housing tenancy is not obtained, there may be an increase in the length of time spent in supported housing before moving on, or a return to homelessness.”

The organisation Crisis estimates that 30% of private renters receive Housing Benefit but only 22% of landlords are willing to accept people on benefit.

“It is possible that the reforms to HB and LHA rates will discourage more private landlords in Swindon from letting to this group…It may also make it more difficult for the local authority to use this as an alternative form of temporary housing for homeless households, especially for families in need of a five bedroom house.”

Over the period 2007-2010 HB claims have increased from 10,840 to 14,192., with the biggest increase of 52% coming from private renters (compared with a 7% increase from Council tenants and 21% from RSL tenants).

Empty Homes

At the end of 2009 there were a total of 2,518 empty homes in Swindon. The government has previously provided funding for local councils to use for the purpose of renewing private sector housing stock in the form of Private sector Housing Renewal grant for a number of years. However the government has stopped this grant which means that Swindon would either use its own capital for this or stop it. The Council decided to stop any further grant approvals. Another avenue is closed down.

Why the silence of Council house new build?

Curiously the SHMA document remains silent on the question of new Council house building even though it built the first new housing for a quarter of a century last year. The failure of government policy is reflected in the fact that owing to Council house sales under the ‘Right to Buy’, and the virtual ban on building new Council housing, the percentage of ‘social housing’ (Council housing and Housing Association housing) available in the town has declined.

The New Labour government maintained this policy which meant that the only avenue for building homes for ‘social rent’ was via Registered Social Landlords (RSLs). Whilst the number of RSL homes in Swindon increased from 2,729 in 2000, to 4,289 in 2010, the number of Council units declined from 11,753 to 10,490. So over an 11 year period there has only been an increase in available units of 297. Over the same period there has been an increase in the number of households in the town from 75,727 to 88,602, meaning than the percentage of social housing has declined roughly from 19% to 16%.

“Right to Buy”

Under the ‘Right to Buy’ 7,552 Council homes in Swindon have been sold to tenants. The shortage that this has created has meant that Council housing has been reduced to a tenure for the poor (See https://keepourcouncilhomes.wordpress.com/2012/02/01/why-the-right-to-buy-should-be-abandoned/ ). This fact is reflected in the steep decline in the number of sales, only 32 in the 3 years from 2008. Given the prospect of the government increasing the discount that Council tenants can get under ‘Right to Buy’, we can expect to see an increase in the numbers of homes sold. This can only serve to worsen the ‘affordable housing’ shortage. Although the government policy is ‘one for one’ replacement – they expect Councils to build one new home for every one sold – there are grave doubts that this will prove to be the case. The SHMA says that “It is unlikely that the Government’s new funding regime for affordable housing will meet its own delivery targets”. Of course, even if they did then that would do nothing to address the growing waiting list.

Swindon Council can build new Council homes through borrowing money from the Public Works Loans Board. However, under the ‘self-financing’ system the government has set a borrowing limit which is only roughly £21 million above the debt level which Swindon was given under the settlement of the national Housing Revenue debt. There is a need therefore to press for this borrowing level to be raised to facilitate new building and other capital spending.

Finally, the government’s new “Affordable Rent” policy whereby RSLs can introduce the so-called “affordable rent” (up to 80% of market level rent) will present a problem of affordability. According to the SHMA “as Housing Associations move towards an affordable rent model, it may be cheaper for households to buy a lower quartile re-sale property than rent from a Housing Association.” The rationale of the government’s policy is to make new tenants pay for new housing through higher rents. As a government document makes clear:

“The model will be more flexible with providers using existing assets to help reduce the amount of public funding needed to deliver new supply. ” (2011-15 Affordable Homes Programme – Framework ”)

The difficulty for Swindon, as with other Councils is that government policy will worsen the shortage of Council and other ‘social housing’. Unfortunately the SHMA offers no prospect of even improving the situation and fails to challenge national government policy. It offers only a continuation of the policy of 30% “affordable” housing on new ‘development’ sites. Even then it accepts that that target will not always be affordable for the developers. This policy is insufficient to address the “significant unmet need for affordable rented housing from single people and couples”. That need cannot be addressed without a programme of new Council house building. It’s necessary to say so and to campaign for a change of national policy.

Martin Wicks

February 27th 2012