This is courtesy of Red Brick blog. One of the many powerful contributions to the London Labour Housing Conference on October 25 came from Madeleine Davis of the Peabody Ex-Crown Tenants Campaign.
In her speech, she first outlined what happened to the rents of tenants who transferred from the Crown Estate to Peabody Trust in 2011. She then drew some general conclusions about housing costs for people living in ‘intermediate’ housing, and concluded by questioning the current use of the concept of affordability, which has become debased.
The campaign can be followed on Twitter @norentrises
By Madeleine Davis
I represent a rather specific group of tenants, those whose homes were bought by the Peabody Trust in 2011 from the Crown Estate (the Queen’s property company). We live in around 1200 homes in four different areas of London – Victoria Park (boroughs of Hackney and Tower Hamlets), Millbank (Westminster), Cumberland Market near Regents Park (Camden) and Lee Green in Lewisham.
Peabody bought all four estates for a knockdown price of around £140 million, after a very widely publicised tenant campaign with cross-party political support forced the Crown Estate to drop its asking price from £250m and impose various conditions on the sale.
We were widely thought to have got a good deal. The conditions of sale established protected rent ceilings for existing tenants at 60% of market levels, up to 80% for new tenants, and with a proviso that of every 10 new lets made by Peabody nine of them had to be to keyworkers. Steve Howlett, appearing before the GLA, made a public commitment that he was ‘absolutely committed to keeping these homes affordable and available to the key workers who are so crucial to London’s economy and quality of life’.
However, those of us who represented the tenants warned that any market-linked rent policy would quickly undermine that promise. And so it has proved.
Affordability and our communities: before and after
Let me quickly contrast what we had before the sale was first mooted, with what we have now. Under the Crown Estate (exempt from many of the laws and pressures affecting lesser mortals and indeed housing providers), a sort of benign neglect had prevailed and created something pretty unique. The Crown had run the estates with rents at similar levels to social housing, but with keyworker eligibility conditions attached. Resident turnover was as a result extremely low, in fact a quarter to a third of tenants were rent-act protected. Rent increases for others were at or just above inflation levels.
So what was at stake was housing of a type almost unheard of in the capital by 2010 – enclaves of decent, cheap, long term-rented homes, right in or near the centre of London, where people working in the key public sector jobs that keep the city going – emergency services, the NHS, police, education, transport – could bring up their families and plan a long term future. We had residents who had been in their homes for up to sixty years, families living close to each other, streets where neighbours look out for each other and feel safe. And what is more, this housing was NOT subsidised housing – it made a return for the Crown Estate of around £3m per year.
What we have now is different, and is of broader relevance as a concrete illustration of the nonsense, lies and muddle that that surrounds so-called affordable, sub-market or intermediate rents.
Not long before the decision to sell the Crown Estate had started talking about ceiling rents in relation to ‘market rents’ (they were less than half of those levels, however), and imposing higher annual rent increases. So when Peabody took over, they were able to present a market-linked rent policy as a continuation of that already in force. They immediately did a market valuation. Their plan was to charge 80% for new tenants (in line with the government’s affordable homes framework that also of course controversially extended this into the social rented sector) and to get existing tenants’ rents up as fast as possible to 60% of those levels by imposing increases of 9% per year. This was possible because they defined us as ‘keyworker intermediate’ rather than social housing.
This model (as we expected) is not working for anyone. Peabody found it couldn’t let flats to new keyworkers at 80%, and is now advertising them at 65%. Existing tenants have seen their rents rise by 36% in the last four years. Many –including working families – are now leaving their homes either because their rents are simply unmanageable or because they can no longer see any long term future on these estates (if for instance they have a child). We are seeing instances of people in real hardship. It’s not hard to see why, when Peabody is asking rents of £960 a month (£11520 a year) for a 2 bedroom flat in Victoria Park; or £1200 a month (£14,400 a year) for a 1 bed in Millbank. The blindingly obvious problem is the absurdity of the linkage of rents to market levels rather than income levels.
If instead we take a widely accepted definition of housing affordability – that it should account for a third or less of net income – then a single keyworker occupying a studio bedsit in Millbank would need to be earning £34,560 after tax to afford the rent. A family with one child under two occupying a two bedroom flat in Millbank would need to be taking home £52920 to afford the rent. Such a family is also likely to have to pay £14000 a year in childcare costs if both parents work full time. A family with two children occupying a three bedroom house in Victoria Park would need a take home salary of £47268 to afford the rent.
To put this in some context, the average (full time, before tax) starting salary for a qualified teacher in inner London is £27,270, for a new recruit to the police force, £25,500, and for a registered nurse £25,665. 
Yet when we raise these issues with Peabody we are blandly told that rents are set at affordable levels, and in one worrying recent letter, that ‘the current rent on these properties is a long way below what it should be’. Complaints about hardship are met with offers of advice on benefit eligibility. And Peabody are also, we understand, trying to renegotiate the terms of sale with the Crown Estate to open up the housing to non-keyworkers, now they are finding that keyworkers can’t afford the keyworker accommodation they are providing.
We have therefore started actively campaigning again, noting the bitter irony of a situation in which a charitable and supposedly philanthropic body whose founding purpose is to ameliorate the condition of the poor and needy in London, is actually forcing people out of their homes and communities. So we would like to ask for the help of Labour members and politicians here today in publicising our campaign against these rent levels and helping us put pressure on Peabody as our landlord.
Lyons and the London housing crisis
Longer term, it’s the broader context that is of course critical. We are seeing a welcome proliferation of housing-related campaigning, from the E15 mothers to London Renters and Generation Rent. We are also seeing more recognition that these campaigns are different manifestations of a systemic housing crisis, and the development of a more joined up critique of the failure or unwillingness of all political parties to tackle it. Here is where the Labour party (of which, I should say, I am not myself a member), has a real opportunity to make the running, especially in London, where the crisis is most acute and where rents (and of course the house prices to which they are indirectly linked) are so obviously unsustainable.
Now here I am really disappointed with the Lyons report, which accurately diagnoses the roots of the crisis but fails to follow through by recommending adequate measures to tackle it. In relation to its treatment of renters, Lyons doesn’t do nearly enough to challenge the damaging obsession with owner-occupation as the gold standard. Renting is still largely seen as the preserve of the poorest and most vulnerable in the case of social housing, or as a stopgap for young professionals. There is not enough effort to push the idea (common in the rest of Europe) of long term renting as a secure and decent option for large swathes of the population, which it absolutely has to be in London. Instead the Lyons report talks about ‘improving the offer’ on shared ownership schemes, without any discussion of the downsides of these – for there is also a strong case to be made that these schemes (especially in London) are poor value and expensive, trapping people into massive debt in pursuit of a dream they are unlikely ever to realise.
Housing Associations are to have their potential and creativity unlocked – presumably that means that they will come to resemble private developers even more than they do already – on the doubtful Panglossian assumption that they’ll use this increased freedom to cross subsidise for the benefit of all (worth noting here Peabody’s 291million surplus last year) .
Also, the Lyons report continues to talk in the debased and now largely useless language of ‘affordability’, and while trying to persuade us of the benefits of a larger market rented sector, completely ducks the issue of rent control.
Housing for use not for profit
The fundamental issue, of course, is that Lyons continues to frame the whole question in terms of housing as investment rather than housing as an essential human need and shared resource. It doesn’t confront the issue of market failure, instead looking for ways by which the market-driven approach that got us into the mess can be manipulated, enticed and propped up to get us out of it.
So, are there any reasons to be cheerful? I hope that some of them might be in this room. If it’s perhaps too radical and utopian to hope that the Labour Party nationally might reconnect with some of its own radical and utopian traditions and try to reframe the debate in that way, then perhaps London can take a lead, and I know that this group has put forward a lot of useful proposals. At the risk of telling you what you already know, I’ll just highlight a couple of points by way of conclusion.
One useful step might be to abandon the language of ‘affordability’, since we all know it means pretty much nothing any more. We need a clear alternative – and here I notice that the idea of a Living Rent (inspired by successes of Living Wage) is already gaining traction, though at the moment different groups appear to mean different things by it. Certainly rent setting in relation to income and not the market is an extremely useful idea, but needs careful handling given that income disparities in the capital and in individual boroughs are so wide that ‘average’ levels might be very misleading.
Finally, I would like to make a plea for some honest discussion around the future of ‘keyworker’ schemes and so called ‘intermediate’ housing. The term intermediate has usually been used to cover shared-ownership type models aimed mainly at keyworkers, but there has also been a smaller intermediate rented sector, also targeted at keyworkers. These models have largely failed to help those they were meant to, because (as our Peabody example shows) the income levels that are increasingly required are way above those of public sector workers. Boris Johnson’s housing strategy moves away from keyworker eligibility for the First Steps programme, and the Lyons report also points in that direction, reasoning that restricted eligibility constrains supply and instead talking in much broader terms of low and middle income earners.
But think back to 2010. The element of our campaign that most captured political and media support was the idea of London’s essential workers being priced out of the capital – that’s the basis on which we got everyone from Boris Johnson to George Galloway onside. Yet at the moment no party is making any sort of case for keyworker schemes as such. Clearly, a massive investment in new social housing (of the kind that SHOUT is calling for) and greater regulation and control of the private rented sector (as argued for by London Renters, Generation Rent and others), if implemented, would – over time – close the affordability gap. But in the meantime, so called ‘affordable’ schemes are passing beyond the reach of groups of people that London really does need to house in order for it to function.
A ten yard stretch of the street where I live contains five flats that between them house two ambulance drivers, a nurse, a police officer, a teacher and a tube worker. All have families and most work shifts that mean they have to live within reasonable travelling distance of their work. If they are priced out, as is happening, London will be the poorer.
 Pay scale information retrieved from : http://www.rcn.org.uk/__data/assets/pdf_file/0020/530228/004405.pdf; http://www.nasuwt.org.uk/consum/groups/public/@salariespensionsconditions/documents/nas_download/nasuwt_012875.pdf; http://www.bbc.co.uk/news/uk-21027176