The Housing and Planning Act will accelerate the loss of social housing and increase homelessness, warns CIH chief executive Terrie Alafat.
The Housing and Planning Act 2016 has now completed its passage through parliament and received royal assent. It introduces a number of major policy changes in England including starter homes, the sale of higher-value council homes, and for council tenants both 'pay to stay' and the extension of fixed-term tenancies.
While we share the government’s ambition to substantially increase levels of housebuilding and their desire to reverse the decline in homeownership, we remain concerned about the on-going loss of social rented housing. Figures from our UK Housing Review show that, through a combination of Right to Buy sales and conversions to affordable rent, 38,000 social rented homes were lost between 2012 and 2015. Some of the measures included in this act now look set to continue and accelerate that trend and we have estimated that in total 370,000 social homes may be lost by 2020.
For example we have previously estimated that receipts from the sales of higher-value council homes are unlikely to be sufficient to both meet the cost of offering discounts to housing association tenants under the voluntary right to buy and to build replacement homes. As a result, and depending on the detail, we believe that up to 7,000 council homes could be lost per year from this measure alone.
Similarly, it now looks very likely that there will be a requirement to make a certain proportion of homes in all new developments starter homes. While these will undoubtedly benefit some aspiring first-time buyers, our concern is that this will be to the detriment of others if these directly replace homes which would otherwise have been built for rent, at levels truly affordable for those who cannot access market housing.
Overall there is a clear danger that this reduction in the number of affordable rented homes, coupled with further welfare cuts which are squeezing affordability, particularly for private tenants, could further increase already rising levels of homelessness. The latest government statistics show a six per cent rise in homelessness acceptances across England, and a 10 per cent rise in London, over 2015. Our own research shows that cuts to Local Housing Allowance (LHA) rates mean that in some parts of the country, only five per cent or 10 per cent of privately rented accommodation is affordable for those receiving housing benefit.
However there was good news for housing professionals in the shape of amendments introduced in the House of Lords which have clearly improved a number of other measures included in the act. For example, we welcome amendments to pay to stay which will not only make it voluntary for housing associations but will also ensure that the income thresholds above which the policy applies are uprated with inflation and that tenants receiving housing benefit will not be affected.
With tenants due to pay an extra 15p in rent for every pound earned over the threshold, there is still a danger that Pay to Stay will lessen incentives for working tenants to increase their income. It will also be both complex and expensive to administer but these changes do at least go some way towards addressing our concerns. And they also allow more room for housing professionals to exercise their professional judgement based on an understanding of personal and local circumstances.
Similarly councils will be required to give all new tenants a tenancy for a fixed term but amendments introduced in the House of Lords have increased the maximum length of this term from five to 10 years, or longer in the case of households containing a child under nine. This is also welcome, as it will give councils and housing professionals much more freedom to take both local housing need and individual circumstances into account when making decisions about how long a tenancy should last.
There are also several areas where important details have yet to be determined and will be set out later in regulations, leaving a number of vital issues still very much 'up for grabs'. For example, the secretary of state retains powers to set out in regulations any circumstances in which councils may still be able to issue secure tenancies. Having previously argued that councils should retain some flexibility in this area, as there will undoubtedly be occasions where a secure tenancy is simply much more appropriate than a fixed term, we will be waiting for this with interest.
But perhaps most significantly, the government will still have to return to both the House of Commons and the House of Lords to discuss the detail around higher-value sales. This will be absolutely vital as it will determine both how the burden of forced sales will be spread around the country and what the prospects for councils being able to replace these homes look like. Therefore although the bill has now become an act, there is still much work to be done to get the best possible outcomes for housing in this country.