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Sunday, 31 October 2010

The House of the Rising Sun

A few years back friends of ours bought a two bedroom flat in Walthamstow to rent out. They rented out to their son who was unemployed housing benefit paid  his rent. The irony was that the Job Centre was directly opposite the development which contained the flat.

At the time I thought it was a great wheeze. What a wonderful way to transfer wealth from the state to the individual and the son got housed.

10 years on we have a frightful row about the state limiting the rent it will pay for those on low incomes. The upper limit for a 4 bed house will be £21,000 a year about £400 a week. Much of the comment and anger has focused on families living in the expensive parts of London, where rents are significantly more than the limit proposed by the Government. The Major of London, Boris Johnson, it was claimed, said that he wouldn't oversee a Kosova cleansing of the capital. He meant families being forced to move out of those areas because the limit on rents. We later heard that some London councils were exploring coastal towns looking for cheap accommodation to move these poor unfortunates to.

People have pointed out that those forced to move will suffer huge disruption. Friends, schooling, social groupings will be seriously disrupted. Many are heavily dependent on existing social services in the area they live in. The new areas they are forced to move to may well not have the finance or skills  to replicate those services; and that could create more expensive troubles and difficulties.

Many of these families have women as the only bread winner, usually working in low paid service jobs which are relatively close to hand. Move them out 50 miles and they won't be able to afford the cost of getting to work and will have considerable difficulty getting a similar job in their new location.

Others point out that the last thing our society needs is a further fragmentation of society. The argue that a mix of communities, the well off and the not so well off living in the same area is beneficial. Increased Yuppie density in desirable parts of this capital of ours is not necessarily a good thing. 

The Government argue that the policy is fair. They ask whether it's fair that a family holding down a job or two can't afford to live in expensive properties or areas while those on housing benefit can. If a job commuter has to travel 2 hours and 50 miles to work because he can't afford to live near his office why should those on benefit get a better deal.

The Government has been accused of listening to the readers of the "Daily Mail" rather than the facts - whatever they are.

The Government points out that the housing benefit bill has doubled in 5 years and  much of this has been due to rental inflation. As I understand it - local councils, who are responsible for making housing benefit payments, pay benefit based on the average area. There appears to be no mechanism to slow rental growth.

If this is the case then it needs to stop. The unemployed, dispossessed, unfortunate should not be a landlord's meal ticket. It might in part explain the explosion in the "buy to rent" market.

Ken Livingstone, Boris's predecessor, is in favour of capping rents. It sounds an obvious ploy but we had rent control in the 1950's and 60's and that led to huge inequality in housing outcomes. Landlords neglecting property because they couldn't keep them up and make a living and scams and intimidation to get round the law. A few found themselves paying a controlled rent in areas which became hugely expensive. The lucky ones were bought out at great cost to developers: the hapless were subject to all sorts of intimidation and deprivations to force them to move.

The housing Minister when interviewed about this earlier this week said there was evidence that rents were moderating because of the announcement of new cap. He's either lying or stupid. Certainly in London there are still enough people moving into the capital prepared to pay the price asked. So there's a real possibility that if this housing benefit cap goes ahead some families in London and other large cities will experience severe disruption.

I'm not a great fan of local authorities but I can't help but feel that when they were the providers of the bulk of social and low cost housing housing outcomes were more equable. I don't necessarily see that as the only solution. Germany has a vibrant private renting sector where a few big, professional, companies provide a good product - not the army of amateur land lords we now have in this country.

More homes - whoever provides them would help.

1 comment:

Anonymous said...

Private letting can feel horribly insecure. I think it can be a headache for the landlord as well if the tenant is a bold rogue. It's one of those issues that, in my opinion, reflect a dysfuntional community and are hard to solve at their own level. Kinda like cheeky kids you can't clout or report to their parents - a problem of lack of community.

The landlord has a succession of strangers passing through his place and has no pride in it or concern for the tenants' wellbeing; the tenants probably resent the landlord and don't especially care about settling bills or leaving the place in good nick. It's a relationship of mutual exploitation.

So I think housing co-ops are maybe the way to go. Apparently they are rare in the UK:

I think council housing is a great thing but there's this free-market dogma so it's an impossible sell to say we should have more council houses in a time of cuts; there's a money-angle in co-ops that the Tories may like and it chimes with all this 'Big Society' hot air.