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Toby Lloyd
 
I'm Head of Policy at Shelter, and have worked on housing issues in the public, private and third sectors for nine years. I'm a Londoner, a cyclist, father of two young daughters and member of the Hackney Co-housing Project.

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By Toby Lloyd

Stoke Harbour: a new garden city

Shelter is very pleased to have been named the runner up in the Wolfson Economics Prize 2014: the world’s second biggest economics prize after the Nobel. Along with hundreds of others we proposed an answer to the question: how would you deliver a new garden city which is visionary, economically viable and popular?

Our design [pdf], developed with architects PRP, was for a new garden city called Stoke Harbour on the Hoo Peninsula in Kent, which could provide thousands of genuinely affordable homes, new infrastructure, services and jobs.

With advice from KPMG we combined our design with an innovative self-financing model that was described by the CEO of Legal & General – a major institutional investor – as “capable of attracting real investment” and going “well beyond the answer to an exam question.”  So we are confident that this is a model that is ready to go.

But, you may be wondering, what is Shelter doing entering an economics prize in the first place?  After all, Shelter is not an economics consultancy, or even a housing developer.

Shelter’s mission is twofold: to help those most affected by the housing crisis with our frontline advice and support services, and to campaign for action which will tackle the root causes of bad housing and homelessness.

Thanks to the prize, Shelter now has an additional £50,000 to carry out this vital work. But our primary motivation for entering the Wolfson Economics Prize was to promote our policy programme for reviving our dysfunctional housing supply system, which we set out with KPMG in May.

Right now, one of those root causes of homelessness is the fact that we don’t build enough homes. Under successive governments we’ve failed to build as many homes as we need to in order to match an ageing and growing population. Our whole housing system has failed to meet the demand for new places to buy or rent and we’re now dealing with the consequences. The shortage of genuinely affordable homes is particularly acute, and lies behind many of the housing problems faced by the millions of people our advice services try to help.

Shelter entered the Wolfson Economics Prize to show that there are real solutions to this national failure. It is possible to build attractive, green, affordable places – even in the South East of England – which can win local popular support. Our new research showed that people in Medway would support a new garden city in their back yard by 54% to 33%, which rises to more than 60% support when people are assured that, as we proposed, local services will improve as a result.

Of course there will be voices of opposition, there always are. However, the majority are concerned about homes, jobs and services for them and their children, and will support new development if the proposals are right for the area and communicated effectively.

Preparing our entry for the Wolfson Economics Prize gave us a great opportunity to speak to a large number of people about a particular proposal for development. More than any investor, architect, builder or housing charity it is local people who need the homes and who would ultimately live there. There is no need for a council of despair about NIMBYism: our evidence suggests that a local referendum on a new garden city proposal could be won.

In recent years, England’s worsening housing shortage has become a concern for the majority of people. Whether you’re a renter paying sky-high rents, one of the one in three working parents cutting back on food to pay your housing costs, or a homeowner worried about your children or grandchildren’s prospects of ever getting a home of their own, the housing shortage matters to you. That’s why housing is now consistently identified as a top five issue for voters – above crime, education and pensions.

For Shelter, the whole Wolfson Economics Prize has been a massive boost to our campaign to build the homes we need. We’ve shown that it can be done, with decent amounts of attractive and genuinely affordable homes. But we’re still a long, long way from building enough homes in England – and even an ambitious programme of garden cities will take many years to make a difference. The shortage is so severe, and the problems so entrenched, nothing less than a major programme of investment and reform will do. We need action across the spectrum – from infill development, self-build and traditional affordable housing investment, to bold land market reform, new garden cities and urban extensions. All the political parties must commit to an ambitious strategy to deliver the 250,000 homes per year we need.

Solving the housing shortage is possible. Now it’s up to all of us to make it happen.

Martha Mackenzie
 
I’m the Stakeholder Relations Assistant at Shelter, I joined the Public Affairs team in July 2012. I have been working on a wide range of projects, most notably engaging with local authorities through our rogue landlords campaign. In my spare time I’m studying for a MA in legal and political theory. When not chained to a desk I can usually be found running or cycling around London.

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By Martha Mackenzie

What’s really happened to rents in Scotland?

Last week, Estate Agent LSL Property Services used the release of their Buy-to-Let index to claim that the ban on letting fees in Scotland has caused a ‘rent hike’. This didn’t sound quite right to us at Shelter, so we decided to go away and take a closer look.

Tell me more.

When we looked more closely at LSL’s index- we found that their own figures did not stack up against this claim of a ‘rent hike’.

  • LSL have reported a 2.3% average annual increase in Scottish rents, measured over a 21 month period. This is the basis for their ‘rent hike’ claim.
  • Interestingly – while this figure cannot easily be compared – the current 12 month inflation rate in Scotland (2.7%) is not substantially higher than LSL’s figures for England and Wales (2.0%), given the margin of error involved.
  • Furthermore, when these figures are regionalised, LSL’s index shows an annual rent increase of 3.0% for North West England. Letting agents are still able to charge fees to renters in England.
  • While the LSL index does show an increase in Scottish rent inflation, this increase started in summer 2013- later that one would expect if it was driven solely by the ban on fees.
  • Equally, the same index shows that rent inflation is now slowing down in Scotland- making causality even harder to pin point.

By their own figures, LSL’s claims are tenuous at best.

How do we find out what is happening to rents?

Regardless of what the figures say, it is always unwise to use a single rent inflation source to make sweeping claims about causality.

Last month, we looked at the broad range of rent inflation figures that are currently in use. Each figure belongs to a different measure or index- and each of these indexes is drawn from a different data source. In this case, LSL’s share of the property market. This means that there will undoubtedly be parts of the market that one single index cannot capture.                                                   

It is also risky to draw broad conclusions directly from a movement in rents. A variety of competing factors can impact rent levels. These factors need to be isolated before we can begin to understand what has actually caused an increase or decrease in rents.

Sounds difficult- what can we do?

Last autumn, Shelter commissioned independent research to help us asses the impact of Scotland’s ban on letting fees. We commissioned this research precisely because of the uncertainly outlined above. 

The research sought to isolate the various factors that impact rent levels- so that we could understand what effect the ban was having on renters and landlords.

The research was conducted by two research agencies: Rettie & Co. and BDR Continental. They found that:

  • Landlords in Scotland were no more likely to have increased rents since 2012 than landlords elsewhere in the UK.
  • Less than one in five of the letting agency managers interviewed as part of the research said they had increased their fees to landlords.
  • Many landlords opted to absorb any increase in their letting agency fees as opposed to passing it on in full.

However, while this research was extremely rigorous- it still did not reveal all the answers. One part of the research showed an unexpected 1-2% rise in Scottish rents, although it could not conclude to what extent the ban had – or had not – contributed to this rise. Other sections of the research suggested wider economic factors were clearly a larger contributing factor.

Ultimately, it is extremely difficult to disentangle what factors drive changes in rent levels.

What do we know?

We know that housing costs are high. This is especially true for private renters. The government’s own figures show that the average renting household currently spends 40% of their weekly income on housing costs.

When starting a tenancy, renters are faced with huge upfront costs. Unpredictable letting fees are piled on top of deposits and rent in advance. This cost burden can be crippling- and can make it even harder for families to find a private rented home. Something that was acknowledged by the Chartered Institute for Housing and Resolution Foundation- who called for a ban on letting fees at the weekend.

That is why Shelter – and the majority of renters – continue to support a ban on letting fees.

Hannah Gousy
 
Hannah is a policy officer at Shelter

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By Hannah Gousy

Renters need more protection than legal technicalities

Renters need more protection than legal technicalities

Two legal cases about private renting have gained a lot of attention recently in the housing press. Both concern the use of possession notices. But what are the implications for renters?

The first is Superstrike Limited vs. Rodrigues, a tenancy deposit case which came before the Court of Appeal last year.  Superstrike took a deposit before the tenancy deposit legislation came into effect in April 2007. When the 12 month fixed term contract came to an end in 2008 and became a rolling statutory periodic tenancy, Superstrike failed to protect the deposit. In 2011, when the tenant, Mr Rodrigues, was served with a Section 21 possession notice, he argued his landlord couldn’t evict him because they hadn’t complied with tenancy deposit legislation, as the periodic tenancy had started after the law had come into force in 2007.

The Court of Appeal ruled in favour of Mr Rodrigues. A rolling statutory periodic tenancy was considered to be a new tenancy, not a continuation of a fixed term. The outcome was that, to comply with the legislation, even in cases where a deposit had been legally protected, landlords had to issue the prescribed information to confirm this whenever a new tenancy arose.

Landlords reported this caused a lot of confusion.

The Government’s response was that this wasn’t the intention of the original tenancy deposits legislation, so they’ve tabled an amendment on deposit protection as part of the Deregulation Bill. If the amendment passes, landlords will not need to re-issue the information about deposit protection when a fixed term tenancy becomes a rolling tenancy or is renewed for deposits taken since April 2007. And landlords will be allowed 90 days to protect deposits taken before April 2007.

This amendment in itself will not substantially affect the rights of renters – requiring landlords to re-serve information which has already been given doesn’t give renters any extra protection. But the case is important because, even where a deposit had been protected, it allowed renters to challenge an eviction on the technicality that the landlord had failed to serve the correct information. This didn’t ultimately stop renters being evicted – but it delayed the process while the landlord served the correct information and then reissued the Section 21 notice, giving them more of a chance to find another letting.

The other recent case of interest is Spencer vs. Taylor; another Court of Appeal case concerning the technical details of how a Section 21 eviction notice is served.

The law currently sets out two types of ‘no-fault’ Section 21 notices, one for fixed-term tenancies and one for periodic tenancies.

Under both notices, landlords must give a two month notice period. However, in a periodic tenancy the landlord must also ensure that the notice is dated to expire on the last day of a period of the tenancy. In practice this means that renters are given as a minimum two months’ notice plus however many days or weeks to bring them up to the end of their tenancy period.  So, for example, if the rent is normally paid on 30th of each month, if notice is served on 15 June, it notice should be dated to expire on 29th August.

This difference between the two notices is fairly subtle, so landlords often confuse the two – either serving the wrong notice or providing an incorrect expiry date.  This allows renters to challenge a Section 21 notice on the basis it’s incorrect.

This is what happened in the case of Ms Taylor, who was in a statutory periodic tenancy after the expiry of a fixed term tenancy. When her landlord served a Section 21 notice, he failed to properly calculate the correct last day of the tenancy period. The court ruled that the notice was in fact valid because the tenancy had at some stage been a fixed term, and so it only needed to be two calendar months long.

Much to the surprise of housing lawyers, the Supreme Court refused Ms Taylor permission to appeal this decision, so it stands. Landlords can now use either type of Section 21 notice to evict tenants who are in a statutory periodic tenancy. Both only give renters two months to find a new home. Again, this case removes the scope to challenge some Section 21 notice on a technicality.  That landlords might confuse the two notices and serve them incorrectly gave renters some limited ability to challenge a possession notice and remain in their homes for a bit longer. When you’ve got to uproot your family, possibly after living in your home for a number of years, and find somewhere new to live in a hurry, even a few weeks’ more notice can make a difference.

What are the implications for renters?

The key implication is that the already narrow scope that renters had to challenge Section 21 no-fault eviction notices has been narrowed further – as landlords are now more likely to get the notices right first time. This matters because renters have so few rights to challenge a no-fault eviction.

Both these cases highlight the very fragile position of renters, and the lack of legal protection to stop them being evicted from their homes at very little notice.  With 9 million people now renting from a private landlord – 1.3m of them families with children – it’s clear that renters who pay their rent and act responsibly urgently need more protection from losing their home with just two months’ notice.

Pete Jefferys
 
I’m a Policy Officer at Shelter and interested in how we can get housing up the political agenda, secure a better deal for private renters and get affordable homes built. Outside of policy, I love exploring new parts of London, sport and going back home to Devon.

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By Pete Jefferys

How to actually deliver a new garden city

As one of the five finalists for the Wolfson Economics Prize (the second biggest economics prize in the world after Nobel), Shelter’s final submission for the prize has now been published.

We were delighted to be selected as one of the finalists in June and have since built on our initial submission to show how a new garden city could be visionary, viable without government subsidy and popular with local people.

We entered the prize because it presented a unique opportunity to show how our proposals for increasing the supply of new homes could work in practice. So our submission focusses on a real location – the Hoo Peninsula in Medway – and engages directly with the unique opportunities and challenges of the site.

We worked with local people to establish how we could make the development of the garden city work for them. And we based our financial modelling on the actual infrastructural, environmental and economic character of the location, to be sure that the garden city would be viable.

By doing this we have developed a plan that is not just theoretical, but a model that is ready to go.

Popular with local people

There will always be voices that oppose new development and there is a danger that sometimes they are the ones that shout the loudest and the only ones that get heard. Our submission is built around the principle that – ultimately – everyone should have an equal say on whether a new garden city should be built in their local area, by putting it to a vote in a local referendum.

In order to find out how we could win support for a new garden city in Medway in a referendum we worked with local people in a series of focus groups, in depth phone calls and a Citizens Jury (all kindly sponsored by Legal & General and run by BritainThinks) to understand their hopes for the area and potential concerns about new development.

We found that, people dislike the idea of any incentive that could be interpreted as a cash bribe, so for example a £5000 cash payment would not make people more likely to support our garden city. However, financial incentives that were perceived as compensation for disruption (like council tax rebates or energy bills savings) are more popular.

Even more likely to persuade people to support the garden city, though, were the non-cash benefits of the development: the new jobs that it would create, the new infrastructure that it would deliver and – crucially – the new affordable homes that would be built. However, that message must be delivered to people in a targeted and credible way. It’s not good enough just to sit back and let the design speak for itself.

Viable without government subsidy

Creating a proposal that could be delivered without public subsidy is one of the Wolfson prize’s key criteria. In order to ensure that our proposal would be viable without subsidy we partnered with architects PRP and received vital support from KPMG, Laing O’Rourke and Legal & General.

With their expertise we developed a new investment model that would bring in private sector investment and release land for the development at lower values by inviting the existing land owners to invest their land into the scheme as well. By investing their land the return they would receive would be dependent upon the continued success of the garden city, incentivising their long-term commitment to it.

We set out how we would drive rapid build out of the site, seeing homes built at 4.5 times the national average rate, to ensure that the garden city would help contribute to solving the housing shortage as soon as possible and deliver returns to investors sooner.

But the long-term viability of a new settlement depends on a lot more than how it will be paid for. It depends upon making sure that the community itself will be economically viable for the long term, by ensuring that people will have access to jobs. That’s why our submission focusses on the creation of transport infrastructure, to tie Stoke Harbour to other regional economies (including 45 minutes to Kings Cross), and includes the creation of 10,500 jobs in the town itself and a new off-site construction factory built on brownfield land.

Building more homes is absolutely essential if we are to tackle England’s housing shortage, bring down the cost of housing and reduce homelessness. Shelter are committed to prove that this is not only something that will be good for our communities, but can also be good for the national economy. We’re determined to show that it is not only something that can be imagined in theory, but can also be delivered in practice.

Whatever the outcome of the Wolfson prize, we believe that we’ve shown that this is something that can be done.

Zorana Halpin
 
Zorana Halpin is a Policy Officer at Shelter

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By Zorana Halpin

Working families forced to cut back to pay their housing costs

Our research, out today, shows that working parents are struggling to make ends meet, with the equivalent of 880,000 working parents skipping a meal in the past year to pay their housing costs.

Despite working families doing whatever it takes to keep a roof over their children’s head, the effects of rising housing costs are taking their toll.

The government’s English Housing Survey shows on average, households spend almost a third of their weekly income on housing costs, rising to two fifths for private renters. What we know now is that the growing proportion of income swallowed up by rent or mortgage payments leaves families with no choice but to cut back on essentials – our research shows that last year 3.1 million working parents had to cut back on what they spend on food.

 

Just how many cut backs can families make? How long can parents continue to skip a meal in order to pay their rent? And what happens if these families lose their jobs?

If these families living on a knife edge suffer a setback – such as being made redundant or falling ill – they are likely to have little to rely on in terms of savings. Government support will be vital whilst they look for work. But the housing safety net has been successively weakened over the past few years meaning that from day one things are tougher for someone who is newly unemployed:  

  • Previously, the newly unemployed got support with their full rent for 13 weeks. This gave them chance to find employment, without having to worry about getting into debt.  Now, those renting privately will only get support to the equivalent of Local Housing Allowance (housing benefit for private renters) rates in their local area. For many families there will be a shortfall between the support they get and their actual rent. Families without an income or savings will struggle to pay that shortfall and could easily leave them building up rent arrears.
  • Under Universal Credit newly unemployed people will not be entitled to any support for the first 7 days of unemployment. Because Universal Credit is paid a month in arrears, this means they will have to wait for 5 weeks for their first payment towards housing costs. We think this unnecessarily exposes struggling families to rent arrears. 
  • On top of that, under current government proposals newly unemployed families in rent arrears will face a hefty 40% deduction from their benefits, until they pay their rent arrears off. This leaves families living on a shoestring. 

We know the majority of people think a housing safety net is an essential part of civilised society.  

When families fall on hard times there should be government support to help them to get back on their feet – that support should kick in immediately and shouldn’t leave families in arrears and facing eviction.

That’s why we’re asking our supporters to tell the government that we need an adequate safety net.  

In the meantime, we want struggling families to know that Shelter can help – because losing your job shouldn’t mean losing your home.

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