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Zorana Halpin
 
Zorana Halpin is a Policy Officer at Shelter

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By Zorana Halpin

London’s forgotten homeless

Question:

How have we got into a situation in London where being homeless could mean: 

a)      Living in insecure temporary accommodation for up to 23 years 

b)      Living in temporary accommodation up to 200 miles away 

c)       Subject to the benefit cap with a £100 per week shortfall, putting you at risk of arrears and eviction?

 

Answer: 

A heady combination of a housing shortage, inadequate government support with housing costs, some private landlords taking advantage of desperate councils, and the benefit cap. 

Temporary accommodation is meant to provide suitable and temporary accommodation for homeless households. But our research out today shows it’s not temporary for some households – and for some households it’s no longer affordable.   

So what did we find?  

Our results found in 17 London councils over a third of households in TA had been there over 2 years, and nearly 500 households had been there for over 10 years.  

Our results indicates a gradual displacement of households (and therefore pressure on housing stock) from inner London to outer London. The majority of households placed out of area by inner London boroughs are placed in outer London. Enfield is hosting at least 1000 households on behalf of other London boroughs.

The pressure on outer London councils is having a knock on effect. Just look at where the biggest rises in placing people out of area has been, according to the government’s own statistics:  

 

 

Source: P1E Homelessness statistics, Q4 2011 compared to Q4 2013

 We also found that an estimated one in 4 London households in temporary accommodation could be affected by the benefit cap, which seems like a perverse joke.

Today’s DWP figures show there were 12,523 households subject to the benefit cap in London at the end of May.

Enfield, who we now know have absorbed over 1000 homeless households from London councils, also have the highest number of households subject to the benefit cap nationally.

According to our estimates in London alone around 3,100 households are likely to be homeless and subject to the benefit cap. This is a conservative estimate and below DWP’s own estimate which was that 4,600 homeless households would be subject to the benefit cap.

Last but not least we found that hundreds of homeless families subject to the benefit cap have a rent shortfall but are not yet in receipt of help in the form of Discretionary Housing Payments.

It’s far from clear where these legally homeless households who are presumably racking up mountains of rent arrears will end up.

So what’s going on?

TA costs are high putting councils in a difficult position when looking for suitable placements in high cost areas – and now meaning thousands of homeless households are subject to the benefit cap.

LHA rates are out of touch adding to the difficulties of placing households in suitable accommodation and meaning that moving households on from temporary accommodation into suitable accommodation is a massive challenge.

Some landlords prefer not to let to housing benefit claimants putting the landlords who do let to people on Housing Benefit in a powerful position. We even know that some are getting incentivised by councils to take homeless households in.     

There’s no doubt that within this heady mix, London’s homeless are being forgotten in more ways than one. 

More homes are needed, and in the interim, the government must act to put protections in place to end this perverse merry-go-round before it gets into full swing.

 

 

 

John Bibby
 
John is a Policy Officer at Shelter.

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By John Bibby

“Looking to avoid providing affordable housing?”

Are you a developer? Worried about pesky obligations to pay for new affordable homes eating into your profit margin?

Then you need the services of a company like this one, who – as they put it – can help you “avoid affordable housing contributions with [their] viability reports”. They claim to be able to help developers avoid such contributions for planning applications where they might eat into profit margins of anything up to a whopping 17.5%. And to prove it they provide a page of case studies detailing an estimated £5.5 million of payments towards affordable housing that they have helped developers to avoid or renegotiate.

Rest assured: this is all perfectly legal.

Negotiation with councils of Section 106 planning obligations has existed since they were created as part of the 1990 Town and Country Planning Act.

So if it’s all legal then what’s the problem?

Partly, it’s just a question of the taste of the company’s advertising. The language used is crass and completely ignores England’s desperate shortage of affordable housing. They may not be the only firm offering this service (plenty do), but they probably are the only one that’s chosen to illustrate the savings that developers can make with an image of someone pushing a wheelbarrow loaded with cash.

But this is not just about some consultant’s poor taste in advertising.

Recent changes in both regulation and the law have made it easier for developers to avoid obligations to pay towards or build affordable housing by claiming that doing so would make schemes ‘unviable’.

The introduction of the National Planning Policy Framework (NPPF) allowed developers to avoid contributions towards affordable housing where doing so would mean that the development would not provide ‘competitive returns’ to landowner and developer. The Growth and Infrastructure Act strengthened this by extending developers’ right to apply for renegotiation of affordable housing obligations that have already been agreed and giving them a subsequent right to appeal. So if the market changes then developers are able to go back and renegotiate.

Shelter argued when both the NPPF and the Growth and Infrastructure Act were introduced that they would make it harder to deliver affordable housing through Section 106 planning obligations.

This is now being borne out by the decisions of the Planning Inspectorate, which has upheld appeals from developers arguing that delivering agreed contributions to affordable housing would make the scheme unviable.

In the case of Land at the Manor Shinfield, the planning inspector found that a 20% margin represented a competitive return meaning that the number of affordable homes delivered as part of the development was reduced from 40 to just two. A 20% margin may sound more than ‘competitive’ compared to other industries, but developers are able to argue for margins of this level because the development process is currently inherently risky and the margins uncertain.

The changes in the NPPF were introduced with the intention of getting development moving, but failed to remove this inherent risk. Instead of creating desperate fixes that minimise the levels of affordable homes being built we should be getting to grips with the fundamental shortcomings of England’s housing supply system.

Earlier this year we argued that we can fix the housing supply system by making it substantially less risky and incentivising developers to deliver unviable sites with devolved infrastructural spending. Sticking with the current approach will just continue to give developers an easy route out of providing affordable homes.

John Bibby
 
John is a Policy Officer at Shelter.

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By John Bibby

Lies, damn lies and rent statistics

Here’s a quick quiz: how much are rents going up by in England?

A)   7.5%
B)   1.4%
C)   4.6%
D)   1%
E)   They’re not rising, they’re falling

It’s a tough one, but if you answered any of A, B, C, D or E then congratulations! You can make a case for being right. All five are estimates of the increasing cost of renting that have been published in the last month.

But there’s a problem, surely: they can’t all be right. So why the wide disparity between the different results?

Part of the answer simply lies in which data the measures are based on.

The first three measures are all made by private property companies based on their own business data (A is from tenant referencing and insurance company HomeLet, B from estate agent group LSL and C from estate agent group Countrywide). All are thus based on different datasets and the differences between their results likely accounted for by differences in the geographic distribution or market focus of their clients.

In a sense this means they can also all be right: the amount that HomeLet’s clients are charging in rents can go up by 7.5% in the same year that LSL and Countrywide’s increase more slowly. They just don’t all accurately reflect the rate of change in market rent for the whole country. And the likelihood is that none of them reliably, consistently and accurately do it.

Which brings us to D and E, the government’s stats: from the ONS’s Index of Private Housing Rental Prices (referred to as the ONS stats throughout the rest of this post) and DCLG’s English Housing Survey respectively. These are both also based on different datasets – the ONS stats are based on a matched sample from Valuation Office Agency data and the English Housing Survey on its own survey sample of 2,500 renters.

But the differences don’t stop there. It is not just that the government stats are based on a different – presumably more balanced – sample and are therefore more right than the private estimates. Both sets of government stats also aim to measure something different from the private property companies’.

The private company stats purport to measure changes in market rents: the amount of rent that landlords charge new tenants (whether advertised or achieved). By contrast, the ONS stats and English Housing Survey try to measure uplift in the amount that all renters actually pay, including both new tenants and those already in rented accommodation.

To illustrate the difference, let’s consider a comparison. The private companies’ rent indexes are similar to familiar measures of house price inflation (such as those published by Nationwide or Halifax every month). Just as the house price figures measure how much prices of houses sold in the last month have gone up since this time last year, the rent figures measure how much rents have gone up for new tenancies last month compared to a year ago. In contrast, the government stats are more like the owner-occupier housing elements of RPI inflation (interest rate payments and property depreciation) as they mix in the costs incurred by people who have just bought a house with those who have been in their home for years or even paid off their mortgage.

It is a critical difference, because those paying the lowest housing costs and facing the smallest increases – both for private renters and owner occupiers – are those who have been in their homes for the longest length of time (as demonstrated in the table from the English Housing Survey below).

It’s reasonable to expect, therefore, that increases in both the ONS and English Housing Survey stats will be smaller (and less volatile) than actual increases in market rents.

This is not to say that the government statistics are not useful – and it’s certainly an improvement on a few years ago when the ONS published no rent statistics at all. Policymakers should be able to refer to a measure of the cost of renting for all renters, to inform decisions affecting the whole of the private rented sector, rather than just new renters.

But they also need clear information on how rents that are available on the market are changing – and this is the missing piece of the jigsaw.

When we talk about increases in house prices we typically think in terms of the amount that I would expect to pay if I bought a home today. We don’t include in the equation historic prices paid by people who bought ten or twenty years ago. Because of this cultural association, there is a danger that when the ONS stat is used in policy discussions to talk about increases in rent, what it actually measures is misunderstood.

And it’s important to know what you’re talking about when you’re discussing rent measures – not least as politicians have been known to trade blows about whether rents are actually rising or not.

As the ONS stat will under-report recent changes in rents, the danger is that policymakers won’t be able to spot spikes in market rents. After all, why would you worry when the official rent statistics suggest rent increases are so low?

What this misses is that, unlike owner-occupiers, private renters move frequently. Each year, a quarter of private renters will move and start paying a new market rent – and so market rents have a big impact on their housing costs.

This is why Shelter recommends that the government commission ONS to start tracking market rents. We fed this into ONS’s consultation on the Index of Private Housing Rental Prices earlier this year and they are now considering this.

Of course, even with entirely robust and comprehensive statistics, renters will still be subject to the possibility of sky-high market rents, unless we get a better deal for renters. But accurate and well-understood statistics can help to make the case for change.


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

Clipped wings generation

One in four working adults between the ages of 20 and 34 is now living with their parents (read the research here).

While some commentators might jump to lazy conclusions about young people just wanting home comforts, new research published by Shelter today shows that the dominant reason so many young adults with independent incomes are not flying the nest is the cost of housing.

In a survey we found that by far the biggest reason given for living at home was the lack of affordable housing. Two thirds said that housing affordability was a factor in their living arrangements while nearly half (48%) said the cost of housing was the main factor. Three quarters of those surveyed did not think they had a choice in their living arrangements and half are worried that living in their childhood bedroom is holding them back from an independent life.

Even when you work hard, an independent home of your own is slipping out of reach for more and more young adults.

However, there’s a discrepancy to explain. There is not a strong correlation between house prices or rents and the concentration of young adults living at home. In London, 21% are living with parents compared to 28% in the West Midlands. The map of the country shows that the “hotspots” are all over England and that cities have lower proportions living with their parents.


Our research explores several options which could explain this, such as concentrations of high or low paid work, deprivation and median wages. With the caveat that more research is needed, our early analysis suggests that there are two main reasons:

  • The biggest correlate we found is simply the proportion of 45-64 year olds in the local population. In other words, a larger proportion of young adults live with their parents where there is the opportunity to do so (and escape high housing costs).
  • However, when asking young adults themselves we found that high housing costs were the biggest reason that they gave.

It’s a combination. Young adults are priced out and so are living where their parents live and commuting to their work. That’s why the proportion of young adults living at home in central London is low – the proportion of parents who live there is low!

So what are the implications of so many young working adults being effectively trapped at their parents’ home?

At a basic level, I would argue three:

  • Growing frustration among otherwise successful working young adults who have little choice but to live at home or face unaffordable rents. They will want to know why their wings are being clipped and will increasingly demand answers to let them live independently and affordably within commuting distance of their work.
  • Growing anger from more and more parents who are not seeing their children gain the independence they once did. Some will target their blame at their children or culture or other factors, but I think that as a growing share of the population finds themselves in this position, the anger of parents will focus more on politicians and their failure to make homes affordable.
  • A growing disconnect in public discourse between housing and other social issues. We are likely to see the number of young working adults living with their parents increase, even in times of economic prosperity and growth. This is what happened through the growth years of the late 90s’ and early 2000s, but this time an even bigger proportion of young adults will be affected. Housing is different and people will want to know why.

I would argue that there’s a big mood shift in housing, which is largely driven by people’s day to day experience of their children, their friends’ children or their grandchildren having their wings clipped. Housing is now a top five issue of concern for voters, higher than it has been for years. We’re also seeing a strong majority across England oppose to rising house prices and a striking reversal in people’s attitudes to the prospect of new homes being built near them. The public wants major action on housing: the prize will be for whichever political party can credibly promise it. 


Zorana Halpin
 
Zorana Halpin is a Policy Officer at Shelter

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By Zorana Halpin

Homelessness: the warning hidden in plain sight

The pithily titled DCLG Homelessness Prevention and Relief statistics are out today. These annual statistics are rarely ever talked about. Just contrast today’s deafening silence with the buzz about the bedroom tax stats last week.

But their bureaucratic veneer masks important figures we need to be talking about.

Today’s statistics are different to the DCLG figures on statutory homelessness. The statutory homelessness figures look at households who have been through a legal assessment to determine whether they are homeless or not, who may then be found legally homeless.

The homelessness prevention and relief statistics count up actions taken by councils (such as negotiating with landlords who want to end tenancies or tackling bad conditions) to help people avoid losing their homes – which is known as ‘prevention. ’

They also cover action taken by councils to rehouse households who have lost their home (though not legally recognised as homeless) – this is known as providing ‘relief.’

The 200,000 plus cases of homelessness prevention and relief dealt with by councils last year are a warning sign hiding in plain sight, of the potential for tens of thousands more families to face homelessness and put already over-stretched councils under intolerable strain.

They highlight the failures in the housing system and strains in the welfare system.

They highlight the short-term, sticking plaster solutions and incentivisation schemes being used by councils desperate to stem the tide of homelessness.

In short, if you want to understand what’s happening on the front line of the housing crisis, you need to look at these figures.

So what do they show?

1. In 2013/14 councils had to take action in over 200,000 cases to help households avoid or relieve homelessness

Councils are seeing more cases than they have ever seen. Over the last 5 years there has been a massive 38% increase in people getting help.

2. They are a sharp reminder that the scale of homelessness is likely to be greater than statistics on the number of legally homeless households that DCLG produce every quarter.

In addition to the 81,900 households found to be formally homeless , today’s figures mention 18,500 cases of people being helped by councils who weren’t assessed under homeless legislation but had lost their home. These households could be a subset of the homelessness cases in the chart below or they could be additional. It’s hard to tell. And that’s not good enough.

3. They indicate that housing benefit changes are definitely taking their toll.

A whopping 24,400 of the cases seen by councils involved helping people with housing benefit-related issues. We already know from the government’s own statistics that 59% people are in rent arrears because of the bedroom tax. What these figures tell us is, unsurprisingly, benefit cuts are driving people to turn to their council for help in keeping their home or finding alternative affordable accommodation. The fact that housing benefit issues can no longer be covered by Legal Aid might explain why so many cases are coming through to local authorities.

4. Right now, the private rented sector is both part of the problem and part of the solution.

What these figures show is the dependency of the council on the private rented sector.  In 3,500 cases, the council took action by putting people into the private rented sector, most likely on minimum six month contracts with no requirements to ensure the homes are suitable, as is the case with placements of homeless people in the PRS. Placing a household in the private rented sector sometimes involves ‘incentivising’ landlords through ‘golden handshake’ type arrangement – such as paying £2,000 ‘finder’s fees.’ This is all in the context of the end of private rented tenancies being the leading cause of homelessness.

4. The burden of housing and homelessness problems is firmly on local councils.

Local authorities are bearing the burden of a housing benefit system and private rented sector that is creaking at the sides.

They are seeing more people than ever come to their doors. And all in the context of shrinking budgets.

We are concerned that local council practice will increasingly start to suffer.  I wrote earlier in the year that if this continues councils will struggle to cope to provide vital homelessness services.

Recent reports suggest this is coming to fruition and that the true scale of homelessness could be even greater.

 

 

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