Last week the government added some last minute clauses to the housing and planning bill to prevent local authorities offering new tenants long term tenancies. This summer’s Budget signalled the government’s intent to do so, citing the need to make best use of stock. It was still somewhat surprising to see such major changes added to the bill on its last day of committee scrutiny.
The new measures would only permit local authorities to issue new tenancies of 2-5 years, except in very limited (and undefined) circumstances. All households would be reviewed 6-9 months before the end of the fixed term and the council would have to decide whether to renew the tenancy, move them to a new home, or terminate. Measures will also prevent relatives inheriting a lifetime tenancy when a tenant dies. Doing so, the government argues, will promote social mobility and make better use of stock.
At Shelter we’ve been taking our time to work out the impacts and assess whether the severity of the housing crisis justifies the move. The government’s arguments should not be dismissed out of hand, but some are somewhat less than persuasive.
Defending the clauses in parliament, the minister Marcus Jones argued that tenancy reviews would support social mobility by prompting people who can buy to do so. The government hopes that, faced with the prospect of losing their home, families will redouble efforts to own. There are a number of flaws with this approach.
The right to buy already offers the best incentive for tenants to buy and a route into homeownership for social tenants. Even when government advertising budgets were cut, CLG continued to market the right to buy, meaning few can be unaware of the option. With discounts up to £100,000 offering a more than generous carrot to tenants, it’s strange that the government also feels the need to introduce such a punitive stick.
The government talks often (and not unreasonably) about the widespread aspiration to own. Those who want to buy and can do so, are doing so. Those who are not likely cannot afford to buy their home, even with very generous discounts. The stick may work for a small number of people opposed to the right to buy in principle, but it seems downright perverse to have to coerce someone into exercising their so-called aspiration. And simply cruel for those who are unable to buy even with a discount.
And in one of those complicated quirks so common to housing policy, it’s actually possible that fixed term tenancies will prevent tenants from accessing the right to buy, as tenants may not be in situ long enough to gain the right to buy and will be unable to accrue sufficiently large discounts to make homeownership affordable.
Making best use of stock
The government argues that regular reviews will ensure that those who no longer “need” their current home can be moved on, freeing up housing for those on the waiting list or families in overcrowded homes. This might mean a move into a smaller social home, or the tenancy may be terminated.
Advocates of prioritising scarce social housing for those in greatest need do have to accept that there is a superficial tension between wanting to house those in the greatest need and then not reviewing tenancies as their circumstances change. But consider why social housing came to be prioritised in this way. It wasn’t just a pragmatic need to put a roof over people’s heads; it was a wish to be able to give people a stable home in which to flourish and plan for the future. Constantly churning people between two year tenancies does not feel like the best use of stock either. Allocation of social housing is so fraught because in many areas the security and affordability it can provide are so prized. Take away one of the core strengths of social housing and the need to divvy it up fairly and efficiently becomes less pressing. Longer-term, the case for investing in increasing future supply also becomes considerably less persuasive.
The minister also referenced overcrowded families waiting for a larger home. Anyone who has spoken to a family in such a situation will know how desperate their circumstances can become and likely will have felt some frustration with under-occupiers – even if they also think their claim to remain in their home is persuasive.
But there are other ways to deal with this, the most obvious being to build both more family sized accommodation and homes that are attractive for older under-occupiers to move to. If sticks are favoured, then existing options can be explored to enable landlords to move under-occupiers to a suitably sized home. This would still be controversial, but would avoid the blunt approach of banning all secure tenancies.
(A cynic may also consider that the concern for overcrowded families is out of step with the removal of financial support from families with more than three children, as part of a government bid to make people consider whether they can afford to expand their family).
The other view
On balance, the government’s arguments do not persuade. Councils already have flexibility to offer fixed term tenancies when they judge it to be appropriate. The government now seems to be legislating out of frustration that local authorities – who know their local housing markets, know their stock and know the people being granted tenancies – have decided that security is often in the best interest of them and their tenants.
Housing in England is already starkly divided into the haves and the have nots. Removing security of tenure will cleave that even deeper and ensure there is no secure option for people unable to buy. The government are clearly comfortable with this and want to enhance the attractiveness of homeownership. But this nudge will always be frustrated at a time when house prices are high and rising, the private rented sector is chronically insecure and the loss of a tenancy is the single biggest cause of homelessness and rising?
Focusing a debate on security via the aspiration to own is also the ultimate red herring. We do not deny that the majority of people want to be home owners, but removing security of tenure will not make it easier for a single household to buy – and could reduce numbers if the Right to Buy is unintentionally stymied. Even in a more benign housing market, it is not clear why those who cannot buy should be denied any chance of security. People’s circumstances will vary, at times insecurity and frequent moves may be bearable, even preferable. But at some point public policy needs to be able to offer an exit from insecurity and the hope of knowing that a home is yours, for as long as you need it.