Achim von MalotkiMasters Dissertation King’s College 2015

Extracts from Sense of Belonging in Church Street - an inner London

Neighbourhood dominated by social Housing on the Verge of ‘urban Regeneration’

With special consideration of

Tenures and the housing market in light of current

housing policy

Dissertation was submitted on 27.2.2015 for my MSc course ‘Sustainable Cities’ at Department of Geography of King’s College.

Research was carried out October/November 2014, with electronic survey for individuals participating in Futures Plan (FP) groups (as community participants in this urban regeneration plan) and paper questionnaire for ‘ordinary’ residents/stakeholders not formally involved with FP.

Aims1. Identify to what extent and in what way Church Street residents

feel they ‘belong’ to the neighbourhood they live in (please contact avmalotki@gmail.com if you’re interested in details on this).

2. Residents’ anticipation of the neighbourhood’s future.3. To compare characteristics of residents/stakeholders

participating in Futures Plan groups with not formally involved residents.

Further aims

Tenure and house price researchAs affordability of the area emerged as a major concern for many, additionally a tenure and housing market analysis was carried out.

This presentation goes further: draws conclusions from research for Church Street in light of the emerging Conservative government housing policy.

Part 1The Survey: Summary Description of Samples

But for PLACE-MAKING it is not just the space between buildings that matters…

Neighbourhood perception regarding key topics by all participants (scale of 5 points)

Church Street is ….

Household income of persons indicating Income

Housing tenure comparison between wider public sample and Futures Plan-participants

Anticipations in a nutshell

• Anticipations of rising property prices and rents score highest, followed by items depicting mainly environmental improvements.

• Note the discrepancy of anticipations between “local environment will be improved” scoring highly and the anticipation “will be area that people like myself can afford” second from bottom.

• Chances of staying in the area, especially for young people growing up in it, are considered as problematic.

Anticipation scores regarding the future of the neighbourhood by all survey participants in detail (measured on 5-point scale)

Colouring of bars: BLUE: commonly perceived as positiveRED: negativeGREY: neutral

Problem perception: "How much are the following issues a problem in the Church Street area?" Average score out of a scale of 4

Attitudes and anticipations comparison between Futures Plan participants and the wider public sample

The following slide needs a little explanation…

• Respondents were asked to assess the Church Street ward as they view it at present using present tense for each item. In another set of questions they were asked about its future. The wording of future-related items was identical with those for the present, the only difference being that the verbs were in the future tense.

• This allowed to analyse the score differences between the two sets of questions - between how respondents rate characteristics of the neighbourhood as anticipated for the future compared to how they perceive these to apply at present.

• A negative score indicates that a particular item is anticipated to apply less or be occurring less in future than at present. A positive score the opposite. Obviously, with the item ‘where a lot of people have difficulty finding a job’, this would be a favourable anticipation regarding this particular problem.

Score differences of anticipated characteristics of Church Street compared with those perceived as existing

In a nutshell…• Significant differences in income, socio-economic status and

educational attainment between Futures Plan participants and locals sampled from the wider public.

• Nevertheless, with regards to attitudes, problem perception and anticipation of the neighbourhood’s future, there is a striking degree of similarity between the wider public sample and FP participants.

• Prevailing pattern seems to be that FP participants are more sceptical - surprising insofar as these could arguably afford to be less concerned with affordability and money matters due to their higher socio-economic position and higher incomes overall.

• Surprising also because they could arguably be expected to be less sceptical with regards to the neighbourhood’s future as they participate in shaping it.

Average scores across household income categories and tenure types for key items related to affordability (scale of 5 points)

Affordability concerns and anticipation of displacementappear greatest not in the three lowest income categories, but eminently in the middle ones.

Summary of survey findings

1. Ethno-religious diversity appears to be appreciated primarily as an asset, however is seen to be negatively affected by neighbourhood change.

2. The view that more higher-income people would be good for the neighbourhood is absolute not universally shared; particularly those most engaged with the neighbourhood tend to disagree.

3. If urban development aimed at more income mix means that more affluent people will move in, the life and prospects for low-income families are seen as coming under strain.

4. Participants expect that neighbourhood change towards more income mix will ‘lift’ existing residents by ‘lifting’ the neighbourhood, particularly by anticipating that it will be easier for people to find employment.

5. There are serious concerns regarding affordability and anticipation of displacement particularly by those not shielded by a secure tenure (which currently the majority of those in the lowest income groups have).

6. Given the observed consonance of attitudes, anticipations, problem awareness and their scepticism, in functional terms the FP participants represent the neighbourhood population rather well.

Part 2 Tenure Analysis

Of the ward’s 4,719 residential properties CityWest Homes (CWH) alone managed 3,030 or 64.2% at the end of 2014. These are divided into two ‘villages’ within the ward: Church Street and Lisson Green. On the next table, watch out between the two ‘villages’ in Church Street compared with Marylebone and St. John’s Wood.

Tenure status of CWH-managed properties in the Church Street ward 2014 in comparison with 2011 (in brackets)

The state of tenancies in 2011

• When the Futures Plan was conceived, the properties CWH manages in the ward had been overwhelmingly tenanted, with only 27% leaseholders, far lower than the 44% in Westminster overall at the time.

• Buyers in the more affluent areas (e.g. Marylebone, St. John’s Wood) had stayed put as owner-occupiers rather than becoming absentee landlords.

• By contrast, in the Church Street ward the majority of lessee homes was let to other people.

What has changed since 2011, when the Futures Plan was conceived?

• Within just three years 259 council homes for rent have been lost – more than the Futures Plan will deliver as ‘affordable’ homes.

• Meanwhile in Westminster overall there has been hardly any shift at all, with the latest figures showing 45.1 percent leaseholders, 54.9 percent tenants. Neither has there been much change in the adjacent management ‘villages’ of Marylebone and St John’s Wood where the share of leaseholds was already high in 2011.

• The number of leaseholds particularly in the Church Street ‘village’ within the Church Street ward shot up, increasing its share by 10 percentage points – almost closing the gap to the Westminster average.

There have been rapid price increases particularly in the inner London housing market. This, it is assumed, will accelerate the turnover-rate of privatised homes whereby tenants using their Right to Buy will sublet the home they once lived in or sell to private investors. Result: formerly publicly owned homes built to meet the housing needs for low-income groups unable to meet these needs on the housing market, will be privately owned and out of reach for these groups.

Tenure change through Right to Buy

• The Conservative-Liberal Democrat Coalition government ‘reinvigorated’ Right to Buy by increasing discounts on the sale price to tenants to up to 70%, or £102,700 in London, to incentivise sales.

• Right to Buy open to abuse: private companies have been offering cash incentives (up to £100,000) to tenants to move out so that the property can be rented out privately at market rates. Locations in Church Street featured prominently among those targeted by such practices in a BBC-broadcast.

• Recipients of means-tested benefits like Housing Benefit are not excluded from exercising their statutory Right to Buy (which forces the council to sell). In Westminster 22 % of Right to Buy sales are to people in receipt of housing benefit at time of application. Remember that Housing Benefit is means-tested and the maximum of savings allowed for claiming it is around £16,000, nowhere near the amount for a deposit.

The Right to Buy in urban regeneration areas

• Large numbers of tenants in London exercise their Right to Buy where and when a regeneration scheme is announced (Association of London Government 2003: 4).

• Anticipation matters: if an area is destined to receive inward investment and a rise in its popularity is expected, sitting tenants will be encouraged to buy, causing what is termed ‘in-situ change’ of the neighbourhood.

• In housing economics it is well established that any investment that will make the area ‘nicer’ – be it amenities and attributes like a much embellished public realm – will be capitalised by the housing market into house prices or private market rents.

• Particularly in times of a housing market with large increases in value of properties, it may take not more than just anticipation of these things to come to cause this effect.

Look who’s keen…

Privatisation and Commodification• Privatisation: sitting tenant acquires the flat he/she lives in through

Right to Buy and becomes a lessee (home owner).• Commodification: formerly publicly owned (hence non-commodity)

housing enters the housing market when the lessee sells the home – either to an owner-occupier, or (much more frequently) to a commercial buyer who wants to let it.

• In the private rental sector the home becomes a commodity to extract rent from.

• Owner-occupier homeownership increases only temporarily through the Right to Buy. In the long term, private renting increases as many owner-occupiers sell or sublet at some point.

• As private renters tend to spend a large part of their income on rents (increasingly over half of it), their purchasing power may be limited even if they have comparatively high incomes.

Why this matters for Church Street

Private sector rents in Church Street 2012, even though they are well below Westminster average are: Median rent for a 1-bedroom flat: £375 per week.Median rent for a 2-bedroom flat: £594 p/w.(If you rank all flats according to the rent paid, the median is exactly in the middle of that ranking.)

When commercial landlords snap up properties that once

were publicly owned it’s not just ownership that changes:• The neighbourhood will change as well if homes are let at high

rents to a transient population. Two thirds of private renters in London reside in their homes for less than three years.

• Recent government legislation explicitly allowed short-term lets in the private rental sector.

• High population churn will lead to greater numbers of people not rooted and not participating in the neighbourhood.

Why this matters for Church StreetPrivate sector rents in Church Street 2012, even though well below Westminster average, are: Median rent for a 1-bedroom flat: £375 per week.Median rent for a 2-bedroom flat: £594 p/w.(What’s the median?: If you rank all flats according to the rent paid, the median is exactly in the middle of that ranking.)

• When commercial landlords snap up properties that once were publicly owned it’s not just ownership that changes:

• The neighbourhood will change as well if homes are let at high rents to a transient (fast-changing and moving) population. Two thirds of private renters in London reside in their homes for less than three years.

• Recent government legislation explicitly allowed short-term lets in the private rental sector.

• High population churn will lead to greater numbers of people not rooted and not participating in the neighbourhood.

Part 3House Price Analysis with the official Land Registry

Dataset, indicating the prices paid when homes were sold

Number of cases (homes) each year:

Median house prices in comparison since 1999 (from 1999 to 2011 two-year-intervals, since 2011 annually; YTD: ‘year to date’)

Development of median house prices (index 1999=100)

Conclusions from the house price data analysis

• In comparison with 1999 and relative to the original investment made, ex-council homes in the Church Street ward offered the highest returns in 2014 of all categories.

• Homes in the Church Street ward overall (that include ex-council properties) start to outperform in relative terms both Westminster & Camden and London overall early on, from 2001 consistently until 2014.

• No particular effect due to the inception of the Futures Plan, which would have left its mark since 2011, is noticeable.

• Substantial profit is made when former publicly owned homes, purchased at a discount, are resold on the open market. Not only does the buyer benefit from the (increased) discount, but homes are commonly also undervalued when the council is selling them to council housing tenants who demand to buy the homes they live in.

What does this mean for local residents?

• Estimated average annual household income for Church Street is £31,134, the median annual household income merely £19,572 (GLA Household Income Estimates 2014).

• The ratio of ex-council homes prices for 2014 versus average local annual household income would be 13.4, with regards to the median annual household income a staggering 21.3. For homes overall in Church Street the ratios would obviously be higher still.

• House prices in Church Street, including those formerly part of the publicly owned stock, are out of reach for but a few of the ward’s residents.

In other words:

If they do not already own a home, the vast majority of Church Street residents has effectively been priced out of their own neighbourhood. Moreover, most Church Street households are also unable to access the private housing market (owning or renting) in most other parts of London.

Final PartWhat has happened since this research was carried out?

Trend:• Accelerated shift in housing from local authorities to

wealthy landlords.• One third of former council stock now let privately.

Policy:Tenure changes at a time of rapidly rising house prices in central London locations (like Church Street) have shown to be fully intentional.Conservative central government legislating for shifting subsidies away from the supply of social housing (abolishing the social housing grant) towards selling off the social housing stock by subsidising sitting tenants who want to buy.

Remember: the median price of £417,500…

…. and then think of the planned extension of the Right to Buy to Housing Association tenants, to be paid for by forcing councils to sell off the properties that fall within the most expensive third of all properties within their areas as they become vacant. • At present (9/2015), local authorities in London are negotiating with central

government about the application of this policy: will it apply to Greater London overall, or to smaller local housing markets at borough-level?

• The question if the housing market in Greater London or in the City of Westminster will serve as baseline will most likely decide on the fate of Church Street’s council housing stock.

• Prices above which council-owned stock has to be sold if Greater London is chosen as the baseline (Inside Housing 4/2015)

If Greater London’s average house prices are set as baseline, Westminster City Council is likely to be forced to sell much of its stock in Church Street.

What happens if average house prices in Westminster are set as baseline for the sell-off

of council housing?

If Westminster City Council is forced to sell council homes not in Church Street but in more expensive wards, this would lead to a further residualisation, i.e. the shrinking of the pool of people eligible for social housing in Church Street:Only the most needy and vulnerable, those in highest priority need on the housing list (often with significant long-term health problems) would have a chance to be housed in what remains of the social housing stock in Westminster.

This is what the UK government seems to want:

Look at the estate agents’ ZOOPLA property heat map, overlaid with the Church Street ward boundaries:

The aim would be to turn those green areas in central London RED. This would mean that homes on high-value land are generating property prices to match.

Why the privatisation of the social housing stock must not be confused with gentrification

• Gentrification is commonly defined as a phenomenon of urban social change whereby members of the middle classes change their location preferences to live in formerly predominantly working class inner-city districts.

• However, what is described here as privatisation is not happening ‘organically’, for example by changed demand in the housing market.

• UK privatisation policy is highly coercive – it relies on stealth through legislation. Does not shy away from relieving independent (charitable) companies like Housing Associations of their assets.

• Subsidies are shifted away from the social housing sector to its privatisation.

• Policy will – and is intended to - alter the social make up of neighbourhoods, particularly in central London.

One of the consequences: exclusionary displacement

What does that mean?• A household very similar to that of a former council tenant

whose home has been sold, will be excluded from living where it would otherwise have lived.

• The household is generally excluded from areas where the housing stock has been commodified.

• The displacement is not physical (not removing people), but economic (through house prices).

• Following the general rule that land value falls with distance from the city centre, only low-value areas (think Barking & Dagenham or the banlieue of French cities) would remain for the displaced.

In the context of current privati sati on- and commodifi cati on policies…

…and their eff ects on inner London…

…completely independent of the Futures Plan for Church Street…

the questi on arises…

For whom?