Responding to Housing Challenges

Sustainable Development Partnership

29 March 2011

Main challenge: Pace and extent of change

25 major policy announcements/changes over last 6 months

Decent Homes Funding

New Homes Bonus

Localism Bill - Local Decisions: a fairer future for social housing

Reform of Housing Finance – effective April 2012

Pan London mobility proposals from GLA – April 2011

Welfare Benefit Bill 17 Feb – changes start April 2011

Main challenges: resources

60% Reduction in funding for new housing from £8.5bn to £4.5bn. No new money in 2011-12, negligible in 2012-13.Government aim for 150,000 new homes by introduction of “affordable rented” homes at up to 80% market rents.Funding for regeneration schemes? H&L, Excalibur, Deptford, Catford Town CentreInvestment in Existing Homes/Decent Homes £1.6bn available - £1.5bn needed in London alone – LBL Bid = £94.5m v £186m/£154m/£126m New Homes Bonus – Estimated £705k per year for Lewisham, plus £119k affordable housing enhancement, £4.2m after year 6

Localism Bill and “Fairer Futures..”

Introduced to Parliament Dec, 2ndReading 17 Jan (same day as consultation ended)

Raft of proposals affecting LAs and housing providers: Tenure reform – 2 year tenancies Affordable Rents – up to 80% market rents Homelessness – discharge into the private rented sector

Allocations - housing list no longer open to all – Band 4? Change to HRA subsidy system – self financing, more local

control from 2012 but won’t cover decent homes Increase in Non Dependent Charges and 30th percentile from April Single Room Rate from Jan 2012 Universal Credit from 2013

Headline changes – For HB

From April 2011 LHA rates set at 30th percentile for all new claimsLHA rates set at 30th percentile for all existing claims but deferred for 9 months – 5,100 private-rented sector residents, an average loss of £12 p/w, an overall reduction of around £3.44 million per yearDHP fund increasedExtra bedroom for a carer where claimant needs overnight care Non-dependant deductions increased for next 3 years – 941 claimants, average weekly cost from £3.20 £6.80, estimated annual loss of £183,000

From Jan 2012Extending “single room rent restrictions” to all single claimants under 35 - 896 single residents aged between 25 and 34, annual reduction of £3.8m

From April 2013From 2013 LHA levels up-rated on the consumer price index (not RPI)Universal Credit Introduced - £350 for single person/£500 for family

From April 2014Restricting HB for public sector residents (Council and RSL) under occupying their properties - 2,138 Council properties are currently under-occupied

Flexible Tenancies – what does it mean?

Lifetime tenancies for existing tenants will not change.Councils and HAs can grant fixed term tenancies, but can also choose to continue to grant lifetime tenancies.Fixed term tenancies (FTTs) will have the same rights (to repair, to buy etc)FTTs can be for a minimum of 2 yearsLandlords will work with tenants to find alternative accommodation at the end of the fixed term.All Councils will publish a Strategic Policy on Tenancies in consultation with key local stakeholders.Individual landlords will publish their own policies on tenancies, consistent with the LA strategic policy and a “Tenancy Standard”.

Affordable rents and a new funding model for affordable housing

New rents will be offered by RSLs (not Councils) from July 2011 for new build and an (undisclosed) proportion of the relets. Landlords will set rents between current social rents up to 80% of market rents. RSL bids to be placed by 3rd MaySome RSLs looking to apply rent uplift at a lower % across all tenants (60% - 65%) but pressure is on for 80%.LAs will let through existing CBL schemes.Hard choices for tenants needing to move and anyone in housing needCouncil and ALMO housing will become more polarised

Potential local impacts of affordable rents for Lewisham residents

LHA based on 30th percentile (VOA figures)

Bed size

Inner SE London BRMA*

Outer SE London BRMA

Median market rents

(SELHP^ data)

80% median market

rents (based on SELHP)

60% median market

rents (based on SELHP)

50% median market

rents (based on SELHP)

Average Council

rents (inc service

charges)

Average HA target rents (inc service

charges)

One bed s/c

173 146 186 149 112 93 73 86

Two bed

209 173 254 203 152 127 83 97

Three bed

265 207 296 237 178 148 94 107

Four bed

345 265 462 370 277 231 102 121

NB: Highlighted cells represent rent levels that will exceed Local Housing Allowance levels for the Outer SE London BRMA based on 30th percentile (approximately 90% of LBLs stock is within the Inner London BRMA)

* BRMA = Broad Rental Market Area^ SELHP = South East London Housing Partnership

The percentage by which the “affordable rents” would exceed current HA target rents (including service charges) are outlined below:

80% rents 60% rents 50% rents1 bed 73% 30% 8%2 bed 109% 57% 31%3 bed 121% 66% 38%4 bed 206% 129% 91%

Summary of Comparison using SELHP Data

Revised Rent as a % of the £350/£500 universal welfare benefit cap

1 Bed 2 Bed 3 Bed 4 Bed 80% Market or LHA 49% 42% 44% 74% 60% Market or LHA 37% 31% 33% 55% 50% Market or LHA 30% 26% 28% 46% Target rent as % Benefit cap 25% 19% 21% 24%

(N.B. these figures use current, existing LHA levels)

Fixed Term Tenancies – Lewisham’s developing view:

LBL cautious approach and committed to security of tenure or minimum 5 year FTT if there is no optionAssessing overall impacts of all proposed changes (inc welfare benefits; affordable rents; new development agreements) before finalising position. Unlikely to introduce for up to a 1 year after more detailed evaluation and consultation completed. When appropriate LBL would consult widely, but strategic tenancy policy could include:

Lifetime tenancies for: All older people (over 65?) Residents with serious permanent physical or mental vulnerabilities

Flexible tenancies for: families occupying large family homes that are a premium within the locality (with review

when youngest child 18) households occupying properties that have benefitted from major adaptations those with health problems regarded as temporary those who face a temporary crisis from which there is a good prospect of recovery

5 year minimum for all fixed term tenancies;High expectations around landlord support throughout tenancy;Locally agreed and published RPs policy/procedure for the use, maintenance and ending of Fixed Term TenanciesWe would wish for RSLs to fit within the LA Strategic Policy

Affordable Rents: Lewisham’s developing view:

Keen to work with Partners on response to Framework Will Consider LA powers through Planning and Section 10680% market rents do not work generally but especially not for family units Urge RSLs not to set affordable rents higher than or close to the LHA levelsWould like to see no more than 30% of household income or Universal Credit spent on housingKeen to negotiate with RSLs to support local new developments and regen schemesDefault position lowest rents possible for all tenants Support parity of rent levels at a lower rate across a wider tenant group to minimise the high end impactsConcerns about the impact of affordable rents and fixed tenancies on mobilitySerious concerns about the % of relets that may be set at higher rentsStill forming views about which households to target the higher rents e.g. those on benefits or earning – flexibility for household circumstances and in different parts of the borough might be the way forward

Issues to consider

Reduced options for moving home with higher rents and shorter tenanciesAffordability/Poverty trap worsens

Benefit cuts for under occupiers of working age in social housing Rents increasing higher then benefits (CPI v RPI)

Return to concentrations of poverty and vulnerability in council housing Migration - from expensive to cheaper areas/ out of London altogether?

Return to focus on producing 1 / 2 bed units as larger units do not stack upReduction in new housing supply Limited Capacity to Discharge Homeless into PRS / LHA at saturation point

Increase in HMOs due to Single Room Rate for under 35 year olds

Increased Administrative burdens with new range of tenancies and rents

Impact on vulnerable adults/ households may be particularly acute

Impact of Multiple Changes?

Going Forward: some current priorities

Agreeing LBL position on some of the key areas like fixed term tenancies and affordable rents;Work with RSL and other partners to mitigate most difficult impacts;Develop comms strategy for communicating changes to tenantsDevelop key issues into a strategic tenancy policy to go out to consult local residents and key stakeholdersReview Allocations Policy and Consult