Written evidence submitted by UNISON [RTB 164]

 

Executive summary

 

Introduction

 

  1. UNISON is one of the largest trade unions in Housing Associations, with over 22,000 members employed in the sector.  We are recognised by some of the country’s biggest Housing Associations – Home Group, Places for People, Wheatley Group, and most of the G15 – and many others.  We welcome the opportunity to submit evidence to the Communities and Local Government Select Committee and have consulted with our members and activists in order to compile this response.

 

Background

 

  1. We are deeply concerned with the housing crisis which has been evident over several years.  Housing is a human right and the Government has a duty to take a pro-active approach to ensuring people living in the UK have decent homes to live in.  This requires the Government to have a coherent and consistent policy on housing, which recognises the necessity for social housing and sets a positive framework in which this can develop.

 

  1. The priority is to increase the nation’s housing stock and ensure there are affordable decent homes for all.  An increase in supply of stock will also reduce the cost of housing overall for everyone, leading to a lower housing benefit bill.  Sufficient high quality social housing would help address health, education and other inequalities, and strengthen local communities.

 

  1. Both Local Authorities and Housing Associations have a vital role to play in delivering social housing.  Many Housing Associations also provide additional community services and social care for vulnerable people which are integrated into housing provision.

 

  1. In September 2012 UNISON was a key part of the Housing Voice alliance (www.housingvoice.co.uk) which published detailed recommendations (http://www.housingvoice.co.uk/downloads/Volume_1.pdf), after identifying the effects and causes of the housing crisis.  We also conduct details surveys of our membership biennially to understand the trends in services provided by, inter alia, Housing Associations.

 

Government policies and Housing Associations

 

 

  1. The exact details and all implications of extending “Right-To-Buy” to Housing Associations are unclear, but it is clear that there will be a major reduction in social housing stock and UNISON is opposed to it.  We welcome the position of the Scottish Parliament to stop all Right-To-Buy.

 

  1. There is ample evidence of a huge reduction in social housing from the failure of Right-To-Buy in council housing to replenish social housing stock.  The Government’s 2012 commitment to 1-1 replacement of stock sold under right-to-buy has not been met.

 

  1. Size matters.  A large and growing social housing sector helps tenants move to different properties as their needs evolve – some of the problems from the “bedroom tax” arose because there were insufficient suitable properties for tenants to relocate to.  Quality social housing also supports the health and welfare of its residents, reducing strain on the health and education systems.

 

  1. This is not to say that in some high cost areas – notably London – where property prices are hugely inflated - that extending the Right-To-Buy will not be popular amongst some tenants.  However, when looked at from a wider perspective the position is very different.

 

Erosion of social value

 

  1. The overall decline in social housing stock is not the only problem.  There is strong evidence that a high proportion of the bought stock ends up in the private rented sector –not serving the social purpose for which it was intended.  Experience from existing Right-To-Buy is that residual stock is of poorer quality, as this is less attractive to buy.  Therefore social housing becomes a ‘dumping ground’ for the neediest people, rather than providing homes for a mixed section of society from which resilient communities can emerge.

 

  1. Many Housing Associations also provide social facilities - such as community centres, floating support to vulnerable tenants, job training and youth clubs - in the areas in which their stock is situated.  Should their stock be depleted and more widely scattered, the future of these facilities may be undermined.

 

  1. It is also unclear what type and quality of replacement social housing will be built.  Without clear guidance, an obligation to replace ‘per unit’ may result in smaller and lower quality stock being built.

 

  1. The arrangements for replacing stock are also concerning.  In terms of social housing generally, the obligation to sell off ‘high value’ council housing stock to fund replacement social housing is likely to lead to geographical stratification based on wealth – “the working poor being pushed out of the city into a hinterland on the outskirts”.  This is also likely to lead to a reduction in social housing stock provided by councils, even if Housing Associations provide replacements.  This change should not be imposed by stealth by the Government.

 

Public finances

 

  1. Not only is an ample stock of social housing a necessity, but it reduces the costs for the public sector.  Right-To-Buy properties are likely to be let out on the private market, often paid for through housing benefit at full market rents.  The net effect is that the mortgages would be paid by housing benefit. The public sector already leases back housing from the more expensive private rented sector. 

 

Finances of the Housing Association sector

 

  1. There are specific issues relating to the future financing of the Housing Association sector which arise from Right-To-Buy.  This has to be seen holistically, and supporting the sector should not be to the detriment of local authority social housing.

 

  1. The reduction in Government grant has already had a major impact in reducing the numbers of properties that Housing Associations are building.  Some are also reaching the limits of their covenants and ability to leverage their assets.

 

  1. HAs have borrowed against future rental income in order to improve the quality of stock and build more. Some Housing Associations have already reached the limit of their borrowing, and have already stopped building more homes.  But also their rental income would substantially diminish with Right-To-Buy and could potentially result in some Housing Associations being bankrupted.

 

  1. Reducing their asset base will undermine the ability of Housing Associations to borrow, and lead to fewer housing starts.  Further, some highly-geared associations may be pushed towards insolvency.  Lenders may view Housing Associations as higher risk, and some may become un-fundable because they do not control their assets.  This erosion of associations’ financial position may, by virtue of their banking covenants, require them to use proceeds from sales to pay down debts instead of re-providing new homes.

 

  1. It is optimistic to think that the sale of relatively high-value vacant council housing will fund both replacements and compensate Housing Associations for selling units below market price.  In some parts of the country, it appears likely that the cost of sales will not fund replacement stock on a like-for-like basis.

 

 

  1. Cutting social rents by 1% a year will help some tenants.  However, with a large numbers of social housing tenants claiming housing benefit, the biggest impact is likely to be a reduction in rental income to social landlords and a reduction in benefit payments by the treasury.  Given the move from ‘social’ rents (at around 50% of market values) to ‘affordable’ rents (at around 80 % of market values) this is clearly not part of a policy of making social housing more affordable.

 

  1. In relation to the financial health of the sector, the proposal is likely to have negative overall effects.  It reverses the 2013 “10-year” deal that from 2015-16 social rents will rise by “CPI +1%” each year for 10 years.  This will undermine the basis on which current Housing Association business plans are based, and on which they have borrowed money.  Some are at risk of becoming insolvent.  This uncertainty around funding will also undermine the willingness of lenders to support Housing Associations’ plans to build more housing stock, and at least increase the perceived risk and cost of borrowing.

 

  1. As a side-effect, the reduction in rental income from the sale of council housing will also add to the financial problems that local authorities face.

 

 

  1. The policy of requiring those with household incomes of above £30,000 (or £40,000 in London) to pay market, or near market rents will have a devastating impact.  It would make no sense for someone earning £29,000 a year to go for a promotion or otherwise better themselves if that resulted in their rent being doubled. Tenants in this position will be effectively forced to try and exercise the Right-To-Buy in order to stay in their homes.  Pay to stay and other Government housing policies  do not address the underlying causes of the housing crisis, which is essentially about a crisis of supply and affordability across all housing markets.

 

 

  1. UNISON’s survey of members employed by Housing Associations show that changes to the social security system have already led to more difficult conditions for staff.  Benefit sanctions and changes like the ‘bedroom tax’ have led to more social housing tenants falling behind with rent, and a rise in anti-social behaviour.  Staff face a greater risk of violence.

 

  1. Workers report that non-statutory services (such as play schemes and community centres) are being reduced (37% of respondents) and more debt management advisors are being employed by their Housing Association (58%).

 

  1. Whilst headlines suggest that the Housing Association sector is affluent, the evidence is that there are more financial pressures, and a fragmentation of social housing stock is likely to worsen this.  Inevitably, increased workloads, more stress, increased violence at work and cuts to overall pay and conditions are the likely consequences for workers at the sharp end.  With a reduced stock, the jobs of maintenance and other workers are likely to be put at risk.  The potential for widespread redundancies if associations go bust is an added concern.

 

 

  1. UNISON does not believe that the housing crisis will be solved by extending Right-To-Buy to Housing Associations. Instead, a major increase in housing both for social rent and private ownership is urgently needed.  Given the lack of suitable and affordable homes to rent or buy, it is important that social housing retains its wider role of catering to households on low to middle incomes.

 

 

September 2015