Friday, November 18, 2011

Why are councils knocking down council houses when there is a shortage of affordable housng?

Sounds barmy doesn't it.  But Nottingham city council have identified nearly 1000, and Birmingham over 1200 homes that they have lined up for demolition. If all councils demolish at the same rate it will mean 60,000 affordable homes are to be demolished across England, with only vague plans that some of them will ever be replaced.
Perhaps even more scandalously it turns out that most of these homes are occupied. The tenants will be evicted and presumabaly put into temporary accommodation.

What could possibly justify this huge upheaval of people and such a big loss of affordable homes? The shocking answer is -  accounting reasons!

The government has decided to allocate it's own housing debt  to councils as part of the scrapping of the HRA subsidy system. Essentially all councils with council homes take a pro-rata share of the government's £23billion housing debt in exchange for keeping rental income on their housing stock. The driver for this was partly councils'  unhappiness with the current system, but surely also a desire from Treasury to remove a huge debt off the public deficit.
The unintended consequence is that councils are seeking to avoid the debt by demolishing houses. Each council house they own will attract around £12,000 of debt.Get rid of a 1000 houses and you avoid £12m debt.

Housing minister Grant Shapps was on You and Yours on Radio 4 with me yesterday sounding reassuring. Although he didn't deny that councils will demolish homes to avoid debt, he said that there was unlikely to be an overall increase in demolitions from this measure.   Hmmm... I'm not convinced. This looks like the policy people missed the consequence of thier policy. I don't like Nottingham and Birmingham's oppurtunism and cynicism, but have no doubt who is really repsonsible for this disastrous policy. Treasury.

16 comments:

  1. In hock to developers'/builders' lobby nonsense: VAT on refurbishment but demolition/new-build VAT-free. Dromey should be pressuring Shapps to sort this insanity out now.

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  2. Oops - fact fail. Nottingham is knocking down 1000 one bed flats, to afford to build 500 family homes. Why? There are loads of families on the housing register waiting ages, but one beds are all we have. So building less than we demolish = more people overall housed in code 4 standard properties and a much better match between supply and demand.....

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  3. Does seem a bit far fetched when, for most authorities who still own their own stock, occupied properties bring in rent which will allow them to borrow to pay back the debt plus give them headroom to carry out maintenance and even start to build again in some cases.

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  4. Annonymous 1. That's not true. I have the committee report here and it says that residents that had been consulted over demolition "had concerns that they would be leaving 2/3 bedroom maisonetter and flats"

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  5. This comment has been removed by the author.

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  6. Annonymous 2. Read it yourself here
    http://open.nottinghamcity.gov.uk/comm/download3.asp?dltype=inline&filename=48874/HousingRevenueAaccountSelfFinancingProgrammeFutureimplicationsforCouncilHousingStock.pdf
    ; http://www.birmingham.gov.uk/democracy/Pages/AgendaDetail.aspx?AgendaID%3d62048

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  7. David that's a totally different issue. We have lots of single people in two bed flats, for all sorts of reasons. Under the new housing benefit rules every one of hose tenants will instantly lose at least a tenner a week. They are nearly all single people or couples, not families. Average wait time in some parts of Nottingham for a family house is a ridiculous 12 years, because there isn't enough of it. We can keep the 1960s stuff that costs a fortune to maintain - or cut our losses and spend the money instead on new family homes. It's either/or, can't afford both. No brainier all the way to build - more rent income, better homes, lower costs, more families housed, more jobs and apprenticeships created from the work!

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  8. Well, as per current updates, The government has decided to allocate it's own housing debt to councils as part of the scrapping of the HRA subsidy system.
    Affordable homes

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  9. Anonuymous (it would be nice if you said who you are)
    Of course, I accept all of that. But you said you were only demolishing one bedroom flats, which you aren't. The council committee report makes it plain that the demolition programme was innitatied to avoid debt.
    I have no problem with demolishing council houses if there is planned programme to replace them. But clearly this isn't the case. the committee report talks about grassing over some of the land and selling other bits. Even if replacement is planned in other areas new housebuilding can't be ready to go, and in today's market may take ages to materialise.

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  10. Apologies David - you're right, I did say one bed flats. What I meant was flats lived in by single people (or couples - the new HB rules don't seem to make any distinction). In the past we've put people in two bed flats - often because we couldn't fill them otherwise - and now we are in a pickle because of a combination of things - poorly built homes, poorly maintained over the years (because we didn't have the cash or the ability to manage it properly) and often in areas people don't want to live in by choice (the Meadows Q blocks for example). It's a bit of a toxic combination - but the bottom line is that, in one short hit, we are simple doing what is sensible asset management that we should have been doing over many, many years - replacing life expired stock with new homes that people want to live in. For all sorts of reasons we've not been allowed to do that, but now there's a fighting chance we will. That can't be a bad thing. If we had the money we would build hundreds of homes a year, as it's good business that pays for itself and improves communities.


    Sorry have to stay anonymous as I helped write the report and manage the consultation!

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  11. Thanks Anonymous, I understand the predicament. In fact I used to live in the Meadows so I understand that too. But you must accept replacement is unlikely to start anytime soon. How about this instead. You give the Meadows flats away for free to any resident who will agree to invest in a refurb program. That way you get the properties done up with no public subsidy and you get better off residents into owner occupation. It's got to be better than demolishing and grassing over. This approach has worked brilliantly elsewhere See this http://emptyhomes.com/wp-content/uploads/2011/09/EmptyHomes2011-InekeHulshof2.pdf

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  12. That's not a bad idea! Could work for houses, or where a collective wanted to take on a small block. Pity those Q blocks look so ugly and imposing - might not be too many takers, but I'll certainly float the idea.....

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  14. Just finalising a report namely a return on equity.

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