Council Houses by Any Other Name

By Kent Barker, writing in the Hastings Independent

The only real surprise is that it’s taken so long. Margaret Thatcher’s mad doctrinaire decision to strip councils of the housing stock they had built up with rate-payers’ money over generations did untold damage. The Right-to-buy was bad enough. While enabling ordinary people to get onto the middle-class property gravy-train, it had the perverse effect of destroying a huge section of social housing. But worst of all was preventing the receipts from sales to be re-invested in social housing

Now council houses are on their way back. Not, ironically, because of a Labour government, but through a Tory one. And not because the Conservatives now suddenly believe in public social housing but because they know councils must be given some new revenue streams once their central government grants are abolished.

So how have they done it? Well, they’ve created a vast pot of money through the Public Works Lending Board and enabled councils to borrow at extremely cheap rates – currently around 3%. So Hastings Borough Council has decided to go for £15 million over the next three years which they will ‘invest’ in domestic property.

Technically this will not be council housing. At least not as we used to know it. Every property will be let on an Assured Shorthold Tenancy – rather than the secure council tenancies of old. And rents will be close to market levels rather than the social rents of pre-1980s. In fact it could be seen as a bit of a con, designed solely to get round the “Right to Buy” rules.

When I asked Council Leader Peter Chowney specifically why his Labour council didn’t simply register as a Housing Association, the answer was simple. “We wouldn’t be allowed to and we wouldn’t want to. Councils can’t be social housing providers and if we were, people would have the right to buy which would defeat the object.”

So instead the council has set up a separate company called something imaginative like the Hastings Housing Company. It will take £5m a year for the next three years from the Public Works Lending board and to start with, buy existing houses and then rent them out. How will it make a profit from this? Well, largely it thinks because it can borrow the money to buy property more cheaply than someone with a commercial mortgage. So in effect, isn’t the Council just becoming a private landlord rather than a provider of social housing? Well, yes and no. Peter Chowney again:

“This is an income generating scheme but we are also looking to offer properties at fair rents … lower than market rates and as close as possible to the Local Housing Allowance rate – although on bigger properties in Hastings this is quite close to the market rate.”

Consequently it is seems that the council will be targeting larger three- and four-bedroom properties to buy – even though they recognise that there is a major shortage of one-bedroom flats available. But Peter Chowney believes that ‘most people’ under thirty-five find themselves sharing and anyway they can only get housing benefit for shared accommodation. Consequently he expects many of the council’s three- and four-bedroom houses to end up in multiple occupation.

In year three of this new regime the council hopes it will actually be building its own homes. But again it’s likely to be houses rather than flats. It is looking at the Harrow Lane Playing field site which it already owns and which is already designated for housing.

So far there’s been little or no reaction from either Housing Associations or private landlords in Hastings. The former are unlikely to be unduly worried, but landlords in the private sector may well be raising an eyebrow. Already they face a plethora of rules and regulations imposed by the council. Now they see them intervening in their area and undercutting their rents. Not that they are likely to get much sympathy from their tenants. Hastings’ rental stock is not renowned for its quality, and many feel that rents are unrealistically high anyway. But since Housing Benefit was introduced after Right-to-buy, largely in order to move social tenants from non-existent council houses into private accommodation, private landlords may well be wondering what the future would be like if the Council became a serious player in the market.

At the current rate of progress that’s not going to be any time soon. When asked how long it would take for HBC to re-acquire the 3000 properties it lost post Thatcher, Peter Chowney just laughed. However the new Council Houses that aren’t really Council Houses, but sort of are, mark an interesting new development in Britain’s pretty badly broken housing market.

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