Housing in Wales

 

Housing in Wales

Mike Hedges AM

Member of the National Assembly Wales for

Swansea East

September 2015

Introduction

Housing is the great challenge facing all of Britain including Wales. The Post war period in terms of housing can be broken down into two periods firstly the period 1945 to 1980. During that period we saw a huge growth in Council Housing, the building of a large number of new estates especially in the larger urban areas. We also saw the growth of owner occupation and the start of the building of large private estates again predominantly in the larger urban areas.

Since 1980 there has been a large increase in empty properties, currently 22000 in Wales, there has been change in Housing tenure, increase in the number of single person households, Increase in pensioner households, Increase in young people in Houses of multiple occupation especially students

Council Housing has declined through the sale of large number of houses and the failure to build new ones, there has also been a substantial growth in Housing Association properties

The decline in the private rented sector of the 1960s and 70s has been reversed with a huge increase in private landlords both the large scale owners and those using an additional house as an alternative to a private pension. As a consequence of benefit changes demand has increased for smaller size accommodation

Since 1980 we have seen almost a complete end to the building of Council houses, the growth of owner occupation which now appears to have stalled and the growth of Housing Associations into major landlords and the return of large scale privately rented housing.

During the whole of this period we have seen a reduction in the average number of adults living in each property due mainly to the growth of single person households and also the reduction in large families.

The sale of Council housing has had a serious effect on the housing market. The simplistic view of the political right is that the number of properties available has not reduced only the tenure has changed.

I believe it has reduced the supply of Council housing and that it has increased demand for both housing association houses and for privately rented properties.

Ending the right to buy and encouraging councils to build houses and flats would be the single most effective way of increasing affordable rented accommodation. Whilst the right to buy remains then the legitimate fear that any new builds will be bought by their existing tenants or for them by members of their family remains a deterrent to building.

The Right to Buy and Right to Acquire allows eligible social housing tenants to buy their council or housing association home at a discount of up to £16,000.Over the past 30 years, the policy has resulted in a huge reduction in social housing stock. Between 1981 and 2014, 138,423 council homes were sold. A 45% reduction in the social housing available compare to when the policy was first introduced

Am I the only one that finds it strange houses on what were wholly council owned estates available for private rent at up to three times the price charged by the local Council. Amongst other things this is bad for public expenditure as the cost of housing increases and housing benefit costs continue to grow.

The Welsh Labour Government is increasing the supply of homes and has increased its target for the number of affordable homes from 7,500 to 10,000 over the lifetime of this Assembly and through its innovative Houses into Homes scheme is tackling the wasted resource that long-term empty properties represent.

The Welsh Labour Government is on course to meet this ambitious target of providing 10,000 additional affordable homes by May 2016. Statistics released in October show that 2,416 affordable homes were delivered during 2013-14, which is an 18 per cent rise on the previous year and brings the total number of additional affordable homes provided so far during this Assembly term to 6,890.

The Welsh Government is investing a further £20 million to improve the Welsh housing stock and bring thousands of derelict and uninhabitable properties back into use. Funding of £10 million is provided over two years to offer interest-free loans of up to £25,000 per property, which is then recycled by local authorities and provided to homeowners across Wales to maximise the funding and improve the standard of Welsh housing

The 2016 Conservative Government budget plans to reduce the benefit bill by £12 billion.#

The main changes are

• Abolishing automatic entitlement to housing benefit for 18 to 21 year olds for new claims after April 2017
• Housing benefit claims will be backdated for a maximum of 4 weeks fro April 2016
• Benefit cap will be reduced to £20,000 from April 2017
• Working age benefits frozen
• Child tax credits will be limited to two children from 2017
• The rates for work related activity group within Employment and Support allowance will be brought in line with Jobseekers allowance for new claims from April 2017

The Tory-led UK Government imposed benefits cuts will put young people and families’ homes and jobs in jeopardy illustrating time after time that getting people back into work or into housing or protecting vulnerable people and families is not on their agenda.

 

Housing Act 2014

The housing Act was a major piece of social legislation s. Following the Social Services bill passed earlier this year, this can be seen as the coming of age of the National Assembly for Wales as a Law making institution. I am sure of two things, that the Act has not met the hopes and aspirations of everyone and that there will be more housing bills.

 

I intend to highlight, what I consider to be, the main benefits from this Act. It is impossible to overestimate the importance of housing for people’s health and the life chances of children, with poor quality housing linked to ill health and children continually moving schools as their parent(s) move from one short term let to another failing to fulfil their potential.

 

There has been both a reduction in the number of council properties and a return to large numbers of properties in the private rented sector in recent years. Under the Housing act , all private landlords and letting agents are required to register, undergo basic training on their legal rights and responsibilities, pass a ‘fit and proper person’ test ,become accredited and they must follow a Code of Practice. This means that for the first time, tenants can have confidence that their landlords are expected to meet certain basic standards and that there will be measures available to them if their landlords do not. I believe the registration and licensing of landlords and letting agents is a positive move towards improving the management of housing in the private rental sector. As the number of people living in private rented accommodation increases, we need to tackle the bad behavior by a minority of landlords and the poor condition of some privately rented properties.

 

In terms of dealing with homelessness the act has two major strengths. First, the legislation outlines the key role of local authorities, in wherever possible preventing homelessness thus making Wales first of the UK nations to turn this principle into a legal requirement. Too often Councils have waited for someone to present as homeless rather than taking action when it was threatened when in many cases, early action could have prevented the resultant homelessness. The second major strength is that the legislation will require local authorities to offer meaningful and early assistance to all people who face homelessness. Whilst I am not happy with the ability of a Local Authority to discharge the homeless duty by placing people in privately rented accommodation, the reality is that with the current lack of social housing and increasing demand for housing such a decision is inevitable.

 

The legislation is also intended to further facilitate the development of co-operative housing by allowing fully mutual housing co-operatives to grant assured tenancies thus protecting the interest of lenders .In some European countries co-operatives make up 20 per cent of all housing but they only provide about 0.1 per cent in Britain. With such a shortage of housing in Wales I do not believe that we can let the potential for providing accommodation via the co-operative model be almost unused.

 

There is also a proposal to place a new statutory duty on local authorities to provide new gypsy and traveller sites where a need has been identified. As I know from Swansea, if official sites are not provided then unofficial sites will be created. The legislation aims to improve the standard of accommodation, reduce illegal sites and unauthorized encampments. This can only be good, not just for the gypsy traveller community but for the community as a whole.

 

The act allows councils the discretion to charge any council tax premium up to a maximum of 100% for long term empty properties. It also allows local authorities to adopt a stepping approach to council tax with incremental increases occurring over a period of time. The number of empty properties in Wales is one of the great scandals of the 21^st century and as the Government has already offered the “carrot” of loans to improve dwellings for sale or rent then the “stick” of higher council tax charges will hopefully get many more of these potential homes back into use.

 

The act also allows for local authorities to charge a council tax premium on second homes occupied periodically within their area. Whilst in most of Wales there are very few second homes, it is a problem in certain parts of Wales. This will not stop the purchase of second homes, but it will increase the annual cost of keeping one and will, I believe dissuade some potential purchasers. More importantly it will put downward pressure on property prices in areas of large scale second home ownership and thus make more properties in these areas affordable by local people.

 

A CO-OPERATIVE FUTURE FOR HOUSING IN WALES?

 

With the average age of first-time buyers being 37 and expected to rise to 40, it’s perfectly clear that the current housing system needs to be changed. Hefty deposits, the difficulty in securing affordable mortgages from lenders, and the overall lack of good quality housing are among the main reasons that have attributed to the continuous rise in the average age of first-time buyers.

 

For many people, the dream of buying their first home has been put on the backburner, and the only remaining options are to either move back in with their parents or to rent a property for many years with the aim of saving up enough money for a deposit. Despite this, the idea of home ownership still remains the ultimate goal for the vast majority of people in the UK.

 

The UK has, after all, been traditionally dominated by two types of housing tenure models, namely that of owner occupation with or without a mortgage and that of rented accommodation either privately or from a social landlord. In other parts of the World however, there is a third form of housing tenure with housing co-operatives.

 

Under a housing co-operative tenure, members of that co-operative have the collective power to manage the accommodation between them. This involves taking responsibility for duties such as arranging repairs, maintaining the property, and making decisions about the rent. As the decisions are made by the members, the principles of both community ownership and democracy are placed at the heart of the housing co-operative model.

 

There are strong co-operative housing sectors in countries ranging from Sweden, Norway, Canada, Austria and Turkey, to name but a few.  In Sweden for example, two large co-operative organisations provide over 750,000 homes which equates to around 18% of the total population of the country living in co-operative housing. In Canada, which began developing housing co-operatives in the early 1970’s, there are now over 400,000 living in Co-operative homes.

 

To put there figures into a domestic  perspective, there are more co-operative housing homes in Vancouver than in the whole of UK, with housing experts estimating that less that 1% of people in the UK live in a housing co-operative. 

 

The idea of introducing and developing housing co-operatives in the UK is not new one. In fact, the idea was previously considered by the former Conservative Government of John Major back in 1992. The then Government asked the management consultants, Price Waterhouse Coopers, to investigate both whether or not housing co-operatives generated a greater level of personal and social benefits in comparison to traditional housing tenure provisions, and also whether housing co-operatives would create affordable, long-term solutions for the housing market.   

 

The investigation lead to a report being published by the Government in 1995 entitled “Tenants in Control: an evaluation of tenant-led housing management organisations", which, to the astonishment of many, concluded that co-operative housing models not only were cost-effective but also provided their members with a number of significant benefits.

 

Subsequent reports and investigations into housing co-operative models have since reinforced the findings of the originally PwC report, as well as identified other potential benefits for its members.

 

For instance, being part of housing co-operative gives members the opportunity to use existing skills or even develop new skills. They provide members with a stake and vested interest in where they live and can help reduce any dependency tenants have on landlords or the state.    

 

In terms of the social benefits, housing co-operatives can help promote community cohesion and integration as well we play a role in reducing vandalism and anti-social behaviour. In some cases, other community services such as child care and social activities for members arose from being part of housing co-operative. 

 

Furthermore, housing co-operatives give tenants control over the property rents, building services and contractors, and also rent arrears. Any surpluses made by the housing co-operative can then be reinvested into the property, depending on the will of the membership.

 

Despite these considerable benefits, the question inevitably remains as to why we are not seeing co-operative housing models implemented and developed in our communities?   

 

The simple answer to this question is down to our arcane feudalist land and property laws which still exist today. Under the current system, there is what can be described as an “inherent conflict of interest” presumption between the rights of a tenant and landlord, and as such, does not recognise or take into account housing co-operative tenures, where property is own jointly by members of that co-operative. The presumption of a “conflict of interest” would hence be absent in a housing co-operative models, as the principles of democracy and commonality of interest are placed at the very centre of the model.  

 

In my opinion, the current land and property laws with the in-built perception of tenure feudalism are not only out-dated but present a major obstacle to the establishment and development of the housing co-operative sector in this country. Despite the current situation, there is light at the end of the tunnel, especially here in Wales. 

 

It’s also worth acknowledging the outstanding work being done across the border by the Labour Co-op MP, Jonathan Reynolds, in the form of his Co-operative Housing (Tenure) Bill, which was brought before Parliament in October 2011. This promising Bill that was introduced under the Ten Minute Rule seeks to end the feudal nature of laws that govern land and property ownership in England by creating a co-operative model as a new form of tenure.

 

What’s clear is that more work has to be done, especially in these difficult financial times, to help people get a foothold on the property ladder at an early age. It’s my belief that the time has come to reach beyond the “traditional” and “conventional” housing tenure options by looking at other alternatives and options to satisfy our housing needs.

 

Co-operative and mutual housing models provide us with a viable, sustainable solution that has the potential to radically change the way we view and think about housing altogether.

 

With the National Assembly for Wales’ new primary law making powers, changing the law to establish and promote a legally separate co-operative housing tenure is now feasible.

 

Three things will need to be done in order for it to be successful

 

Firstly there needs to a change in the law to make the creation of housing co-operatives easier.

 

Secondly lenders need to be convinced of the security of their lending which may entail a Welsh Government underwrite.

 

Thirdly it needs to be publicised and people need to be enthused into creating and joining them.

 

None of these is insurmountable with the political will to achieve it.

 

Empty Homes and registration of private Landlords

 

According to a recent housing white paper there are 22000 long term empty homes in Wales within the private sector. The new houses to homes programme is supported by investment to bring these houses back into use.

I believe that any house that has remained empty for over two years which has not been actively marketed and put up for auction should each year it is empty move up one band of council tax. This should differentiate between the can’t sell and the won’t sell

We cannot allow these properties, many in areas of substantial housing shortage, too remain empty.

This is the carrot- supported investment and the stick of increased charges.

Increased council tax year on year when a house is just left to decline and not only removing one potential home but in some areas blighting a whole street

Planning Policy Wales requires local planning authorities to optimise the delivery of housing to meet the requirements of all sectors of society.

This is a matter of local delivery and the forthcoming improvements to the planning application process and refinements to the Local Development Plan process aim to improve this.

The Welsh Labour Government has published guidance on how local authorities can use the planning process to facilitate and bring forward development, whilst ensuring that they continue to deliver the maximum possible amount of affordable housing. It is the shortage of land designated under local development plans for building houses which is driving up the cost of building land.

 

Housing Decisions

Housing is devolved to the Welsh assembly but under our current devolution settlement like all statements on what is devolved it comes with caveats

Firstly and crucially is funding, funding comes from the Welsh block grant and any in year financial consequential of expenditure in England on devolved areas. The Treasury acts as judge and jury over whether there should be a consequential increase or decrease in the Welsh block grant. There is no appeals mechanism, the decision and the money are sent and the Welsh government have to work with what they are given.

An example from Outside of Housing sector, Wales had its share of the cost of building cross rail. It is not due to have its share of the cost of the High speed rail links. Which I consider a bizarre decision with no right of appeal

Most of the detailed Housing Policy is decided in Wales but there is pressure to follow key English only initiatives.For example the help to buy scheme, where money is added to the demand side and with nothing done on the supply side which inevitably will lead to increased prices. This started in England and followed in Wales.

However for detailed housing Policy in Wales the Welsh Government bills agreed by the National Assembly set housing law

There was the Housing Act l 2014 and there is the renting homes bill 2015

Renting Homes bill.

There are two distinct rental markets. First is the high-cost, high-quality, generally short-term rental properties, where there are usually no problems. The second is the lower cost end of the sector, which provides housing that, 40 years ago, would have been provided by the local council or by halls of residence for students. The Communities Equality and Local Government committee made 37 recommendations regarding the Housing bill, but I intend to concentrate solely on four of them.

 

The first one is an issue that I raised in 2011, and that is electrical safety. Recommendation 30 calls for provision and installation of carbon monoxide and smoke alarms and for the periodic inspection of electrical wiring to be mandatory in rental properties. Carbon monoxide, fire and poorly maintained electrics can, and have, led to deaths. I believe we should support hardwired smoke alarms. We also know that electrical sources are the biggest causes of fires in Welsh homes. I believe we should have five-yearly electrical safety checks in the Welsh private rented sector; it’s going to keep people alive. This is not asking for something unusual or particularly expensive, or onerous. Scotland has already done it.

 

I also have concerns regarding contracts for 16 and 17-year-olds. Currently, when 16 and 17-year-olds have accommodation, it’s underwritten by a responsible adult, sometimes a parent, but often social services. My concern is that if 16 and 17-year-olds have their own tenancy and manage to organise their own utilities, very hard-pressed social services departments and social workers may decide that they may no longer need support; they’re looking after themselves.

 

Further to contracts for 16 and 17-year-olds whilst  I and I am sure many people will applaud the intention behind this measure, and, certainly, the Minister has been very convincing in her arguments, but I have serious concerns with the proposal. The conclusions of the Communities equality and local government committee described how there may well be legal issues in terms of insurance and access to utilities for 16 and 17-year-olds, and I agree with those concerns. But also, those people are likely, in many cases, to be very vulnerable. Those witnesses giving evidence to the committee who supported this particular right being extended to 16 and 17-year-olds did so with qualifications, and did so in the context of support frameworks being in place to support and sustain those tenancies. The Bill does not provide for any of those safeguards, and therefore it may well lead to a situation whereby vulnerable people are made more vulnerable.

 

It really does concern me that social services will say everything is sorted, they’ve got a house and they’ve got their utilities, so why should we still be involved? Well, for a lot of 16 and 17-year-olds, in that state, they’re quite often very vulnerable and in need of adult support or they will be in danger of drifting in to bad habits with the danger of eviction.

 

The third issue I want to discuss is retaliatory evictions. When the Communities, equality and local Government committee first started to gather views on this, I expected it to be wholly about tenants’ complaining about the need for repairs and landlords then going for evictions.

I strongly support the provision of a rebuttal presumption that an eviction is retaliatory in cases where it occurs after a contract holder has registered a complaint with a landlord about the condition of the property? At the Community, Equalities and Local Government Committee, we were also told that a retaliatory eviction had taken place because the tenants gave evidence in court against a landlord. The landlord took it upon himself then to take action against the tenant. This has to be a cause for concern, not just in terms of housing, but in terms of the way the law is enforced. If people feel they’re about to lose their home if they give evidence against a landlord in court,  I think the likelihood is that very many people will not actually give evidence when they should.

 

Finally, what quality of homes should people expect? I have dealt with constituents who have houses neither wind nor waterproof, which are very expensive to heat due to poorly fitting single glazed windows, and are damp, does this constitute fit for human habitation, because these properties help keep the NHS busy? I have been told of a case in a in a South Wales constituency where a tenant living in a private rented home has rent collected by an associate of the landlord every Saturday morning, only in cash.

 

They have no record of who the landlord actually is no address, no contact for that landlord. They’re living in a house that is full of damp, with insect infestations, rotten wood, rotten window frames, broken doors and broken windows. The family in that house are ill, what legislation must do is change the lives of families like that wherever they happen to be in this country.

 

I fully support the ambition of the Bill, and if my constituents end up in safe, warm and dry properties, then it will have succeeded in improving their lives, and also, as a by-product, it will have reduced demand on the health service.

 

 

Future

What are the further developments I wish to see in housing in Wales:

Ten points for better Housing in Wales

First- I believe most importantly, is the suspension of the right to buy and the building of new houses and flats. The provision of social housing built and run by the Council is I believe the most efficient and cost effective way of providing much needed housing.

The second development I would like to see is the substantial growth of co-operative housing. We know it works across large parts of the world including Europe and North America. We need legislation to make it easier to built and manage co-operative housing and a commitment to its provision.

Third- whilst major progress has been made in relationship to private rented properties there is a desperate need, especially in the major conurbations, to introduce rent capping. The very high private sector rents are one of the major causes of the escalation of the welfare bill. Instead of cutting benefits, I believe we need to limit the rents being charged.

Fourth,-the current bill partially tackles this; privately rented houses should be of a reasonable standard and safe to live in.

Fifth-Local Authorities should build houses for sale and use the profits from the sale to support the Housing revenue account

Sixth-Secure tenancies should be the default renting housing option

Seventh- predictable rent rises in line with inflation unless there has been a substantial improvement I the building

Eighth- There needs to be a ban on letting agent fees as fees are business costs, and they ought to be paid by the business

Ninth – Ensure that privately rented properties are routinely inspected by Environmental Health Officers

Tenth- Tenants should not be subject to unreasonable rules.

Finally substantial progress has been made in housing legislation in Wales but there remains more to be done.