Agenda item

Maxine Holdsworth, Service Director for Housing Needs and Strategy, made a presentation, copy interleaved, on changes to housing legislation proposed through the Housing and Planning Bill and the Welfare and Work Bill, and the possible implications for Islington.

The following main points were noted during the discussion:

·         The extension of Right to Buy to housing association tenants was to be financed by the sale of high value council-owned properties. Whilst Right to Buy was popular with tenants, the council was opposed to the financing mechanism which disadvantaged local authorities.

·         London boroughs were lobbying the government to earmark Right to Buy sales receipts for housing investment in the borough or region they originated from. This would ensure that housing associations reinvested capital receipts into meeting London’s housing need. 

·         Councils were to be required to sell high value properties when they became vacant and return the proceeds to central government. Due to the very high property prices in the borough, it was thought that transferring the council’s housing stock to private ownership could alter the social mix of the borough.

·         It was estimated that the council would be required to sell 300 properties per year; the London boroughs of Islington and Camden were expected to be the two areas most affected by the scheme due to the high numbers of valuable council-owned homes. Islington had previously agreed to retain the ownership of its high-value street properties, whereas other boroughs had transferred the ownership of their most valuable properties to other organisations.

·         There were 26,000 council owned properties in Islington, with 40% of the population living in social housing. The council had a considerable housing waiting list and 900 people living in temporary accommodation. Officers were concerned that the sale of high-value properties would increase the difficulty of housing families with several children requiring multiple bedrooms. It was suggested that the mandatory sale of properties could decrease council lettings by up to a third. 

·         The Committee considered the impact of starter homes being offered to first time buyers at a 20% discount. Although it was acknowledged that this would help first time buyers, it was expected that developers would be able to provide starter homes in lieu of social housing, without any corresponding Section 106 contribution. As the council required developers to provide 50% social housing or shared ownership in new developments, it was thought that the scheme could reduce the number of new affordable homes developed in the borough.

·         ‘Pay to Stay’ would require households earning over £40,000 to pay market rent on their council or housing association property. It was thought that 9% of households in Islington would be affected by the legislation and, whilst housing associations would be permitted to retain the additional income, all additional income received by local authorities would be returned to the Treasury. London boroughs were lobbying the Government to raise the income threshold to £71,000 in London, the same as the Local Housing Allowance level. It was also noted that housing providers did not routinely collect data on household incomes and there would be an administrative cost to collect the data.

·         The Committee noted the implications of the 1% annual reduction in social rents over the next four years as set out in the Welfare and Work Bill. Officers explained that the council did not yet charge target rent on all properties and the council’s 30 year housing business plan was predicated on gradual rent increases and re-letting at target rent. As a result the 1% annual decrease was expected to have significant financial implications, with the council losing £15 million income over the next four years, or one fifth of the Housing service’s controllable budget. It was noted that a large proportion of the Housing service’s budget was on costs the service could not control, such as repaying debt on council developments.

·         The Committee commented on the reduction in the benefit cap for non-working families from £26,000 to £23,000. This was expected to have a significant impact on some council tenants and it was thought that this would increase the demand for discretionary housing payments and reduce levels of rent recovery.

·         The Committee expressed concern at the proposed Pay to Stay legislation, and cited examples of tenants with a household income of over £40,000 who earned considerably less when they moved into their properties many years ago. It was commented that market rent in Islington was excessively high. It was thought that £40,000 was not a high family income inside London and it was reported that some tenants had considered giving up employment to ensure they could afford to remain in their family home. It was suggested that the Government would not intend for the policy to act as a disincentive to employment, and such issues required further consideration by the Government.

·         As the council’s most valuable properties were street properties managed by Partners for Improvement in Islington, the Committee highlighted the additional issue of the council being required to compensate Partners for any properties sold, while also forfeiting the capital receipts from the sales to central government and losing an asset which would otherwise be used to alleviate housing need in the borough. It was hoped that the Government would grant local authorities flexibility in regards to their property sales.

·         The Committee noted the new local authority duties and powers proposed to be introduced as part of the Pay to Stay legislation; the duty to require income details as a condition of tenancy, the power to charge market rent if no income details were provided, and the power to check employment information with HMRC.

·         It was noted that London boroughs of all political-makeups had expressed concern at the proposed legislation. It was advised that the Government was currently consulting on the plans.

·         Officers advised of the proposed £450,000 cap on the price of starter homes and speculated that there would be relatively few starter homes built within Islington due to land values. It was suggested that greater numbers of starter homes would be developed in outer London boroughs.

·         It was confirmed that the proposed ‘Pay to Stay’ £40,000 household income threshold did not take into account household expenditure, such as student debt.

·         It was commented that housing associations often had mortgage debt on their properties and any Right to Buy receipts would first need to be spent paying back lenders, as opposed to investing all capital receipts in new development.

·         The Committee considered the possible demographic changes arising from the legislation, and how this could potentially affect employment to lower paid jobs inside London.      

·         A member of the public queried if leaseholders would receive priority for buying the freehold of adjoining properties if the council was required to sell them. It was advised that the council was awaiting the finer details of the scheme.

The Committee thanked Maxine Holdsworth for her attendance.