Social Housing Property Plan Review - Attac Jersey - Submission - 30 April 2007

Attac

Association for the Taxation of Financial Transactions for the benefit of Citizens

Jersey Chapter

Attac Jersey is a member of the international tax justice network

20th April 2007 Forward

Submission on States Housing, Buy, Sell or Rent to the Health, Social Security and Housing Scrutiny Panel.

Chris Steel BSc (Hons) Soc Sci (Open)

Researcher

Tel: 01534 852076

Mob: 07797767168

E-mail: rebelrouserjsy@localdial.com

www.jersey.attac.org www.taxjustice.net

Contents

SummaryPage 3 Introduction....Page 4

Statistical Overview..Page 5

The Right to Social Housing.......Page 6 The Need for Social Housing..Page 6 Social Housing Rents...Page 7 The Needs Based Model.Page 8 The Choice Based Model....Page 8 Tenure Size...Page 9 First Time Buyer Properties....Page 9 The Housing Mix...Page 9 Funding Housing......Page 10

Recommendations.......Page 12

References....Page 13

Summary

We believe that the proposed reduction of social housing stock to approximately 3,500 units by the Housing Department may well create micro pockets of perceived dysfunctional families leading to an anomic spiral of social problems, including social exclusion. This has been witnessed in the United Kingdom (UK) since the introduction of the right-to-but policy and the sale of State (Council) social housing stock to housing associations and trusts.

Social housing in the UK, regardless of who provides it, plays a crucial role in providing 20% of all available housing at the current time, which is recognised to be at least 5 percentage points below what is needed. Jersey whose entire social housing stock at 16% of all housing is planning to cut theirs by selling 800 units to first time buyers. There is a demand for social housing in the UK and Jersey that is well above what is currently available, and the benchmark would seem to be around 25% of all housing.

We have noted inconsistencies from data written or commissioned by the Housing Department, in that, the States of Jersey Statistics Unit stated that there was a need for 1,415 social housing units between 2005 and 2009, but the Housing Minister (Senator Le Main) noted in 2005 that Jersey has a surplice of social housing stock at 5,000 units. Whilst in 2006 there were 265 families on the Housing Departments waiting list.

The objective of contemporary housing policy in the UK is to create small to medium sized estates of mixed socio-economic status groups of mixed age, which may well avoid some of the social problems normally associated with purely social housing occupied estates, which the UK and Jersey have suffered from in the past.

We also note that in certain areas of the UK that suffer from wide socio-economic inequality, like Jersey, there is  a  real  need for subsidised first time buyer homes for skilled and essential employees like those from the emergency services, where only 0.67% of them can afford to become owner-occupiers.

There also needs to be a review of the very high social housing rents in Jersey, as at the current time they are preventing economically inactive tenants from returning to paid employment. The high full social housing rents in Jersey create a disincentive to those seeking to return to paid employment, because if they are on a subsidised rent, as soon as they retune to paid employment they may have to pay social security, parking fees, income tax and full rent, often leaving them financially worse off.

The Housing Departments policy of transferring or selling social housing units, at hugely discounted prices, to housing associations and trusts, combined with high rents, poor standards of maintenance and lack of choice based allocations for State supplied social housing, represents a cost-cutting department who do not understand the role of social housing in the twenty-first century.

Introduction

The objective of this Scrutiny submission is based on whether the States of Jersey Housing Department should sell 800 social housing units to first time buyers and the consequences it my have on existing and future social housing needs and stock. Contemporary evidence will be cited from the States of Jersey Social Housing property Plan 20072016, and comparative data from the UK, but especially from London, the South West and the South East, as they tend to have similar social and economic structures to Jersey. This will enable us to indicate whether Jersey needs less or more social housing.

A brief statistical overview will set the scene for an analysis of the right and need for social housing, social housing rents, allocation models, tenure size, the problem for perspective first time buyers in areas of wide socio-economic inequality and the need for small to medium estates where the right sociological housing mix can  assist a good feeling  of community, and limit the social problems inherent with some social housing estates. We will also look at the perceived need for subsidised first time buyer homes.

To end we will analyse the argument that the Housing Department has no other option but to sell 800 units of social to fund the refurbishment and maintenance programme of the existing stock and make recommendations from the evidence given in this submission.

Statistical Overview

• The States of Jersey's Housing Department budget is less than 0.1% of gross national income (Jersey in Figures, 2005).
• On the 16th January 2007, the States of Jersey Housing Department had 4,602 units of social housing, which is 13% of all housing in Jersey (Social Housing Property Plan, 2007).
• After the sale of 800 social housing units to first time buyers the Housing Department aim to retain a stock of 3,500 social housing units, which would be approximately 10% of all households in Jersey (Social Housing Property Plan, 2007).
• On the 16th January 2007, Jeresy's housing associations and trusts had 1,062 social housing units (Social Housing Property Plan, 2007).
• This gives a total for all social housing in Jersey at the current time of approximately 5,664 units (Social Housing Property Plan, 2007), which is 16% of all households in Jersey (Migration: Monitoring and Regulation, 2005).
• On the 6th April 2006, there were 265 families on the States of Jersey social housing

waiting list (Jersey Evening Post, 2006).

• There is a recognised need in Jersey for 1,415 social housing units between 2005 and 2009 (Jersey's Housing Requirements 2005-2009, 2005).
• 60% of States of Jersey social housing tenants are over 50 years of age, and unlikely to be able to afford a mortgage, leaving 40% who are under the age of 50 and may be able to afford a mortgage (Social Housing Property Plan, 2007).
• 70% of all households in Jersey have a household income of less than £34,000 per annum, making it difficult for them to become owner-occupiers (Jersey Household Expenditure Survey, 2004/05).
• At the last Jersey census in 2001, 51% of households in Jersey were owned either outright or by mortgage (Jersey in Figures, 2006).
• Despite a doubling of the number of dwellings since 1951, housing availability per household in Jersey is today 5% lower than at that time (Parr, 2000).

The Right to Social Housing

The Universal Declaration of Human Rights, article 25(1) states that,

"Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control." (Roosevelt et al, 1948).

The Social Housing Property Plan, states that,

"The Purpose of social rented housing is clearly to meet the accommodation needs of those in the community who would be unable to house themselves, whether through rental or purchase, in the open market." (Social Housing Property Plan, 2007).

We would argue that, civil, political and social citizenship (Marshall, 1992) are at the core of a democratically legitimate society, and that without social citizenship at its core, contemporary society may well become a fragmented and marginalised society. We would argue that the State, and the State only has the responsibility to house all those who seek social housing, as housing associations, trusts and private sector landlords cannot be called to account by the electorate. In areas of high economic inequality, like Jersey, the State should provide an equitable means for essential and skilled employees to be able to become owner-occupiers through subsidised first time buyer properties, but not from existing social housing stock.

The Need for Social Housing

The States of Jersey Housing Department argue that,

"The present public sector social housing stock is larger than is necessary overall to meet social housing need, and demographic changes mean that it is the wrong mix' to meet predicted need (particularly for sheltered housing) in the medium to long-term future." In addition, the Housing Minister (Senator Le Main) states that the 5,000 properties his department has "is far too many. There has to be some disposal of properties back into the marketplace." (Jersey Evening Post, 2005).

That has led to the Housing Departments decision to sell 800 social housing units to first time buyers, without replacing the lost stock (Social Housing Property Plan, 2007). We believe that this will lead to a shortage of social housing in the short, medium and long term, based on evidence from the UK that notes,

"Twenty-five years ago, the introduction of the right to buy rapidly privatised a million council houses and led to a steep decline in the supply of accommodation to let at prices that were affordable by people on low incomes." (Malpass, 2005).

The right to buy policy, buoyed by discounts of up to 70% of market value reduced social housing stock from 6 million in 1980 to its current level of 4 million (Pryke, 1998). The decline of 2 million social housing units by the State (Council) seems to have led to polarisation and social exclusion as,

"processes which deny the opportunity for some households to access housing are a key source of social exclusion. Without adequate housing it is difficult to conceive that anyone can be considered to be fully included in society and be able to enjoy their citizenship rights." (Pawson and Kintera, 2002).

In the UK the right to buy and sale of State (Council) social housing to housing associations and trusts has led to a thorough shift in housing policy not witnessed before. This has led to a social residualization of social housing stock that is in declining condition due to lack of repair and investment with little or no stock replacement, where the remaining tenants have witnessed reduced levels of rent abatement (Murie, 1982). Social housing tenants living in State (Council) accommodation are now much more likely to be less-skilled, unemployed, on welfare benefits, be single parents or pensioners, and have a higher percentage of ethnic minority tenants than the general demographic mix, therefore limiting their life chances (Skellington, 1992). For example, in the UK, 42% of all social housing tenants have serious medical conditions or disabilities, and 24% of social housing units, the biggest percentage, are occupied by single females who are mostly pensioners (Hills, 2007).

The most recent review of housing in the UK (Hills, 2007) notes that there are 4 million social housing units, which is 20% of all housing in the UK, 12% is provided by the State through local Councils and 8% is provided from housing associations, trusts and other registered social landlords. However, there is a recognised and real need for a significant increase in social housing stock by the State (Council). Although, in the UK 20% of all housing is social housing stock and there is a demand for an extra 1 million units over the next twenty years. This would be a 25% increase over existing social housing stock, but would only maintain the current ratio of 20% social housing stock to all housing, due to expected increases in the private sector (Holmans et al, 2005). Therefore, the UK needs to be increasing social housing stock to approximately 25% of all housing, and Jersey should be aiming to follow this guidance, as Jersey has significantly fewer owner occupiers that the UK.

Social Housing Rents

The average un-subsidised State (Council) social housing rent as an average from London, the South West and South East is £60 per week or £3,120 per annum. The average housing association or trust rent for the same three areas is £70 per week or £3,640 per annum. The private sector rents for the same three areas average out at £145 per week or £7,540 per annum (Hills, 2007). State (Council) social housing rents average out for the above areas as 44% of private sector rents. Jersey's social housing rents are comparable to that of the private sector in the three areas mentioned above, with a range between £98 per week for a bed-sit and £285 per week for a five-bedroom house (Jersey Evening Post, 2006). These non-subsidised social housing rents are only approximately 10% below that of comparable rented units in the Jersey private sector. The high rents for social housing in Jersey, whether it is provided by the State or housing associations and trusts, may well lead to social housing tenants being trapped in cyclic relative poverty. This is due to the lack of incentive to seek paid employment, for those who can, when entering the realm of paid employment may actually see a reduction in household income due to the high maximum social housing rents in Jersey.

The Needs Based Model

The States of Jersey Housing Department states that,

"The provision of long-term, sustainable and affordable housing to meet the needs of those  members  of  the  community  who  are  least  able  to  secure  suitable accommodation, is the main function of the Housing Department." (Social Housing Property Plan, 2007).

There has been a long history of coercive social housing allocation policies based on the needs model (Power and Turnstall, 1995), as,

"those which allow little or no area preference and/or those which operate strictly enforced one offer only' policies." In Addition, "an increasing use of a take-it-or-leave- it approach in respect of offers to non-homeless and transfer applicants." (Pawson and Kintrea, 2002).

The direction that social housing policy has taken over the last twenty-eight years in the UK is a residual needs based model, where social housing is concentrated on those with the greatest need, but at the lowest cost to the public purse. This tends to lead to concerns about the creation of communities where the vast majority of the residents are on low incomes, be it welfare benefits or minimum wage paid employment that tends to severely handicap social mobility because of the unbalanced socio-economic mix (Hills, 2007).

The Choice Based Model

The  Social  Housing Property  Plan,  makes  no  mention  of  choice  based  social  housing allocation. However, we believe that the choice based model provides a fairer approach to social housing allocation and that there is a current trend for the model (Brown et al, 2000), noting that,

"allocation policy are towards choice-based lettings, aiming to enhance consumer choice  into  allocations,  and  towards  community  lettings,  which  aim  to  widen neighbourhood social and/or demographic mix." (Cole et al, 2001).

Choice based models may be used by trained social housing allocation staff to overcome some of the inherent problems with social housing estates, in the form of, antisocial behaviour, deviancy, crime, dysfunctionality, drug & alcohol abuse and problems of social and economic deprivation (Murie, 1999). If the above social problems are allowed to become manifest social housing becomes highly stigmatised and marginalised, which then tends to be utilised for those families that either cannot or will not participate in paid employment (Pryke, 1998).

The choice based model allows empowerment of those seeking social housing and has proven very popular with the State (Councils) that have introduced it since 2000, and the Department for Communities and Local Government have set a deadline for all Councils to have adopted the choice based model by 2010 (www.direct.gov.uk, 2007). The choice based models have proven very popular with applicants, who prefer it to the needs based model, and as a consequence the State (Councils) have/has witnessed faster re-let times for vacant properties and reduced turnover of stock once tenants have accepted a tenancy (Hills, 2007).

Tenure Size

Social housing tenants in the UK enjoy less space per person than other types of tenure, even less than they did a decade ago, and are therefore less satisfied with their living space. If we use data from the three geographical areas of London, the South West and the South East as comparable to the socio-economic mix of Jersey, we can see that the average floor space per person in the private sector is 38.1 square meters, and for social housing the average is 30.0 square meters per person (Hills, 2007). We could not find statistics on tenure sizes for Jersey.

First Time Buyer Properties

Living in areas like London, the South West, the South East of England and Jersey, where house prices are very high and unobtainable for a significant proportion of the population, has led to the first time buyer being unfairly handicapped due to the economic inequality of these regions (Braham and Sherratt, 2002). Research indicates that 99.33% of key public sector employees like, firemen, police offices, teachers, nurses and ambulance staff cannot afford to buy their own property in London the South East and South West (The Halifax, 2007). It is now 69.3% more difficult for first time buyers in the UK to become owner- occupiers than it was in 1994, due to the steep average house price increases in London, the South West and South East (Shelter, 2006).

The Housing Mix

We believe there should not be pockets or estates of housing divided by the occupant's income or wealth. The very reason social housing tends to receive a bad reputation is because of the polarisation it creates for its tenants. This has been witnessed in the UK and in Jersey, examples of which would be the old Nicholson Park and Elysee estates.

With a solely market driven model of housing policy, where those on the lowest incomes seem to end up in the lowest cost and most undesirable estates leading to polarization, relative poverty, social exclusion, and lack of opportunity to become socially mobile. These problems can be overcome to some extent by utilising sub-market rents for those returning to paid employment. Those retuning to paid employment have traditionally found that as their income increases their rent subsidy is adjusted, which tends to act as a disincentive to returning to paid employment (Hills, 2007). Socio-economically mixed estates or communities tend to be the only way to a better society.

The conceptualization of mixed communities or estates, is not a modern idea as Aueurin Bevan (1949) notes that,

"It is entirely undesirable that in modern housing estates only one type of citizen should live. If we are to enable citizens to lead a full life, if they are to be aware of the problems of their neighbours, then they should be drawn from different sections of the community. We should aim to introduce what has always been the lovely feature of the English and Welsh village, where the doctor, the grocer, the butcher and the farm labourer all lived in the same street the living tapestry of a mixed community."

Bevan's concept of community has been supported by recent research into mixed communities from twenty case studies, where the overwhelming outcome has been deemed very successful. Mixed communities seem to have avoided the problems inherent of social housing estates like, stigmatisation, polarisation and social exclusion (Holmes, 2006).

Funding Housing

The Social Housing Property Plan states that there is an urgent need for the maintenance and refurbishment of the existing social housing stock, and that,

"Inadequate revenue budget and capital funds to achieve this re-investment, and a corresponding duty placed on the Housing Department under the States Strategic Plan 2006 to 2011, to produce detailed proposals for the procurement of funding to sustain a programme of refurbishment works for States rental accommodation." In addition, that, "For a number of years, the Housing revenue budget has been starved of funds, while at the same time there has been constant pressure to defer capital spending." Adding that, "the only realistic way in which these two issues can be dealt with, is through the sale of some property in order to raise the funds to be spent on the remainder." (Social Housing Property Plan, 2007).

As for first time buyers, The Social Housing Property Plan states that,

"There are undoubtedly a number of ways in which the States could encourage home ownership, whether (as with the H2 and H3 sites) by supporting the development of affordable starter homes; through financial assistance in the form of tax incentives; or (as was suggested recently) through some form of interest-free loan scheme." Arguing that this could be achieved through, "Housing association administrating a Homebuy scheme provides an interest-free loan of 25% of the cost of an identified property on the open market, and the tenant funds the remaining 75% from savings and/or a mortgage." Alternatively, direct discounted sales of existing social housing stock where, " Price s have been set at 10% discount to first-time buyer market price, with a contractual provision for States clawback' of that 10% when the property is next conveyed". Alternatively, a shared equity model; where, "In order to extend the opportunity to as many people as possible, discounts of up to 25% are offered." Although, "maintenance obligations for the whole of the property are passed onto the purchaser, which, together with the reduction in management costs, will to some extent offset the foregone 25% rent." (Social Housing Property Plan, 2007).

We believe that the argument presented in the Social Housing Property Plan, that the only way to fund essential maintenance and repairs to existing social housing stock is to sell 800 units to first time buyers is unfounded and ill advised. Jersey has a real need for significantly more State supplied social housing and first time buyer homes.

This could easily be achieved by using long-term government issued bonds as surety at commercial banks to raise funding for capital projects, and Jersey's geographical size would seem perfect for this type of project as,

"Local spending provides local benefit. If capital funding is needed to secure that benefit, then it makes sense to seek to raise at least some of that funding in the area that will benefit from the spending." (Murphy, 2005).

We believe that the Housing Department can take the same advantage as private business in raising funds for capital projects, where governments always have a lower cost of borrowing from banks than the private sector. The revenue generated could cover repayment of loans from commercial banks from the income generated by mortgage repayments from first time buyers and rents from social housing tenants in new and refurbished developments (Steel, 2007).

Recommendations

Based on the evidence in this scrutiny submission, we recommend that the proposal, set out in the Social Housing Property Plan 20072016, by the Housing Department to sell 800 social housing units to first time buyers be terminated forthwith. There must also be no further sale of existing or new social housing, to housing associations or trusts, as they cannot be accountable to the electorate.

We recommend that the Housing Department should establish a building programme where small to medium sized estates could be built with an even split between State social housing, first time buyer homes and open market homes, which would meet the desired sociological mix for social interpellation and a feeling of community.

We recommend that the Housing Department seriously pressurise the States of Jersey legislature to enact policy whereby States Departments, like the Housing Department, with capital income can utilise government issued bonds as surety at commercial banks to fund capital projects.

References

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Braham, P. and Sherratt, N. (2002), Education, Housing and Social Justice, (eds), in Braham, P. and Janes, L. (2002), Social Differences and Divisions, (eds) Oxford, Blackwell Publishers.

Brown, T., Hunt, R. and Yates, N. (2000) lettings: a question of choice', Coventry: Charted Institute of housing, in Pawson, H. and Kintrea, K. (2002), Social Housing Allocation Policies and Social Exclusion in Britain, in The Journal of Social Policy, (October 2002), Cambridge, Cambridge University Press.

Cole, I., Iqbal, B., Slocombe, L and Trott, T. (2001) Social engineering or consumer choice? Rethinking housing allocations', Coventry: Charted Institute of Housing, in Pawson, H. and Kintrea, K. (2002), Social Housing Allocation Policies and Social Exclusion in Britain, in The Journal of Social Policy, (October 2002),

Cambridge, Cambridge University Press.

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