Properties sell-off by Southwark - how can this be right?

[minder]

I know there's been threads about this before but in the South London Press today, right at the bottom of page 7, an inch-high report about Southwark Council selling off more council houses/flats. They've already sold 91 properties at auction since 2009!

"A town hall with an 11,000 name housing waiting list plans to sell off a large number of its properties. Labour-run Southwark, which is the largest local authority landlord in London, proposes the sale of up to 140 properties a year for the next seven years.

The cash would fund improvements to its other homes. It has around 2,000 empty council homes. In some cases the homes would require less than ?10,000 investment to bring them back into use.

Next week, the council's cabinet will agree plans to sell more homes at auction.

These will include voids with a value of at least ?300,000, bedsits, one and two bedroom flats on first and second floors.

How can this be right?

[sophiesofa]

Are you against or for?

If it funds making 2000 properties livable then that sounds good to me. I'm not sure about auction though as homes under the hammer has given me the possibly false impression that properties would make more sold through estate agents but I'm definitely not a property expert!

[James Barber]

Hi minder,

The policy is not quite as you've quoted from the South London Press I believe.

The previous Lib Dem led council sold council homes in exceptionally poor condition - from memory needing more than ?25,000 of repairs to make habitable. But larger homes were exempt from this as the council has a severe shortage of larger properties. When over crowded families move into larger properties it tends to have a ripple affect for many others. Looking at the property profile we felt this would overall have minimal impact and the capital receipt allowed for more renovations on other properties earlier.

The new Labour policy will not look to keep larger properties and the threshold of renovation costs has been lowered a lot and significantly more properties will be sold.

The most likely affect will be acquired street properties - generally flats and houses in victorian terraces - being sold. In East Dulwich ward we have about 500 such homes out of 5,200 total homes.

The next council Cabinet committee will be discussing and agreeing the long term capital investment strategy for council homes. With that we'll be able to tell which homes will receive no investment and probably being primed for sale.

[womanofdulwich]

i think part of the problem is that public housing stock is set at a higher standard than private. i think for example they all have to be double glazed, and whilst private sector might do this there is no compulsion, so in its desire to raising standards public sector housing has kind of shot itself in the foot, as they do not have the funds to do so.

[languagelounger]

Very good point WoD. What seems unjustifiable about this, is that the Council says that is is selling off properties because they need major repairs, when those properties can be in perfectly habitable condition and have been recently occupied.

E.g. Southwark sold a three bedroomed terrace house near here recently for ?319,000, after the long standing tenant died. It was perfectly sound but didn't have central heating and had (a completely usable) kitchen dating from the 1970s. It was bought by a developer who said he spent ?70,000 on it (including adding an extra floor, 2 bedrooms and a second bathroom, and one of those kitchens that's too shiny to cook in) and sold it after a few months for ?495,000. At the same time, isn't it the case that Southwark is still housing homeless families in bed and breakfast and short term private sector rented properties, at huge cost?

Can the Councillor say why this is supposed to add up? Firstly, why does Southwark sell such properties at all, when a lot of families, including those not accepted on the housing list,and people living in other parts of the country with high unemployment, would be delighted to be offered a large habitable house on a quiet green road in London zone 2, just a few hundred yards from a school. Are they really saying that a homeless family, or a family needing to move to London for work, would turn down a house because it was heated by gas fires and an electric water heater, and didn't have a vanity kitchen? If so, I don't really see that they could be "homeless".

Secondly, why is Southwark selling its properties at auction, where they sell for 20 to 30% less than via estate agents? Would they save a heap of money if the properties were just placed with local estate agents and the council hired a contract legal exec to do the conveyancing?

At the time this house was sold I had friends in Newcastle hit by redundancy, he was offered a job here but there was no way they could afford to move, they couldn't even afford to split up their family and have him live in London during the week while still paying for the family home.

[Carrie]

Southwark are also selling properties via estate agents.

[minder]

Agree completely with languagelounger (you've put it much better than I could have).

As said before in a previous thread about this, a few council houses and flats within 5 minutes walk of me have been sold within the last couple of years, amd there's been lots more on the auction site. They've all been sold at auction, and then done up to be sold off at a high price.

But before this has all been done Southwark could have passed them on to people on the waiting list. They were all in perfectly habitable condition - no double glazing though (not all council places have double glazing) or fancy kitchen/bathroom, but then that's what gives Southwark a reason to say they need too much done to them. It's only because Southwark have let their housing stock get in such a way that they seem to justify this now.

Why would Southwark do up lots of flats on the Dog Kennel Hill estate (double glazing, etc) then sell them off? How did they find the money for that?

[DJKillaQueen]

Well also it seems a mystery to me that whilst over a third of council tenants are living in homes that are not up to decent homes standard, why the council should be deeming other perfectly adaquate porperties as not habitable enough. The clue of course is in the types of properties being sold, desirable higher value terraced housing for example. And if they are not being sold at the best market value either then that is something to look at.

What James fails to mention is that the previous council also sold off perfectly good other buildings that could have been converted into dewellings. And they had a policy of leaving new developments to the private sector and housing associations - the elephant and castle development being a perfect case in point - where none of the social housing on offer will be council owned. In other words the previous Lib dem council had as little interest in increasing council owned housing stock as anyone.

In Southwark the shortages are clear.....the borough needs affordable family sized housing. That's what the council should be focusing on.

[Pugwash]

In my line of work, I have contact with many people who are homeless or seeking a housing transfer. Many have been offered property such as described by LL above, but have turned them down for various reasons. They are unwilling or unable to redecorate, or improve the property in any way. None of them would live in a non central heated property. Many people on transfer list have disability living requirements i.e need for wheelchair access i.e. wide door openings, walk in shower, all on level etc. Disabled Facilities Grant offered by LA usually take 6 months or so to come through after an OT and Surveyor has completed the necessary forms.

I believe it is a question as to whether people are willing to accept habitable housing and to make do with a kitchen that might be 20 years old but in usuable condition.

In some cases, the council have tried to update the property with new windows and central heating etc, but the original tenant has refused to allow workmen entry to do this. This is surprisingly common amongst elderly tenants who dislike change and are fearful of letting 'strangers' in the property.

[James Barber]

Hi DJKilla Queen,

As I said. The Lib Dem led council when last in Southwark did sell council properties. The new Labour led council is planning sell 2 or 3 times as many per year.

When the Lib Dems led the council the Labour government set the rules about building new social housing. To fund it requires either council tax payers pay a lot more to fund it or council borrows money or grants from central government. The 1st isn't tenable, the second isn't allowed so the only option for new social housing WAS via grants from central government to housing associaitons - the Labour govt didn't allow any such grants to councils.

And DJ you know this so why pedal the distortions?

[Alex K]

Having grown up with "council housing" always in the background (although our family never needed to avail itself of such a benefit), I don't know the answer to a simple question: When was it agreed that it is the council's business to own and to manage housing? (Just a blind spot in my education. But I shall be grateful for historical background.)

A counter-example to the council-as-landlord model exists, of course: Private landlords, council tenants (rent paid by the council, but the properties in which the needy are housed are owned by individuals or by firms).

Perhaps the question is: If Southwark Council were to "outsource" provision of housing to private landlords altogether, would things be worse for those who are now the council's tenants?

So, two questions: Historical background, and a Tory-ish hypothetical... Thanks!

[languagelounger]

Hi Alex

Reasons why a civilized country decided it could do better than private landlords:

outside toilets

rain dripping through the roof all night

rising damp

gas and electic pipes fitted by the unqualified

no blacks, no Irish

no women if we can help it.

Reasons why it could have worked better than it has:

corruption, corruption, corruption.

[minder]

Let's hope your family never need to avail itself of such a benefit in the future, Alex. Especially as "council housing" has always been in the background.

To answer your question, I would think social housing has been around since the 1940s - who else but the local council had to manage them?

[DJKillaQueen]

The corporation of London was building soical housing from 1930 onwards but council houses started being built in the late 19th century to primarily provide decent, and affordable homes to the working classes, and providing security of tenure. It was a response to a need and one that has not gone away with private rents becomes increasingly unaffordable for growing numbers of working (let alone unemployed) people.

Part of the reason why councils have shortfalls in money for maintenance is because the government creams off a percentage of the rents paid by council tenants. If councils were allowed to keep all the rent they collect they would be able to afford all the running and maintenance costs of their stock. That is going to change though thankfully.

As for outsourcing to private management companies.....(which is not the same as selling stock to private landlords) some Local auhorities already do that (Lambeth for example) - the aim being to improve service and mamagement/ save money etc. The local authority still own the stock. I think it would be very dangerous to only have housing provided by private landlords. We've been there before and we all know the consequences of that for those at the bottom.

For me though the issue is simple. Housing in the private sector is too expensive for too many people and offers little security of tenure - something which is important for the mental health let alone anything else of a lot of people. What affordable council housing does is give those on low incomes/ or those with health issues a chance to have some stability and in some cases a chance for an upward social mobility that the private sector would never afford them.

[James Barber]

Hi DJQ,

You're abolsutely spot on. Private rents are so high and tenure low that such property should only be a tiny part of the property mix. But in Southwark it isn't.

Buying homes is also ridiculously expensive.

How to lower the price?

Clearly the supply of homes is to low - this is partly why the government is trying to incentivise local authorities to allow homes to be built by recieving giving extra funding for 7 years after a new home built. But it wont be enough.

Equally the demand is outstripping supply. Things like high speed rail should soread the economic benefits of the south east northwards but wont be enough to counter London growth.

Locally what can we do to increase supply. Very few sites you could built many homes. The Dulwich Hospital stalled plans envisaged around 2/3rd of the site being built on for homes.

[Alex K]

Thanks, DJKillaQueen, for a factual and informative response. My understanding is -- after some feats of WikiFu -- that charitable organisations such as the Peabody Trust began in the 1860s to provide subsidised lodgings for those who could not afford to live where they wanted to live. (I write "wanted to live" rather than "needed to live" because in that era, it seems to me, emigration was an option that some persons chose.) These organisations are now known as housing associations. They have increasingly accommodated themselves to governmental regulation (as a part of gaining access to government-dispensed funds) and are since 2008 considered in law public authorities. The Peabody Trust supplied, in effect, a privately organised alternative to the almshouse. (The balance between "almshouse" and "workhouse" has never been an easy one to get right... who are the deserving poor, who are the Bill Sikeses and the benefits scroungers?) During the 1850s, 1870s, and 1890s various Acts for the Housing of the Working Classes established that a municipality, that is, its representatives, could inspect housing owned by private landlords, command that it be set in order at the landlords' expense, or order that it be torn down -- and that a municipality could tax its inhabitants for the funds necessary to build subsidised lodgings. Council-erected housing was the result.

Minder, when I wrote "always in the background", I meant: Always there, taken as a given, part of the landscape. Council housing for me has been part of How Things Are, un-noticed, in the same way that air is invisible. Good, now and then, to step back and ask: How did things as they are get to be as they are? With regard to your question of "Who else but the local council had to manage them?", the Wikipedia article on housing associations lets me infer that for decades the answer was: "Housing associations". They handled much of the subsidised-housing stock till after World War II, when replacement of housing stock lost to bomb raids was too big a job for the private sector to take on. In the Thatcher years, they accepted responsibility for much council stock, tipping the balance back the other way.

Thanks, Languagelounger. Building codes, governmentally mandated inspections of rented properties (whether or not the rent is paid by the council -- I'm a private tenant, and my landlord sends in a CORGI gasfitter to check the boiler and cooker once a year), civil-rights legislation, and the Acts that permitted slum clearance have done a lot to improve the quality of housing stock. In theory, at least, or so it seems to me, a council could say: We don't want to own the housing; but before we write you, Ms Landlord, a rent cheque we shall be sure that the housing that you let is in apple-pie order. Maintain a force of inspectors, then, rather than a force of plumbers, glaziers, plasterers, electricians... There will always be Rachmans, always be inspectors who accept backhanders to look the other way. But in theory! **grin**

[languagelounger]

(The balance between "almshouse" and "workhouse" has never been an easy one to get right... who are the deserving poor, who are the Bill Sikeses and the benefits scroungers?)

Um, Alex, people on average and above average incomes in the UK cannot afford to buy a home (or increasingly even rent one).

Unless they are subsidised by someone else (parents), which surely, in your language, makes them "undeserving", they have no chance of finding the ?60,000k plus deposit now needed even for a small flat.

Before the crash, "non status" mortgages were becoming the most common type of house loan in the south east, even after earnings multiples had been upped to 5x. A "non status" mortgage was where no proof of income was required - and was provided through a mortgage broker, to protect "the venerable financial institutions" that ran this racket. That's the same banks/building societies that also owned the estate agencies selling the houses at ever increasing prices, that could only ever have been supported by "non status" mortgages, as there were never enough people actually earning the incomes needed.

It was of course a criminal offence to borrow money on the basis of an invented income, or to induce an applicant to do this, and to provide it knowing that it was all a big lie. And then there was the government, which knowingly kept blowing the bubble.

How many SE22 homes were bought on non status mortgages, provided by Northern Rock, Fred the superinjunctor et al, and are currently effectively paid for by the public money that bailed out the banks? How many des res ED dwellers paid their own way, and how many are "Bill Sikses" and "scroungers"? But then the balance between "fragrant" and "fraudulent" is still such an easy one to get right.

[DJKillaQueen]

That's a good post lounger. We never seem to discuss the level of white collar fraud and of course the gravy train that was entirely designed to descriminate against those on lower incomes, and increasingly so.

Look it's simple. There are always going to be people at the bottom. We've had a situation in the past where if you didn't work you didn't eat and let's remember the poorest were working the longest hours in appalling conditions to make barely enough to eat each day - while their employers got very wealthy very quickly.

We don't want a return to that do we? Homelessness is not something I think anyone in their right mind would knowingly want to create the conditions for. Nor do we want a return to families living in one room. We are not born onto a level playing field and no civilised society would ignore that.

We are in a mess housing wise, both in the public and private sector. The public sector has a dire shortage of larger homes, mainly becuase they were all sold off under the right to buy scheme. More than a million homes had been sold by 1987 with massive discounts to the buyers. When Labour came to power in 1997 they cut the discount that councils could offer and in 2005 chaged the rules so that a tenant had to have lived in their home for at least 5 years before they could buy. To date almost 2 million homes have been sold. Compare that to the waiting lists nationally for council housing of 1.6 million households along with many other existing tenants in overcrowded accomodation due to a lack of availabe larger homes to transfer them to. So there is one reason for the shortage.

The private sector has a different set of problems, fuelled by the speculative nature of the housing market. Estate agents, banks, government and indeed some buyers all have played a part in creating what is going to be a very difficult thing to slow down. We talk about the poorest needing affordable accomodation. But here we have many people too, on good salaries (and not qualifiying for social housing) seeing more than half their wages being swallowed up by rent often on just part of a flat. Unless they have parents with spare money to help them get on the property ladder they too are destined for a life of working to pay someone else's mortgage. The impact of this is to reduce upward social mobility for all but the most affluent (something that Thatcher's right to buy scheme ironically had set out to challenge). One way or another, rents and property prices can not continue to outstrip wages in the way they are doing. But to regulate or cap risks throwing landlords (esp those in the zero deposit buy to let sector) into negative equity.

We should never have got here in the first place.

So what are the current government doing to sort it out? The FSA is looking at recommendations to outlaw products such as zero deposit and self certified mortgages. The Government has decided to attack the benefits system by reducing the amount of available benefits for claiments when paying rent. The idea I think is to force local average rent levels down (or force the poorest to move) but even if the values are forced down, because the cap is limited to an average 'percentage' of local rents then the benefits cap will continue to be forced down as the the average local rents drop, that's IF landlords reduce rents (all the signs so far are that they are not and are removing their properties from the local authority housing lists). It is becoming increasingly difficult to rent in the private sector if you are in receipt of any kind of Housing benefit.

And the most immoral move has to be the plan to reduce the Housing Benefit by 10% of any claimant after a year of unemployment. This is a shortfall that most will not be able to make up from their ?65 per week JSA. For a single person in a one bedroomed council flat that would be around ?10 a week. For the same in private sector rented accomodation it could be anything up to ?30 per week.

So what is the answer? For me that has to lie in regulation...measures that will slow the rate of growth. That has to be rent capping at the repayment cost of a mortage on the value of the building and a minimum secure of tenure for tenants (I'd suggest 5 years). It also has to mean the end of certain types of mortgage, and products aimed at offsetting normal market forces. It seems ridiculous that we have had three recessions since the early 80's and the housing market hasn't been porportionally hit by any of them.

[Alex K]

Hi, languagelounger. Thanks for an informative post. But may I ask you to re-consider one small aspect of it?

"Unless they are subsidised by someone else (parents), which surely, in your language, makes them 'undeserving'..." --

I don't know who are "the deserving poor" and who are "the undeserving poor". Some centuries ago it was easier to tell, back when the rich man was in his castle, the poor man at its gate. Then the "deserving", after lives of conspicuous piety, were granted shelter in almshouses and the "undeserving" (blasphemers, fornicators, that lot) in workhouses. Or so I've heard -- all second-hand, though; really not my epoch.

Accordingly, I don't have an opinion on whether recipients of transfer of wealth (as a house-purchase deposit) from older generation to younger generation are "deserving" or "undeserving"; and I take mild exception to being tagged as having an opinion on the point.

The fragrant holders of fraudulently obtained "non-status" mortgages are in an interesting category. I didn't appreciate that large numbers of mortgages were granted on such a basis in recent years. (Certainly I didn't get one. I've never been clever about finances. A contributing factor to my still paying rent!) The transfer of wealth in that situation took place not within a family, but from mortgagor to mortgagee. You've traced that wealth beyond the mortgagor to the public funds that bailed out conniving banks. To have profited from that sort of transfer of wealth, obtained by deception, DOES seem wicked.

But I shall be surprised to learn that enquiries into various failed banks' status have gone deeply enough to pick out individual mortgagees, to review loan-origination documents, and to prosecute the persons, on both sides of the desk, who swore falsely.

[languagelounger]

Explained by the BBC Money Programme in 2004

You're someone who maybe follows the news, but you weren't aware of the extent to which the mortgage and house markets have been skewed by fraud over the last decade. Not surprising, because it's been an example of a whole society deluding itself. Possibly the peak of madness was when the "Labour" Chancellor popped up at a City of London dinner congratulating the banks on the size of their bubble.

"Non status" had been going strong for some time before it was covered on this rare occasion by the BBC. I remembered this precisely because of the silence elsewhere at the time, and everywhere afterwards. Not long before the crash, BBC news announced that if house prices continued at their current rates, etc etc, the average home would be worth 650,000 by, oh, was it 2011? They then gave about 5 mins to an estate agent and an investment banker to reassure us that yes, it was all real, and completely sustainable, just look at Iceland, etc, etc.

Interesting point DJK, about a correction. I noticed the same people who kept telling us that the crash was coming, are now pointing out that several European countries are currently close to bankrupt, and that the correction has to come too.

[Huguenot]

It does no good to hand to use housing benefits to drive taxpayer money directly into the hands of private landlords who escalate rents to drive taxpayer contribution even higher, let alone to facilitate the fraud that can only take place in the bloated environment of government funded bureaucracy.

Half the households in the country are now receiving housing support of some kind or another from the taxpayer - a complete distortion of a welfare fund that was originally set up to giver security to the disadvantaged.

It's a considerable mistake to think that the correct response is to plough even more taxpayer money into perpetuating a dysfunctional market.

I should add that I don't think there should be single people in one bedroom council flats except in extreme circumstances - it facilitates a lifestyle without the responsibility and pressure of a constructive social environemnt vital to social development.

[edhistory]

The first significant municipal housing in East Dulwich was the Grove Vale Estate built by Camberwell Borough Council between 1903 and 1905.

There is a brief account here.

If I remember rightly the estate was self-funding from the rents that were used to repay a 60-year municipal loan.

What Camberwell could do in 1903 Southwark can't do in 2011.

John K

[DJKillaQueen]

I should add that I don't think there should be single people in one bedroom council flats except in extreme circumstances

Think about what you are saying there. That a 40 or 50 year old should be living in one room (even if they are working and receiving no benefits)? Let's punish the single and poor with no privacy or independence, especially those that are unfortunate enough to suddenly find themselves unemployed. And given the current state of the market, the rent on one room in the private sector is more than the rent on a council flat in many cases...so bit of a false economy if you think it will save taxpayers money in benefits.

Most council one bedroom flats are too small for two people to live together in anyway, which is why couples, as soon as they have a child seek to be moved.

For a single person to get a council flat in the first place, they already have to be in some kind of vulnerable situation.

We don't live in a fair world, so expecting everyone to have equal resources and opportunity is nonsense. They don't and thank god that some of us witness on a daily basis the difficulties of these people and can speak for them...especially when those who have absolutely no idea are so quick to suggest they should be reduced to the most miserable life they can be from the 'I'm alright Jack' brigade.

it facilitates a lifestyle without the responsibility and pressure of a constructive social environemnt vital to social development.

This is total nonsense. I know many people living in one bedroom council flats doing very important jobs or doing very important voluntary work. You clearly don't know anything about people in social housing do you if you tar them as some sort of socially inept breed of human? Next time you come to London, let me introduce you to the people you claim to be without repsonsibility and inept. You'll wish you'd never said such a stupid thing.

I totally agree as you know that taxpayers money paying the mortgages of private landlords is a scandal. But it going to take more than capping benefits to force rent levels to change in the private sector. There is already evidence that new capping levels are reducing the amount of properties available to those on benefits to rent (which wasn't the intention). So that leaves some form of direct regulation by the government on rent levels, but how do you do that without plunging landlords with mortgages into negative equity? It's a real mess with no easy answer.

[minder]

-- moved topic --

[DJKillaQueen]

Is the lounge really the right place for this thread?

According to an article in the press this morning 60% of 20-45 year olds think they'll never be able to afford to buy a home. Also I read something recently that 40% of all new property purchases are being paid for in cash.