A council that will be affected greatly by the new Welfare Reform Bill has announced plans to build 2,000 homes in its borough in the coming years to provide good affordable properties for its tenant population.
Government policy would not work
Islington Council were outspoken in their criticism of the Government’s plan to allow housing associations to build and let properties close to the local market rent. They believed that the policy would not work in their corner of London, where the average rent for private residential apartments is close to £1,000 a month. The council were worried that precious building land in such a built up area of the capital developed in the name of social housing would never be tenanted by those in dire need of accommodation, but instead they would be covered with property business insurance and let out to private wealthy tenants.
Massive development will offer affordable rent
Instead the council have put together a 54 point plan for the borough which they suggest will make Islington a better and fairer place to live. At the helm of the plan will be a development of almost 2,000 homes which will be covered by landlord insurance and built for the needy people of the area. Importantly the council say the homes will be let at affordable rates. The council are launching the initiative in a bid to narrow the gap between rich and poor in the borough and although they won’t be building the homes directly they will have a big input in the planning and implementation of the homes.
Many social elements to the grand plan
The plan is not without controversy. The council say they want to persuade people living in under-occupied homes to move to homes more suitable, freeing up big homes to be occupied by big families. They propose to pay all council employees a minimum of £8.30 an hour (the London Living Wage) and ensure that all contractors of council work do the same. The plan is to ensure that no council employee earns more than ten times more than another.
The council will encourage good neighbour schemes and provide a phone line for tenants to report anti-social behaviour. The social housing scheme introduced by a socialist council will operate in the heart of capitalism; it will be an interesting venture.
It does appear that the Welfare Reform Bill is managing to bring opposite and diverse factions together for the first time. Unfortunately the architects of the bill have little to crow about because the separate entities are uniting to oppose the bill.
Creation of new organisation
The birth of the Tenant Choice Alliance (TCA) has come about because of the bill and involves such groups as the Residential Landlords Association, the Council of Mortgage Lenders, the National Housing Federation and the Tenants and Residents Association of England. The alliance is targeting the housing allowance aspect of the new universal benefit scheme that will be introduced via the Welfare Reform legislation.
Private Landlords threaten action
When the Bill becomes law, all of the universal benefit will be paid directly to the tenant, with the government defending its position by saying that benefit claimants should be responsible for their own financial arrangements and it is important that they manage their own affairs. Private landlords in particular are concerned about the situation and rather than pay out more in landlord insurance to protect themselves from rent arrears have threatened to stop letting their properties to people on benefits. It would be a disastrous situation but landlords are not alone in asking for a change.
Housing associations agree
Many housing federations agree with landlords that tenants should be given a choice, saying that many unemployed tenants would much prefer to see their rent paid directly to their landlord. This gives then the security of knowing their rent has always been paid and eliminates their fear of becoming homeless. Most tenants are fearful of getting into arrears and welcome the payment by-passing their very difficult to manage budgets.
Tenants ask for choice
A spokesman for the Tenants Association in the alliance also confirmed that choice in the matter would be most desirable. And it does seem the most sensible way forward. Many people in the UK today worry about not being able to afford homeowners insurance to protect their property, but to actually worry about not having a roof over your head because you are behind with your rent is a different proposition entirely, and the truth is lots of people are hopeless when it comes to managing money. The present Government have demonstrated time and again over the last 12 months that they are willing to change direction if they think they have got something wrong. The TCA will be hoping the Welfare Reform Bill will get the same kind of understanding.
As the impending Welfare Reform Bill and Housing Benefit changes draw ever closer, local authorities, tenants and landlords are becoming increasingly concerned of what the eventual outcome will be.
Warning to government
It is beyond doubt that the warnings from homeless charities such as Shelter, who say that well over 50,000 people may have to leave their homes when the new payments come into effect, are being taken seriously by Local Authorities whose job it will be to re-house them. The leaked letter from a government department worried about the same problem has panicked some in Whitehall, and political commentators are now pondering on whether we shall see yet another Government u-turn.
Change in age limit
The homeless figure may well be compounded by another part of the Welfare Reform changes that will see single people under the age of 35 only be paid benefit for renting out a room as opposed to a one bedroom flat. The cut in allowance will almost certainly mean many will have to leave their present home and landlords concerned about rent arrears accumulating from tenants on benefits are taking their own course of action irrespective of their landlord insurance policies.
Charity notices change in attitude
Thames Reach, a homeless charity that attempts to find homeless people in the London area safe accommodation, are reporting that private landlords are now reluctant to take on tenants under the age of 35. They are worried that in a few months time they won’t be able to afford the rent and this will mean the landlord will be looking at mounting arrears, a void period in his property or the worst case scenario, a claim on his property insurance when taking out an eviction order to get his property back. It is a risk some landlords are not prepared to take and who can blame them.
The demand for rented property is at its highest for years, and landlords are spoilt for choice. The Government lost a chance to redress the situation last month when they refused to give landlords the opportunity of getting direct payments from the state. They may come to rue that decision in the next 12 months as the homeless question becomes less of a debate and more of a crisis.