What’s behind housing crisis?
Millions too poor to afford a home
By Kevin Ovenden
GETTING A house to live in has become a crisis for millions of workers across Britain. The problem is not caused by an “invasion” of refugees occupying council homes, as papers like the Daily Express argue.
Asylum seekers who have been dispersed across Britain end up in appalling accommodation often run by dodgy private companies. Most refugees in Dover are housed in bed and breakfast accommodation. In Cardiff asylum seekers live in maisonettes that people on council waiting lists have rejected. In Liverpool refugees live in tower blocks abandonedby the council as unfit for tenants.
Blame for the housing crisis lies with New Labour’s policies. The free market in housing now means that people earning less than 30,000 a year can no longer afford average house prices in over half of all counties in England. Those shocking figures were released last week by the National Housing Federation.
In 28 counties and unitary authorities you need an income of between 30,000 and 40,000 to get a mortgage for an average home. In another 18 areas you need to be on over 40,000. The combined income of over 70 percent of households is less than 30,000 a year.
That means post workers, bus drivers, rail workers and nurses are priced out of buying a home in most areas. So too are teachers, most lecturers and others who are considered to be in public sector professions.
The problem is particularly acute in London, where there is also the greatest shortage of teachers and nurses. There is only one London borough out of 32 where you can buy a home on less than 30,000 a year-Barking and Dagenham. In all but four boroughs an income of over 40,000 is needed. The government’s response last year was to announce 250 million to help “key workers” with buying costs.
But that is to be spread over the next three years. So only 3,300 homes will be subsidised this year. The amounts on offer will still not be enough to put homes within reach of, say, a nurse and a basic grade council admin worker with two children. And it excludes “key workers” like bus drivers!
At the same time councils across Britain have virtually given up on building housing and are trying to hand their stock over to private companies. Housing associations have also reined back building programmes. A recent report from the Department of Trade and Industry found that orders for public housing (council and housing association) are plummeting.
An average 1 billion a year of new orders came in each year between 1989 and 1999. Orders peaked in 1993 at nearly 2 billion, but have been on a downward spiral since then. This is over the period when local authorities drew in billions of pounds from the sale of council housing.
The collapse in council house building has forced people into the private rented sector or to try to buy a home. That has sent private sector rents soaring. Increasingly, speculators have bought up housing (driving the price up) and then rented it for exorbitant rents.
The government is considering lifting rent controls in “low demand areas” and artificially boosting rents. Sickeningly, it wants to avoid “excessively low rents”. It would mean the reverse of an original scheme to avoid high rents. This is all to encourage investment in high value property, which only the well off can afford.
Directors on board for a big reward
TWO DIRECTORS criticised for lavish handouts to other board members at one housing association are now on the board of another. Brian Clarke and Mike Hill were two of the five members of the board at the Liver Housing Association.
They sanctioned a 873,000 severance deal for three other directors who left when the association merged with the Grosvenor Housing Association last month. The Housing Corporation quango report into the payments originally proposed to dismiss the directors.
But it has since decided that such action would be “disproportionate”. So Clarke and Hill have now taken up their new posts on the board of the new merged outfit, Arena Housing Association.
Trapped in slum houses
ONE in 12 households in Rotherham, south Yorkshire, are overcrowded or in slum conditions, a new study says. Of these, 6,000 are in desperate need of rehousing but cannot afford to move to better accommodation. The city needs 651 new homes to be built every year for the next five years to keep up with demand. But there are no plans to build anything like that number of council houses.
THE DRIVE to clamp down on housing benefit fraud is leading to the innocent being evicted while cheating property owners get away scot free. Peter de la Mothe is the benefits policy officer for Camden council, north London.
He looked at the impact of the government’s “verification framework” on housing benefit in Inside Housing magazine. The framework is the name for the measures taken supposedly to cut down on housing benefit fraud. He wrote:
“I believe that the framework has increased the poverty trap for those in low paid employment who simply do not have the time to wait in long queues at town halls. New figures show an increase in repossession orders by social landlords by 12 percent in 2000. How much of this increase is due to debts caused by housing benefit delay or over-zealous application of the framework is unclear but I doubt it is helping.”
The regulations require an endless stream of original documents from those applying for housing benefit. Many people simply do not have them. Processing them takes a huge amount of time.
Either way it means that people applying for housing benefit, by definition poor, have to wait longer and longer to get their money. Private landlords and now social landlords-housing associations and other companies that the government wants to take over council housing-will not wait for their rent. Evictions soar.
Mothe writes, “One high profile housing association recently told me it was thinking of closing down much needed housing schemes in some parts of London specifically because it could not budget for the uncertainties created by the new framework.” He added, “And I suspect the framework is also inflating rents as social landlords budget for ‘bad debt’ and higher interest charges.”
The framework does not even target the main area of fraud-by property owners. Mothe writes, “A recent initiative in Camden, in association with the London Team Against Fraud, has identified multiple ownership fraud where owners have been masquerading as tenants. The savings in just one case are likely to be more than 70,000. Many will be astonished that the requirement to carry out such checks does not appear in the framework.”
Instead the focus is on harassing individual claimants. Privatisation of housing benefits is making this even worse. Companies such as CSL and ITNet have simultaneously wasted public money, screwed charges from councils and led to rising evictions through late payment of housing benefit.
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