Low-income tenants are facing severe financial pressure just as landlords are being asked to deliver more. We fail to listen to tenants at our peril, say Keith Edwards and Tamsin Stirling.
We’ve all felt how important home is during the pandemic. A place to keep safe in, to live, work and learn. Councils and housing associations provide well over 200,000 homes across Wales. Without these homes, many more households would be homeless or living in squalid, overcrowded conditions. And social landlords don’t just provide homes, they work alongside communities and other organisations to secure positive economic, social and environmental outcomes.
The financial settlement on which social housing has been based for some years in Wales balances capital grant from government at a rate which those working in England would be highly envious of, with above inflation rent increases each year. This has enabled previous targets for new social housing to be exceeded and underpins the 20,000 target for the current Welsh Government term. But there has been increasing questioning about above inflation rent increases from a number of quarters, including the Bevan Foundation and the Joseph Rowntree Foundation. A review of rent policy carried out for Welsh Government published in 2019 noted that average rent to income ratios for Welsh social sector rents were at historically high levels.
Looking at things from the perspective of social landlords, significant financial pressures are evident which could place the strong relationship with Government under pressure. In coming years, social landlords will be expected to deliver more new homes to a higher environmental standard as well as making serious progress on increasing the environmental performance of existing homes. There is also investment to be made to deal with outstanding issues of fire safety and growing concerns about disrepair, as highlighted recently by ITV. And social landlords are being pencilled in to play a more important role as economic anchor organisations locally as the ‘Can Do’ sector. Add to this very high levels of inflation on both materials and labour and the squeeze is very evident.
The squeeze is also very evident when you look at things from the perspective of tenants. Balancing paying rent with providing food for kids or heating homes is already a stark reality for many people and pressures are only going to increase. Many households have experienced a loss of income during the pandemic and over half of those living in poverty in Wales are in work. Alongside above inflation rent increases, service charges can be substantial. Have homes been designed in such a way that builds in a requirement for service charges which are often not seen as value for money by tenants? And what is the role of service charges in compounding in-work poverty?
And look what is coming down the line for low income households. A cut to Universal Credit, the end of furlough, significant increases in fuel costs and increases in the cost of food and other basics. Almost every day, we hear news that will mean increased costs; in August 2021, the inflation rate was over 3% and the Bank of England has warned that it is likely to rise to over 4% this winter. Next spring, everyone in work will pay more National Insurance.
So we have a situation where what social landlords are being asked to do by Government is being partly funded by above inflation rent increases paid by low income households. And when it comes to decision/policy making at a national level, the voice of tenants has been muted – whether intentionally or not. An independent tenant perspective needs to be around the table when decisions that affect hundreds of thousands of tenants are made. In the coming months, might we see radicalisation of tenants on issues such as rent increases?
So what’s to be done? There is no magic bullet. But here are some thoughts on steps that could be taken:
- Start at home – individual housing associations and local authorities have to focus on affordability BEFORE modelling rents for next year – and they have to ensure they are efficient – no vanity projects or ‘largesse’
- Understand the impact – the impact of rent and service charge increases needs to be understood from different perspectives. What are the consequences at a national level, for the housing sector, for communities/tenants?
- Clean up service charges – they need to be justified, fair and consistent and, most importantly, value for money for tenants
- Honest and open dialogue between social landlords and Welsh Government which acknowledges the impact of rent increases on poverty. Should rent increases be capped or even rents reduced and what would this mean for grant rates? A radical option would be to relook at the mixed funding model altogether – should current tenants be paying (through the rent) for development, decarbonisation etc?
- Tenant role in decision/policy making at a national level – we have to address the current deficit in decision/policy making by establishing an independent tenant-led body. As a start Welsh Government should carry out a feasibility to find out how tenants want their voices to be heard
Over the last 30 years or so, there has been a shift in attitudes and approaches from a paternalistic ‘your landlord knows best’ to ones where the sector has tried to engage with tenants, listen to what they have to say and take necessary actions. But this is not universal, as shown by the recent ITV expose of the squalor that some social tenants have to endure and the crass and insensitive way some social landlords responded.
This is a clear warning for the sector. We fail to listen to tenants at our peril. If we want to avoid going back to confrontational relationships, we need to act now.