Policy update

POLICY DEVELOPMENTS IN OTHER PARTS OF THE UK

UK

Benefit cap raised but LHA still frozen

The benefit cap will increase in line with inflation from April for the first time since it was introduced.

The surprise measure announced by chancellor Jeremy Hunt in his Autumn Statement means that the main cap for families will rise from £20,000 to £22,020 a year outside London and from £23,000 to £25,323 in the capital and will release some of the financial pressure on households with children and those living in expensive areas.

However, there was no such increase in Local Housing Allowance, with rates frozen for the fourth year in a row despite rising private rents.

Hunt also confirmed that the increase in social rents in England will be capped at 7 per cent in 2023/24, more than the 5 per cent proposed in a consultation and slightly more than the 6.5 per cent cap in Wales. The National Housing Federation later announced that English housing associations will cap rent increases for shared owners at the same level.

The chancellor reversed most of the tax cuts proposed under the ill-fated Liz Truss government. A ‘permanent’ cut in stamp duty on house purchases introduced by his predecessor Kwasi Kwarteng was turned into a temporary stamp duty holiday until March 2025.

Mortgage alarm bell sounded

More than 750,000 UK households could fall behind with their mortgage in the next two years, according to the Financial Conduct Authority.

The country’s top financial regulator said that there were already close to 200,000 regulated mortgages (around 2.4 per cent of the total) in payment shortfall as at the end of June 2022.

However, it warned in a letter to the Treasury select committee that another 570,000 households could be at risk of a payment shortfall over the next two years thanks to rising interest rates.

The estimate is based on assumptions that households will experience a 10 per cent fall in their real incomes over the period and that households spending more than 30 per cent of their gross income on their mortgage payments is at risk of a shortfall.

ENGLAND

Review recommends audit of all social housing

Housing associations should work together to publish a thorough audit of all social housing in England and commit to re-focussing on their core purpose.

Those were among the key recommendations of the independent Better Social Housing Review published in December. The review was set up by the National Housing Federation and Chartered Institute of Housing, which committed in advance to accept all of the recommendations.

Other recommendations were that:

Housing associations should partner with tenants, contractors and frontline staff to develop and apply new standards defining what an excellent maintenance and repairs process looks like.
The Chartered Institute of Housing should promote the traditional housing officer role as a supported and valued employment opportunity with a recognised programme of training and continuing development.
Associations should work with all tenants to ensure that they have a voice and influence at every level of decision making across the organisation, through both voluntary and paid roles.
Associations should develop a proactive local community presence through community hubs which foster greater multi-agency working.
Associations should support tenants and frontline staff to undertake an annual review of the progress each organisation is making in implementing this review’s recommendations.

The review was set up in the wake of media exposure of shocking conditions in some social housing and published following the inquest into the death of two-year-old Awaab Ishak. The coroner ruled that this was due to a severe respiratory condition caused by exposure to untreated damp and mould in his family’s home and said it ‘should be a defining moment for the UK housing sector’.

Helen Baker, chair of the Better Social Housing Review, said: “The shockingly poor quality of some social housing has been in the spotlight recently and our review supports the need for urgent, sector-level action to address the issues. We would like to see our recommendations built into sector-wide, as well as organisation-specific, plans within six months.

‘The power imbalance between tenants and housing providers remains one of the biggest problems facing the sector, perpetuating rather than dismantling the societal stigma and discrimination experienced by people living in social housing. This is particularly true for those from black and minority ethnic communities.’

Housing secretary Michael Gove named and shamed 14 different housing providers for their poor performance in 2022 after they were sanctioned by the Housing Ombudsman for maladministration.

SCOTLAND

Social landlords announce below-inflation rent increases

Ministers reached an agreement with social landlords on a rent settlement for 2023/24 that will keep increases significantly below inflation.

The Confederation of Scottish Local Authorities (COSLA) and the Scottish Federation of Housing Associations (SFHA) published statements setting out their members’ intentions for rent in 2023/24. COSLA has committed to keeping local authority rent increases to an average of no more than £5 a week. Members of the Scottish Federation of Housing Associations and Glasgow West of Scotland Forum of Housing Associations have reported planned increases averaging 6.1 per cent.

The reference to average figures, rather than a fixed cap, allows for the flexibility to honour the outcomes of the statutory tenant consultations that social landlords must undertake each year on rent setting.

Tenants’ rights minister Patrick Harvie said: ‘The statements of intent from the social rented sector, based on consultations with tenants, will keep rents affordable while allowing social landlords to continue investing in essential services such as home improvements and maintenance.’

NORTHERN IRELAND

Housing associations show resilience

The 20 housing associations in Northern Ireland increased their turnover by 9 per cent last year to £429 million.

The 2022 Sector Global Accounts published by the Northern Ireland Federation of Housing Associations (NIFHA) said that all surpluses were reinvested into improvements and maintenance to existing homes and the building of new ones. Operating surpluses fell by 2 per cent but the results came despite a 12 per cent increase in operating costs.

Private sector borrowing has resulted in a total of £1.541 billion currently invested in social and affordable housing. The NIFHA says the strength of the financial model is highlighted by the fact that the gearing calculated at 32.5 per cent is well within the financial comfort range of between 25 per cent and 50 per cent.

Other key figures within the report include 835 new social homes completed with construction started on a further 1,700 new-builds during the same period.

NIFHA chief executive Seamus Leheny, said ‘The social housing sector has faced huge challenges in recent years, but the resilience of our members has ensured that the sector remains in a strong position.’

WELSH GOVERNMENT

Draft Budget squeezes spending

Key housing budgets will be left largely unchanged in 2023/24 despite rising inflation under Draft Budget plans announced in December.

Finance minister Rebecca Evans described it as ‘one of the toughest budgets since devolution’ with Welsh Government’s overall budget £3 billion lower than if it had risen in line with inflation since 2010/11.

However, housing organisations urged ministers to look again at key housing budget such as Housing Support Grant in its final budget expected in February.

Social rent cap set at 6.5 per cent

Rents for social housing in Wales will rise by a maximum of 6.5 per cent in April under a settlement announced by climate change minister Julie James in November.

The settlement followed extensive consultation with housing associations, local authorities and tenants over the rent increase for 2023/24 in the context of inflation that is far higher than when the five-year rent standard began in 2020/21.

Rents normally rise by the inflation rate in September plus 1 per cent if inflation is between 0 and 3 per cent but CPI inflation last September was 10.1 per cent.

Welsh Government sees the 6.5 per cent increase as the best compromise between the interests of tenants facing a cost of living crisis and landlords who need to invest in their housing stock and services.

Around 75 per cent of tenants have all or part of their rent paid by housing benefit, meaning that some of the savings from a below inflation rent increase will go back to the Westminster Department for Work and Pensions.

Landlords will have the flexibility to reduce or freeze their rents for individual homes or increase them up to a maximum of 6.5 per cent plus £2 a week provided that their overall rents do not rise by more than 6.5 per cent.

According to modelling by Community Housing Cymru and the Welsh Local Government Association, an increase of 6.5 per cent ensures that no landlord will face a budget deficit next year.

As part of the settlement, the minister said she had secured a series of commitments from social landlords including that there will be ‘no evictions due to financial hardship for the term of the rent settlement in 2023-24’ where tenants engage with their landlords.

Service charges are not covered by the rent standard but landlords will be expected to include them in affordability assessments ahead of announcing any rent increase.

Help to Buy to run for two more years

The Help to Buy Wales scheme was extended by March 2025 in a move to support the housing industry and supply chains.

The current phase of the scheme, which provides equity loans to home buyers, had been due to finish in March this year. Help to Buy has already closed to applications in England.

To reflect changes in the housing market and the impact of the current economic climate, the new price cap for the scheme will be £300,000 from April 2023 in line with increases in average prices.

All homes purchased will also need to reach a minimum of Energy Performance Certificate (EPC) B.

Housing minister Julie James said: ‘The Welsh Government wants to ensure support for potential new home-owners continues to be relevant and targeted at those who most need it, particularly in these economically challenging times.’

WALES

Award for rapid rehousing project

A small social housing development in Bridgend has won a national award for innovation.

Ffordd Yr Eglwys, delivered by Valleys to Coast housing association, won the ‘delivering innovation’ category at the recent Ystadau Cymru awards run by Welsh Government.

The four-home development in North Cornelly was the first to be built by a social housing developer using a modular construction method, with structural insulated panels manufactured off-site.

They are innovative not only in construction, but in design – offering one-bedroom accommodation set over a traditional two-storey house style.

The scheme was delivered as part of the Rapid Rehousing Protocol during the Covid pandemic which accelerated the need for good quality affordable housing for people moving on from temporary accommodation.

The homes – delivered by Valleys to Coast in partnership with Bridgend County Borough Council and funded by the Welsh Government’s homelessness grant – took just 12 months from planning approval to being ready for handover.

They were designed by Cardiff-based firm Pentan Architects and the modular components provided by Pontyclun-based First Start Homes.

The first social housing development of its kind in Wales, an archetype is now available to other social housing developers in the hope that the scheme can be replicated at speed in other areas.

Chief executive of Valleys to Coast Joanne Oak, said: ‘We are thrilled to win the delivering innovation award for our Ffordd Yr Eglwys development. We are proud to be leading the way for Wales in developing new social housing of this type and hope that we see more of these modular homes being built to help address local housing needs in other areas.’

Caerphilly agrees ownership policy

Caerphilly County Borough Council’s Cabinet has unanimously approved a Low Cost Home Ownership Policy that will help people on lower incomes access affordable home ownership.

The policy applies to properties acquired by the council through the planning system or properties built via its own development programme and does not apply to homes within its existing housing stock.

Through the policy, prospective home buyers can purchase a property via shared equity or shared ownership. To be eligible, they must meet specific criteria set out within the policy.

Cllr Shayne Cook, cabinet member for housing, said: ‘We understand that many local people aspire to home ownership, but increasing issues around affordability often prevent them from being able to buy their own home.

‘We are currently amid a national housing crisis and with over 6,000 applicants registered on Caerphilly’s Common Housing Register, providing a range of options for people to access sustainable, affordable housing has never been more important.

‘The council is making great progress in delivering on its ambitious plans to build new homes and increase the supply of affordable housing in the county borough. Launch of the Low Cost Home Ownership Policy is another step on this exciting journey.’