Hammersmith and Fulham Council's Policy on Social Housing - Taking the Ladder Away from those in Housing Need.The Conservative-run Council is gradually getting rid of its social housing through policies of sales, disposals and regeneration/demolition of a number of estates. The Council sees social housing as a problem in terms of deprivation, poverty and unemployment. Its Housing Strategy titled "Building a Housing Ladder of Opportunity" sets out its vision with home ownership at the top of the 'ladder' and all other forms of tenure are secondary to this. It sees other tenures as rungs on the ladder leading to home ownership.In tandem with its planning policies, the Council insists that no new socially rented housing is sought when it approves residential developments, so that the proportion of social housing in the Borough is rapidly declining. This policy runs counter to what is required by the London Plan. Instead the Council prefers to seek what it deems to be affordable housing in the form of intermediate rent, shared ownership and discounted market sales. The Council should be aiming to obtain 40% affordable housing provision from the schemes brought forward by private developers, with 60% being for open market sale. Of this 40%, 60% should be in the form of social rented housing and 40% should be low cost home ownership or intermediate rent. Sales of Empty Council HousingIn 2011, the Council reviewed its policy of allowing the sale of what are called expensive voids. Prior to 2011, properties becoming empty and which were expensive to repair, were offered for sale on the open market. The April 2011 Cabinet meeting agreed to lower the threshold of what was considered 'expensive to repair' from 30,000 to 15,000. This also coincided with the completion of the Decent Homes Programme which, according to Council figures, brought 99.6% of Council housing up to a good standard of repair at a total cost of 213 Million. Therefore, there would be in all probability, be few properties left that met the old 30,000 repair cost threshold.Sales of empty properties increased and raised large sums for paying off debt, providing more affordable housing and promoting regeneration (such as the Earls Court scheme which will result in the loss of Gibbs Green and West Kensington Estates). There seems to be little point in delivering other forms of affordable housing by the sale of perfectly good (and decent) existing housing. The numbers of Council funded affordable housing schemes to date has been minimal especially in the context of the large numbers lost in sales. In addition, using the proceeds of sales to finance the loss of more of the Council's stock in the Earls Court area, seems to be perverse. According to Council figures, the number of sales totalled 262 from 2009 to the end of 2013 and revenue generated was 112Million. The number of sales went up from 15 in 2009 to 88 in 2013. The Council is particularly secretive about its sales programme. It refuses to give anything other than the number of sales when asked about this under the Freedom of Information Act. However, research of auctioneers' lists reveals a considerable amount of data about the Council's property sales. The list of auction sales for the last three years is attached to this paper. The list will not give details of properties sold by private treaty, but it represents the vast majority of sales - estimated at over 90% of the total. It can be seen that 21 studio units, 111 one bedroom units, 40 two bedroom units, 33 three bedroom units and 2 four bedroom units were sold in the last three years. Of these 72 were ground floor flats and 31 were were whole houses. There is a huge shortage of houses available for letting in the Council's stock which largely consists of flats. The loss of this number of houses further limits the Council's ability to meet housing need - especially larger families. The number of ground floor units lost to the stock is also a matter of concern as some of these could have been let to people on the waiting list who have mobility limitations. When the Cabinet approved expanding the sales policy, it was advised by the Assistant Director of Legal Services that scarce properties for which there is a pressing need should not normally be sold. It was also advised that due regard must be given to the likely effects on persons protected by the Equality Act 2010. The loss of so many houses and ground floor properties must run counter to this legal advice. The legal advice also warned that the sale of property must be motivated by bona fide housing policy and not be tainted by considerations of electoral advantage. The criteria and mechanism for the selection of properties to be disposed of must be objective, transparent and uniform across the borough and be firmly rooted in housing policy. Given the Council's secrecy about the sales, it is anything other than transparent and it runs the risk of being accused of seeking electoral advantage in the scale of its disposals. Given the history of Westminster City Council and the gerrymandering scandal, the Council needs to be particularly careful about the number and location of sales. The list of sold properties shows some wide disparities as to the ward distribution of sold properties and it could be argued that the location of sales is not uniform across the Borough - as legal advice indicated it should be.Other Losses of Council HousingIn addition to the loss of Gibbs Green and West Kensington Estates as part of the Earls Court development, the Council is also disposing of individual blocks. Two of these have been emptied in preparation for demolition at Watermeadow Court and Edith Summerskill House. The Planning Division produced a Planning Assesment document in November 2012 which stated that any proposal for Edith Summerskill House would result in the loss of 66 social rented units on the site - most likely it would be a high density development with some discounted market sale units made available.Watermeadow Court has been emptied in readiness for demolition though a scheme under the Council's joint venture partner, Stanhope PLC - as is the situation with Edith Summerskill House. It is not proposed to replace the loss of social rented units. The Council may seek to re-provide the number of social rented units at Gibbs Green and West Kensington and this has been allowed for in the outline scheme so far approved. Such an allowance for rehousing these tenants will form part of the affordable housing requirement anyway and it will form part of the developer's requirement to provide the full 40% affordable housing as required by the London Plan. Whether this will be achieved in practice is debateable.The controversial scheme approved at Shepherds Bush Market will provide 212 residential units, all but 6 will be for market sale but the scheme will involve the loss of a further 12 social rented units. Six units for discounted market sale have now been included at the request of the District Valuer.Overall, with reference to all residential schemes approved by the planners in the last 5 years, there will be a net loss of 37 social rented units - not including Edith Summerskill House/Gibbs Green and West Kensington Estates and sales of empty properties. The loss of these additional properties will total 820 units plus the loss of properties sold under its empty property disposal programme which is now approaching 300. This is in the context that some social housing has been provided in the last 5 years by Housing Associations, but this is totals around 39 dwellings and has declined over recent years. The loss of social housing from the total stock is therefore significant.There will have been limited sales taking place under right to buy provisions and the Council has now approved a scheme to sell shares of each property to existing tenants.The Council has made its intentions clear as far as estates such as White City are concerned. They are to be 'regenerated' probably in partnership with its joint venture company. The White City Opportunity Area Planning Framework notes the imbalance of social rented units in the area and includes the White City Estate within the boundary of the WCOA. This sets out the vision of Council tenants moving into new housing (though not social housing) provided in the east of the area which would give "scope to consider a partial renewal or redevelopment (for instance by replacing blocks considered to be environmentally unsuitable)....The estates could be transformed with a greater range of housing types and sizes." This is likely to mean that each block will be redeveloped at a time with no obligation to replace the housing with more social housing. The vision indicated for Edith Summerskill House outlined in the Council planning document of 2012 is likely to be adopted whereby a proportion of the new housing will be for discounted market sale.Why Dispose of Perfectly Good Social Housing?Given the large amount of money spent in recent years bringing the Council's stock up to a good standard, it seems wastefull of public funding to sell good quality housing. Particularly so as housing need in the Borough is increasing, as are the costs of providing temporary/emergency accommodation for those in the most urgent of housing need.In the period from 1st January 2010 to 20 November 2013, 2505 homeless households approached the Council for help. As at 20 February 2013, there were 138 people sleeping rough on the streets of the borough. In the year 2012/13 the Council's emergency housing costs rose to 1,751,000 up from 387,000 in 2009/10.In the context of human costs to families with children, the Council placed 463 households with one or more child outside of the borough (but within London) in the period January 2012 to 31 December 2012, at a cost of 2,036,000. A further 121 households with no children but to whom the Council owed a homelessness duty were placed in accommodation outside the borough. Of all households housed temporarily that year, 329 were placed in B&B accommodation - often for longer than than the law permits them to be in B&B accommodation. A further 22 households were housed outside of London altogether that year at a further cost of 79,000. All told, over 600 households had to be housed outside of their local area in 2012, severing local connections such as schooling, friends, support networks and health care.It should be noted that the Council also sold its own accommodation for meeting urgent housing need in the form of homeless persons hostels. It gave itself planning permission for a change of use of 12 hostels to general residential use following a decision in February 2007 that they were not needed anymore due to falling homelessness levels. Planning permission was given despite planning policy to resist the loss of hostel accommodation both locally and throughout London (as contained in the London Plan's policy). It seems a lack of forethought went into this decision as homelessness has never gone away and the Council's determination to reduce its own stock, has and will worsen the situation.The Council may well argue that housing need in the borough has fallen because its waiting list only has 768 households on it at April 2013, compared to 9361 households on the list at April 2010. This disguises the fact that the Council has removed anyone on the register who does not meet its new criteria. The Council has now removed those from the register who are homeless but are housed suitable temporary accommodation; have not lived in the borough for more than 5 years; applicants who don't 'behave'; those who do not make a community contribution; it has reduced its overcrowding criteria by ignoring those who are overcrowded by one bedroom (living rooms count as a bedroom for LBHF purposes) and it will not house non-dependent young persons over 18 years old living with the household.The revised register has had a small improvement on the average length of time households have to wait for a suitable property to beome available. In 2012/13 households waited on average 34 months for a studio to become available, 22 months for a one bedroom flat to be available, 48 months for a two bedroom unit, 63 months for a three bedroom unit and 85 months (7 years) for a four bedroom unit. By 2013/2014 this had reduced to 11 months, 11 months, 37 months, 54 months and 79 months respectively. However, in the period 2009 to 2012 the Council disposed of/sold 209 properties, 22 of which were four bedroom or more, 38 were three bedroomed, 41 two bedroomed, 84 one bedroom and 24 studios. During 2013 to date, a further 7 studios, 54 one bedroom flats, 17 two bedroom flats, 17 three bedroom flats and two four bedroom houses have additionally been sold. The reuse of these properties for rehousing would have reduced the time households have to wait, reduced the overall numbers on the housing register plus allowed for more rehousing of homeless families. Households wishing to downsize due to housing benefit cuts to those deemed to be underoccupying (the bedroom tax) are also severely disadvantaged by the loss of one bedroom dwellings from the stock and also risk problems with rent arrears/homelessness as they wait for a suitable smaller property to become available. In addition, the Council is making matters worse by having to decant tenants from those blocks which it seeks to regenerate or dispose of in some other way - such as Edith Summerskill House and Watermeadow Court. This sort of policy can only add to the existing pressures on the reducing housing stock - especially as the Council now has its joint venture partner appointed specifically to redevelop parts of the Council's housing stock.Is there too much Social Housing in the Borough?It has already been noted what Londonwide affordable housing planning policy requires in new housing schemes. Hammersmith and Fulham Council state that no more social housing should be provided because there is an imbalance in the tenure pattern of the borough. Around 15% of the total housing stock is rented from the Council, with a further 15% rented from a Housing Association mainly at a social rent level but this figure includes intermediate rented properties. In total 31% of the Borough's stock is in the social rented tenure compared to the Inner London average of 33%. So compared to the rest of Inner London, there is no real disparity. There are quite large variations by ward with College Park and Wormholt wards having more than 50% in the Council/RSL sector according to the 2011 Census. Others such as Munster and Parsons Green have 20% or less in these sectors. Shepherds Bush Green and Hammersmith Broadway have higher than average proportions of stock in the Council/RSL sector - at around 38-40% but most other wards have average levels of social housing or less than average.Sands End ward is one ward where large housing developments are either built or in the pipeline. As at 2011, the Council/RSL sector made up 34% of the total stock (slightly more than average) but taking into account recent planning permissions, this is projected to reduce to 24% of the stock. The Council will lose 80 more units through the demolition of Watermeadow Court but despite these reductions, there is no social rented housing being provided by any scheme given planning permission in the last 5 years - other than to replace some lost at the planned Hurlingham Retail Park scheme.What has become apparent from a comparision between the two Census figures 2001/2011 is the decline of the owner occupied sector as a percentage of the stock. This has dropped from 43% in 2001 to 35.6% in 2011 and is said to be the second highest fall in the country. Over the same period, the private rented sector has increased from 23.4% to 33.1%. There have been an extra 5300 dwellings added to the borough's housing stock in the period and this seems to have fuelled the increase in the private rental sector. So rather than the Council achieving its vision of a property owning majority, it appears to be achieving the opposite whilst at the same time removing the social housing sector. A Borough of Opportunity - for property developersIn all schemes of over 10 dwellings, given planning consent in the last five years the Council has only managed to achieve provision of 16% of what it defines as affordable housing. Most of that 16% is in the form of discounted market sale at 41% of the total affordable provision. The rest is either via shared ownership (8%) intermediate rent (11%) key worker (4%) or replacement housing for the loss of the two Earls Court estates and over 700 units which have consent in outline only and where the type of affordable housing tenure is unknown. A full list of schemes with more than 10 dwellings that have been given planning consent in the last five years is attached. The provision of affordable housing would have been considerably worse if it were not for some Housing Association schemes and a small number of Council's own development. In a of number of instances, developers have not been obliged to provide any affordable housing or have been given the option to pay money to fund minimal off site provision (which the London Plan states should be used in exceptional circumstances only). Notable developments which have no affordable housing provison are the Town Hall/181 King Street scheme (196 dwellings), Queens Wharf/Riverside Studios (165 dwellings) Harbour Avenue (89 dwellings) 27 St Annes Road (84 dwellings) 405-409 King Street (40 dwellings) 72 Farm Lane (44 dwellings) and in the case of the Shepherds Bush Market scheme of 212 dwellings, only 6 will be for discounted marker sale. Major developments at the BBC Television Centre (1025 dwellings), North of Westfield (1522 dwellings) Carnwath Road (257 dwellings) Earls Court (5845 dwellings) and the Dairy Crest site (1150 dwellings) have been approved with the developer being obliged to provide around 10% affordable housing.Planning officers' reports recommending a decision on these schemes more often than not justify not meeting the affordable housing target as being due to the scheme being on the margins of financial viability. This seems beyond credibility in a borough were property prices are particularly high and are said to be the fourth highest in the country. As part of major applications with housing content, developers usually submit a financial appraisal which considers the build cost, resale cost and any unusual site development costs. These appraisals are usually confidential and not available to the public. However, occasionally the Council makes these confidential documents available. One such appraisal has been uploaded to the Council planning database in 2009. The application for Kelvin House in Glenthorne Road was submitted at the start of the financial crisis and it made great store of the depressed state of the property market. Following approval, the original proposal was resubmitted with a request to reduce the affordable element from 14 units to 5 due to the worsening market and this was agreed by the Council. The scheme is for a development of 81 dwellings. The financial appraisal relied in large part on resale values and the likely poor returns. Values were projected as being around 230,000 for a low floor one bedroom flat and up to 450,000 for a high floor two bedroom flat. The majority of flats were predicted to realise less than 300,000 - around 270,000. Figures from Rightmove.co.uk reveal that in late 2011 these flats were sold for considerably more when released for the first time. Four flats achieved a sale price of more than 500,000, the majority of one bedroom flats sold for around 360,000 and the lowest sale price listed was 317,000. Sale prices were therefore 80-100,000 higher than that accepted by the Council's planners. Assuming an average undervaluation of 90,000 per dwelling on this scheme, the excess would net the developer slightlly under 7 Million, less any increased building cost but plus the in-built profit margin. The financial appraisal for Ashlar Court near Ravenscourt Park has also been uploaded onto the Council planning database. This scheme gained planning consent in 2011 for a mix of new build and refurnbishment of the former nurses home building. The planning officer's report to committee indicated that 6 shared ownership dwelllings will be made available (as affordable housing) but it was not possible to achieve the Council's preferred tenure of discounted market sale as the scheme was at the limit of being financially viable.The financial appraisal lists expected sales values of each type of property, ranging from 206,000 for a studio flat, 296,000 for one bedroom flats, 592,000 for a three bedroom flat and 685,000 for large two bedroom duplexes. In total the estimated sales value was 28,471,000. The flats have been released onto the market and are currently showing on Rightmove.co.uk. A one bedroom flat is being marketed for 600,000, two bedroom duplexes are available at 1.1 million and three bedroom flats are being offered for 1.075 million. The increase in value is in the order of 100% which would give the developer a windfall profit of around 25 million extra. The developer's contribution towards the affordable housing element is quoted as 250,000 in the financial appraisal. More recently, 405-409 King Street was approved on the basis that 2 shared ownership dwellings be provided off site as this was the limit of financial viability. The whole site is being developed for market sale. Whilst no financial appraisal information is available on the Council's website, the recent local rise in property prices since the scheme was approved in 2011, would suggest the 'marginal viability' justification for no affordable housing provision, ought to be revisited. Currently, the five bedroom houses are on the market for 3 million each, three bedroom houses for 1.4 million each and a one bedroom flat for 625,000. Evidence suggests that two bedroom flats sold for around 890,000. If this was repeated, sales would total around 44 million. The development is for 41 dwellings and this suggests that development costs plus an allowance for profit exceeds 1,000,000 per unit. It must be financially viable to provide affordable housing on site at these values and to suggest otherwise is not tenable.The financial appraisal model is seriously flawed as it only serves to demonstrate to the Council's planning officers that schemes are at the limit of viability and this results in low levels of affordable housing provision in new developments. It seems that low valuations of new dwellings is also being accepted by planners without question and it is particularly inept of the Council not to be achieving more than an average of 16% affordable housing provision in a borough of high property values - as the above three examples show.Is the Affordable Housing Being Provided, Affordable?The Council states that its preferred affordable housing types are intermediate rent, discounted market sale and shared ownership. More social rented housing is not part of the affordable housing model. Intermediate rent is normally at a rent level which is 80% of the market rent. Lettings are usually done through a Housing Association on an Assured Shorthold basis. Discounted market sale (DMS) offers properties to qualifying residents at a fraction of the market value. The rest of the property's value is held in trust by the Council. Initially DMS offered properties at 70% of market value but this typically is unaffordable so it has been reduced and is linked to income. Shared ownership enables purchase of shares in a property, starting at 25% with the aim of eventually owning the whole property. Until this happens, the occupier pays rent on the un-owned share. The Council has developed its own version of the Right to Buy called Right to Buy Part so in effect the tenant becomes a shared owner, paying rent on the un-owned share. Unusually, the Council scheme starts with shares at 15%. This scheme will not apply to new developments as it is only open to existing tenants of social housing.The Council believes that intermediate rent is affordable housing. Some typical rents for the W6 area have been taken from the Rightmove site. The cheapest one bedroom flat available in W6 is listed at 1096pcm, two bedroom flats are available in the range 1300 to 1800pcm and three bedroom flats are available at 1690 to 3000pcm. Applying the 80% calculation to the two bedroom example, this would equate to 1040 to 1440pcm. Taking the mid point, a two bedroom intermediate rented flat would cost 1240pcm or 14880 a year. It is inadvisable to spend more than 35-40% of the household income on housing, so this rent level would indicate a household would need to have an income of at least 37000 (after tax and deductions). Realistically the required salary level would need to be 50,000 which is within range of two people earning 25000 for instance. Having one wage earner in the household would find it a bit of a struggle to meet this rent on a typical income. Figures taken from the Section 106 agreement dated January 2013 for the scheme at 6-12 Gorleston Street, which has 23 intermediate rent units, quote intermediate rent levels of 220 per week for a one bedroom flat and 280 per week for a two bedroom flat. The income levels quoted as needing to sustain these rents is 38,650 for a one bedroom flat and 51,500 for a two bedroom flat. In the case of the later, 280 per week equates to 14,560 per year with an income needed of over 50,000 - which is not too dissimilar to the example given above. Rent levels in the SW6 postcode area would be even higher than for the middle of the Borough. And as for the penthouse units on top of the tower blocks at Edward Woods Estate developed by the Council for intermediate rent, households would need an income of over 100,000 per year to sustain rent and service charges.The Council announced its Joint Venture deal with Stanhope PLC and outlined its plans for Edith Summerskill House and Watermeadow Court. It believes that 40% of the resulting dwellings will be available for discounted market sale. A third of the dwellings will be targetted to those on incomes of 30,000, a third will be available to those on incomes of 40,000 and the rest for those with an income up to a limit of 80,000. If residents of the borough have those sort of incomes then DMS will be affordable as a way into home ownership, but they will never realise the full value of the property as the un-owned part is held by the Council in trust in perpetuity. They can only sell the proportion of the property that was originally offered for sale after the discount was applied. The most that someone with an income of 80,000 could borrow on a mortgage is around 280,000, which together with a deposit would probably mean that they will own around 45% of a typical one bedroom flat in the south of the borough.Shared ownership tends to be geared to what households can afford to buy. Housing Associations administer shared ownership schemes on their own developments and values tend to be lower than found in the open market. However, households needing larger units will also need to find higher amounts. For instance a one bedroom flat is available via Notting Hill Housing Trust in W12 has a full market value of 320,000 with shares available from 50% at 162,500. This could be supported by an income of 47,000. However, a three bedroom House in Sundew Avenue W12 has a market value of 595,000 and shares are only available from 60% at 359,000. This could only be supported by an income of more than 100,000. As well as the mortgage to consider, households will need to budget for rent to be paid on the un-owned part as well as there being a liability for service charges and major works costs. As a form of tenure, the Census shows that shared ownership has increased marginally from 0.9% of the stock in 2001 to 1.6% of the stock in 2011.The Council has recently approved a shared ownership scheme for its own tenants which allows tenants to buy upwards of 15% of their property and rent the rest. It has added a further 'rung' to the housing ladder they claim. However buying 15% also means that tenants/shared owners are now liable for the cost of any work done to their estate/home together with regular service charges such as insurance and caretaking. In effect they pay twice for these items - through their rent and the part purchase. The purchaser also becomes liable for repairs within their demised property. The Right to Buy part purchase also effectively removes that property from the Council's stock of potential relets to those in housing need. Given the Council's regeneration vision for Council estates, it also might mean a shared owning household gets compulsorily purchased, paid a small sum in compensation and find themselves out of a home and unable to buy anything else. The Council is also not commiting itself as to whether buying a part of your property means that the tenant loses out on the 100,000 discount that is available for right to buy purchases in London. They will get a proportion of this discount related to their share - but until they own 100% of the property, they will not get the full RTB discount. In terms of affordability, the Mayor of London's Housing Strategy notes that a third of Council tenants in London earn less than 10,000 and a further third earn less than 20,000. The scheme is unlikely to be affordable for the majority of tenants because as the Council calculates, a 15% share of a one bedroom flat in SW6 will require an income of 26600 rising to 36600 for a three bedroom flat. In addition for the one bedroom flat example, the tenants monthly outgoings will rise from 427 to 579 per month. As with all of these schemes, they are only affordable if the required amount of income is flowing into the household. By removing the social housing sector and through the Council's refusal to promote this sector through new housing developments, those on low or modest incomes will be squeezed out of the borough. Whilst the Council sees low income households as a 'problem' it is effectively creating problems elsewhere as more households have to find an increasing part of their income to be able to afford to live in the borough and so reducing their disposable income to spend locally. What is apparent in assessing affordability is that the required income levels are not earned by the majority of public sector workers such as nurses, police and fire fighters. Most of these schemes will be unaffordable to key public sector workers and the question has to be asked, who will run and maintain our health and other public services locally if they cannot afford to live in the borough?

25th April 2014