Around 90,000 people are now claiming UC.
Universal credit is really happening, and it’s driving some of the biggest changes in landlord-tenant relationships we’ve seen for quite some time.
Here is some really useful information which can be watched on webinars with your tenants from the CIH on calculations, roll ut and supporting customers:
Practical implications of universal credit – eligibility
Social landlords are understood to be using a little-known Universal Credit regulation to protect their income from the impact of the bedroom tax. A number of landlords have spotted a clause in complex benefit regulations that allows them to collect the rent shortfall resulting from the bedroom tax for tenants in arrears.
Unlike a normal ‘alternative payment arrangement (APA)’ – under which housing costs benefit is switched to the landlord when tenants are in eight weeks of arrears – using the regulation alongside an APA means landlords can receive the full gross rent, without a bedroom tax deduction.
The move does not protect tenants from the bedroom tax, as the money is still deducted from their overall Universal Credit award. But it means that landlords do not have to collect the shortfall in benefit from the affected tenants.
Under the regulation, landlords ask the Department for Work and Pensions (DWP) to take the entire rent cost straight out of the tenant’s overall Universal Credit claim, if it is deemed to be in the claimant’s best interest.
According to Inside Housing:
“Housing benefit expert Julia Service, of consultancy Housing Systems, told Inside Housing that a number of landlords have used the regulation to receive the “gross rent” where tenants had been affected by the bedroom tax.
The regulation states: “The secretary of state may direct that Universal Credit be paid wholly or in part to another person on the claimant’s behalf… to protect the interests of… the claimant.”
Sam Lister, policy and practice officer at the Chartered Institute of Housing, said the regulation gave landlords an alternative to chasing tenants for additional rent.
Manchester association Mosscare said it intended to use it to obtain shortfalls caused by the bedroom tax “as a last resort” in order to avoid costly court eviction costs.
The DWP declined to comment.
Nearly 90,000 people are currently claiming Universal Credit, according to official statistics published yesterday.
Universal Credit combines several benefits into one payment paid in most cases directly to claimants.Landlords can apply for an APA to have the housing costs element paid to them where tenants are in eight weeks of arrears or more.
IN NUMBERS:The bedroom tax and Universal Credit
456,959 Tenancies hit by the bedroom tax in May 2015
£15.24 Average bedroom tax deduction amount
89,357 People claiming Universal Credit in July 2015
36% percentage of Universal Credit claimants in social housing on APAs in May 2015
Source: Department for Work and Pensions/ Inside Housing research “
The English social housing regulator is now naming smaller providers which have missed financial reporting deadlines as part of a new ‘transparent’ approach.
According to Inside Housing:
The Homes and Communities Agency (HCA) this week issued nine regulatory notices to small landlords which failed to submit their accounts to the regulator within six months of their latest accounting period as required. For providers with 1,000 homes or less, the HCA does not produce full regulatory judgements and relies on information submitted in accounts to gain assurance that the landlord complies with regulatory standards.
In the past, the HCA would have dealt with the missed deadline by having a private correspondence with the provider, but it is now naming providers which have missed their reporting deadline by publishing regulatory notices on its website. The notices were issued because the regulator “does not have adequate assurance” of financial viability.
Bronwen Rapley, deputy director for investigation and enforcement at the HCA, said: “The submission of accounts by smaller providers gives us evidence of viability. It is about transparency.”
Ms Rapley said a continuing failure to submit information could lead to enforcement action from the regulator, but stressed the HCA has a duty to be proportionate.
Bill Hitchens, a trustee of one-home association Dame Bertha Lopes Almshouses, which failed to submit accounts to the HCA on time, said the organisation was having difficulty changing the signatories to its bank account – and therefore getting information for its accounts – having lost its treasurer and secretary.
The other eight landlords to recieve notices for late accounts filing are Almshouses of William & Rebecca Pearce, Brent Community Housing, Charity of Sarah Jane Wood & Mary A Garnett, Harman Atwood for Almshouses and Curates House, Joseph Chariott’s Charity, the Abbeyfield Dorcas Society, the Abbeyfield Wallasey Society, and the Butlin & Elborow Housing Trust.”
Whilst social landlords are reeling from the May Budget which included an unexpected rent cut of 1% per annum for the next 4 years, they now also face a large increase in court fees to issue possession proceedings and the closure of some courts possibly requiring longer travel times…
Thanks to Anthony Collins for the incofmrtaion below:
Back in January 2015 we outlined the Government’s plan to increase fees at the County Court. The MoJ has now published the Government’s Response to the consultation and has submitted proposals for further fee increases. These further fee increases are in addition to and separate from the increases to fees for money claims which came into effect fromMarch this year.
Confirmed increases
There will be exceptions for some applications such as varying or extending an injunction for protection from harassment or violence (though this seems to be designed to cover personal injunctions and it is unclear whether it applies to an ASB injunction brought by a social landlord).
Despite overwhelming opposition in response to these proposals the above increases will go ahead and are estimated to generate significant additional income for HMCTS each year. The increases will be laid before Parliament by Statutory Instrument “as soon as Parliamentary time allows”[1]: Parliament is in recess until 7 September but we expect to see these in force during the Autumn possibly.
Proposed further increases
The Government has recognised that the disposable capital thresholds for fee remission (i.e. where person applying can avoid paying the fee due to low income) will also need to be amended and proposes: a capital limit of £20,000 for applications with a fee of £10,000 or more and a limit of £25,000 for applications with a fee of £15,000 or more or where the applicant is aged 61 or over. Whilst the increases may be thought to reduce the number of claims brought by tenants against landlords, the fee remission will probably not affect the majority of low income customers.
There is no clear timeline for when these proposals would come into force, but we would expect to see these changes timetabled for March 2016.
How will this impact on you?
Landlords should note the potential impact on budgets. Reply to the consultation on the proposed further increases before the deadline of 15 September. The Consultation document is available from thejustice.gov.uk website and responses should be submitted by Tuesday 15 September to mojfeespolicy@justice.gsi.gov.uk .
Court closures
At the same time the Government has issued a consultation to close more courts. Please click here to view the consultation.
Some of the county courts on the closure list include Bath and St Helen’s. Again the main driver is about reducing the court service’s expenses where courts are not fully busy.
This consultation ends on 8 October 2015 and responses should be sent to email: estatesconsultation@hmcts.gsi.gov.uk.
[1] Paragraph 45 of the Consultation
[2] Excluding personal injury claims which remain capped at £10,000
[3] Excluding personal injury claims which remain capped at £10,000
Please contact the Housing Litigation team on 0121 212 7400.
Court Fees
Councils could have to overhaul residency requirements for social housing or risk a High Court challenge, following a landmark legal judgement.
According to Inside Housing:
” The judgement, handed down by the High Court, could confound some local authorities’ attempts to control their housing waiting lists after the government relaxed allocation rules in 2011.
In 2014, a homeless mother of five, who is unnamed in the judgement, was barred from joining Ealing Council’s housing waiting list because she had not lived in the borough for long enough. The mother left Hounslow for Ealing after fleeing domestic violence, according to the High Court judgement, handed down on 7 August.
Ealing Council in 2013 introduced a policy stopping people from joining its housing register unless they have lived in the borough for at least five years.
The court found the policy breached the 1996 Housing Act, which requires councils to give “reasonable preference” to homeless people. Lawyers now believe that the ruling sets a legal precedent for other English local authorities.
The ruling means that councils could be open to judicial review if they apply blanket residency criteria policies that do not exempt people in the reasonable preference category. In Ealing, 58% of waiting list applicants fall into this group.
An Ealing Council spokesperson said: “We received a copy of the judgement handed down to us on Friday and are taking time to look at it in detail and will then consider our options.”
The Localism Act in 2011 gave local authorities unprecedented powers to control their housing waiting lists. An investigation by Inside Housing last year found English councils had struck more than 100,000 applicants off their waiting lists since 2011.”
Housing associations are calling for lenders to accept a change to the way stock is valued which could create hundreds of millions of pounds of extra borrowing capacity in the sector.
Accoridng to Inside Housing:
The NHF believes a current model of assessing stock called Existing Use Value Social Housing (EUV-SH) significantly underestimates the true value of social housing assets. Stock transfer organisations are required to use EUV-SH, as are landlords for stock purchased under Section 106planning agreements.
EUV-SH takes into account net rental income for a whole portfolio of properties over 30 years adjusted for inflation. It aims to be an estimate of how much social stock is worth if organisations sell stock to one another and leads to homes being valued at around 30-40% of market value. However, the NHF believes evidence of actual transactions between providers show stock is actually more valuable than EUV-SH shows.
The NHF is working on a paper outlining plans for a new “Market EUV-SH”, based on different assumptions, which it believes could lead to properties being valued at closer to 60% of market value. This would lead to fewer properties having to be held as loan security, thereby releasing borrowing capacity.
The National Housing Federation will publish merger guidance for housing associations following the summer Budget announcements.
It is urging all of its members to think “strategically” about their future following George Osborne’s announcement of a 1% annual rent cut for social landlords.
It has commissioned consultancy Savills to survey landlords and write guidelines on mergers.
According to Inside Housing:
Stephen Bull, head of governance at the National Housing Federation (NHF), said: “The main rationale for this is to provide members with a clear process and thinking when considering mergers or when an initial approach has been made.” Mr Bull said it is too early to go into more specific detail about what the guidance may contain.
However, he said the 1% rent cut will makes things “very difficult for some organisations” and some will need to have “immediate discussions” about their future.
The federation has estimated the rent cut will take £3.9bn out of the housing association sector’s borrowing capacity. Recent stock transfer providers are understood to be particularly affected because they have had less scope to diversify funding and risk, and are locked into long-term debt to refurbish stock based on assumptions of inflation-linked rent rises.
The NHF move comes after the regulator the Homes and Communities Agency (HCA) wrote to all smaller providers warning them to notify them immediately if they cannot cope with the Budget changes. Julian Ashby, chair of the HCA regulation committee, in the letter on 31 July, said some landlords “may conclude that an independent future is no longer possible”.
The HCA is looking for organisations which would be willing to rescue landlords in trouble. Mr Ashby has also suggested providers adopt a “takeover code” to help landlords cope with mergers. There are currently 1,785 providers of social housing on the HCA’s register.
Nearly 40% of all council flats sold under the Right to Buy in England are now being rented out privately, according to exclusive research by Inside Housing.
Figures released by 91 councils under the Freedom of Information Act (FOIA), in the most comprehensive piece of nationwide research on the issue, show 37.6% of ex-council flats are likely being rented privately at market rents.
It comes as the government prepares to extend Right to Buy discounts of up to £100,000 to a further 1.3m housing association tenants – a policy it estimates will cost £4.5bn.
The councils revealed they have sold a total of 127,763 leasehold properties, with 47,994 leaseholders living at another address, a strong indication that the home is being sub-let.
The National Housing Federation (NHF) said the figures demonstrate why it is keen to “explore with government other ways housing associations can help more families get on the path towards buying their own home” apart from extending the Right to Buy.
The research showed more than half the ex-council flats in six areas are now being let privately, with the highest – 69.6% – in Milton Keynes.
Many councils rent back their former properties sold through the Right to Buy at market rates to provide temporary accommodation to homeless families. Some ex-local authority homes in London are advertised on Zoopla for more than four times the average social rent.
Here is an example from Inside Housing:
“There is a two-bedroom flat listed on Zoopla, which sums up – in a nutshell – why so many people paying attention to housing policy in the UK get annoyed about the Right to Buy.
It is a first-floor flat in Bermondsey, south London, just a short walk from Tower Bridge and Boris Johnson’s glossy headquarters on the south bank of the Thames.
It has a small, well-fitted kitchen, a lounge and a balcony. From its brown-brick exterior, it is unmistakably part of London’s 1960s council house building boom, but according to its description on the property listings site, it is now “ex-local authority”.
The letting agent is offering the flat for £1,712 per month, a 409% mark-up on the average rent for a council flat in Southwark of £418.
This rent increase is extreme, but the move into the private rented sector (PRS) is a trend that exclusive research by Inside Housing demonstrates is being replicated all across England.
Freedom of Information Act responses from 91 councils show they have sold a combined 127,763 council flats and maisonettes since the Right to Buy was introduced in 1980.
Among these, 47,994 leaseholders are registered as living away from the property – a strong suggestion that they are renting it out privately. This means 37.6% of the council homes which were sold off at a discount in the hope of fulfilling a homeownership dream, are now back in the rental sector. Just for much higher rents.
Inside Housing arrived at the figure by asking councils how many residential leaseholds have been sold. This occurs where a flat or maisonette is sold to a tenant under the Right to Buy – with the council continuing to own the freehold of the block.
Councils were then asked how many leaseholders have registered an away address, which indicates the property is being sub-let. While this does include a small margin for error where, for example, family members live in the home free of charge, it provides the best possible estimate and is the figure some local authorities use to estimate how many homes are being rented privately.
So what is the impact of so many ex-council flats going into the private rented sector?
The first is that the higher rents are railroading through changes to the traditional make-up of estates, especially in high-value areas like London.
“It is fundamentally changing the nature of former social housing estates, because the people who can afford the private rents are not the same people who could afford social housing rents,” says Karen Buck,Labour MP for Westminster North.
“Over the years, I have seen many of our estates become virtual honey pots for estate agents and landlords,” adds Pat Callaghan, cabinet member for housing in Labour-led Camden – where 36% of the 8,922 leasehold properties are sub-let.
She says estate agents flyer estates, particularly seeking older tenantswho want to move out of the city. They then fund the purchase, allow them to move and the property goes straight into the private rented sector.
“The landlords want to get as much money as they can for the property, so they split it up and let it out, often to a group of students to share,” she says.
Philip Glanville, cabinet member for housing in Hackney (7,423 leaseholders, 26% sub-letting) agrees.
“When I first got elected in 2006, the estates were mainly people who owned the home or council tenants,” he says. “Now there are a lot of professional sharers and students.”
This trend is not confined to London. Nick Atkin is chief executive of Halton Housing Trust, which owns 6,400 homes in Cheshire following a transfer from the council, and many of them remain subject to the Right to Buy.
“One in four sales is made to someone who is in receipt of housing benefit, so they are often not the person buying the home,” he says.
“It can be friends and family, but it is also companies who offer to purchase the home on their behalf.”
Catherine Hand, a partner at Trowers & Hamlins solicitors, explains that while there are restrictions on when a tenant can sell their Right to Buy home, there is nothing councils can do under the current system to prevent immediate sub-letting.
This has a knock-on effect on estate management. Social landlords remain responsible for the upkeep of the estate as a whole, but not the homes in the private sector.
“We have invested £130m into our homes and neighbourhoods, and some private landlords obviously don’t invest to the same standard,” says Mr Atkin.
Ms Callaghan explains that the council spends time and legal resources tracking down private landlords to repair properties – and also picks up the tab where their actions damage surrounding stock.
“One landlord moved a group of four students into what was originally a two-bedroom flat,” she says. “The tenant below contacted us, because it flooded the sewage system and she had urine running down her walls.”
There is also the cost to the public purse in housing benefit and temporary accommodation. Both Camden and Hackney, and many councils all across the country rent back the homes they sold at a discount to provide temporary accommodation to tenants.
This means there is a hit to the housing benefit bill – as the private landlord charges a market rate for the property and the taxpayer picks up the cost.
Inside Housing’s research comes as the Conservative government prepares to extend full Right to Buy discounts to 1.3 million housing association tenants – and sell thousands of high-value council homes to fund it.
During the election campaign, David Cameron made this extension one of his flagship policies, saying: “Conservatives have dreamed of building a property-owning democracy for generations.”
But with nothing in place to prevent homes going into the private rented sector, Mr Cameron may in fact be subsidising a new generation of buy-to-let landlords.
Indeed, the research shows that across the 91 councils, 2,020 leaseholders have bought their home since discounts were raised in 2012, and already registered an away address.
Kathleen Kelly, assistant director of policy and research at the National Housing Federation, says this demonstrates one of the reasons why it is keen to explore changes to the planned extension.
“Clearly once a home is sold through Right to Buy, owners are free to sell the property on after a period of time and many of these homes do end up in the hands of private landlords,” she says.
“That is why we are keen to explore with government the other ways that housing associations can help more families get on the path towards buying their own home, such as shared ownership and buying smaller stakes.”
In response to the research, Brandon Lewis, housing minister, re-issued the government’s explanation of its plan to extend the Right to Buy, saying: “It is important that councils make the best use of their assets and manage their housing stock as efficiently as possible. So it is right that as high-value council homes become empty, they should be sold to fund new affordable housebuilding in the same area.”
The Department for Communities and Local Government refused to comment in any further detail on the findings.
The research follows a similar study by the Daily Mirror two-and-a-half years ago, which looked at the figures from 13 large metropolitan areas, and concluded a third of homes were in the private rented sector.
Further research by London Assembly member Tom Copley last year showed an average of 36% of homes across London boroughs.
But Inside Housing’s is the most comprehensive nationwide study – and suggests an increasing trend.
Of the 13 London boroughs that responded to both Mr Copley and Inside Housing, nine showed an increased proportion of likely sub-lets in just 12 months. The most marked rise was in Brent, which saw an additional 200 leaseholders with away addresses in the year – going up from 25% to 32.9% of properties sold.
Nationwide, six local authorities have now reached a tipping point where more than half the flats sold under Right to Buy are being rented privately. In Milton Keynes, the most heavily affected, 69.6% of the 1,610 leaseholds sold have away addresses [see box].
To test the theory that these homes are out of reach of the working poor, Inside Housing telephones the letting agent for the Bermondsey property described above. We pose as a local teaching assistant and requested a viewing of a home – once built at the public’s expense to house London’s working poor.
“I’m not being rude, but how much do you earn?” the letting agent asks. We say £18,000 per year, and explain that we hope to qualify for housing benefit to help pay the rent.
“We don’t take tenants on housing benefit,” the agent responds curtly and ends the call. It appears the fears are justified.
| Rank | Local authority | Leaseholds sold | Away address registered | Approximate % sub-letting |
|---|---|---|---|---|
| 1 | Milton Keynes | 1,610 | 1,121 | 69.6 |
| 2 | Stevenage | 1,365 | 893 | 65.4 |
| 3 | Blackpool | 397 | 259 | 65.2 |
| 4 | Corby | 591 | 371 | 62.8 |
| 5 | South Kesteven | 128 | 73 | 57.0 |
| 6 | Kingston | 1,497 | 752 | 50.2 |
| 7 | Enfield | 4,670 | 2,264 | 48.5 |
| 8 | Northampton | 808 | 384 | 47.5 |
| 9 | Nuneaton | 430 | 204 | 47.4 |
| 10 | Stoke | 348 | 165 | 47.4 |
Source: Inside Housing research
“
In a regulatory case report on The Air Ambulance Service published on 12 August, the Charity Commission highlights the duty of charity trustees to act collectively and emphasises the importance of seeking specialist legal advice on issues of charity law.
Complaints were made to the Charity Commission after the charity ran a fundraising event that lost £111,000 and made a loan of £27,000 to its deputy chief executive. The Commission found that there had been serious governance failings, concluding that:
The charity trustees agreed an action plan to address the concerns raised and have ‘made good progress’ in doing so. However, the Commission’s findings are serious and it is likely that the trustees had to devote a significant amount of time to responding to the Commission and managing the reputational impact of the investigation and consequent publicity.
The report is a useful reminder that charity trustees are ultimately responsible for the actions of their charity. The Commission emphasises that charity trustees must
‘make themselves aware of and monitor any significant endeavour the charity enters into, ensuring that proper risk assessments and due diligence are carried out at the outset and kept under review’.
The report also highlights:
‘It is a legitimate call on a charity’s resources to seek professional advice when it is needed, including when entering into significant fundraising ventures.
Charities need to be aware when and where they need to obtain proper advice in relation to charity law specifically (as opposed to experts in any other areas of law) – either from the commission, or from a charity law specialist’.
For the full report click here.
Contact Shivaji Shiva.
The Air Ambulance Service runs two local air ambulances services, serving a total of five counties – Warwickshire, Northamptonshire, Derbyshire, Leicestershire and Rutland – and the Children’s Air Ambulance. It is a substantial charity with annual income of around £11 million and a dramatic web-site headed ‘Mission Critical + Saving Lives’.
Councils in property ‘hotspots’ across England could be made to sell huge numbers of homes to fund the extension of Right to Buy, while others will be hardly affected.
According to th CIH exclusive research to reveal the extent to which the council home sell-off policy varies in different local markets across England.
Data provided by 59 councils under the Freedom of Information Act shows that in some areas more than half of council housing could be eligible for sale as it becomes empty.
Under plans announced by the Conservatives in April, homes valued in the top one-third of their type in their region will be sold to reimburse housing associations for sales, clean up brownfield land and build replacement housing.
As well as inner-London boroughs, authorities in the East and South East of England, and in Yorkshire said they could lose thousands of homes.
Proposed regional-level ‘thresholds’ – which don’t account for localised variations in property prices – would leave an estimated 59% of council housing in Harrogate vulnerable to sell-off.
By comparison, other councils, including Northumberland, Portsmouth and Croydon, have no high-value stock, with Manchester, Nottingham and Slough estimating less than 1% of their homes will be affected.
Social housing figures are now calling for the definition of ‘high-value’ to be set in line with smaller local markets. Richard Donnell, research and insight director at valuations agency Hometrack, warned of a “hollowing out” of social housing in expensive postcodes, should the government pursue a broad-brush approach.
