Response to Consultation
3 Year Rent Restructuring Review
ODPM
Eland House
Bressenden Place
London SW1E 5DU

20.08.04

London Tenants Federation Response to Consultation on the Rent Restructuring Three Year Review

The London Tenants Federation (LTF) is an umbrella organisation, bringing together borough wide council tenants federations / organisations across the capital. Our comments regarding the Rent Restructuring Three Year Review are as follows. We would be grateful for a response to the specific questions asked.

1. NO TENANTS were represented on this review.

Government has made proclamations that it wants tenants involved in all decision-making in relation to our homes and communities. It has said that 2 of the aims of rent restructuring relates to tenants - that rents should be 'fair and less confusing for tenants' and there should be a 'closer link between rents and the qualities that tenants value in properties'. It is remarkable that despite this, there has been a complete failure to engage tenants in this review.

The London Tenants Federation wrote to the ODPM in May '03 asking for representation on the review. In response, we were advised that we could not have representation on the review and that a member of the 'Tenants Sounding Board' would represent the views of tenants. We received no information on how this selected tenant might either consult with or be accountable to other tenants across the country about the effects of rent restructuring. We were advised that the ODPM 'hoped to arrange a discussion of emerging findings from the review with interested parties later that year' and that they would keep us in touch with developments.

If a discussion took place 'later that year' the LTF was not informed or invited and no one from the ODPM has kept us in touch with developments.

We wrote to the ODPM again in March '04 when we found out that the 'Tenants Sounding Board' tenant had not actually attended any of the review meetings. We were advised that the ODPM 'would hope shortly to consult on the findings and any options that might seem appropriate'. They added that they 'would ensure that the London Tenants Federation are fully consulted in this process'. It is not clear what the ODPM meant by 'ensure'. Although the recommendations are now out for consultation, we have had no contact from them.

This dismissive attitude towards tenants is compounded by the Consultation Paper, which obscures the main issue for tenants to the point where it is misleading. It would be perfectly possible to read the entire Consultation Paper and not realise that the proposals will result is higher rents for almost every social housing tenant. Nowhere in the consultation is the significance for rent levels, as a result of the combination of high valuations and the associated change in the formula for the target rent explained or discussed.

In fact it looks as though the additional rent rises amount in London for RSL tenants come to more than 1% per annum on top of the existing RPI+ 0.5% per annum. Paragraph 1.12 of the Consultation Paper is therefore highly misleading.

The absence of any comparative worked examples or even any guidance as to how to compare rents under the current and proposed systems all contributes to a concealment, unintentional or otherwise, of the true significance of the proposals.

Please advise -

i. Even had the 'Tenant Sounding Board' member had been able to attend the review meeting, how would that member have been accountable to other tenants?
ii. Given that there are particular problems for London tenants in relation to rent restructuring, due to the effects of high property values, why was our original request to take part in the review not more seriously considered?
iii. Why wasn't an alternative found to the 'Tenant Sounding Board' member who did not attend the meetings? There are a number of representative regional and national tenant organisations. Why was none of these approached?
iv. If two the four aims of rent restructuring are to genuinely make 'rents fairer and less confusing for tenants' and to achieve 'a closer link between rents and the qualities that tenants value in properties', why did the ODPM not think it essential that tenants be represented in reviewing rent restructuring?

Having failed to consult tenants, it is very hard to see how the review was able to conclude that the "basic policy is sound" (page 5 of Consultation Paper).
"Sound" perhaps from the point of view of landlords maximising their income.
But from tenants point of view it seems the Review was a charade - primarily a money gathering process for RSLs.

2. There are regional differences in the effects of Rent Restructuring for tenants, which have not been adequately addressed in the review.

At London Tenants Federation meetings, members have complained that in London, rent restructuring has neither achieved 'rents that are fairer and less confusing for tenants' or 'a closer link between rents and the qualities tenants value in properties'.
They have complained that huge differences in rent levels are occurring across boroughs - for the same sized properties on similar estates, with similar levels of services. The rent differences often represent no more than the high value of properties in some parts of London and in individual boroughs. It can simply be the result of gentrification in some areas.

It disadvantages tenants whose estates happen to be in such areas and does not reflect the qualities that tenants genuinely value in their properties. Tenants do not see this as 'fairer'. Tenants do not put the same weight on many factors which owners value for a number of reasons often linked to different incomes, especially in London. Clearly with anyway insufficient social housing in London, council tenants do not have a choice of where they live. It is glaringly obvious from chapter 4 of the consultation paper that the kinds of issues raised by London tenants have not been addressed in this review.

The qualities that tenants value in their homes are primarily about the quality of services and repairs to their estate. There is no relationship between rents paid and the quality of services received in the formula that now determines our rent levels.

In London council tenants on average are paying £13.15 a week more in rent that our councils receive in the combined total of Management and Maintenance allowances and Major Repairs Allowances. In fact nationally council tenants find that the Government takes £1.5 billion more rent money than is returned in allowances. As tenants do not make capital gains the payments on debt charges on the assets are not directly relevant to tenants.

Proposals in the Three Year Rent Restructuring Review will hike up council tenants rents further across the country with no benefit in terms of services to our homes. There is absolutely no way that anyone can define this as 'fair'.

It also flies in the face of ODPM's own research, which shows that M&M allowances should be some 35% higher than they are at the moment.

3. Recommendations in the review appear to be based on inflated and questionable valuations made by RSLs.

It is very clear that an inflated valuation will financially benefit RSLs. Unlike our local authorities they retain any extra rent yield from rents - money, which they may well put into development rather than improved services. Effectively this is a tax on the poorest members of our society, the RSL tenants proportion of which will be used to provide more social homes. Especially given RSL structures it is taxation without representation.

It seems that the extra collected from council tenants, will simply go the governments coffers - perhaps to cover the additional housing benefit that will be required to meet these rent increases.

Why has the ODPM has not questioned the RSLs' valuation - 22% higher in London than had been expected? Some RSLs may well have done the valuation in a perfectly balanced way. Others seem to have taken advantage of the system. We are told they have options for up to five approaches to valuations. Lacking any effective external validation it is unrealistic to expect tenants to regard the outcomes as 'fair'.

It is particularly indefensible that council tenants rents will be hiked up on the basis of figures that have not been independently assessed and a formula which does not use the correct national average property valuation figure unlike the initial rent restructuring. Can ODPM give an assurance that a council will not be penalised in any way if it chooses after proper consultation with its tenants not to implement the full increase now being proposed for some or all of its tenants?

The London Tenants Federation is extremely concerned that the outcome of this Review seems to simply reflect the influence that the RSLs and the money lenders have had within the review and heightens its exclusion of tenants. It seems that Government has handed over the driving force in policy making on rents to the landlord lobby and effectively excluded tenants from the process.

Please advise -

i. Why was the recommendation (para 1.16) in the HACAS review to investigate some at least of the RSL valuations ignored?
ii Why was the national valuation figure not updated to stop the higher than expected valuations pushing up average rents.

4. It seems that the RSL agenda, as noted above, is being promoted - in the guise of 'harmonisation of council and housing association rents'. It seems also that the government is happy to accept this agenda.

There is no proper justification given for harmonising at the RSL rent levels. An option of harmonising at the local authority level is not even discussed in the consultation paper.

It is clear that a fairer method of increasing rent differences between property sizes could be applied, than that recommended in the review. In order to balance rent increases on some larger properties, rent reductions in smaller sized properties could be implemented. Once again the more money for RSLs approach is unquestioningly proposed.

It is difficult to see the review's recommendations as being about anything other than increasing the rent yield for housing associations and about the pressure that they and the money lenders have applied within this review.

5. The recommendations will not achieve rents that are 'affordable' for London's tenants and will have a detrimental impact on the governments' targets around social exclusion and child poverty.

Rents in London are anyway not 'affordable' to the 60% of tenants who already have to claim housing benefit to meet the cost of their rent. The review's recommendations will do nothing but increase rather than decrease this figure. They will necessarily make life more difficult for the poorest in our society.

If accepted, the recommendations will on average further increase the already substantial rent rises that London council tenants face. The combined effect of the original rent increases under rent restructuring as initially implemented and now proposed would be to increase London tenants' rents by over £40 a month (15%) on top of inflation by 2011/2, the end of the implementation of rent restructuring. Clearly this varies from borough to borough but at its greatest (in Camden) will increase rents by over £70 per month on top of inflation (an increase of a quarter) by 2011/12.

For pensioners with a small occupational pension, who don't qualify for housing benefit, more of their pensions will disappear in rent. For example - a pensioner with a total income of £12,000 pa and a current rent of £68 a week will be paying a third of their net income in rent.

It is likely to force more into becoming dependent on housing benefit. A tenant facing an increase in 15% on a rent of £80 per week would have to increase their earnings by £18 per week to meet the increase.

Tenants who are already claiming housing benefit will find it more difficult to move out of claiming benefit.

These are serious consequences for tenants and also for government policies around getting people into work, social exclusion/inclusion and reducing child poverty targets.

The gap between the wealthy and the poor in London is huge and it is difficult to see that these recommendations will do anything but further entrench this divide.

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