Professor of housing at Ulster University
November 08, 2016
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| The rent to buy scheme raises questions over affordability and how people will be chosen to take part. Photograph: Andrew Matthews/PA |
There has been much debate over the weekend about plans by government to introduce a “buy as you go” scheme.
According to David Orr, chief executive of the National Housing Federation (NHF), the scheme would cater for a large section of the population who lack the necessary money to save for a deposit or commit to a mortgage.
In theory the proposal sounds credible. But there have been many attempts in the past to introduce similar schemes, including try before you buy, rent to own, right to aquire, social homegrant and voluntary purchase grant, to name but a few.
What is different about this proposal? The NHF has identified 1.4m people as not being served by current housing options. It claims that there are many tenants living in the private rented sector who want to own their own home but cannot get a mortgage because their income is low or work insecure. The proposals would be for new build housing and new tenants and the federation believes that this would contribute significantly to housing associations’ plans to build 335,000 homes over the next four years with the help of additional funding.
This is all very well but the proposal assumes that participants will pay 90% of market rents. This will surely exclude many who at the moment are finding it difficult to afford market rents in the private rented sector and who are sharing or living in overcrowded conditions in order to do so. Would 10% below market rents be attractive?
For those who do use the scheme, there must be a question about what would happen if their circumstances change during the 25-year period, when incomes could, of course, go down as well as up.
It’s not clear whether housing benefit would support the equity part of the rental payment if income falls within these levels. Confining someone to such a long period in one dwelling will also affect mobility. Will the equity accrued be portable if someone wants to move on? Who will select the lucky ones to use this scheme? What allocation system will be used? If government funding is underpinning the scheme with taxpayers’ money how should this work? We have seen examples of generous discounts given to sitting tenants in the past through the right to buy, which has seen more than 1.9m council homes in England sold off, many of which have ended up in the private rented sector, rented to people supported by housing benefit.
The private rented sector itself has grown substantially in the past ten years almost doubling in size. There are now 11 million private renters, including 1.5 million families with children. There are also around 1.5 million tenants claiming housing benefit in the sector many who are paying an increased shortfall between rents charged and what diminishing housing benefit levels allow.
In the past, housing policies have encouraged the private landlords to house people with lower income, who would previously have been housed in the social sector. Many councils discharge their homeless duties by using private landlords. using this sector. Yet tenants renting privately do not get the same benefits as social housing tenants, even though they may be in similar circumstances. They do not qualify for discounts through the right to buy scheme, they don’t qualify for good management and maintenance services that social landlords can give and they certainly have less security to remain in their homes for longer periods. So why are the chosen 1.5 million going to be treated differently?
The building of many more houses by housing associations over the next four years has to be welcomed but should the 1.25 million on social housing waiting lists not be first priority?
As it stands, this scheme looks to me like a tenure transfer from the private rental sector to housing associations for one group of people, while councils will continue to offer private rented accommodation to discharge their homelessness duties.
One colleague I spoke to recently called it “yet another chancers’ lottery”. I hope he is wrong.
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