How to solve the Housing Crisis in London

SpareRoom attended the Future of London Housing debate hosted by the Evening Standard on Wednesday 20th March, in a packed room of over 1000 attendees. Housing is clearly a subject that is close to the hearts of many Londoners and the debate and following Q&A session became quite heated – showing the passion and emotion involved.

All of the panellists, including thinkers and politicians from all sides of the political spectrum, agreed that more housing supply was needed to relieve the housing crisis enveloping London. Deputy Mayor for Housing, Richard Blakeway called for London’s share of stamp duty to be ploughed back into a massive house-building programme. Whilst the MD of Berkeley Housing proposed a simplified planning process, the former London Mayor, Ken Livingstone’s call was to provide council housing for mixed communities, so there is less segregation between rich and poor in London. Alain de Botton, philosopher and writer, suggested a blueprint for attractive, affordable design that could be repeated easily and efficiently across London, removing some of the hurdles in the planning process, whilst the broadcaster and architectural graduate Janet Street Porter called for high density building, across railway lines and over car parks, like in New York. Possibly the biggest applause of the evening went to Evening Standard columnist Rosamund Urwin’s suggestions of disbanding Foxtons, banning Kirsty Alsopp and deporting the Candy Brothers. Standing up for ‘renty-somethings’ she focused on her own case of being shut out of home ownership, and renting with family members.

Whilst many of their suggestions were valid and probably will help to resolve the housing crisis in a few years to come, if more intensive building programmes do get underway (we’ve only built half the number of homes we need for the last 20 years and have a lot of catching up to do), there was a distinct lack of focus on the here and now. With so many thousands of people on housing lists in London, and the capital attracting workers and students like never before, there is an imperative need to offer practical solutions to today’s housing crisis, before London becomes a place that no real people can afford to live and work in.

Sharing existing resources seems to be the elephant in the room that nobody would mention. Amongst the talk of pressing empty properties and even offices into homes for the needy, there is no mention of the thousands of under-occupied properties that can help to ease the crisis. This is already happening – as teenage children grow up and move away, ’empty nesters’ are starting to rent out their spare rooms in their thousands – but we need to see more of this, to make an impact. What could the policy makers do to help encourage this trend?

We would suggest a raise in the tax free limit homeowners can earn through the Rent a Room scheme for starters – it’s been at the same rate since its introduction in 1997, whilst rents have been rising dramatically. Why not make it more attractive for people with spare rooms to take in a lodger, and help to remove the pressure on the limited supply in the private rented sector, and the social rented sector too? We’ve been pushing for this with our Raise the Roof campaign for some time, and hope that the Chancellor may see fit to increase the tax benefit in his next budget, even if it wasn’t included in last week’s.

Other ways to increase supply include removing some of the hurdles involved in turning a property into an HMO. This will promote more efficient use of existing property, and help young people to find somewhere affordable to live in the here and now, rather than being told to wait for houses yet to be built.

Do you agree? What do you think could be done to help solve the housing crisis sooner, rather than later?

Bedroom Tax or Spare Room Subsidy – What’s in a name?

Yesterday’s spat between David Cameron and Ed Milliband at Prime Minister’s Questions included a squabble about the under-occupancy penalty, about to come into force on 1st April. The PM tried to shift the terms of the debate by using the phrase ‘Spare Room Subsidy’ to counter the opposition’s use of ‘Bedroom Tax’ to describe the penalty. Whilst the two parties can argue till kingdom come about the naming of the measure, its effects will be the same – to put more pressure on low income families who live in social housing, and who are reliant on benefits to pay their rent.

The intention was to save some expenditure on the £23bn housing benefit bill, as well as reducing under-occupancy in the social sector. It’s becoming ever clearer that the measure will achieve neither of these aims – as there aren’t enough smaller houses for people to move to, and many of those affected will have few options to raise the funds to pay the penalty, simply racking up arrears instead. This will put further pressure on the stretched resources of social landlords, who won’t be able to invest in more house-building – the one thing we’re all agreed is most needed.

Whilst party leaders squabble about the words they use to describe the measure, its implementation draws ever closer and anyone who is likely to be impacted needs to understand how it affect them. We’ve put together a concise guide to the Bedroom Tax, which you can download for free.

Supporting Social Tenants during the introduction of Welfare Reforms

The Chartered Institute of Housing today launches a new guide aimed at helping its members deal with some of the issues raised by Welfare Reform, and in particular, the Bedroom Tax or Social Sector Size Criteria.  The rules come into force next April, and will mean that social tenants of working age with a spare bedroom or two will lose some of their housing benefit.

One of the options for impacted social tenants to cover the shortfall is to rent out a room, which will also serve to bring in extra income for the household.

SpareRoom has over a decade’s experience in helping people through the process of finding lodgers, and are pleased to be able to share some of our expertise. Beyond offering a marketplace to advertise for lodgers, we also provide information and guidance on many other aspects of the process including: who you need to inform, how to interview lodgers and what kind of house-rules to put in place.

The CIH worked with SpareRoom to produce ‘How To Support Tenants to Find a Lodger’, the latest in a series of How To guides.  It explains clearly and succinctly the ways that councils and housing associations can support their tenants in exploring the option of getting a lodger. As well as highlighting the changes coming into force, the guide sets out how social landlords can benefit from putting together a strategy to help tenants find lodgers, covers legal matters, financial matters including the impact on tenants’ benefits, and offers links to further resources such as lodger agreements, advertising tips and the Rent a Room Scheme, whereby anyone can earn up to £4250 per year tax free by renting out a room.

Practical suggestions cover how to communicate the options to tenants, as well as how to support tenants through the process of finding a lodger. In “Learning from others” the CIH highlights proactive organisations and what they’re doing to support their tenants to rent out their spare rooms.

‘How to support tenants to find a lodger’ is available for free download  from the Chartered Institute of Housing. Find out how to get a lodger to cover the bedroom tax shortfall.

Options for social tenants facing the Bedroom Tax

Changes to benefits are coming into force on 1st April 2013, which will affect the housing benefit entitlements of thousands of social tenants up and down the country.

Housing associations and local authorities have started to inform their tenants of the changes and their expected impact, but there is still much to be done to help social tenants make informed decisions about the changes and how to mitigate their impact.

New rules on under-occupancy will mean that people will receive less housing benefit to cover their rent, if they are deemed to be under-occupying their home. The government is seeking to save money and at the same time, encourage those with homes too large for their immediate needs to move to smaller homes, vacating the larger ones for growing families.

The under-occupancy rules will affect an estimated 670 000 households next April, and there are not enough alternative one bedroom properties for under-occupying couples and singles to move to.  In some parts of the country, particularly the North, the impact is likely to be felt more strongly, as a greater proportion of social housing stock is larger, due to fewer restrictions on space.

The average cost for each under-occupying tenant will be £676 per year, based on an expected £14 per week shortfall in housing benefit. When the welfare reform kicks in next year, tenants will face tough choices between paying for the shortfall in their rent through income, or downsizing. An alternative to this tough conundrum is for the tenant to take in a lodger. With their spare room filled in this way, they won’t be deemed to be under-occupying, and they have the capacity to make some additional income, whilst remaining in their own home.

Some local authorities and housing associations are starting to develop strategies to support tenants who wish to consider taking in a lodger. The tax and benefit implications are not straightforward, and it’s vital that social tenants get help to consider the wider implications of having someone unrelated to them living in their home.

SpareRoom has published The Social Tenant’s Guide to Taking in a Lodger, which is available for free download, and is intended to guide individuals through this potential minefield. Housing associations may also use it as part of their efforts to support tenants in their choice of action in response to the Bedroom Tax.

To download the free guide, visit http://www.spareroom.co.uk/bedroomtax