Agenda item - Public Involvement

To consider the following matters raised by members of the public:

(a)       Written Questions: to receive any questions submitted by the due date of 12 noon on the 21 June 2017.  Note: questions should only relate to Item 21 – New Homes for Neighbourhoods – Scheme Approval – Lynchet Close.

(b)       Deputations: to receive any deputations submitted by the due date of 12 noon on the 21 June 2017.  Note: deputations should only relate to Item 21 – New Homes for Neighbourhoods – Scheme Approval – Lynchet Close.

Questions

20.1     There were none. 

          Deputation

20.2     The Committee considered the following deputation which was presented by Carrie Hynds: 

          (a) Deputation Lynchet Close Rent Levels

Supported by: Sheila Rimmer, Nichole Brennan, Carrie Hynds, John Hadman, Zoe Polydorou

Deputation to Housing and New Homes from the Living Rent Campaign

“We are here to urge the housing committee to agree to more affordable new council housing. Rents are too high for ordinary people to afford and live on in the city and we argue that public providers of housing (such as the council) should not be setting

rents in relation to the market, but rents should be based on what people can afford.

We understand that each year on average 80 social rented homes are lost to the city through the right to buy. These homes are being replaced by so called “affordable rents” which are twice as much. But the council could replace some of these homes with rents much closer to ordinary council “social rents”.

We therefore ask the committee to consider building new homes at less than so called “affordable”, private sector or LHA rates (all these rates are linked to the private rental market rather than incomes. In contrast a living rent is linked to household incomes. Social rents are also set mostly in relation to incomes as are the

council’s welcome concept of a “living wage rent”

If we take the middle income of households in the city and assume they should not have to spend more than a third on rent, then rents need to be less than £9,000 a year for middle earners and even less than £9,000 for half of households whose incomes are less than this. 10,000 households can only afford to pay social rents and

many others not much more.

One option (option 5 in previous committee papers) would involve the council making no surplus from the new council houses over the first 40 years. Under this option two of the rents are around 60% more than council rents which is the level calculated by the Living Rent campaign as a “living rent” for Brighton and Hove. We urge you to

support this option. This would be a historic step forward and the council would be setting an important example to others.

We also understand that there is an option to charge the same level of rents as the Joint Venture with Hyde “Living wage rents” and that charging these rents still generates a surplus for the council. This option enshrines the principle of linking rents to income and though the rents are a bit higher than our campaign calculates they should be, we support also this option. Partly as we accept that the higher rents are partly mitigated by the lower energy bills expected.

In general we ask that in providing new council homes that the committee as a matter of policy always consider providing rents at Living rents and Living wage rent levels. As a not for profit landlord, the council is one of the few bodies able to provide more genuinely affordable rents needed by the lowest 50% of households in the city. It is vital you do this.”

20.3     The Chair responded as follows:

“Building new homes on council land is a council priority and essential if City Plan housing targets are to be met and the city’s ‘housing crisis’ tackled.  Increasing the supply of housing is a primary objective in the council’s Housing Strategy 2015.  The strategy identifies the lack of new affordable rented housing as a key issue for the city, and specifically the need for family homes.

The council recognises that market rents are high in the city and can be unaffordable to residents, especially those on lower incomes.  It has capped rents on its own developments at Local Housing Allowance levels in response to this.  The council is also taking action through initiatives such as the proposed Joint Venture with Hyde Housing which aims to provide 1,000 homes; 500 of which will have lower rents which are affordable to those on the National Living Wage.  This is possible as they will be cross-subsidised by 500 Shared Ownership properties.

The council’s New Homes for Neighbourhoods programme addresses this undersupply by developing new homes on suitable council owned sites across the city in order to meet City Plan targets and housing need. To date, 34 council homes for affordable rent have been completed under the New Homes for Neighbourhoods programme. 131 are on site and will be completed in this financial year, another 12 have planning permission and over 100 more are in the pipeline.

In order to finance this programme, Housing and New Homes Committee and its predecessor Housing Committee have to date set Affordable Rents for new build council homes at the lower of 80% market rent or Local Housing Allowance (LHA) rates, in accordance with the council’s Tenancy Strategy. This followed analysis in a report to Housing Committee introducing the New Homes for Neighbourhoods estate regeneration programme in March 2013 that indicated the council could build five and a half new homes for Affordable Rent for every one new home at Target Rent.

When setting the level of affordable rents for the City the council has to take account of and balance the following factors:

Ø  to maximise the number of homes built in the City that are below current market rents and are affordable;

Ø  to minimise the subsidy made by the HRA towards new build schemes to ensure it protects the level of service and investment on current tenants’ homes;

Ø  the need for consistency in rents across the City so that tenants pay the same rent for a new two bedroom home, for example, regardless of whether it is in a scheme that happens to be relatively more or less costly to develop. That can be argued to be fair and equitable to tenants;

Ø  current Government policy limits the contribution that Right to Buy receipts can make towards new build schemes to 30% of the build cost which means that the HRA has to find the other 70%;

Ø  It needs to minimise the amount of borrowing made by the HRA in order to stay within the borrowing cap set by Government. Currently the HRA can only borrow a further £14.3 million

Even at the current agreed level of setting rents at the lower of 80% market rent or (LHA) rates, subsidies have been required from the HRA for schemes agreed to date. This means that current and future tenants’ rents make a contribution towards the new build schemes rather than rents being used for improving the landlord service or improving current homes.

Your deputation makes reference to the report on Lynchet Close, discussed and deferred at Housing &New Homes Committee on 14^th June 2017 for which 6 options for rent were costed including some options for living wage rent. This scheme is unique in that for various rent options it makes a surplus for the HRA. However, even for this scheme, the report recommends either Option 1 or 2 be chosen, in order to maximise the surplus to the HRA. The reason for this is because all the other new homes for neighbourhood schemes have so far required a subsidy. Therefore, options 1 or 2, enables more funds to go back into the HRA to offset these subsidies. This scheme will be considered by the special Housing and New Homes Committee this evening.

So, in conclusion, the current level of affordable rents being the lower of 80% market rent or LHA rent, does mean the council can increase the numbers of homes built for rent below market rents in the city. These homes are built to a high specification with good thermal properties allowing these residents to benefit from lower energy costs.”

20.4     Councillor Mears made the following points:

·       The Lynchet Close properties were not affordable. There was a need to review build costs as well as rent levels.

·       Councillor Mears understood the concerns expressed by signatories to the deputation.

·       The council was only building for people on benefits and not for people just above that level.

20.5     Councillor Gibson made the following points:

·       He was sympathetic to the Living Rent Campaign deputation and supported the objectives and central points.

·       The council had to build affordable properties for working households and people whose wages are topped up by benefits. The Council was the only provider who could provide properties for this range of people.

·       He supported the idea that the council could develop clear policies around affordability. He hoped that it could be agreed to link rents to household incomes.

20.6     Councillor Bell supported the deputation. Rents needed to be linked to people’s earnings to enable the most vulnerable to obtain housing.

20.7    The Chair thanked Ms Hynds and the signatories to the deputation and wished them well for the future.

20.8     RESOLVED:-

That the deputation be noted.