A commute too far?

Is the gap between LHA rates and market rents making London markets less viable?

The Mayor of Newham, Sir Robin Wales, has courted controversy today following revelations that the Borough has written to 1,179 organisations in search of ways to find ways to relieve housing pressure in the area.

In particular, an invitation to lease homes for 500 families from Brighter Futures – a housing association in Stoke 160 miles away – has sparked a  war of words involving the housing association’s chief executive, the Local Government Association and the Housing Minister .

Responding on the Today Programme this morning (24 April 2012) Grant Shapps described Newham’s approach as “unfair and wrong”. He also accused the Mayor of “playing politics as we’re in election season”.

Politics being politics it did not take long for stories of other, Conservative-led, boroughs taking similar steps to out-source their housing obligations to out-of-London locales. The City of Westminster’s Smart Housing Group (SHG) has apparently approached housing providers in Derby and Nottinghamshire (130 miles away) for much the same reason.

Unfortunately, as political parties go about point scoring against their respective local authorities the real issues at stake here all too often get buried in mountains of rhetoric.

These are real life examples of the shortage of supply relative to available housing in London. Housing demand in London far out strips the availability of homes, leaving households with few options when it comes to finding somewhere to live.

This shortage of supply is of course exacerbated by the restrictions we have witnessed on LHA.

A recent NLA survey showed, not only that more than two thirds of landlords active in this sector may be forced to exit, but that a significant proportion have seen tenants they would have liked to retain leave their properties.

If this were not bad enough, in the case of Newham there is the added complication that the Borough has proposed to introduce Selective Licensing in respect of every private-rented property  – which is arguably not a very selective approach. It is a real concern that this additional complication will deter potential investors from committing to the Borough at a time when increasing supply should be the collective goal.

Nobody could deny that there are genuine issues in the private-rented sector in Newham, but the majority are at root a consequence of insufficient supply offering limited choices to potential tenants.

Newham, and a number of other areas in London and the South East desperately need to increase supply, and the only people who seem interested in doing so are private landlords. There certainly seems to be no appetite for construction of new social housing.

People choose to live in London Boroughs such as Newham because they need proximity to work, they have a connection with the local community and value the other amenities present in the area. Transplanting these households will not improve their access to these things and is likely to perpetuate their LHA dependence.

All local authorities should be working with landlords and tenants to help support tenancies involving housing benefits which can be more challenging to sustain.  They also need to support tenants to find  professional landlords, identify appropriate local accommodation within the scope of the available LHA rates and so far as possible sustain existing tenancies.

General Jack D. Ripper (wonderfully portrayed by Sterling Hayden in the Kubrick classic ‘Dr Strangelove) once said:

“today, war is too important to be left to politicians.”  

I’m starting to wonder if the same may be true of housing.

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