Freeze Rents & Service Charges Campaign
This report is written on behalf of SHAC and does not represent the views of the Homes for Us Coalition
The Labour Party will not support the call for a freeze on rents and service charges, according to Matthew Pennycook, Shadow Minister for Housing and Planning.
The statement was made when a group of organisations which included SHAC met with Pennycook on Wednesday 14th December as part of the Homes for Us coalition.
The coalition delegates were Suzanne Muna and Jackson Caines for SHAC, two delegates from the New Economics Foundation, a Labour councillor, two representatives from MedAct, and a delegate from Defend Council Housing and Homes for All.
The coalition had asked for Labour to support a set of demands previously put to Housing Minister Michael Gove.
Four Demands on Government
The first demand is a rent and service charge freeze across all rentals (housing association, private and council) from April 2023. This should replace the social rent rise cap of 7%, and unlimited rises allowable in the private sector.
The second demand is an extension of the freeze to service charges and shared ownership rents. These are currently uncapped although the National Housing Federation reported that housing associations have voluntarily agreed to hold shared ownership rises at 7%. A meeting of SHAC members however revealed that some associations are already considering reneging on this promise.
Pennycook was asked to support four demands put to Michael Gove in an outsized letter handed to the Department for Levelling Up, Housing, and Communities in November
Legislation to stop landlords evicting tenants and residents purely on the basis of inability to pay during the cost-of-living crisis was also included. An eviction ban has been used before during lockdown, and coalition partners believe that the cost-of-living crisis represents an even bigger threat to tenants and residents.
The final demand is that funds should be targeted more effectively on the basis of proven need. This could include supporting those struggling to pay rents, funding councils to replace lost revenue, or even helping smaller housing associations without a pot of reserves to draw upon.
No Support from Labour
Pennycook responded that the Labour Party would not support the coalition’s four demands. He argued that such measures were not affordable. He did however note that there were arguments for protecting tenants and residents from unscrupulous landlords, and said that Labour would be announcing plans for better regulation in its next manifesto.
Delegates had prepared powerful arguments on affordability, demonstrating that allowing landlords to increase rents would cost more to the Treasury and taxpayer than the proposals made by the coalition.
For example, SHAC delegates explained to Pennycook that because a large proportion of council and housing association tenants have their rents paid through the Housing Benefit element of Universal Credit, every 1% increase in social rents costs the taxpayer approximately £1bn in welfare payments. We believe that a better approach would be to freeze rents and target the money more effectively where it is needed, instead of simply adding to housing association surpluses.
A representative from Defend Council Housing made the same argument on the huge cost to the taxpayer of increases in council rents, around half of which are paid by Universal Credit. This is a wasteful recycling of money in and out of the Treasury.
We also reminded Pennycook that housing association tenants have been falling into ever greater arrears at a steady average of 10% between 2018 and 2021, according to the Regulator’s Global Accounts. This does not take account of the cost-of-living crisis which will no doubt accelerate arrears levels.
This trend will only increase the burden on the taxpayer as more people require emergency support with housing.
The Burden on Councils and Health Services
A Labour councillor described the huge cost that falls to councils when housing associations evict tenants unable to continue paying rents. These tenants have to be supported in extremely expensive temporary accommodation (mainly exempt from the Social Rent Cap), until they pay off arrears and are allowed to bid for another housing association property. The process can take years and costs councils millions.
Councils Paying Millions More for Temporary Accommodation in Social Housing Shortage
Pennycook said that Labour is considering how it might address the shortage of social housing, and aimed to reduce the reliance on temporary accommodation. He believes this requires increasing the supply of affordable housing.
Representatives from Medact highlighted the strain on the NHS caused by poor housing. The organisation is a network for health workers set up to challenge social inequalities that damage health. Their representatives powerfully described the cost to the NHS of poor housing, with damp conditions causing lung and skin disease, poor maintenance causing injuries, and the strain on tenants adding to the mental health crisis.
Research by Building Research Establishment (BRE) carried out in 2021 supports Medact’s assertions. Their report found:
More than half (£857 million) of this annual NHS treatment bill can be attributed to defects in poor homes which expose residents to excess cold, while the second biggest cost to the NHS comes from hazards which cause people to fall and injure themselves, predominantly on staircases.”
The report notes that both issues adversely affect children and older people in particular.
This led to a discussion about Labour’s policy in regard to poor housing, and Pennycook reiterated his belief that the best solutions came from increased supply and stronger regulation. Reliance on these policies is rejected by SHAC for failing to offer fundamental change within the sector.
Home Ownership Prioritised
While many attendees were disappointed by Pennycook’s responses, his statements were in line with announcements made elsewhere by the Labour Party. In his speech to Labour Party conference in September 2022, Labour Leader Keir Starmer said:
I’ve seen home ownership rise almost my entire life – it’s the bedrock of security and aspiration … But now, under the Tories, the dream of owning your own home is slipping away for too many. And that’s a political choice. Because if you keep inflating demand without increasing supply house prices will only rise. And homes become less affordable for working people … we will set a new target – 70% home ownership and we will meet it with a new set of political choices.”Keir Starmer, Labour Party Leader
Later at the same conference, Lisa Nandy Shadow Secretary of State for Levelling Up, Housing and Communities said that Labour would like social housing to become the second largest tenure after home ownership.
Labour Pledges to Become ‘Party of Home Ownership’
The meeting ended with a request from delegates to meet again in the new year with Pennycook and his boss Lisa Nandy. Our aim would be to extend the discussion to the housing crisis more broadly. Pennycook promised to give the request consideration and consult with Nandy.
See here for SHAC’s housing policy documents.
It was clear to SHAC delegates that logical arguments would not cut ice with Labour when set against the powerful landlord lobby. Instead, we believe that change will need to be forced from below through tenant and resident self-organisation.
The Freeze Rents & Service Charges campaign aims to do this through lobbying, protests, other campaign actions, and ultimately collective rent and service charge strikes if necessary. For more details, see here.
20 December 2022
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