Category Archives: Housing

Grenfell Tower: A Question Of Management

The tragic, but avoidable fire at Grenfell Tower in Notting Dale, West London has raised a number of questions about the management of council properties, the quality of building materials and governmental oversight. We don’t know the actual cause of the fire as investigations have yet to be conducted. One thing is for certain, council tenants deserve a better deal and they’re not getting it.

Ask most council tenants who they want to manage their housing and they’ll almost always tell you “the council”. I used to work in housing and I spoke to many tenants, some of them were faced with having a Tenant (or Resident) Management Organisation (TMO/RMO) or ALMO (Arm’s Length Management Organisation) forced upon them. When I used to work for Lambeth, one estate, the Blenheim Gardens Estate was on the brink of being transferred. The tenants were being promised all sorts by the council and many of these promises came to nothing.  There are plans to transfer the estate to an Housing Association.

TMOs, RMOs and ALMOs tend to be a stepping stone to an eventual stock transfer to a housing association like Peabody, or a private property management company like Pinnacle. In either case, tenants get a raw deal. They may discover that the terms of their tenancies have changed or the quality of estate management declines.

Grenfell Tower is managed by Kensington and Chelsea TMO. Like the rest of Kensington and Chelsea’s housing stock it was transferred to the TMO in 1996.  The Grenfell Action Group have made numerous complaints to KCTMO about fire safety, which have all been ignored. The block itself has recently been refurbished at a cost of £8.7 million, but many believe that the quality of materials used for the building’s cladding are responsible for the blaze.

The Tory government  also failed to carry out a fire safety review of tower blocks. The minister responsible, Gavin Barwell, apparently “sat on the report”. The Independent reports:

Gavin Barwell failed to give the review the green light during his tenure as housing minister, despite it already having waited for years.

The fire expert behind a report calling for the desperately needed safety appraisal, said he had spoken to Mr Barwell earlier this year and the then-minister told him no decision on the review had been taken.

The bottom line is that councils will usually ignore the concerns of tenants in order to save money. Kensington & Chelsea Council is Tory-controlled, so it comes as no surprise that they transferred the management of their entire housing stock to KCTMO, who have been described as a ‘mini mafia’. Scum sucking parasites is what they are.

The Tories are no friends of council housing and Hammersmith and Fulham councillor, Harry Phibbs, sees tower blocks like Grenfell Tower as “vertical slums”.

During his time as mayor, Boris Johnson, closed fire stations. He was warned of the potential consequences.

The Tories must also take a large measure of the blame for failing to act when they had a chance, and for the cuts they’ve imposed on local authorities in the name of deficit reduction.

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Housing associations are greedy money making machines.

Crown Estate tenants protest at the sale of their homes to Peabody

One the face of it, housing associations (HA’s) – also known as Registered Social Landlords or RSL’s –  seem to be doing a great job. They house people in need (but only if you’re on the council house waiting list in the first place) and they provide properties at affordable rents… allegedly. However the truth is the HA’s often immerse themselves in activities that are far removed from their ostensible remit. Some HA’s like A2 Dominion, Peabody and Notting Hill Housing Trust appear to be run for the purpose of making vast sums of money, while tenants are used as cash cows and forced to endure ever-increasing rents and declining services.  Many, if not all, HA’s have been seduced by the idea of growth, which, as all of us knows, is finite. Nothing can keep growing forever.

Many HA’s were founded with noble aims: the alleviation of poverty, providing housing for those with low incomes and so on. Since Thatcher’s disastrous Right to Buy (RTB) policy in the 1980s, the HA’s have been left to fill the yawning gap caused by the sale of housing stock, which was never replaced because councils were forbidden from using the capital receipts from RTB sales to build new properties for social rent.

But this was part of the Tory strategy to destroy left-wing politics in Britain for good for they believed that by encouraging people to buy their own homes, they would break the Labour Party and rule unopposed for millenia. That was the strategy, but the problem with this idea was that it relied on all new homeowners being able to keep up the mortgage payments. Many couldn’t.

By 1989, it was beginning to look as though the plan had failed as thousands of people lost their homes in the wake of Black Monday. But still more people applied for mortgages and when the sovereign debt crisis began over 5 years ago, sub prime mortgages were blamed, yet the current government seems to think that stimulating another property boom is the solution to the crisis.

By the 1990s, the HAs were beginning to adopt more market-led business models. This has invariably led to a conflict between their social functions and their commercial interests.

Housing Associations have long been seen as vehicles for increasing home ownership and they are being encouraged to promote shared equity schemes and to tie themselves closer to wider business interests by getting involved in unsubsidised development for profit.

http://www.geos.ed.ac.uk/homes/sglynn/neoliberalism.pdf

Rather than operate as purely social landlords, HA’s have become increasingly involved in property development and land speculation. They have also been moving increasingly towards market rents, thereby contributing to the lack of affordable rented property in the capital.

The Peabody Trust was founded in 1862 by an Act of Parliament. The Trust was bequeathed a large sum of money for its day by American financier, George W. Peabody, for the alleviation of poverty in London. The notion of growth did not figure in the original intentions of The Trust, but like so many other charities,  it came to regard itself as a major player in the marketplace.

Since the late 1990s, Peabody has been increasingly involving itself in large-scale council estate stock transfers; snapping up swathes of housing in Islington and Hackney for a song. It has bought land and developed on it; the properties that have been built are, more often than not, available for market rent or shared ownership only. Last year, it received every Crown property in a mass transfer, much to the tenants’ dismay.

The Peabody Trust gained hundreds of new tenants when it purchased a number of housing estates from the Crown Estate Commissioners. Stock transfers often involve a change in tenant status given the differing legislative rules about which landlords can provide which types of tenancy. In this case, the issue was whether the former Crown Estate tenants were secure or assured tenants.

The High Court held that Peabody’s new tenants were assured tenants, like the vast majority of other tenants of registered providers of social housing.

This is pretty typical of HA’s: move swathes of tenants to a less secure form of tenancy and pretend that you’re doing them a massive favour, when all the while, you’re eroding their rights as tenants. Peabody did this a few years ago with its assured tenants: it tried to trick them into signing forms that agreed to change the terms of their tenancies. Many tenants refused to sign. In the case of the Crown Estates, the tenants had secure tenancy status and were downgraded to an inferior status once the transfer was complete.  The Assured tenancy was introduced by the Thatcher government as a means of further eroding the public rented sector. Before the introduction of these tenancies, tenants had their rents protected under the provisions  of the Rent Act (1977).

Last year, Peabody announced that it was launching a £200m capital bond after spending that amount on the Crown Properties stock transfer. It is interesting how HA’s like Peabody can play the bond markets but it can’t operate a decent maintenance service for its tenants. In the last 3 years, it has gone through as many as 3 maintenance contractors after closing down its in-house maintenance service to “save” money.

HA’s, contrary to what they tell us, are in the business of making money and if this means trampling on their tenants’ rights, then this is what they’ll do. These days, HA’s are more likely interested in offering homes for so-called “market rents” or shared-ownership than providing social housing for affordable rents. Yet, it is social rents that fund  their projects. HA’s, like the privatized utility companies, can go to a bank and borrow money against the guaranteed income from rents. Strangely enough, even though tenants who rent their homes are seen as cash cows, they  are still seen as “too needy” by the landlord, who would much prefer it if they were renting at market levels or tied to them as leaseholders.

Shared ownership is one way an HA can increase rents, since they aren’t protected by law. Some rents are increased by as much as 500%, which are often loaded with service charges. This article from The Evening Standard says,

Mr Howard paid £79,000 for his share of the £195,000 two-bedroom flat, which carried a monthly rent and service charge of £347 until it shot up to £433 in April.

The couple’s problems began shortly after they moved in. They included:

Rubbish not collected for five weeks because of poor access to the bin sheds.

A lift out of service for 11 days.

A broken front door which had no handle and remained unsecured for nearly two weeks.

Mr Howard said: “We could not do any repairs ourselves because we were mostly tenants. When we complained, Newlon were invariably rude and unhelpful and treated us as though we were the problem.”

Things became much worse when they asked about selling their share of the flat, thinking the trust would buy it.

“When we suggested this, Newlon refused point blank, claiming they had no money to do so,” said Mr Howard.

As long as they get your money, they’re not actually interested in what happens to the flat or, for that matter, the estate. Cyclical maintenance schemes are also costly. Tenants do not have to contribute towards the cost of these programmes but leaseholders are often saddled with bills that go into their thousands.

The other issue with shared-ownership is negative equity. From The Independent,

Negative equity, in which the money owed on the mortgage is more than the value of the property, has affected many owners who bought properties before the market took a nosedive in 2007.

This hasn’t just affected shared ownership, but typically had an impact on new-build properties. Shared-owners have also been left reeling from rising rents, mounting costs for repairs or maintenance to communal areas and inflexible contract terms in their agreements with housing associations, which run the schemes.

Shared-ownership also raises questions as to who owns the property. Let’s put it this way: if you live in such a property, the HA has more rights than you do. If you have paid off your mortgage, you are still required to pay rent, which means that you will not, nor will you ever, own the property outright. Indeed, the HA can still evict you if you fail to meet your rent payments.

The shared ownership idea was dreamt up by HA’s with the idea of raising vast sums of money. It has nothing at all to do with alleviating poverty or providing housing to those in need. HA’s develop partnerships with lending companies. In some cases, the lender is the HA.

Chief executives of HA’s tend to earn the kind of salaries that would make most bank managers green with envy. Peabody’s Steven Howlett, for example, earns in excess of £197,000 per annum (a 7% increase on last year’s salary). Others earn much more.  While chief execs are earning 6 figure incomes, they slash their staff’s pay. The Morning Star reports,

Greedy housing association bosses were caught with their snouts in the trough today when union Unite slammed their “nauseating” pay rises while their staff are expected to suffer wage cuts.

Unite lambasted One Housing chief executive Mick Sweeney, who has had a £31,000 rise in pay and bonuses taking his income to £176,000 a year.

Meanwhile hundreds of his staff face 35 per cent pay cuts.

Look Ahead chief executive Victoria Stark increased her own pay packet £19,200 to £168,300 not including pension contributions.

Inside Housing has produced a list of Chief Executives pay. Topping the list  of high earners is David Bennett of the Sanctuary Group who receives £287,000 per annum. Sanctuary, like many HA’s, is a registered charity. This means that they don’t pay tax on the money they make, so if you run an HA, then you’re onto a good thing.

To run an HA, you don’t need any qualifications nor do you have to have an unblemished criminal record. You can set up an HA by getting 5 more people and convincing the relevant authorities that you have the best interests of the community at heart. After that, you can print your own money.

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