Tenants on rent restructuring

The following is a letter being sent by Winchester council's tenant representative body, TACT, to the ODPM: We write as representatives of the tenant body to underline those issues that we believe should be investigated in the review of the rent restructuring process that we understand is currently under way.

Property valuations, while affecting only 30% of the total value, are well above average in this part of the country, and the gap has widened since 1999, particularly over the past two years. Any re-basing of the valuation point will further undermine the goal of affordability. In this area prices are driven up, reflecting the demand for accommodation from those moving into the area from outside. Most who can afford their own homes already own them, or have bought under the right to buy. The whole point of social housing is to make provision for those who cannot afford the prices of the private sector conditions to those remaining in social housing who, by definition, cannot afford private sector prices.

In the rural parts of the district, prices are even higher than the district average. However, manual wages are lower than the country average, making affordability even worse, and driving out people with local connections who have limited means.

Of the remaining council tenants, a high proportion are elderly. Their pensions are fixed at national rates, with no loading, unlike wages, whereas those with a small industrial pension in addition to the state pension are likely to lose the protection of housing benefit, so will be particularly harshly affected by every above-inflation rent increase.

The application of the formula in the Winchester area adversely affects those on low fixed incomes as both property values and average county earnings add a positive loading within the formula.

Many of the elderly live in housing designated for them, including sheltered accommodation, and do not have the same rights as other tenants, such as the right to buy. It is a feature of accommodation for the elderly here that there will be a small extra bedroom, but it is unfair to apply the full loading to the rent for these bedrooms in the same way as for housing provided for families that may have two wage-earning adults.

The imposition of a rigid national formula on the rent-setting process removes local landlord discretion. Winchester City Council housing runs with a negative subsidy and, in effect, tenants who pay their own rents are covering directly the costs of housing benefit for those who do not. The subsidy system is being used to impose the new formula rents, but will worsen the position for tenants who pay their own – increasing – rents to subsidise those who cannot, while being caught in a poverty trap and barely above the benefit levels themselves.

We support the aim of universality in rent setting but, at least for those with nationally set incomes such as the state retirement pension, an overriding test of affordability should be applied. Rents should not be set according to local conditions in private housing and labour markets that will severely restrict affordability for the less affluent, whose housing needs can only be met through social provision.