Rents. First report back on the February 19 negotiations between the Joint Committee of Notting Hill and Genesis Residents and the Executive Team of NHG.
The Joint Committee of Notting Hill and Genesis Residents met with representatives of the executive team of NHG on 19 February.
We had three people on our side – two members of the Joint Committee of Notting Hill and Genesis Residents and the Chair of the UNITE housing workers branch as an external observer.
For NHG, Carl Byrne, Group Director of Housing and Jeremy Stibbe, Group Director of Regeneration and Strategic Asset Management attended.
After this meeting we wrote to Carl Byrne, on 3 March, setting out the issues on which we had agreed and those which were still in dispute or which we had not the time to discuss at the meeting.
Carl Byrne replied in a letter which arrived on 29 March. You will find the two letters below.
This report is one of six report back we are publishing on various aspects of the negotiations We are in the process of arranging general meetings for residents across NHG to discuss these negotiations and consider how to move forward on issues which are of concern to residents (including those which may not have appeared in these negotiations).
In general the main pressure on rents is clear. The business plan of NHG rests on the principle of maximising income flow to pay for an increasing debt burden (currently some £4 billion) for the construction of largely of out-of-reach homes.
NHG has mostly stopped building ‘social rent homes’ – homes for a social rent at about 40% of market rent – which are desperately needed to solve the housing crisis.
To ensure a strong income stream to repay their debts, NHG have to get the money from their tenants. If that means forcing many tenants into the poverty or benefit trap, then NHG has made it clear that this is what they will do.
- Cutting so-called ‘Affordable’ rents (see points 2.1 in both letters)
We put it to NHG that affordable rents (at 80% of market rents) should be cut to ‘social rent levels (at around 40% of market rent levels).
Both Boards and Executive Teams of Notting Hill Housing and Genesis Housing Association welcomed the introduction of ‘affordable rents’ in 2011. The Government had ended almost all direct funding for social rent homes in 2010 and ‘affordable rents’ at 80% market rent were introduced to fill the funding gap. In effect, housing associations borrowed money on financial markets to develop out-of-reach housing and paid it back through charging much higher rents. These higher ‘affordable rents’ have led to the ‘poverty trap’ or ‘benefit trap’ for many NHG tenants who have to pay them.
NHG response: To our surprise, the NHG side agreed with us that affordable rents are not really affordable for many NHG tenants.
But NHG refused to move on the main problem – that these rents are far too high and should be brought down to social rent levels (which are at roughly 40% of market rents). They say: “[we] understand your ask is for us to make a radical shift here, something we’re not looking to do on the basis of the risk it presents to us being able to increase the number of lower cost rental homes we manage.”
It should be pointed out that the ‘low cost rental homes’ that NHG have constructed are not real social rent homes. NHG have a very small number of social rent homes in their future development plans. The NHG Chair refused to disclose how many social rent homes have been built over the past few years but in the Genesis Housing Association Financial Report for 2017/2018 Genesis said it have constructed only six new social rent homes in that year. The other 233 homes completed in that year were market rent, shared ownership, affordable rent or outright market sale. So only 2% of the Genesis development effort went into social rent homes.
‘Low cost homes’ is a legal term and can mean any home that is less than the market rent or price (including 99% of the market price). We are very concerned to see NHG continuing to use this intentionally confusing language.
This issue remains on the table for future negotiations.
2. Freezing rent rises for elderly ‘Secure Tenants’ (see point 2.2 in both letters) who have suffered massive rent rises recently.
We say that secure rent tenants have paid enough and that rents should be frozen. Since 2016 elderly Genesis secure tenants (pre 1989 tenancies) have suffered really savage rent increases often in excess of 50% and up to 170%. Genesis refused to negotiate at all. This forced many elderly long-time tenants into the poverty trap as any savings they have are stripped from them by Genesis – and now NHG. Others elderly tenants were forced to rely on benefits, which they found humiliating after a lifetime of work.
NHG response: we are pleased that NHG conceded that that had got this wrong. They say:
“We didn’t manage the communication and resident engagement on this situation well.
For the 2019/20 rent setting regime we have agreed that all secure rents will have a 1% decrease from their 2018/19 level applied on the anniversary of their review, unless they are exempt.’
NHG have not said how long this decrease will last, nor what are the ‘exemptions.’ This will have to wait for further clarification or negotiations.
3. That NHG should refuse to impose post-2020 rent increases (see point 2.3 in both letters).
We argued against the proposed rent increases for all assured tenants from April 2020. NHG has conducted no research about the effects of the new rent increases starting in April 2020 of Consumer Price Index (CPI) plus 1% for a five year period. We do not think it is appropriate for a charity to raise rents bearing in mind the flatlining wages over the past decade.
NHG response: NHG effectively refused to accept this point at all. They say: “The issue of affordability and sustaining tenancies is at the heart of our approach to housing management. It is of course for many of our residents something they grapple with on a daily basis. We have dedicated teams working with new and existing residents to ensure that they remain out of debt.”
We think the NHG position is completely indefensible.
You can’t say that ‘affordability and sustaining tenancies’ is at the heart of your approach and then admit that you have no idea if rent rises will have an impact on the financial situation of your residents.
In the current economic climate – with the lack of clarity over Brexit and wages not increasing in line with inflation – rent rises for thousand of assured tenants is completely wrong.
Letter from the Joint Committee of Notting Hill and Genesis Residents to Carl Byrne, Director of Housing NHG. 3 March 2019
Letter from Carl Byrne, Director of Housing NHG to the Joint Committee of Notting Hill and Genesis Residents. Received by e mail on 29 March 2019