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Rent Restructuring

Extracts from this essay...

Introduction

RENT RESTRUCTURING The rent restructuring (RR) debate was triggered by the publication of the 2000 Green paper 'Quality and Choice: A decent home for all'. The following paper is a response to the numerous policy developments and subsequent implications that have resulted from this document. The paper will be presented in two parts. Firstly one is concerned to deal with the policy and the decisions that have been taken by the Labour Government over that last few years. Here I will comment on rationale that lay behind the decision to abolish the old system of rents. Also I will attempt to uncover why the Government is so keen to seek convergence of rent levels between the two social housing sectors. In the second part of this paper I am more concerned to identify the real life implications of the shift in direction of the policy. Below I will discuss what the policy shift actually means to those organisations and self interest groups affected by it. Particular attention shall be paid to the implications arising from the policy which affect social landlords. Due regard shall be paid here because some landlords believe that a question mark hangs over their future viability. Another major point of concern for me in this paper is how tenants of social housing will be affected by the changes that will result from rent reform.

Middle

The tenant who accepts less favourable circumstances perhaps a smaller property in less desirable location can expect to pay a cheaper rent. Obviously sandwiched in between such statements in the documents are those reassuring statements about fairness and affordability. Seemingly the Government were anticipating the disquiet that rent reform would create amongst some self interest groups. The text in the policy statement stresses how landlords and tenants will be affected. Landlords are partially reassured as the statement promises flexibility. An attempt to reassure tenants also appears. The housing corporation produced guidance in October 2001 for HA's. This guidance came in the form of a document entitled: 'Rent influencing regime: Implementing the rent restructuring framework'. The guidance offered by the housing corporation stressed that HA's were expected to implement Government reforms. However the document went to some considerable lengths to reassure associations that they have flexibility to fulfil whatever obligations they may have. It was stressed by the Government that social tenants will pay at most no more than inflation plus £2 in any one year. More details on how this was going to work were detailed in the April of 2000. The document contained advice and guidance for landlords on how to use the rent setting formula to calculate correct rent levels. The maths was as follows. Seventy percent of the rent that a landlord could now charge was to be based on the relative earning capacities of individuals in the local area.

Conclusion

The Government, however, remains steadfast in its support of the new system. They claim that more not less people will benefit. By striving to close the gap between sector rents "we will offer tenants wider choices and be more equitable" (Mauthe, 2001). It is also the case that under the new scheme tenants will be more educated so that they understand rent pricing systems more and are aware of their rights as housing tenants. The government also points out that that the system implemented was chosen after much consultation and that it was the best option on the table by some way. The 2000 Green paper Quality and choice: A decent home for all was a groundbreaking document. Rent reforms began in April of 20002. It is at this time too early to evaluate how successful or not RR will prove to be. However, concerns exist, particularly amongst landlords and tenants. HA landlords are particularly worried. Many feel that there is too much Government intervention. They are also worried about meeting financial obligations and attracting more investment. Tenants groups are also suspicious of the new reforms. It is obviously very early days but affordability issues are worrying many tenants particularly those in the south. The Government understands the implications of RR. They are far reaching, and the future direction of rent reform must be carefully considered on the basis of the evidence that will be collated by our social landlords over the coming years.

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