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. The Government has suggested that tenants will get a better deal under the new rents system. However it is the case that many tenants associations country wide are reportedly up in arms! This debate is particularly new. RR only began in April 2002. Much of the comment has proved to be particularly subjective. In this paper one will try to read between the lines and attempt to present as balanced an argument as possible.
As mentioned, the intensions of the Government to implement rent reforms were first documented in the April 2000 Green paper. It is perhaps a worthwhile exercise to briefly set out the proposals for RR in their historical context. This is the history of the fair rents system. The ‘fair rents’ belief has underpinned recent rent setting policy. This is relevant because if one studies the legislation the Rent Act 1965, 1977, Finance Act 1972 and the subsequent housing Acts of 1980 and 1988, one can trace the origins of RR as proposed in the 2000 Green paper. One can also study these pieces of legislation and identify many parallels between them and the new ideas that are behind RR. The Rent Act 1965 put in place the regulatory framework that enabled the setting of fair rents. Fair rent as suggested by Garnet 2000 is not a “real market rent but an administrative arrangement. The idea behind a fair rent is that a rent can relate to the market without abandoning the tenant to the vagaries of unrestrained market forces” (Garnet, 2000:376). Such ideas resonate throughout the RR policy documentation.
The 2000 Green paper contained numerous proposals for a wide range of housing issues. The major claim was that this was a paper that would offer choice. “The aims of the Green paper were simplification, choice, affordability, and efficiency (Department of the Environment, Transport and the Regions (DETR), 2000). The proposals for rent reform can (the government has suggested) be basically understood within the context of the choice agenda. In Chapter 10 of the Green paper 2000 the Government sought consultation on how rent reform might be achieved, constructed and subsequently implemented. Within this chapter, the desire to seek rent convergence between rent levels in both of the social housing sectors was made clear. It was the “Government’s intension to restructure social rents over a ten year period ensuring that there is comparability between the sectors” (King, 1999: 96). Foreseeing a potential backlash, the Government went to great lengths to reassure all parties concerned that no matter what options were ultimately chosen, rents would always remain affordable. The desire of the April 2000 Green paper is to sell the case for change. However, the authors are constantly attempting to reassure all concerned that change will always be ‘just’ and would be implemented fairly. The rationale behind ‘Quality and Choice’ was a perceived sense of injustice on the part of the Government about what had gone on before they came to power. The Government believed that the existing housing system was outdated and that it afforded a good deal to nobody. The new rationale was that the cost of social housing should be directly linked to the attributes that tenants favour most in a property. In this respect, the desire on the part of Government was evidenced in the housing policy statement that was published in December 2000. This was the follow up to the April Green paper ‘The way forward for housing’ (DETR, 2000). Within this document were contained details of the Government’s decisions. Detailed within was the chosen pathway that all social landlords were expected to adhere to when in the process of setting rent levels. The social landlord, whether Local Authority (LA) or Housing Association (HA), was now required to calculate rents differently. Landlords were now required to make calculations which incorporated several housing related variables. These factors would include the size of a property, the value of a property, and also included a calculation based on regional earnings. The new rationale with regards rent calculation sought to replace the many anomalies that were perceived to be indicative of the old system. It was highlighted by the Government that in the past (under the old system) it was not uncommon for the rent on a one bedroom flat to outstrip the cost of a two or even three bedroom house. The proposed Government objective is that “there should be no arbitrary differences in rents between similar properties in similar areas” (DETR, 2000). This then often “results in confusion to the tenants and landlord alike” (Mauthe, 2000: 305). The Government has rejected suggestions that their rents policies are part of another agenda. The rationale behind change the Government argues is a desire to bring some sensibility to a flawed and outdated system of setting social rents. For the Government what is right in the 21st century is that social tenants just like anybody else should pay rent on a scale related to what they get. This rationale is based on market economics. The argument follows that it is proper that a tenant living in large property in one of the better locations should pay a higher rate of rents to reflect the favourable circumstances. 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.
