The Fair Share Housing Scheme A new shared affordable housing product to support people who make a big contribution to the local economy January 2012 Cllr Jonathan Glanz Cabinet Member for Housing and Corporate Property Westminster City Council Westminster City Hall 020 7641 6000 64 Victoria Street westminster.gov.uk London SW1E 6QP Westminster City Council The Fair Share Housing Scheme:A new shared affordable housing 2 product to support people who make a big contribution to the local economy Foreword One of the central themes of the Coalition Government’s period in office has been localism, devolution and local flexibility. One of the key challenges for local authorities has been in establishing what exactly this means for councils, councillors and local decision-making. At Westminster City Council we have embraced these new opportunities, reforming our housing allocations policy, commencing a review of community governance and winning our joint bid to become a Community Budget pilot area. Increasingly, we are searching for local solutions to local challenges. In this new, localist world, we know that answers should not come from ministers or Whitehall bureaucrats. This is typified by the innovative Tri-borough project. By combining certain functions with our partners in Hammersmith and Fulham and the Royal Borough of Kensington and Chelsea, we are able to maintain high quality services even in a difficult financial climate. These approaches will not necessarily be adopted elsewhere but our focus is on improving the lives and opportunities of our residents. The Fair Share Housing pilot is another policy we have designed to deal with a particular local issue. Central London is, by any measure, an expensive place to live. Often only affordable for the rich or those with heavily subsidised housing via traditional social rents, the majority of households in the ‘middle’ fails to qualify for priority in the social rented market but are unable to afford private rents. In the private rented sector it is common for individuals to live with others whom they may or may not know in a shared house or flat but conventional social rented accommodation does not allow for this approach. Meanwhile, some areas of cities contain social housing which, despite being large enough, is less inappropriate for families. Parts of the West End, we believe, fall into this category. Our local solution is to provide a small number of high quality units for shared use by individuals which will be affordable to people earning the London Living Wage. Rents will be higher than social housing but significantly below the average market rate, which for some parts of Westminster is as much as £750 per month for a room in a shared house. Additional revenues will then be used to build new affordable homes or improve existing units. Because of limited availability and the expected high demand, we propose to prioritise those people who make a strong contribution to the area. Traditionally the term ‘key worker’ has been confined to public servants but we recognise that there are many more people who work hard or volunteer their time to make Westminster a special and economically successful place, without whom the city would not function as it does. These are people integral to the future of the area and we want to help strengthen their connection with Westminster. The Fair Share scheme will not work everywhere. It may not be required anywhere else but it will help address a particular local challenge and ensure that Central London remains a diverse, culturally rich and economically prosperous. I hope you agree. Cllr Jonathan Glanz Cabinet Member for Housing and Corporate Property Westminster City Council The Fair Share Housing Scheme:A new shared affordable housing 3 product to support people who make a big contribution to the local economy Contents Summary 4 Major advantages 6 Details 7 Case studies 9 Key considerations 10 Supportive statements 11 Westminster City Council The Fair Share Housing Scheme:A new shared affordable housing 4 product to support people who make a big contribution to the local economy Summary In the context of reduced public funds and declining affordability for housing in Central London, Westminster City Council wants to support low wage individuals who make an active contribution to the capital’s economy but for whom buying or renting a property in Central London is an unrealistic prospect. Because most of these people will not qualify – or will not be prioritised – for traditional social housing, a new product is required. The Fair Share Housing Scheme will provide high quality sub-market rent accommodation in Central London on a shared basis for people who do their fair share for the local economy. Rents will be targeted in order to remain affordable to households on the London Living Wage and will be around a third cheaper than an equivalent arrangement in the private rented sector but the programme will require no government grant. Tenants will be safe in the knowledge that the new units will be of a good size, including larger than average double bedrooms and that the property will be fully compliant with all affordable home standards. New research has shown that high rents and living costs are increasingly forcing tenants in the capital to share homes. Central Government has recognised this in its Housing Benefit policy. The average number of people living in each property has increased in London by 33 per cent in just two years according to HomeLet. Over the same period, London rents have increased by 23 per cent while average incomes have risen by just 6 per cent, creating enormous pressure on housing in Central London in particular. To compound the situation, as oil prices continue to rise and train fares are planned to increase by more than inflation for the next three years making it increasingly expensive to work in the capital. The Mayor’s impressive housebuilding record and the Government’s housing reforms as well as the introduction of Affordable Rent products will help but more can be done. The proposed pilot would encompass up to 25 units in Westminster’s central activities area which are currently allocated for affordable housing or proposed for affordable housing in existing planning applications. These areas often prove unsuitable locations for family accommodation due to their proximity to the throbbing heart of London’s night-time economy. If the pilot is successful Westminster City Council may look to design appropriate future developments with this model in mind or encourage developers to include suitable units within its mix. Westminster City Council The Fair Share Housing Scheme:A new shared affordable housing 5 product to support people who make a big contribution to the local economy The pilot will: S • upport workers on the London Living Wage who play a key role in the economic life of the city; • Satisfy demand for housing without the need for further public subsidy; I • ncrease the rental streams from appropriate properties which can be used by the landlord to provide and maintain more suitable affordable housing elsewhere in the city Westminster City Council The Fair Share Housing Scheme:A new shared affordable housing 6 product to support people who make a big contribution to the local economy Major Advantages • Support a diverse local economy: Westminster and, more generally, Central London is a popular place to live and work because of the vibrancy and diversity of the area; people of different means and from different backgrounds coming together at the heart of the most exciting city in the world. This unique facet of London life is threatened by rising accommodation, transport and living costs. • No need for public subsidy: Whilst saving individual tenants around one-third on their rent, by charging individual tenants a rent of around £100-120 per week on a three-bed property, total receipts per property will be approximately £160 higher than would be the case under the Affordable Rent programme in Westminster. • Counter the exploitation of tenants by some private landlords: The Fair Share scheme would be targeted at people who are unlikely to be prioritised in the traditional social housing system but, despite working in Central London, struggle to pay full market rent for a property in the capital and are unable to save the necessary deposit to get on the housing ladder. These people can be left at the mercy of some unscrupulous landlords who charge extortionate rents for run-down properties. Our new product will see rents around 33 per cent lower than the equivalent in the private sector and also provide peace of mind to tenants who will benefit from having a reputable landlord who will ensure that rooms are of good size and the property is fully compliant with the standards required of affordable homes. • More stable and productive workforce: Commuting for hours each day on crowded public transport or snarled up roads threatens productivity amongst employees and makes it more difficult to staff shops and offices in the event of transport shocks caused by severe weather, for instance. Having a more local workforce increases flexibility and gives employees more leisure time. • Reduce overcrowding on public transport: Many of the key rail routes in to Central London are overcapacity and the line into Paddington is one of the most overcrowded on the entire national network with three out of five trains during the morning rush hour carrying more passengers than they were designed to. Providing more affordable accommodation close to where people work will help ease some of this pressure and promote a greener way of life. Westminster City Council The Fair Share Housing Scheme:A new shared affordable housing 7 product to support people who make a big contribution to the local economy Details Locations We have earmarked a number of sites within Westminster’s Central Activities Zone in and around the West End which would are suitable for the pilot. This will consist of new build and conversion of existing stock (pending sign-off from the Homes and Communities Agency) and comprise of up to 25 units. Soho Housing alone will be supporting affordable sharing with around 20 properties over the next two years. Legal status of tenancies The properties would be let on assured shorthold basis, with all sharing tenants either jointly signing a single tenancy or each individual tenant signing their own agreement with the landlord. Tenants will be responsible for payment of their own rent and a contribution to shared costs. Tenure length Flexibility will be one of the major advantages of this new scheme but a balance will need to be struck so that tenancies do not turn over too regularly otherwise there is a risk that additional costs will be incurred in regularly re-letting. To achieve this, standard notice periods of 1-2 months would need to be strictly enforced. Tenants The Fair Share scheme will be specifically targeted at those who make an active contribution to the local economy by working in the City of Westminster or, where appropriate other Central London boroughs for a period of 12 months or more. Others who can demonstrate a newer but permanent connection will also qualify. Eligibility would depend on a maximum income which would be subject to market testing and consultation. It is likely that an income of at least £17,264 before tax would be required which would reflect the London Living Wage minimum hourly rate of £8.30 per hour for a forty hour week. A maximum income to access the scheme would be proposed in order to target the opportunity at those single adults that have less affordability to exercise other housing choices in central London. This might be set at around £30,000 before tax. Precise detail on work eligibility will be subject to further discussion but it is likely that the following sectors or professions will be prioritised: • Nurses • Special Constables • Teachers in the first three years of career • Hospitality sector workers Westminster City Council The Fair Share Housing Scheme:A new shared affordable housing 8 product to support people who make a big contribution to the local economy • Performing artists • Market traders • Frontline transport workers • Those who can prove a regular commitment to work unsociable hours in Central London Rents It is envisaged that the average rent levels although below median private rents for the city will be higher than those charged under the council’s affordable rent policy as stated in the Affordable Rent Statement of September 2011. In W1, for instance, the median rent paid by an individual renting a room is just under £190 per week, and the GLA median weekly shared room rate for all of Westminster is £144. If a 20% discount on the latter figure was used as part of the Fair Share scheme, a reasonable rent for each sharer might be around £100-120 per week. Type of accommodation The most suitable accommodation type for this tenure would likely be 3 bedroom units. Living space and kitchen would be shared amongst all three housemates. The arrangement would require enough flexibility so that the accommodation could revert back into conventional use at the end of the pilot period. For this reason we are not proposing that en suite facilities or individual basins be provided in the bedrooms as would be in a traditional hostel type accommodation and licensed Homes in Multiple Occupation. Potential sites for pilot To test the market effectively for demand for shared housing arrangements that operate outside of private market and to be in a position to draw adequate conclusions about the ongoing viability of the scheme, we propose running small pilots in two or three separate locations – comprising of around 25 units within the West End. It is not possible at this stage to discuss externally the locations or the providers for the schemes owing to the initial stage of agreement reached for each of the sites and because consultation is still to be successfully concluded and permission obtained from the Homes and Communities Agency relating to a use change to around 10 units. Westminster City Council The Fair Share Housing Scheme:A new shared affordable housing 9 product to support people who make a big contribution to the local economy Case Study André Dique André Dique is a volunteer Special Constable in the Metropolitan Police. He lives in Leighton Buzzard in Bedfordshire and until recently patrolled out of West End Central Police Station. He now patrols out of Paddington Green Police Station in Westminster. In his day job as a Build and Release Software Manager based in Fulham, Andre would still struggle to afford to live in Central London and therefore still commutes for around an hour each way from Bedfordshire. When on the Response Team, duties commence at 7am which requires Andre to catch the 4.42am train from Leighton Buzzard. Living closer to Central London would make it easier to carry out late night or early morning patrols and be available for emergency cover. Case Study Adrian Stones Adrian Stones is a tenant in one of the existing pilot schemes in Soho. The property is owned and managed by Soho Housing Association. He recently left his job as a civil servant to take up a position at a homelessness charity. He shares the two bedroom home with a professional ballet dancer. The proximity to their respective workplaces and the extra time afforded to them means that they have both also started volunteering locally in the evenings and at weekends and have become involved in local events and organisations. As well as the significantly lower living costs, Adrian considers a major advantage of this arrangement to be the chance to meet new people through his flatmate. Westminster City Council The Fair Share Housing Scheme:A new shared affordable housing 10 product to support people who make a big contribution to the local economy Key Considerations • Tenant behaviour: Although one individual tenant will be responsible for the tenancy, with little or no input into the selection process for fellow tenants, it will be difficult to hold them accountable for negative actions or poor behaviour by their housemates. Each tenant should be included in the tenancy or have their own individual agreement with the landlord to negate problems finding a Peer Tenant to take full responsibility. • Allocation of tenants and sub-tenants: Sharing arrangements in the private housing market may have other features that prove more attractive than affordability of the sub- market scheme. The main one is likely to be choice and control over whom to share the property with. It is unknown how a scheme whereby sharers have no input into whom else they share their home with will be viewed by potential applicants. • Competition from the private housing market: Sub-market housing schemes normally have a client group for which market housing is not easily accessible. But the sub-market shared housing scheme will be competing with shared housing arrangements in the private market. It is anticipated that three bedroom+ family size homes in central London that have been rented by families are likely to be rented by sharers once the Local Housing Allowance caps come into force for existing claimants in April 2012 meaning that there may be an increase in private landlord properties for sharers. • Costs: higher turnover of tenancies may mean a small increase in administration costs while the prioritisation of single-person households would, in theory, mean that some families who would otherwise have been eligible for those properties will remain in temporary accommodation for longer periods. Westminster City Council The Fair Share Housing Scheme:A new shared affordable housing 11 product to support people who make a big contribution to the local economy Supportive Statements “London’s economy will only continue to grow if working people are not priced out of the rental market. I welcome Westminster’s innovative thinking and hope that other councils will use the greater freedoms we’re giving them to think about how to help local workers live close to their work.” , Rt Hon Grant Shapps MP Minister of State for Housing and Local Government “As the only affordable housing provider based and operation exclusively in central London we understand the housing market in Westminster and find there is significant need among younger people with work in central London but no chance of affording to live here nor eligible for traditional affordable housing. Intermediate or market rented homes work perfectly in Soho and Covent Garden and we intend to provide more to support this innovative and sustainable approach.” Joe Chambers, Chief Executive, Soho Housing Association “Barratt London supports this initiative to increase the availability of accommodation for affordable rent for local workers and believes that The Fair Share Housing Scheme provides an innovative approach to allowing individuals to access accommodation in Central London.” Alastair Baird, Regional Managing Director, Barratt London “It is hugely important that people on the London Living Wage who make an active contribution to their local economy are supported by housing schemes such as this. Dolphin Square Foundation continue to work with the City of Westminster to understand the housing demands in central London and the Fair Share Housing Scheme is a great example of the good progress being made in meeting these demands. “By providing these high-quality and affordable shared homes, important steps are being taken to support those looking to live and work in Westminster whilst also helping to contribute to the capital’s housing needs. We are delighted to be looking to support one of these pilot schemes”. Brian Ham, Chief Executive, Dolphin Square Foundation Westminster City Council The Fair Share Housing Scheme:A new shared affordable housing Westminster City Hall 020 7641 6000 12 product to support people who make a big contribution to the local economy 64 Victoria Street westminster.gov.uk London SW1E 6QP Headings 27pt Opening paragraphs/ pull quotes etc – Helvetica Light, 14pt on 18pt leading. In elementum ante eu mi. Phasellus augue. 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