Rural housing

Andrew Bradford

Kincardine Estate

Filed 03 Jun 06
©www.land-care.org.uk

In Scotland, owner occupation is higher in the country than it is in the towns. I want to look at the remaining rented sector. The role of the private rented sector increases dramatically with rurality. In communities below 1000 strong, the private rented sector PRS) provides 11 times as many houses as do housing associations. The PRS is the dominant housing provider, 53% of all rented housing.

We know that the rural PRS is very different from its urban cousin. Tenancies last much longer and rents are often set at affordable levels to help meet local needs. There is very often no alternative affordable housing source. The authorities have long been aware of differences between urban and rural housing; logically any rural housing strategists would long since have recognised that and sought to work with the private rented sector to understand it, to nurture it, to seek to work with it and build upon its existing activity.

Andrew Bradford
Kincardine Estate
(To enlarge photo Click Here)

Photo©Kimpton Graphics

Governments over the last 15 years have claimed to have rural housing policies, but the evidence is that little more than lip service is being paid to rural housing issues. Instead, we have what are deemed to be solutions to urban housing problems applied to Scotland. The problem has got worse over the last decade and a half, not better. Government is not getting it right.

All the local housing strategies identify a need to work with the private rented sector; all acknowledge a lack of understanding about the sector. That information is fed back to government. So, what action do we get from government? Instead of a determined effort, first to gain an understanding of the sector, we have legislation. Based on what? We know it is not based on a thorough knowledge and understanding of the subject because the government’s own housing agency admits as much. Is government getting it right?

Government supports the provision of new affordable rented housing. I have shown many times over the recent years how this support is allocated. Of government programmed expenditure on new rented housing provision, almost none goes to the private rented sector. This is the case even in rural areas where the PRS is the dominant rented housing provider. Government has no problem setting contracts with the private sector to build roads, yet it seems to be terrified of contracting with the private sector to build and rent affordable houses. Failure to include the private sector as part of the solution is no more logical than only using those roads contractors that begin with the letters or the initials X, Y or Z, and ignoring all the remainder of the alphabet. Is government getting it right?

The total budget for Community Scotland's programme expenditure on rented housing last year was £260million. Of that the share for the rented private sector was £1.2million, which is less than half of 1%. Assuming the support remains the same for the next three years, then the grants paid to the private rented sector will be exactly extinguished by the cost to the sector of the fees paid for landlord registration. And that’s excluding all the costs that are applied to the landlords in making those registrations

Ostensibly, landlord registration is to identify who are the landlords. But since my local authority wrote to me advising of registration because they already knew I was a landlord, I have to question the benefit of this costly, and so far, utterly ineptly executed exercise. Is government getting it right?

On top of the extra costs imposed by the Anti-social Behaviour Act and the Housing Act, we have to meet further costs under the controlled activities regulations and water supply regulations, which seem likely to add costs of several hundreds of pounds on individual private rented sector properties, and almost all of those will be in the vulnerable rural sector. These extra costs are either going to put people off the business of renting houses or to add to the costs of the tenants. And guess what? The greatest effect of those increased costs will be going onto the affordable rural rents. I ask again, is government getting is right?

For private landlords to continue to deliver housing over time, the ownership must pass from one generation to the next. Capital taxation seems to be designed to prevent that from happening. I calculate that it will take me between 40 and 70 years of gross net rent, before income tax, to earn the money to pay the capital gains tax or inheritance tax on each of my properties. That’s unsustainable. What will happen across the country, as far as I can predict, is that properties will have to be sold in order to pay the tax. Best value is achieved by selling a vacant property. Which ones to sell? The ones giving the lowest yield, the affordably rented ones.

So, I fear, out these tenants will go to sell the properties, to pay the tax and the tax payers’ money needed to provide the houses, to re-house these unfortunate families will probable exceed the amount of tax raised in the first place that caused them to be homeless. Has government got it right?

How much better it would be to do a deal that encouraged the properties to transfer a generation on condition that they remained in the affordable private rented sector and met certain quality standards and permitted the tenants to remain exactly where they are today.

The title of this conference is ‘Who should run the countryside?’ The story I have told you so far shows what a complete mess the government has made of housing issues in recent decades. The most remarkable thing to me is that the rural private rented sector continues to serve such a vital role in providing essential rural housing much of it at affordable rents despite, rather than because of government policies and strategies which seem designed to make it next to impossible for private landlords to continue to deliver housing over the long term. The stubbornness of the rural private rented sector in continuing to provide vital accommodation cannot continue forever in the face of this onslaught by government. And the pressure is greatest in rural Scotland where rents are lower, costs are higher and margins for the landlord are smaller. The decline has already started. Between 1991 and 2001 the census identified a 5% reduction in the rural private rented sector, that’s in contrast to a growth in the private rented sector nationally. So what can be done to get it right?

First, there has to be a determination to focus on the product; simply said – decent, affordable rented housing - and to be clear that all methods of delivery are eligible for support, be they housing association, private rented sector housing trusts and so on. What matters is value for tax payers' money and the quality of the product, not the method of delivery. A decent contract will take care of concerns about rent levels, quality of management, allocation, accountability and so on. To this end, the SRPBA have put forward our proposals for private sector grant for new build, affordable rented housing. I am pleased to say that we are currently in very fruitful discussion with the Executive about this. I am hopeful that a new opportunity for affordable rural housing provision will be open to the private landlord. We are getting it right.

How do you ensure quality of the product? Again, SRPBA have been in partnership with Dumfries and Galloway Council in a pilot study with inter-local voluntary accreditation schemes. Learning from that we have now put before the Executive our proposal for a national voluntary accreditation scheme in alliance with the Scottish Association of Landlords. It is clear to us that eligibility for the grant scheme I mentioned a moment ago should be linked to accreditation. If you can’t deliver on quality of management and property then you don’t qualify for grant; it’s quite simple. I believe we are getting it right.

Secondly, old dogmatic views on the rights and wrongs of public versus private sectors must go; surely we must all be working towards the same goal: getting decent affordable housing to those who need it.

Thirdly, before passing any more regulations there needs to be a huge effort to gain knowledge and understanding of the private rented sector, about the differences between urban and rural sectors, about what can be done to nurture and support these vital service providers.

Fourthly, Scotland needs to work with national government to find a solution to the inheritance tax issue. Why, for example are exemptions of 100% on those taxes in place for the transfer of businesses which might be as socially useful as a pornographic magazine store, when the businesses providing vital affordable rented housing are not given any exemption at all.

Finally, let us use common sense. Far too often it is said to me - and it was said again at lunch today - that when I come up with some suggestions about resolving housing problems: ‘Oh, but that’s far too sensible; that’s far too logical for our politicians.’ What a terrible comment on our political masters! They are the ones who should be applying common sense, not stopping its application. The right solutions, surely, are those that work. At present, the only strategies being tried - the only tools in the box - are those that fit a particular narrow political dogma. We can see that it is not working. I have been banging on at this for 16 years and the problem today is more acute than ever. It’s time to equip that toolbox with all the possible tools and use any of them that work.

There are glimmers of hope. We are talking to the Executive about our proposals. But it is little short of a scandal that in 16 years I have seen such little progress when the solutions to rural housing problems have been blindingly obvious to me all along, I have spent those 16 years telling them about it. Either I have been very bad at telling the story, or they have been determined not to listen.

As a closing example, we at Kincardine Estate provided 14 affordable rented houses 6 years ago. They are leased to nominees from the local authority housing list, they are barrier free, they are affordably rented, they are energy efficient, and they used a high proportion of renewable resources in their construction. More importantly, we did this with a grant that would have achieved only 8 houses on the ground if that same amount of money had been given to a housing association. I got a grant to build those 14 houses because it was a research project. I am not currently allowed to repeat that exercise. As a result, as I see it, followers of political dogma are in some circumstances condemning 6 families out of every 14 to continued homelessness, when if they were willing to work with the private sector, all 14 families could be housed without any increase in public expenditure.

Between government and the private rented sector, I have to ask: who has proved more cost effective at delivering housing to meet society’s needs?

Get it? Right.

Acknowledgements and Disclaimer

Land-Care is grateful to Tony Andrews, CEO Scottish Countryside Alliance, and to Dick Playfair of Playfair Walker for the invitation to attend the conference in a media capacity, the opportunity to participate in both formal and informal discussion, and for their help in providing Land-Care with transcripts of the papers presented.

No responsibility for errors or omissions in the transcription process can be taken by SCA, Playfair Walker or Land-Care.

Kimpton Graphics is a division of Land-Care.

Finis

MENU

Rural housing

Andrew Bradford

Kincardine Estate

Filed 03 Jun 06
©www.land-care.org.uk

©www.land-care.org.uk

Further reading recommended by Land-Care

Acknowledgements and Disclaimer

MENU

Rural housing

Andrew Bradford

Kincardine Estate

Filed 03 Jun 06 ©www.land-care.org.uk

©www.land-care.org.uk

Further reading recommended by Land-Care

Acknowledgements and Disclaimer

Filed 03 Jun 06
©www.land-care.org.uk