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Housing Association Mergers

Keith Parkins | 19.10.2006 15:09 | Analysis | Social Struggles

Councils tenants are promised the earth when they are fed a pack of lies to convince them to vote for the sell-off of their homes, privatisation by any other name. What they are not told however is that they will have no further say in the future of their homes.

'There is merger mania just now that is being fuelled by the Housing Corporation saying future development cash will be concentrated on fewer and fewer associations.' -- Derek Joseph, Managing Director, Tribal HCH

'The small local housing association we're told will do such a good job of running your estate, very rapidly becomes part of a much larger regional and national housing association where you have no say whatsoever. So if you stay with the council you can choose at elections, at regular intervals – it’s called democracy – to change your landlord. If you privatise that’s it, it’s a one way street.' -- Paul Holmes MP

Council house sell-off, together with the widely discredited Pathfinder programme, are two of the projects that were being pushed by John Prescott and ODPM, now being promoted with religious zeal by Ruth Kelly and her Orwellian named Communities Department.

Once privatised, rents go up, service charges go up even faster, and faster still are the fat cat salaries of the people at the top. Repairs and refurbishments become virtually non-existent and as does tenant representation.

According to the National Audit Office, it costs £1300 more per home to improve homes post-privatisation than if they had remained under council control.

Privatised tenants have less secure tenancies, it is easier to evict them.

RSLs and housing associations are building houses for sale. The chief inspector of housing for the Audit Commission has said too many 'chase the customers they haven't got and neglect the ones they have got.'

RSLs and housing associations are acquiring massive land banks, forcing property prices up for everyone. London and Quadrant is the sector's biggest developer. Last year it announced plans to more than double its land bank from £60 million to £150 million.

RSLs and housing associations have no interest in the local community. London and Quadrant, the fourth largest RSL, plans to close six sheltered homes in Bexley.

RSLs and housing associations are amassing massive surpluses, most of it direct from the public purse.

Tenants have less say. It is the management who dictate who if anyone will represent the tenants. In Sunderland, for example, the tenants themselves are no longer allowed to elect their own representatives, they are handpicked by the management.

Tenants who speak out are victimised.

Peter Sandy, a Pavilion tenant, was threatened with an Asbo and eviction from his home when he spoke out against Pavilion and the treatment of its tenants. Roger P Murphy has suffered similar treatment at the hands of Dominion Housing Group (formerly Acton Housing Association) for daring to criticise their piss poor performance and treatment of tenants.

Housing Associations and RSLs (registered social landlords), despite their friendly sounding names, are in all but name, private corporations, in practice modern-day Rachman landlords.

Although private landlords in all but name, their tenants have less protection under the Housing Act 2004 than their fellow tenants in the private sector. They will not, for example, be protected by the deposit scheme.

Driven by the industry regulator, the Housing Corporation, merger megalomania is now the name of the game. According to Inside Housing there has been 100 full scale mergers and 70 acquisitions within the last two years. [Inside Housing, 10 February 2006]

The larger the grouping, the more remote the management, less the accountability. Tenants have no say in these takeovers and mergers, are not consulted.

Aldershot-based Pavilion was a poorly performing housing association. It was taken over last year (officially it was called a merger) by Eastleigh-based Atlantic to form First Wessex Group. During a brief honeymoon period, tenants saw some improvements, it is now as bad as it was prior to the takeover. First Wessex is now proposing to takeover Portsmouth Housing Association.

Thames Valley Housing and Richmond Housing Partnership are in merger talks. The combined group would be dominant in West London and the South East.

It does not have to be, tenants who are still council tenants should say no. If not, it will be the last chance you will have to have a say in the future of your own home. A spanner has been thrown in the works of Pathfinder by a successful legal challenge.

In the face of growing public opposition, neon-Labour is finding it increasingly difficult to maintain these flawed housing policies. For the third successive year, the neo-Labour Party leadership was defeated at the Party conference when their policy on privatisation of council housing was put to the vote.

What has happened in Germany should sound alarm bells as to what could happen in the UK. Public housing, having been sold off, has subsequently been acquired as a speculative investment by venture capital flowing from the City of London. The same could happen to privatised social housing in the UK.

Related topics and further reading

Fred Harrison, Boom Bust: House Prices, Banking and the Depression of 2010, Shepheard-Walwyn, 2005

Mike Lane, The Regeneration Game, 2006 {DVD}

Austin Mitchell, Labour conference backs direct investment third year in a row, Defend Council Housing newspaper, October/November 2006

Sebastian Mueller, Imapacts of Privatisation, September 2006 {briefing paper for London housing conference}

Roger P Murphy, Lies Damn Lies, and Dominion Housing Group, Indymedia UK, 3 October 2006
 http://www.indymedia.org.uk/en/2006/10/352539.html

Nooks and Corners, Private Eye, 13-26 October 2006

Keith Parkins, Curitiba – Designing a sustainable city, April 2006
 http://www.heureka.clara.net/gaia/curitiba.htm

Keith Parkins, First Wessex plan takeover of Portsmouth housing, Indymedia UK, 12 September 2006
 http://www.indymedia.org.uk/en/2006/09/350606.html

Keith Parkins, Liverpool resident halts Pathfinder programme, Indymedia UK, 27 September 2006
 http://www.indymedia.org.uk/en/2006/09/351960.html

Keith Parkins, London Social Forum – housing and land rights conference, Indymedia UK, 2 October 2006
 http://www.indymedia.org.uk/en/2006/10/352437.html?c=on

Keith Parkins, M3 Landlord Link Forum, Indymedia UK, 16 October 2006
 http://www.indymedia.org.uk/en/2006/10/353666.html

Keith Parkins, Pathfinder hits the buffer, Indymedia UK, 17 October 2006
 http://www.indymedia.org.uk/en/2006/10/353777.html

Keith Parkins
- Homepage: http://www.defendcouncilhousing.org.uk/

Comments

Hide the following 2 comments

Mortgage debt exempt from inflationary index

20.10.2006 09:04

Keith - thanks for this brilliant post - living in the margins of the uk it is good to know that others are just as brassed off about 'affordable' housing as me.

in your LSF - post you linked to here you said this:

"Interest rate change is a crude instrument to dampen down the property market, as the level of rate rise needed to impact on an out-of-control property market imposes huge burdens on productive sectors of the economy. Housing debt as a percentage of GDP had dramatically escalated from 23% in 1980 to 65% in 2002, a situation that is clearly unsustainable. If interest rates cannot control rising property prices, then all that is left is a land tax."

and you also said you were just reading Boom Bust. here is another quote from the intro to this book:

“Gordon Brown’s first act on arriving at the Treasury was to announce the independence of the Bank of England. There would be no political tampering with the money supply. In future, interest rates would be set by a Monetary Policy Committee (MPC) composed of eminent economists. Brown set the target inflation rate: 2.5%.”... “But that 2.5% target was defined by Gordon Brown to exclude mortgage interest payments on houses.”

this means that house prices are effectively discounted from any effect of changing interest rates - because interest rates are set in relation to the inflationary index. the idea is to allow investment in uk real estate to grow unabated - i.e. who cares that it causes exclusion of the poor from ownership - so much the better for privatised RSL's.

and for your interest i wrote a review of Boom Bust in Sustainable Economics:

Boom Bust House Prices, Banking and the Depression of 2010 by Fred Harrison
2005 pub: Shepheard Walwyn, pp.274, ISBN : 0 85683 1891

The ambitious subtitle of this book summarises his theory that there will be a recession in the coming years due to the cyclical nature of the modern business trend of growth and decay. He believes that those in power are either ignorant of this fact or wilfully negligent given the blatant evidence of an 18 year pattern of Boom and Bust. He suggests that, like the reason why climate change was not noticed by NASA even though they were actually measuring all the necessary data, the current crisis of house and land price inflation is too incredible for people to adjust to the possibility that there are deep flaws in the entire system.

The fundamental mechanism which is posited as the failsafe of the modern economic equation is supposed to be the adjustment of the inflationary index through government changes in interest rates. That Gordon Brown made it the first major change of his appointment at the Treasury to hand over this mechanism to the Bank of England is further complicated by his condition that mortgage repayments would be excluded from the inflationary index. Such a move, suggests Harrison, entrenches an already debt-burdened middle class with a multi-faceted paradox which requires a deep analysis of the real cause of inflation and recession as the speculative interests of property developers.

Through an exhaustive debate as to the historical and contemporary causes of speculative gains he outlines the case for a split in understanding between the creation of wealth through productive labour and the manipulation of the national product by investors who use the exclusion of land values from the economic equation as their tool. On this count it is perhaps indicative of the nature of this dilemma that he says on the one hand that the experts not only differ but actually admit to their confusion, and on the other that there is nevertheless a logic to the phenomenon of Boom Bust which can be derived from the historical process of mortgage borrowing through the creation of Building Societies, and the more obscure facts of social demography such as industrial displacement and longevity.

Turning to America and the Dot Com bubble his analysis takes on a more global perspective in light of the inability of Alan Greenspan of the Federal Reserve to alleviate soaring speculation-fuelled inflation of not only the futures market on the internet, but more interestingly, it’s effect on the property market in Silicon Valley. Although he shows that it is again the process of monopolisation of the scarce commodity of development land which spikes the market, and that therefore the fluctuation of interest rates created by restrictions on money supply merely squeezes an over-extended demand, this is exacerbated by the existence, or even non-existence, of electronic currency, especially in relation to companies which had yet to produce anything at all.

The book takes Australia as a case study for an evaluation of the possibility of preventive action in the form of a tax on speculative investment in the property market. This, as he demonstrates, has taken various forms in the modern context, but none as far-reaching, as his figures suggest, as a total shift in emphasis such as the Single Tax advocated by Henry George would have if applied to the examples he quotes. Given the relative ease by which Australia’s property market can be statistically analysed, he proposes that a full-scale implementation of a land value tax would entirely fund the public purse based on the unearned gains which have been made by private investors. More relevant perhaps is the surprising observation that a comparison between Australia and Japan yields some interesting facts about the density of population in relation to the land mass and therefore the relative availability of development land.

This last fact somewhat prefigures a rather weak advocacy of a return to a more holistic philosophy of land use and it is surprising to find that he champions the unrewarded labourer, not as a means to restoring social equality, but as a spur to greater productive efficiency. Perhaps the two are the same, but in the context of his passing remark that LVT could facilitate a future where private ownership could become more equitable, I feel that Fred is veering more towards a ’free-market’ paradigm than his otherwise neo-romantic evocation of traditional agriculture might imply.

Greenman
- Homepage: http://www.green-culture.blogspot.com


Boom Bust

20.10.2006 16:54

I hope soon to have a review of this excellent book by Fred Harrison.

Further points he makes on inflation, is that the rise in house prices is excluded from the retail price index, thus it does not reflect reality.

To dampen house price inflation, which is driven by land price inflation, he suggests a hefty land tax, so hefty, that we would not have to pay income tax.

Keith
- Homepage: http://www.heureka.clara.net/books/


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