Agenda and minutes

1.1         There was an amendment to the minutes at 6.1: change the ‘The National Hairdressers' Federation (NHF) to ‘The National Housing Federation (NHF)’.

1.2         RESOLVED: that, after the amendment above, the minutes of the meeting held on 27 October 2015 be signed as an accurate record of the meeting.

2.1      There were no declarations of interest.

3.1      Dr Jacqui Daly (Research & Consultancy Director, Savills), gave a presentation to the meeting. The key points to note were:

·         She had spent approximately 15 years conducting research on the Private Rented Sector, and was currently conducting research in the Build-to-Rent market.

·         The current market trends in housing in the UK since 2000, are that owner-occupation has been falling, social housing is continuing to fall (as it has since the early 1980s) and the private rented sector has been increasing, with an estimated 5.7m dwelling in the private rented sector by 2018.

·         This period has also seen a growth in buy-to-let properties – from 2m to 4.2m from 2001-2015 and this has helped the growth of the private rented sector.

·         Some of the factors that have led to an increase in the private rented sector have been cultural changes, such as the difficulty of young people to get on the housing ladder, more people divorcing and/or staying single, the flexibility of not owning your own home.

·         The financial crisis of 2008 has also exacerbated the problem of first-time buyers owning their own home due to the stricter lending rules and difficulty in raising enough money for a deposit, so more people are using the private rented sector.

·         There is also the issue of rising house prices, especially in London/South-East London. House prices in London have seen real annual trend-line growth of 3.6% over recent years.

·         In terms of deposit affordability, in 2002, the deposit-to-income ratio in London was approximately 40%, but in 2015 that has gone up to over 120%.

·         In the UK as a whole, the average deposit is £27,885, whereas in London alone it is £74,519.

·         There has been a definite shift from owner-occupation in the under 35 and 35-44 years categories, with a fall of 732,000 and 783,000 people in mortgaged owner-occupation.

·         People using the private rented sector went up 2.43m from 2001-2011– and in the under 35 category, went up 1.137m.

·         In Lewisham, properties in the private rented sector went up from 15,930 in 2001 to 29,375 in 2011. The social rented sector was pretty static around 36,000 and owner-occupation went down slight from 53,826 to 50,664 in the same period. The growth of growth of households in the private rented sector has been over 80%, which outstrips the growth in London and England and Wales (just over 60%).

·         The projection is that the shift to using the private rented sector is set to continue, with all age groups bar the over 65s seeing a growth in the use of the private rented sector.

·         Policymakers have been looking to see how they support the ‘build-to-rent’ market to cater for this growth in use of the private rented sector.

·         For local authorities, this is beneficial as it will help provide vibrancy and create a sense of place in large regeneration sites, ease waiting list for affordable housing, and it attracts dynamic and mobile young professional with high disposable incomes.

·         The National Planning Practice Guidance (NPPG) has offered  ...  view the full minutes text for item 3.

4.1      Dave Baldock (Head of Strategic Finance, London Borough of Newham), gave a presentation to the meeting. The key points to note were:

·         LB Newham’s housing sector is set in context of:

o   Newham having a large private rented sector (40,000)

o   The private rented sector is increasing at a rapid rate (was 30,000 only 5 years ago)

o   Standard  of management of properties is “variable”

o   Landlords can be problematic

o   Length of stay is typically 6 months – so there is a transient population

·         The national context of an increasing use of private rented sector property, with a fall in owner-occupation is also prevalent in LB Newham.

·         There has been political support to intervene into the housing sector in LB Newham.

o   Private rented sector growing

o   Landlords of variable quality

o   HMO issues significant in Newham

o   Desire to intervene

o   LB Newham already has a Private Sector Licensing scheme

o   Council  to develop a private rented sector offer

o   Previously  created Local Space – an Registered Social Landlord providing Temporary Accommodation

·         In terms of land, the Council has considerable land holdings in the borough. There is also the London Development Agency land in the borough, as well as the London Legacy Development Corporation has land at the Queen Elizabeth Olympic Park.

·         LB Newham are able to access a lot of land, including their own, which makes it more feasible to build its own housing than other London Boroughs.

·         LB Newham proposed in December 2012 setting up a wholly owned company – Red Door Ventures -with the objective of operating a business to let homes for market rent which would purchase land and develop/purchase housing for rent from which the Council would receive a return on its investment as well as re-payment on any loans over a set period.

·         LB Newham would initially be the sole shareholder and funder. Legal advice received to the Council allowed for the Company to trade and allows for ownership outside of the Housing Revenue Account. It also stated that rent levels need not be restricted, and could be of market and ‘affordable’ (80% of market rate).

·         Red Door Ventures would look to target young professionals, families, and those caught in the difficulties of high rent in London, but still unable to afford their own home.

·         13% of the homes in the first development would be1-bedroom, 43% would be 2-bedroom, and 44% would be 3-bedroom.

·         For the delivery of Red Door Ventures, it will subcontract a range of functions like management and rent collection.  Staff for Red Door Ventures would initially be seconded or recruited direct.

·         The business model for Red Door Ventures is for the company to act just like any other commercial developer, and would also comply with the Council’s planning obligations like any other developer.

·         The Red Door Venture’s business plan is to build 3158 properties over 30 years, and acquire 518 street properties. It is projected that 39% of these properties will be family units of three bedrooms.  ...  view the full minutes text for item 4.

5.1       The Chair noted that item number 6 was restricted from press and public and reported that:

·         ‘It is recommended that under Section 100 (A)(4) of the Local Government Act 1972, the public be excluded from the meeting during discussion of this item because it involves the likely disclosure of exempt information as defined in paragraph 3 of part 1 of Schedule 12A of the Act as set out below and the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

·         Information relating to the financial or business affairs of any particular person (including the authority holding that information)’.

6.1      Jeff Endean (Housing Programmes and Strategy Team Manager), gave a presentation to the meeting. The key points to note were:

·         Lewisham’s Housing Strategy is on track to deliver 500+ new homes in Lewisham by 2018.

·         The Council are now looking to intervene in the private rented sector. This will enable them to:

o        develop high quality homes

o         offer a high quality management service          

o         offer transparency of costs

o         improve security of tenure

o         Offer a range of rents including a “living rent”

·         Intervening in the private rented sector will also allow them to make the best use of the Council’s land whilst maintaining a long term interest to drive quality; and enable the Council to benefit from rising land values. It will also generate an income stream for the Council while sharing the risks with industry leaders.

·         The objective would be to start with large sites where efficiencies highest and able to leverage external investment and share risk

·         It will potentially make a surplus for the General Fund – estimated 400,000 per annum minimum.

·         In 2011-12 the private rented sector population in Lewisham became larger than the social housing population for the first time since the 1960s. Over half of private rented sector residents in Lewisham are under 34 and more than 85% are under 49. A quarter of households in the private rented sector have dependent children; 84% are economically active and a third claim housing benefit.

·         With the national statistics showing that 18% of private rented sector tenants live in poverty before housing costs are taken into account and 38% live in poverty after housing costs, it is prudent to look to intervene in the market as it can add some benefits to residents.

·         Research in Lewisham has shown a number of things about renting in the private sector in the borough:

o   28% of tenants in Lewisham are dissatisfied with the quality and condition of their accommodation

o   The most common complaints are those relating to damp, leaks and cold and that properties are old and run-down

o   Tenants often face high up-front costs: a deposit, rent in advance and agents’ fees

o   22% were considering moving as the cost was too high

o   51% expected their next property to be another private let; 16% hoped to own their own home and 16% hoped to move into social housing

·         The private rented sector costs in SE14 (New Cross/Telegraph Hill) have risen 34% in the past two years, so this was chosen as the most logical place to intervene in the private rented sector.

·         The proposal is to develop the vacant site in Besson Street. This is in the Telegraph Hill ward; and is 2.5 acre site.

·         It was previously a New Cross Gate New Deal for Communities (now the New Cross Gate Trust) site, wholly owned by the Council. The Previous Planning Permission for the site was not built out due to financial reasons.

·         The Council objectives on the site are for approximately 230-250  ...  view the full minutes text for item 6.

7.1      Roz Spencer (Co-ordinator, Rogue Landlords Taskforce), gave a presentation to the meeting. The key points to note were:

• There have been a few Government changes since the consultation was initiated:
  • Housing Bill introducing new system of fines
  • Consultation on amending Mandatory Licensing regime to include all Houses of Multiple Occupation (HMOs)
  • ‘Right to Rent’ requirements on private landlords – risks for the council
• The consultation lasted 12 weeks - from 1September 2015 to 24 November 2015 (10 weeks statutory minimum)
• The consultation consisted of:
  • Consultation document and on-line survey on Lewisham website
  • Mail shot of over 4000 letters to all addresses with combination of commercial and residential, with invitation to public meeting, summary of the proposal and link to website
  • Public meeting 15th September 2015, which had 40 attendees
  • Emails to subscribers to Lewisham Life magazine with links  to the consultation document on the council website
  • A written briefing note to Ward Assembly meetings
  • National Landlord Association (NLA), Residential Landlords Association (RLA), Generation Rent, London Property Licensing.co.uk and all neighbouring borough’s websites asked to publicise the consultation and provide hyperlink to our website
  • hard copies of the document available at Laurence House Customer Access Point
• In terms of responses, there were 136 on-line responses. There were four detailed organisational responses - NLA, Citizens Advice Bureau (CAB), LB Lambeth and RLA.
• Respondents information:
  • Overwhelming majority live in the borough
  • Largest group of respondents were owner-occupiers, about 40% of whom were private landlords
  • Slightly more of the respondents were private tenants than private landlords (56% vs 44%)
  • More than half the landlords let only one property, only 3% have portfolios over 10 properties
• The opinions on the ‘5 key questions’ from the consultation are as follows:
  • “More properties for private rent should be licensed” - Strongest opinion and biggest consensus this included a quarter of the private landlords. No private landlords disagreed with the statement
  • “Licensing improves conditions” - big majority agree including just under a third of private landlords, though 21% disagreed with the statement
  • “It is right to target flats above commercial premises” 60% agreed though private landlords were divided on the question with only one quarter of them agreeing. 90 % of tenants were in agreement
  • The standards to be met for a license: a small majority felt standards proposed are about right, but 28% who were overwhelmingly private tenants, felt the standards were not tough enough. Just under half of landlords considered them too tough.
  • On the proposed fee of £100-110 pa – opinion was most divided on this question; a small majority favoured the fee being at least the proposed sum but more than two thirds of landlords thought the fee too high
• Some of the qualitative feedback from the consultation consisted of the following:
  • NLA in support of the scheme, see this as a positive opportunity to campaign for more small landlords to gain accreditation – partnership work plan in place
  • CAB - no evidence of more people from over shops complaining – in keeping  ...  view the full minutes text for item 7.

8.1      Mark Humphreys (Group Finance Manager, Customer Services), presented the report to the meeting. The key points to note were:

• In the July 2015 budget statement, Government announced that it intends to legislate for a 1% reduction in social rents to be applied each year for the next 4 years from 2016/17. This is expected to be passed within legislation within the next few months.
• The impact of the change in policy is a total reduction of forecast rental income within the business plan is £1.90m. The expected rent reduction over the next 4 years is £25m, with £374m being lost over the life of the 30 year business plan. 
• Officers will look to make savings to offset the impact of the reduction of social rents, for example:
  • Officers, together with Lewisham Homes, have already identified an saving of £1m arising from a reduction in Repairs and Maintenance allocations. This budget has under spent by at least this amount in the last financial year and is expected to do so again in the current year. This is as a result of the Decent Homes improvements carried out over the last four years.
  • Further savings are expected once a review of other asset investment priorities is competed in January 2016.
• In respect of services charges, it is proposed that the overall tenant increase being proposed is 11.20% or £0.81 per week (pw). This will move the overall charges from £7.26pw to £8.08pw for existing services, and the introduction of two new charges for lumber disposal and enhanced housing management for sheltered housing units at a polled average of £0.60pw and £0.88pw respectively.
• In respect of garage rents, they have been proposed to rise in line with RPI inflation at September 2015 which is 0.80%. This represents an increase of £0.09pw and would raise the average charge from £11.56pw to £11.65pw. The proposed increase would raise an additional £9,000 of revenue income.
• The report will go to Mayor & Cabinet in February 2016.

8.2      In response to questions from the Committee, the following was noted:

• The Committee noted their worry about the loss of revenue for the Council to build affordable homes due to the Government’s policies.

8.3      RESOLVED: That the Committee noted the presentation.

9.1                   Roger Raymond (Scrutiny Manager) introduced the report. The key points to note were:

·         The items scheduled for the January 2016 meeting are as follows:

o   Lewisham Homes - mid-year review

o   Brockley PFI – mid-year review

o   Lewisham Homes - Management Agreement: Update

o   Lewisham's Housing Strategy (2015-2020) - Update

o   Allocations Policy

o   Rehousing the homeless - Charity Groups

o   Health and Housing

o   Key Housing Issues

9.2       In response to questions from the Committee, the following was noted:

·         That the Lewisham's Housing Strategy (2015-2020) – Update can be put back March 2016 meeting when there will be time to take into account the Government legislative changes to housing.

·         That an information item be added to the Committee’s work programme for March on Houses in Multiple Occupation and the use of article 4 directions.  

9.3       RESOLVED: That the Committee agree the work programme for 2015-16.

10.1    No items were referred to Mayor and Cabinet.