Poplar Harca sells off homes “to fund improvements”

The Coalition Government is trying to run down social housing in favour of using public money to subsidise private renting deals – keeping house prices high enough to avoid another immediate recession. They have put all sorts of restrictions on housing associations: encouraging them to build new homes, but requiring them to change many of their practices, making them less tenant-friendly, to do so.

The question for housing associations, and it is a difficult one, is whether to swallow all the requirements the Government is putting on them, or whether to speak out against them – and possibly risk losing their funding.

It’s a question which is pertinent across the public sector. The British Medical Association was initially fairly neutral on the Government’s proposals to change the NHS, but now that the disastrous consequences of these policies are clearly visible, it has been cutting in its criticism (see report, page 10).

Many Housing Associations are wringing their hands and crying crocodile tears over government policy in the housing sector, but few have yet spoken publicly about the consequences of the Government’s policies.

Nonetheless, it was still a surprise earlier this month to see that “social landlord” Poplar Harca had placed one of its flats, a flat which was built with public money to be there for social rent, for sale on the open market. The property was placed with Savills for auction on the basis of a 125 year lease and 250 per annum ground rent.

ELN rushed to ask this local landlord what had happened. We received the following statement from Neal Hunt, Director of Development at Poplar HARCA:
“As part of the Affordable Homes Programme, we agreed with the HCA and GLA that a certain number of properties would be converted to affordable housing, and a certain number would be sold-on to provide housing supply across the sector.  This sale is part of that agreed quota.  The money raised from the sale of this property goes straight back to building more affordable housing. In line with HCA “Value for Money” guidance we only choose to dispose of void stock that is either difficult to let or in need of significant investment to bring it back to a lettable condition.”

We asked for some clarification and received the following:
“Under the AHP scheme we’ve built 287 new properties and will sell 24 properties, over a 4 year period. It was a funding requirement of the HCA that we had to make these sales – the properties we’re selling are mainly bedsits or one beds, none are family units. The sales cross-subsidise the new build.”

What Harca seems to be saying is that it took a pot of government money under the Government’s Affordable Homes Programme (AHP). The money was given on the basis that Harca built 287 homes and sold 24 (to raise money to contribute to the building costs of the 287). The GLA agreed this: why was the GLA involved, rather than Tower Hamlets, the local Council? The London Mayor has been taking more and more powers away from boroughs, with the blessing of the Government – and this decision of the GLA seems to be yet further evidence that this is so that government policy can be upheld rather than the views of local Councils.

So far, so not very good but blameable on the Government (if we are charitable). However, what Poplar Harca has forgotten to comment on is why it chose this particular property to auction off: 43 Langdon House, Willis Street. Harca says that it only disposes of void stock: we can take their word for it that the property was void and they have not evicted anyone to make it empty. Harca says the 24 properties it will sell off are either difficult to let or “in need of significant investment to bring it back to a lettable condition.” No property in Tower Hamlets is difficult to let, so we have to assume that this property is significantly below lettable standard. Is it the one flat that is in such poor condition, or the block? We do not know.

More curious is the comment that Harca mainly sells bedsits or one-beds, but does not sell “family units”. What is a two bedroomed property if it is not a family unit?

The deep irony of the whole situation is that as it is so hard for individual families to obtain mortgages on local authority flats, this flat is almost certain to have been bought at auction by a property owner who will do it up and rent it out rather than live in it. It is more likely than not that the eventual tenant will have to claim housing benefit in order to cover the rent.

The most likely narrative, then, is that the Government wants to cut public subsidy of social housing so it makes Harca sell off some properties in order to fund the building of others; and that the Government will then subsidise – with public money, via housing benefit – the rent of this flat so that a private property owner will gain an income. It would have been easier if the flat had just remained in Harca’s ownership and they had let it out at a social rent and the Government had gone out and found a private property owner and given him or her £150,000 (the very approximate cost of a ten hearing housing benefit subsidy).

It is usual for flats in the middle of social housing that are let out on a private basis to have a high turnover: this does not help keep communities stable on these estates and it usually throws up more anti-social behaviour problems than occur in the social rented sector.

Another irony is that while this measure of selling off individual flats is sometimes justified on the basis that it creates mixed estates (diluting the social housing population), newly built private estates are left to be exclusive because there is no way in to them for social tenants (though many newly built private estates do have numbers of private tenants, with all the problems that this brings).

At the root of the Poplar Harca situation is bad government policy. What the tenants of Tower Hamlets have a right to know is what Poplar Harca is doing to change this policy. Is this kind of selling off property the best way to serve the housing needs of the residents of Tower Hamlets?

PS, 2nd July 2014: Since publishing this story, ELN has asked further questions of Poplar Harca and has received the following reply.

“The AHP definition of a ‘family unit’ is three bed plus. We have primarily targeted 1-bed and bedsit homes for sale, where the cost of bringing them up to our lettable standard was greater than the average.
The particular property in question needed a significant amount invested to bring it up to that lettable standard and so we took the decision to dispose of it in a newly refurbished block so we could maximise the income from it – all to be invested in building new homes.
We have now sold all 24 of the homes to meet our obligations to the Homes & Communities Agency under the 2011-15 Affordable Homes programme.
Of the new properties built, 112 of them are 3 bed plus. They are a mixture of shared ownership, social rent and affordable rent.”