Hundreds of empty homes in Birmingham, originally designed as an athletes' village for the Commonwealth Games, will be sold by the council at a loss of more than £300m to the taxpayer.
Ayoub Khan, the independent MP for Perry Barr where the apartments are located, said it was an “absolute scandal” that the Labour-led authority had agreed last week to sell more than 700 homes to a private company in a deal forecast to result in a multimillion-pound loss.
There are three obvious thoughts.
The first is that if this area had a Labour MP, this would not have been said.
Second, why haven't these homes been used for social housing?
Third, what sort of madness in local authority administration requires this? Is Labour really acquiescing in this when Birmingham City Council is effectively under government control? What does that say about its own housing targets? And why not just fund a housing association to take them over if need be?
This is incomprehensible.
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Totally incomprehensible. If sold to a private company how many will end up as holiday lets?
Lots
Holiday lets in Birmingham?? you sure..
Why not?
If my wife is travelling away overnight (whether alone or with the family), she’ll usually check out the prices on Airbnb before booking a hotel. When she’s meeting up with her many sisters and needs more than one room, or if we’re taking our young children with us, it is often cheaper and more convenient to book a multi-room apartment or house.
I realise that this means we’re partially responsible (in a very tiny manner) for the disappearance of affordable housing in cities, but it’s not something we can afford to take a moral stand on, I’m afraid. Similarly, when booking holidays in nice parts of the country.
Why not indeed.
Last time I was in Birmingham it was a vibrant city with lots of things to do. A bit like London really, but not so big and not so overwhelming. Not everyone wants to holiday on the beach or in a wet field. Me for one.
I had the exact same reaction, it truly beggars belief.
Criminal. I would want to know whether the private company that is acquiring these houses, has any connection to anyone in the council.
Another example of capitalism putting profit before people.
My proposal to ensure everyone has somewhere safe and secure in which to dwell.
With apologies, this may appear to be incomprehensible to those with decent, analytical and non-apparatchik attitudes, thinking and behaviours.
To those who might be self-seeking and/or affected by (self inflicted) ideological blindness, might such rentier supporting actions feel and even appear to be in order?
Scammer & Co work for the rich not the many!
Don’t get me started………………………..
I do not know the state of the HRA at Birmingham (the housing revenue account), how much headroom there is to take out a loan or for these units to be ‘appropriated’ into the HRA from another budget heading within the Council – say ‘Estates’ or some other department.
It depends where they sit in the Council’s financial architecture – which department currently owns them. And it might be over the fact that the current owning department is foolishly acting like a private sector model and insisting on a full market price to balance its books so that it is not showing a loss on its accounts? I have seen that in my own local authority where one department seems more insular than others (acting as if it were a separate business unit), but I’ve also seen those arguments waived in order to boost affordable housing delivery.
For all we know, the units might have actually deteriorated and might need major works on them that Birmingham’s HRA cannot afford. They might need modernisation which could be expensive.
Assets are liabilities too.
All I would say is that somewhere an options appraisal and a business appraisal or two exists and my belief is that it is in the public interest that these are fully divulged and the council accounts for its decision in broad daylight.
Birmingham’s appeal to the government to save these for social use in my view should be taken seriously by Stymied and The Reeve-cividist.
Central government grants to councils have dropped some 40% and still claimed that councils like B’ham have badly managed their money. If Labour don’t help, they’re endorsing Tory policy, guilty as charged. I’d be outraged at that personally.
But its what the Tories have done to Council HRAs that concerns me.
Firstly, from 2015 or thereabouts under the guise of the Localism Act they made all HRAs stand alone council controlled capital budgets, with no top up from central government, where as before councils were made to send their surplus’s to the Treasury to have the money re-allocated (although increasingly, I understand that this too often worked in London’s favour and the shires lost out).
After claiming that they had now empowered council HRAs, the arch bastard Tory in chief George Osbourne then made all councils restrict their rent rises (their income) at 1% (well below inflation) only from 2017 for about 5 years. This threw even my own HRA’s long term financial planning totally out of whack. If your income growth is restricted, so is your headroom for surpluses and internal borrowing and then reinvestment fro new housing and modernisation plans. Everything had to be scaled back and B’ham would have suffered this too.
On top of that, the Treasury snoops also like to see what rate of return you are using for your internal borrowing and if they think it is too low, they tell you to increase it to their preferred view. And it’s supposed to be locally managed! Bollocks.
All I see is a train crash for social housing. New Labour adopted the 80% market rents (higher than ‘target’ or social rents) for new social housing from the Tories in ’97 that enabled the government to cut its investment and maintenance grants to councils and housing association landlord HRAs and getting tenants to pay more for their accommodation.
Social Housing Grant rates from Homes England per unit have been niggardly – as low as £15K or less a unit, yet under Help to Buy, wealthy stockbrokers have been able to fund large expensive houses whilst they’ve sent their kids to private schools – that is a fact.
I have a housing degree and all I can say is that housing finance is now nothing more than a game of snakes and ladders which has too many snakes in it.
It takes imagination and balls to work in a context like this where still surprising things can happen – I know because I’ve been part of them. But it is getting harder and harder and there is no doubt that Laboured has to face up to the fact that it has to put its hands in its pocket or face the consequences.
Central government investment in affordable housing must re-start in earnest, otherwise the whole lot will end up being sold to the private sector just to keep the HRAs operating until there is nothing left. Social housing set up as it is now, is set up to eat itself in the long run.
And then you would see homelessness levels rocket in this country, and then how long before you get the equivalent of Brazilian favelas around the country?
There’s a lot at stake here.
Too much for our current ‘kakistocracy’ to deal with I feel.
(sorry for the long post and colourful language)
Thanks
Thank you, PSR.
You will be even more outraged when you hear how well the Olympic village in Paris was built, integrated with public transport, spaces and amenities, and how it will become social housing for one of the poorest areas of France.
One of the many brilliant things about this blog is the number of active participants who know their stuff and are prepared to share it. Thanks Pilgrim Slight Return for a very informative comment.
Thank you and well said, Kirsten.
The tragedy is the likes of PSR, Richard, Mike Parr and John S Warren are not allowed anywhere near government, or if in, allowed to rise, and the airwaves. It was the same at the Foreign Office with my friend Aurelien, especially when sofa government became the fashion under Blair.
It’s the same in my, ahem, profession, too.
Thank you PSR, all, much appreciated
All local authorities, which are in special measures are being forced to sell off property assets, usually at substantial loss. The was the Tory policy and it appears that the Labour government is just going along with it.
Voters were warned before the general election that under Starmer (Scammer) the Labour Party had become a second Tory Party. Because of their widespread ignorance they chose to ignore the warning. It can’t be argued anymore that merely having elections will effect much change in this country. We simply have as a result of widespread ignorance the Single Transferable Party as argued on this blog. It will be a long slog to reduce this ignorance. The mainstream media won’t be of much help!
If this had been done whilst the tory party were in power, with labour in opposition, the labour party would be up in arms about it.
But then….Perhaps the underlying financial situation left them in a position where they saw no way out, (without help from central government), other than to sell public assets for any price? I don’t know. But I do know that different decisions should have been made and I believe it is just another step on the way to ruin.
What I can see is that more and more life is progressively become more difficult for those on low or no income. The systems that we had 50 years ago that worked are now failing. People are becoming more and more alienated from society.
Can I suggest it might be taken as a sign of the early stages of collapse, and our ruling elite just haven’t a clue.
My conjecture is that these flats need a lot of work to bring them up to acceptable social housing standards and the “council” does not have the money for the necessary repairs and upgrades. The longer the flats sit empty with no regular or upgrade maintenance, the faster they deteriorate.
This is really not a “council” problem. It is a “Westminster” problem.
Your conclusion is right, I am sure
Reading that article, it does show what an absolute mess housing has become in this country.
Labour’s Deputy Leader Angela Rayner said the next Labour Government will deliver the biggest boost to affordable housing for a generation – with social and council housing at the heart of Labour’s secure homes plan.
https://labour.org.uk/updates/press-releases/rayner-says-labour-will-deliver-biggest-boost-to-affordable-housing-for-a-generation/
These flats are probably a lot better than many properties in the private rented sector, which, let us not forget is more or less, totally unregulated.
Here’s the Tory Act that doesn’t work because no one polices it unless a tenant complains.
https://www.gov.uk/government/publications/homes-fitness-for-human-habitation-act-2018/guide-for-landlords-homes-fitness-for-human-habitation-act-2018
Here is the then Tory Govt’s own investigation into housing conditions.
The PRS Private Rented Sector) has the worst housing conditions
The expansion of the PRS has focused attention on the need to improve conditions. The English Housing Survey (EHS) estimated that in 2021, 23% of PRS homes did not meet the Decent Home Standard – around 1 million homes. This compares with 13% of owner-occupied and 10% of social-rented homes.
https://commonslibrary.parliament.uk/research-briefings/cbp-7328/
Labour say they want more council houses, and then we see something like this happening. Who honestly believes they will deliver. I suppose they will say it gets in the way of balancing the books.
The main issue here is that selling the houses crystallises a capital loss. That can be avoided by renting the homes for as long as is needed to repay the development cost. The mechanism for doing that (through the HRA, housing associations or wholly owned subsidiaries of the council) is less important than the fundamental issue here – you can avoid making a capital loss by keeping the properties as an investment in the longer term.
When saying “Boo!” to a goose may be unconscionably provocative.
Mariner commented above, “I realise that this means we’re partially responsible (in a very tiny manner) for the disappearance of affordable housing in cities, but it’s not something we can afford to take a moral stand on, I’m afraid. Similarly, when booking holidays in nice parts of the country”.
And I thought *#$%@ etc., but then I took a deep breath and wondered whether there was any moral issue for which Mariner might feel “partially responsible (in a very tiny manner)”.
I’m left wondering how many tiny grains of sand it might take to make a cumulative difference.
Readers may (or may not) be interested in the work of Cameron Murray of Fresh Economic Thinking.
His book is big on the issue of social housing and whilst it has an Antipodean focus, the issues apply globally.
https://www.fresheconomicthinking.com/p/the-great-housing-hijack