Shortly after that, Duncan Crow challenged me in a reply to say how. I didn't bother, mainly because Martin Ballard does a far better job. But here's a few ideas:
- Tenants will pay higher rents.
Ok, rents go up every year. But Housing Associations generally charge more than councils.
- Tenants will pay higher rents
What is more, the transfer documents do not include anything to stop a revaluation of the stock by the new HA after transfer (this was one thing that the Council referred back to the Executive on Nov 22). A revaluation would probably lead to steep rises for at least some tenants. Would we be hugely surprised it it turned out to be most tenants? Shouldn't the stock have already had a recent valuation as part of the process going on now?
- Tenants will pay higher rents (so will home-owners)
If they are also renting a garage. In fact, most garages are rented by homeowners. When I asked a flippant question from the gallery on Nov 22 about whether garage rents would rise to meet the levels of house rents (as the valuation of the average house is about £2000 and the valuation of the average garage is about £2600 by the latest figures), I was surprised to get the answer from Bob Lanzer that the rentable value per square foot for a garage is indeed apparently more for a garage than for a house.
- Tenants will pay higher rents
The way the finances work is this. A new Housing Association will be set up to buy the housing stock etc from the Council. They will pay £30M, or thereabouts. As a brand new entity, it will not have the cash, so will have to borrow at market rates to do that. So, immediately, the HA will not only inherit the liabilities that landlords have (sitting tenants, repairs & maintenance), as well as assume new promises made for them by the Council to replace over 4000 kitchens and 5000 boilers in the next five years, but they will also have a massive debt. Who pays the interest on that? Tenants do, through their rents. If interest rates increase, we can expect that to be passed on.
- Did I mention that tenants might have to pay higher rents?
Of course, I could be spouting fearmongering propaganda (but at least I'm not spending £30K of public money on DVDs to do it). After all, the council sets up a rent agreement with the new HA doesn't it?
Yes. But the National Audit Office has found that 17% of transfer associations had ripped up those agreements. Scottish Borders was supposed to limit increases to inflation plus 1%. But instead rents went up by 5.5% (inflation plus 3%). Increases in tranfer associations in Scotland are higher than increases in pre-existing Housing Associations, which are higher than for councils.
And of course these agreements have a time limit. What happens when the time runs out? Well, look to Hastings, where the transferred tenants of 'Ten-Sixty-Six' found that the average rent went up by 10% in the year that the agreement lapsed.
- Not to labour the point, but rents might increase
Housing Associations are beholden to their 'owners' and creditors, not to the tenants. If there are financial problems, there's no hefty bank account to help out (Crawley Borough Council is £100M in credit), and so the choice is to increase rents, to sell assets, to cut services or to borrow (which will of course mean higher interest payments).