The future of social housing in Europe European colloquium 22nd-23rd november 2007 Paris

Social housing and the market Social Housing Privatisation in England: Differential Impact and Questions about Social Mix Alan Murie Centre for Urban and Regional Studies University of Birmingham

Structure of Presentation Sales of council dwellings to sitting tenants Social Housing in England Privatisations The Right to buy 1980 –Policies –Progress –Impacts Neighbourhood effects, social mix and RTB Conclusion

Perspective: Social Housing in Europe Social Housing as % of housing stock 1980 England 31% Netherlands 34% In England social renting housed a large section of the population not just excluded households Already a trend towards a narrower social base as private renting declined and home ownership expanded

Perspective:Social Housing in England Before the Right to Buy Uneven geographical pattern of council housing development Differentiation in council housing: a hierarchy of demand/ internal ‘market’ Discretionary sales –Few between the wars; – few in 1950s; – increasing 1960s and 70s

Privatisations Financial and other encouragement of home ownership Making social renting less attractive: –Rising rents –Restricted New Build The Right to Buy: Transfers to Home Ownership Stock Transfers from municipal Landlords to Housing Associations

Privatisations: Sales of Social Rented Dwellings The Right to Buy Policy since 1980 How it has impacted locally (Birmingham) –Over time –Across different neighbourhoods –Consequences for social mix

THE RIGHT TO BUY: OBJECTIVES WERE NOT ABOUT SOCIAL MIX The Prime Minister May 1979 “Thousands of people in council houses and new towns came out to support us for the first time because they wanted a chance to buy their own homes. … …. a giant stride towards …a … property owning democracy. It will … give to more of our people that prospect of handing something on to their children and grandchildren which owner-occupation provides.”

The Right to Buy A Right replacing discretionary power for Sitting Tenants to buy the house they occupy at Discounts up to 50% market value and be able to sell on the market after 5 years

DEVELOPMENT OF RIGHT TO BUY After 1980 even higher discounts (Up to 60% for houses and 70% for flats) increased complexity After 1998 new maximum discounts and regional variation

Trends: Cumulative proportion of stock sold by Region: England EAST E MIDS W MIDS S E S W N E ENGLAND LONDON N W Y & H

RTB Sales in English Regions:

Proportion of social housing stock sold to sitting tenants:

Implications of Regional/Local Evidence The same policy varies in impact over time and place The national economy Policy Changes The Regional Economy (incomes and employment) The Local Housing Market

Largest local authority and landlord in England (144,000 council built dwellings) –13,510 sold before 1979/80; – 41,903 sales1979/80 to 2005/6 Total 55,413 sales (38%) – of which 5,839 flats Birmingham

TRENDS: BIRMINGHAM

Sales of council houses and flats in Birmingham 1998/99 to 2005/6

Valid Sales before Right to Buy (as % valid properties)

% 0% Smoothed average over 500m Proportion of council stock sold

% 0% Smoothed average over 500m Proportion of council stock sold

% 0% Smoothed average over 500m Proportion of council stock sold

% 0% Smoothed average over 500m Proportion of council stock sold

% 0% Smoothed average over 500m Proportion of council stock sold

Ratio of Sold properties to remaining Council managed Stock (2001)

What has been Sold and Who has Bought? Middle aged and middle income Better properties Longer tenancies Purchasers Becoming younger

TRENDS:DISCOUNTS Rising with changes in legislation Falling subsequently with younger purchasers and lower maximum discounts

Immediate Impact of Right to buy on mix? At Tenure level – within social renting? Middle (higher) income and middle aged move out Contributes to established trend to residualisation of council/social rented housing At Neighbourhood level? No immediate change Purchasers want to stay Repayment of discount if move within 5 years Some potential leavers stay because they have bought

What happens to social mix when properties are resold on the market? Varies according to market circumstances and property: In some cases very similar households access through the market as would have in the social rented sector In other cases ‘gentrification’

What happens to social mix when properties are resold on the market? All Areas Greater turnover and more young and employed households than among tenants generally High price markets Gentrification (young professionals with 2 earners) of best estates and in London/South Low demand markets Less appeal to gentrifiers Manual workers and self employed Families Flats and leaseholds Some ‘unsaleable’, Some second homes

Initial Conclusions Variation in sales at neighbourhood level reflects popularity of properties/ preferences of tenants High sales in best areas where more affluent, long standing tenants Further residualises the least popular estates Less clear what happens on resale but least demand (least affluent purchasers) in least attractive estates Pattern responds to demand: a market pattern

How have individual estates changed ? Birmingham Analysis of 12 estates – different locations and rates of sale Data –RTB sales –Census Census tracts that relate to estate boundaries (some already high sales by 1981)

Selected estates in Birmingham

How have individual estates changed ? Assessing the Positive view More tenure mix More Social Mix More Ethnic Mix Where do privatised properties fit in the market?

How have individual estates changed ? More tenure mix? Privatisation inserts private ownership into social rented areas Initial sales to sitting tenants generates growth of home ownership in subsequent sales some properties become private rented

Birmingham Estate changes :Tenure Estate%Social 1981%Social 2001 Decline in Social Housing Ladywood Hawkesley Woodgate Valley Castle Vale Shard End Kingstanding Falcon Lodge Pineapple Sparkbrook44368 Ward End Perry Common Spring Road Estates Birmingham

Leakage to private renting Initial sales to sitting tenants generates growth of home ownership Census (and other) evidence: in subsequent sales some properties become private rented Growth of home ownership not sustained Fragmented rental ownership and rights of tenants will affect dynamics of estate

Leakage to private renting EstatePRS growth as % of All Private growth Ladywood43.2% Hawkesley24.5% Woodgate Valley28.6% Castle Vale21.8% Shard End25.6% Kingstanding23.1% Falcon Lodge16.4% Pineapple30.9% Sparkbrook40.5% Ward End29.4% Perry Common28.8% Spring Road28.4% Estates27.7% Birmingham23.9%

Leakage to private renting In Ladywood and Sparkbrook leakage very high – over 40% but all of the others except Falcon Lodge exceed 20%. Pattern not linked to initial tenure structure or rate of privatisation but to other attributes/market position?

How have individual estates changed ? More social mix?

Is there more social mix following privatisation? Household Type and Age? Estates were not uniform in 1981 Some had more social mix than others –Property size, type and turnover –Life cycle of estate

Is there more social mix following privatisation? Household Type and Age? More single persons More single parents Fewer families Fewer childless couples Trend similar to city except single parents and younger.. Variation between estates A role earlier in housing career

Is there more ethnic mix following privatisation? Ethnicity?Trend on estates as a whole similar to city Polarised pattern between estates Related to existing BME presence (market)

Growth in non-white population : Birmingham Estates Non-white population has grown most in estates which already had the largest non- white population This pattern most apparent in private sector Social renting dampens trend? Estate% White 1991 % White 2001 Difference Birmingha m Ladywood Hawkesley Woodgate Valley Castle Vale Shard End Kingstandin g Falcon Lodge Pineapple91 0 Sparkbrook Ward End Perry Common Spring Road Estates

Social renting dampens trend? In ‘Non-white’ areas social rented housing is more likely to be ‘white’ In ‘White’ estates social rent more likely to be ‘non- white’ but not Ladywood where social sector non-white skew except Pineapple, Perry Common where social sector white skew and Castle Vale where very little difference

What happens to property values following privatisation? Same 12 estates in Birmingham Indicative data on council house sale prices and wider market

Sale prices of Council properties Perry Common £20,552 £21,611 Falcon Lodge £20,038 £28,270 Hawkesley £18,912 £25,492 Sparkbrook £18,499£23,700 Bournville £18,323£31,680 Kingstanding £18,298£20,970 Bartley Green £16,261£23,130 Spring Road £16,025£28,502

Increases in sale prices partly relate to adjacent market

Property Values in selected estates: Different rates of change

Selected Estates: Market Environment Estates are in both higher and lower priced segments of city Increase in values partly reflects this –A varied pattern –Property type and size –Location –Popularity

Conclusions: Neighbourhood effects of Privatisation Privatisation will not immediately change the position of estates but will change the dynamics in the longer term when: –different property values emerge –exposed to processes that may speed differentiation and segregation –leakage to private renting It will rarely revitalise the least attractive estates or increase diversity and will make the regeneration of these estates more difficult

Conclusions: Neighbourhood effects of Privatisation The social rented sector operates within a market and internal processes similar to market? Differentiation between social rented estates carries over to market difference Within the market differentiation uncontrolled –Housing choice less managed –Investment in property relates to market position –Turnover and turbulence reflects role in market –Weaker direct management of neighbourhood These differences not generating change everywhere but divergent trajectories for estates

Conclusions: Social Housing Privatisation Housing tenure interacts with economic, demographic etc. to shape social mix Privatisation not creating or preserving mix Social mix strategies based on manipulating housing tenure are unreliable. The problems associated with the least attractive estates not addressed by the sale of individual dwellings: require policies to address regeneration, neighbourhood dynamics and management.