Why would Milton Keynes council develop 3 bed council houses to rent for £487 per month when it can develop 3 bed council-owned housing to rent out at £900 per month?

This is what Labour controlled Milton Keynes council is planning to do and note extremely well the different terminology I use which is correct and I explain below.

Milton Keynes council is looking to set up a Local Housing Company (LHC) which is defined as an independent commercial organisation wholly owned by a local authority to buy, develop and manage housing – in lay terms a private landlord owned by a local council – and has begun a 12 week consulation on this reported here from which the above photograph comes and which opens with this:

MK Council is planning to set up its own housing company to build 2,000 “truly affordable” homes for people to rent or buy, the Citizen can reveal. The ‘private’ company will be owned and managed by the council, and tenants will have the same security and rights.

The part I have emphasised in bold is legally incorrect and a deceit of the council and the councillor who said it which is Nigel Long the cabinet member for housing as a private landlord which is what a LHC is cannot offer the same security of tenure and same tenant rights as a social landlord in law and in fact. The tenure will be the same AST used across all other private landlords and is the tenure that currently allows all tenancies to be ended by a section 21 notice or no fault eviction and this WILL be the tenure for the new private landlord company, the LHC, propsed by Milton Keynes council.

NB – I am not making a point against MK council especially or against a Labour run council either as all local councils are planning to develop this LHC construct which kills off what we call council housing or what we call social housing. The case of Milton Keynes is illustrative of all councils … so now let me turn to what this actually means in terms of rents which is hugely significant.

Official Rent Figures

MHCLG the government department where housing sits produce each year the rent levels of social landlords in all areas of England and these include the rent levels charged at the ‘social rent’ level (SR) and rents charged at the misnamed ‘affordable rent’ level (AR) which is set at a maximum of 80% of the full market rent (FMR) charged by private landlords.

The 3 bed rent level (SR) in Milton Keynes is £487 per month The 3 bed rent level (AR) in Milton Keynes is £900 per month Thus the 3 bed rent level (FMR) in Milton Keynes is £1,125 per month

What MK council is seeking to do is to develop 2000 new houses using its new LHC to charge 2000 lots of £900 per month as a private landlord instead of 2000 lots of £487 per month in rent as a council landlord! The council wants to charge every tenant of the new LHC council-owned housing 85% more in rent and using the example of all LHC properties being the 3 bed property charging each one of these 2000 tenants £413 more in rent each month!

Crunch the numbers and 2000 lots of £413 per month gives an INCREASED rent charged by the council-owned private landlord extra income of £9.912 million per year.

Put another and correct way, Milton Keynes council wants to charge tenants £9.9 million more in rent per year than it does now! Kerching!!

General

Local Housing Companies charge so much more in rent and operate a housing rented product that has far less security and tenant right and whether they are in Milton Keynes or any and every local authority across England.

The current government issued a Social Housing Green Paper (SHGP)last year and I said at the time (here) its key purpose was to kill off what we call social housing by the key driver of the SHGP which was the Local Housing Company construct. I started that post in August 2018 and now almost a year ago with:

Councils as private landlords will eclipse the PRS landlord, eclipse the HA landlord and eclipse the council public sector landlords by number of properties they manage and do so by the private landlord construct called LHC – Local Housing Companies – and within 15 years time. No, I haven’t lost the plot. I am merely stating with a very high degree of confidence that this is the inevitable consequence of the Social Housing Green Paper (SHGP) released last week by the government. My conclusion is rational not speculative, sensationalist or scaremongering; it is merely a case of stating the bloody obvious.

The Milton Keynes example today says this in the very succinct terms I opened this post with of:

Why would Milton Keynes council develop 3 bed council houses to rent for £487 per month when it can develop 3 bed council-owned housing to rent out at £900 per month?

Now let’s really get down to what this means and take a critical look at affordability.

The Labour councillor in Miltom Keynes used the term “truly affordable” on his home Labour Party page here and the term “truly affordable” is the exact same term used by John Healey in Labour’s housing manifesto and also used to mean a rent of not more than 30% of net household income. Now those pesky numbers reader.

For £900 per month in rent to be “truly affordable” it means the household needs to have a household income of £48,000 per annum gross to be able to afford this apparent truly affordable rent level of a property owned by a council in Milton Keynes.

What f*cking planet are you on John Healey and the Labour Party when you think that a lone parent full-time in-work nurse or teacher or police officer or any other key worker with two children is not deserving of a 3 bed rented property owned by a council!

The overall average social rent in Milton Keynes in the official figures above is £104 per week and only marginally more than the £102.59 English national average social rent figure revealed in the English Housing Survey that is also released annually by MHCLG. In short it is a very valid proxy for what the Local Housing Company construct will mean right across England in practical terms.

When Milton Keynes council charges £900 per month for these LHC 3 bed properties we see a council operating NO DSS as the maximum Local Housing Allowance payable in Milton Keynes for a 3 bed is £830 per month. Hence the council-owned private landlord company will EXCLUDE those on social security benefits!

Conversely, they could set the rent at this £830 per month maximum to not exclude the benefit household yet that would mean the tenant would need to find employment paying a net monthly salary of £2,767 which means finding a job paying £44,000 per year! In short a LHC creates welfare dependency to use that obnoxious term.

I wonder what the new housing minister McVey will make of this LHC policy which is her party’s key driver. How can paying 85% more in rent to a council-owned private landlord help McVey’s priority of getting people on the housing ladder when the chronic increase in rents they face mean they have all but no chance of saving anything at all for a mortgage deposit!

Councils will and are developing this LHC private landlord construct apace to shaft key workers and others who rent with excessive and genuinely unaffordable rent levels . Councils are abandoning any social purpose and abandoning the 1948 Welfare State pillar of rehousing those in housing need. Councils are far more concerned with mitigating the outrageous cuts they have had from central government by shafting tenants by this private landlord device called a Local Housing Company.

Councils of all political persuasions of course yet Labour-run councils are complicit with the Tory government ideology of rented housing that is charge the bastards as much as you can and to hell with the consequences … and lets speculate over what those consequences will be!

A significant rise in the average overall rent in every locale is one inevitable consequence which also inevitably begets an overall rise in housing poverty and all other forms of poverty. Tenants will have to earn more to afford any rent whether council, HA, private or LHC landlord. Far more arrears and evictions will happen and which gives all local councils far greater cost in homelessness. Far more businesses will fold as they cannot find anyone willing to work for minimum wage because such workers will be better off, in housing terms at least, by not working.

All of the above are highly probable consequences of the ill-conceived knee-jerk policy of Local Housing Companies.

The more you have to pay for rent they less you can possibly save for a mortgage …

What absolute incompetent f*ckwit (a) designs a policy like LHC in the first place, and (b) what absolute incompetent f*ckwit goes along in abject complicity with such a policy?

Local Housing Company – a definition by Government

Local Housing Company: independent commercial organisations wholly or partly owned by local authorities to buy, develop or manage properties.

The above is the official definition from the Tories SHGP (here) a policy announcement sub-titles a “New Deal for Social Housing” and yet its key driver is to create more private landlords in LHCs! It is and always has been absolute fuckwittery of the highest order and the example and illustration here of its largest incarnation in Milton Keynes shows what it really means.