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 1980-2001

15%

20%

25%

30%

35%

1979/80-1993/94

1994/95 1996/97 1998/99 2000/01

EAST

E MIDS

W MIDS

S ES WN E

ENGLANDLONDONN W

Y & H

RTB Sales in English Regions: 1980-2005

0

5,000

10,000

15,000

20,000

25,000

30,000 North East

North West

Yorks & Humber

E.Midlands

W.Midlands

East

London

South East

South West

Proportion of social housing stock sold to sitting tenants: 1980-2001

CURS Urban andRegional StudiesCentre for

© CURS, The University of Birmingham

This work is based on data provided with thesupport of the ESRC and JISC and usesboundary material which is copyright of theCrown and the ED-LINE Consortium.

Proportion of social housing stock sold to sitting tenants1979/90 to 2001/02, by local authority districts and Unitary Authorities

LegendProportion of all stock

Over 40% (39)35% to 39% (82)30% to 34% (97)25% to 29% (63)Up to 24% (73)

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 stock 1957-2002

0

100

200

300

400

500

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

Date of sale

Ave

rage

num

ber o

f sal

es p

er m

onth

Houses and bungalows

Flats and maisonettes

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

05001,0001,5002,0002,5003,0003,500 number of

sales

1998

/99

1999

/200

0

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

Year

Houses

Flats

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

1980

100%

0%

Smoothed averageover 500m

Proportion of council stock sold

1985

100%

0%

Smoothed averageover 500m

Proportion of council stock sold

1990

100%

0%

Smoothed averageover 500m

Proportion of council stock sold

1995

100%

0%

Smoothed averageover 500m

Proportion of council stock sold

2000

100%

0%

Smoothed averageover 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 1981-2001– 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 1981-2001:Tenure

Estate %Social 1981 %Social 2001 Decline in Social Housing

Ladywood 96 69 27

Hawkesley 86 57 29

Woodgate Valley 81 54 27

Castle Vale 80 50 30

Shard End 79 45 34

Kingstanding 77 45 32

Falcon Lodge 64 33 31

Pineapple 47 33 14

Sparkbrook 44 36 8

Ward End 43 30 13

Perry Common 39 22 17

Spring Road 27 17 10

Estates 61 39 22

Birmingham 39 28 11

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 rentingEstate PRS growth as % of All Private growth

Ladywood 43.2%

Hawkesley 24.5%

Woodgate Valley 28.6%

Castle Vale 21.8%

Shard End 25.6%

Kingstanding 23.1%

Falcon Lodge 16.4%

Pineapple 30.9%

Sparkbrook 40.5%

Ward End 29.4%

Perry Common 28.8%

Spring Road 28.4% 

Estates 27.7%

Birmingham 23.9%

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 1991-2001: 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

Birmingham

78 70 -8

Ladywood 68 55 -13

Hawkesley 94 91 -3

Woodgate Valley

94 89 -5

Castle Vale 95 92 -3

Shard End 95 90 -5

Kingstanding

94 91 -3

Falcon Lodge

98 96 -2

Pineapple 91 91 0

Sparkbrook 24 14 -10

Ward End 69 48 -11

Perry Common

92 87 -5

Spring Road 76 61 -15

Estates 81 71 -10

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

1998 2003• 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 1998-2003 partly relate to adjacent market

£15,000

£17,000

£19,000

£21,000

£23,000

£25,000

£27,000

£29,000

£31,000

£33,000

1998 2003

Perry Common

Falcon Lodge

Greater Kings Norton

Sparkbrook and Sparkhill

Greater Bournville

Kingstanding

Grand Total

Hodge Hill, Shard End andBucklands End

Bartley Green

Spring Road

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.