Opportunities and pitfalls

The Department of the Environment, Transport and the Regions has started to draw attention to its daily e-mailed press releases by heading them with witticisms.

A recent example was a release on the boring subject of the Wood Committee, headed "much more helpful than the Wouldn't Committee". One possibility when it press releases the housing Green Paper later this year or early next might be to resort to one of the Oxford English Dictionary definitions of "green" - "full of vitality: not withered or worn out".

How green will the paper be? As far as rents and benefits are concerned, it looks set to be pretty challenging. The early signs are that the intention, at least, is to start the process of completely reshaping the way tenants pay for their housing and get help from the state to do so. The promise is that the paper will be green in another sense too - there will be various policy options and a reasonable period in which to discuss them. The Chartered Institute of Housing has already been promised by DETR that its background research on rents will be published in the run- up to the Green Paper. It would be good, too, if the process of developing options were an open one, especially given the radical nature and far-reaching consequences of what is being contemplated.

There is also the question of how broad in scope the paper will be. Signs are promising that it will embrace broader housing issues, including issues about the private sector. The institute has been pushing for a broader content and we have now published our suggested agenda, Putting the House in Order, which sets out what else we would like to see in it, as well as commenting on the rents and benefits issues.

So what are the potential opportunities and pitfalls that housing associations should be watching out for? The starting point must be rents, because this is the part of the government's agenda that it is likely to pursue first. It is now widely understood that the aim will be to achieve a more rational structure for rents, reflecting capital values, and to work towards rents that are consistent across the social sector. Associations may have to change their own rent structures (but are likely to be under less pressure to do so than local authorities), but will be more affected by pressures to bring their overall rent levels into line with national guidelines.

The challenges will be greatest for associations pressured into reducing their rents, particularly those in the northern half of the country (where rents are highest compared with the private sector) and where low demand may also be a problem. In our report Housing Associations - A Viable Financial Future? we drew attention to this issue and the safeguards that would be needed for associations put in this position. We are following this up with further work on the possible responses of associations in low demand areas.

In any case, in our Green Paper submission we argue for the sector as a whole to have sufficient time to adapt to changes in the rent regime which may be desirable from a policy viewpoint but could be highly problematic to implement. The danger is that the government will see rent reform as a vital precursor of reforming the benefit system, and rush into it too quickly. We are also working with the National Housing Federation and Local Government Association to ensure that the affordability argument is paramount and does not get lost in attempts to create more of a social housing "market".

Benefit reform also looks challenging, although with a potentially longer time scale in which to respond to the changes. The case put by the institute, the federation and others for a system which integrates housing support with the new tax credit scheme for working families seems to have been won in principle. It now seems likely that the government will extend the logic of this argument to embrace non-working households too, with an element of housing subsidy included in income support and job seeker's allowance. Housing benefit would then become a residual payment, covering the balance of rents.

This then paves the way for "shopping incentives", either by progressively increasing the flat rate allowance, or reducing housing benefit, or both. This is the area in which policy options are likely to be offered. Associations will obviously be concerned about potential increases in rent arrears. In our submission on the Green Paper, we also point to the importance of simplifying the benefit system (and improving its administration) if tenants are to be able to understand how the new set-up works.

In moving on to the wider issues that may be covered by the Green Paper, we can see a link between one of them - the possibility of a single tenancy for social housing - and rent reform. The logic of a common basis for setting social sector rents is to create a common basis for what tenants receive in return for the rents they pay. There is now widespread support for a single tenancy - and there are already moves in this direction in Scotland - so this will be at the top of institute's agenda for the further reforms that the Green Paper should encompass.

There is also a link between benefit reform and another of the institute's wider concerns. Housing policy often ignores issues concerning the majority tenure - home ownership - and this is wrong. The aim should be for home ownership to be sustainable in the widest sense. An important step is for the government to recognise that, having withdrawn mortgage interest tax relief, it now offers little support to low income home owners. A flat rate housing allowance should therefore extend to this group as well as to tenants.

If one of the government's aims is to create more of a social housing "market", a key element is the allocation policies practised by social landlords. The institute believes that this issue should also be faced in the Green Paper, and that a balance needs to be struck between aiming for more consumer choice and ensuring that housing need is addressed. Variations in approach (and in the Corporation's regulatory stance) are likely to be needed between high demand areas where the focus will continue to primarily on need and low demand areas where more active marketing of the stock may be required.

Housing Corporation chairman Brenda Dean recently called for the government to look at how to regulate the private rented sector more comprehensively, and Putting the House Order makes the case for doing so. It would be particularly appropriate in areas of falling demand for social housing where private sector tenancies are available, with support from housing benefit, yet are of poorer quality and less well managed.

Conversely, given the severe shortages of rented accommodation in many areas, our report also calls for a fresh look at the Right to Buy and the Right to Acquire. Arguably there should be much more flexibility in how these are applied, so that in areas of high demand the supply of rented homes can be better protected.