Cash for sink estates goes down the drain

Despite a multi-million-pound investment by housing associations to revamp substandard council homes, one-third of estates are proving hard to let, with tenants facing higher rents, according to a report.

The study, which was supported by the Joseph Rowntree Foundation, found that from 1991 to 1994 housing associations pumped pounds 1.3bn into local authority estates, including pounds 761m in public subsidies, and created 26,000 new homes.

But many homes had proved hard to let out because surrounding estates have poor reputations and do not have a "great mix of residents". The associations were also losing their battle to provide cheaper homes through special rent-agreement deals to many of their tenants, the report alleges.

Housing association rents for new homes were in the region of 25 to 75 per cent higher than for equivalent-sized, modernised local-authority homes. Only on one out of the 15 estates included in the study were local authority and housing association rents at the same level, despite rent agreements in one-third of the authorities studied.

In one West Midlands metropolitan district, according to the study, potential conflict over rents was growing as council tenants were reluctant to move out of blocks being demolished and into more costly housing-association homes.

Many local authorities and housing associations want to create more mixed communities on council estates but this was not being achieved. The majority of those housed were claiming housing benefit and eight out of 10 recent lettings were to households where no adult was in paid work.

Professor Tony Crook, author of the study, said that poverty-stricken residents were paying out for the privilege of living in new homes. He called for a reassessment of the housing association grant rates so that residents might pay lower rents and be less dependent on housing benefits.

He said: "There is likely to be a pay-off from having higher rates of `bricks and mortar' subsidy so that rents are lower, less housing benefit has to be paid and poverty and unemployment traps are reduced. This would enable the creation of more diverse and less disadvantaged communities."

Professor Crook said housing associations would soon face a financial squeeze as they were dipping into their cash reserves in order to pay for the costly and unpopular housing. He concluded that housing associations would do better to concentrate their investment in priority areas where there was action to regenerate and destigmatise the entire estate.

But Rod Cahill, chief executive of the Ealing Family group, which rents out 5,000 homes a year in London and the South-east, said that while housing associations did experience problems he was very sceptical about some of the findings.

"I would be very, very doubtful, with the pressure on accommodation as it is, that there was a significant amount of stock that was hard to let ... we have no problem in letting."

He said that housing associations were not to blame for the lack of social mix. "Frankly the only way you are going to get a different social mix is by local authorities nominating less needy people on a higher income. In London this is simply not credible," he said.

"Housing associations cannot change the economic environment. At the end of the day we are housing providers and a wider role than that has limits."

A new lease of life? Housing Association investment on local authority housing estates; The Policy Press, Rodney Lodge, Grange Road, Bristol BS8 4EA; pounds 11.95

Leading article, page 17

Fleeing to suburbia, page 19