House Party

Lewisham political party-cum-cafe proprietors People Before Profit have launched a campaign to prevent the Council from selling off a number of houses across the borough. They have occupied five houses, including one on Friendly Street in Deptford.

The campaigners say that the homes should not be sold in the first place given the housing shortage in the borough and / or that they are being sold below proper market rates. LPBP's Ray Woolford, an estate agent, claims that if the Council spent some money to do them up, they would generate a significant return on their investment. Here's the video they've made to present their case:

Thanks to Max for the link.

53 comments:

Shame said...

Let them sell them as long as the money goes into the provision of newer housing elsewhere.

Often a small terrace does not suit a modern family of four.

Anonymous said...

I think I read that Tower Hamlets council are considering buying private housing stock to do up and rent for profit/investment & to ensure better quality housing for residents. Why shouldn't we all profit from btl? @rotzie

Brockley Nick said...

I think the argument that the Council should do what any property owner with a bit of sense and access to capital would do - do the properties up before selling, to maximise value - is a good one, unless anyone can explain why it's not that simple?

Anonymous said...

They should be turned into a housing co-op.

Anonymous said...

It's never that simple. The council needs to have access to the capital required, which will have to come from someone's budget (perhaps skip a bin collection one week?). There would have to be someone to oversee the projects and perhaps the refurbishment contracts would need to be put out to tender. If the properties are listed then consents would be needed over and above standard planning. Perhaps there are also tax issues - there may be a hefty CGT bill...

Mb said...

Will (and should) the money be ring fenced to provide more or better social housing provision though? Decent housing for those who need it must be a core function of a local authority if the private sector cannot provide a solution?Selling off the assets to fill a funding hole may be unavoidable short term but will it ever be replaced? Dumping families in B&Bs isn't a cheap option

Don't know enough about housing policy to answer, only asking the question.

Still can't get over the irony of someone who presumably represents landlords who may well have profited from council house sales heading this up. Perhaps I'm obsessing over it.

Brockley Nick said...

@Anon

Thanks. Re: Access to capital, this ought to be relatively easy to overcome, surely? Property is about the one thing UK lenders are happy to lend for - maybe set up a JV with a company with the capital.

Someone to oversee it - sure, create a new post, paid for with the profits from doing up these properties?

Listed properties - fair enough, don't take responsibilities for this.

CGT - I didn't think we paid CGT on property?

Anonymous said...

I'm not sure what Mr Woolford meant by 'generate a significant return on their investment', but I suspect the quote may be taken out of context.

But surely there could be no greater 'significant return on their investment' than housing people in this accommodation, ie, an investment in people, or has the running of the Council to be based largely on financial gain?

Brockley Nick said...

It means eg: spend £20k on renovating a house. Increase the selling price by £40k. Profit = £20k or 100% ROI.

Anonymous said...

Is it just me that thinks occupying things is utterly un-democratic?

Anonymous said...

Oh and CGT is payable by individuals; capital gains are subject to corporation tax which cuncils do not pay...

It stries me that the council should seek local investment partnerships and share the extra gains with no further capital expenditure on their part.

FrFintonStack said...

@BrockleyNick

"Thanks. Re: Access to capital, this ought to be relatively easy to overcome, surely? Property is about the one thing UK lenders are happy to lend for - maybe set up a JV with a company with the capital."

Councils are legally prohibited from borrowing against housing-stock equity to fund repairs: that's why housing association stock is often much better maintained than council, and why the promise of repairs is frequently dangled in front of tenants during stock-transfer elections.

That said, we're talking about a few houses here. I can't imagine that the council wouldn't have the few grand necessary in liquid form to fund a short-term investment that would almost certainly prove profitable.

Yours, a former housing officer.

Anonymous said...

I think the established practice here is to use a "public/private partnership" following the laudable template of the Brockley PFI scheme for "regenerating" the conservation area. That way, everyone wins. Except the council. Or ratepayers. Or tenants. But Regenter or whichever corrupt, trough-swilling gangsters the council is stupid enough to "partner" with.

Brockley Nick said...

@FrFrintonStack - thanks, very interesting

fabhat said...

I noticed these houses for sale - and what is good/interesting about the sale of them is that they do have a clause stipulating that they must be sold only as the main home of the buyer...Still not great, but at least it should mean that developers won't buy them to do up and sell on, but that it will be sold to people wanting to live theere - that's if the clause is enforced...?

Anonymous said...

Underlining why councils should not be landlords. They are useless at it prima facie and political considerations/pancis - what if the nutcase doesn't vote for me? unfortunately become overly significant.

Stoopid Person said...

This is great, listening to the anons is like Radio 4, Open University and a bit of Gary Bushel to keep it real.

Sweet.

bumbags said...

It would seem like common sense for the council to do them up then sell to make more money. BUT...
By the time the council have employed three extra people to over-see the development, then more people to discuss which builders to use, more people to sign everything off etc etc the revamps would end up costing a FORTUNE.
Anything done by any council involves a huge amount of waste and multi-layered admin.
I'm afraid what sounds good in theory would not be a good idea in practice.

Anonymous said...

please undestand that the properties sell better if they need work. The council is very unlikely to use the specifications that a private owner wants, so the money would be wasted.

I, for once, agree with the Council. I hope this is a trend. I also agree if the put conditions that he houses cannot be converted into flats.

max said...

From an economic point of view I think that the occupiers make a very convincing point when they remind that there are quite a few people housed at huge expense in Bed and Breakfasts and how refurbishing these properties would see the investment back through reduced B&B bills quite rapidly.

Anonymous said...

I agree with the councils proposal to sell as seen. The bureaucracy involved in tendering the contracts for renewal works would be onerous and costly. This is not the time for a long drawn out process. Get them sold. Let a private builder do them up and then he can confront the housing market..but more likely private rental. It must be horrendous to be living next to those rat infested properties. Lewisham is doing the right thing! People Before Profits will end up costing the council tax payers of Lewisham more money in time consuming enforcement action.

Anonymous said...

What is saved in B&B costs could be eaten up by housing benefit?

Is there nothing to stop a housing association buying these properties and doing them up?

This story was featured last night on the locak BBC news....two 'students' occupying a property were shown but for some reason didn't want to be named.

Why doesn't the estate agent buy the properies

Anonymous said...

Why doesn't the estate agent buy the properties, do them up and rent them out to a homeless family?

If the properties are being sold at auction how does he know they will sell below the market price for a property in that state?

Anonymous said...

Re the property with a bath in the kitchen, could it be the property was leasehold, with the council as the freeholder?

There are a couple properties nearby me that were in that situation, they tended to have residents who'd lived in the properties for 40-50 yrs, by the time they became elderly the lease had almost run out.

Anonymous said...

This isn't as black and white as it seems, and Occupy may have shot itself in a very large foot.

Firstly, because a property is advertised at a guide price at auction does not mean that's the price it will achieve. It will obviously be far in excess of this if they interest I witnessed is anything to go by.

I didn't have chance to view any of these properties but I did see a lot fo people queuing to go in the one in Friendly Street. I spoke to a charming young couple who wanted to get on the property ladder as near to, or in, Brockley. Is it a loss to the public purse that this couple may have eventaully purchased-- somewhere around the 250k mark--and then developed a nice home in which to start a family? Or are taxpayers with large deposits exempt from wasted council assets?

And what of the landlord, who purchases such a property, develops it, and then lets it back to the council or a housing association? There is a caveat in the purchase that ensures any uplift, profit, is kept in the public purse.

So please get your facts rught, Occupy.

Anonymous said...

Sorry, that should read: Please get your facts right, People Before Profit.

max said...

I'm sorry Anon 9:01, I see a major flaw in your argument and it's the fact that there is a huge shortage of affordable properties for people unable to afford market prices, and that's what People before Profit are highlighting here.
It is not the Council's role to improve the private market by putting their properties on sale, they do have a duty to house people in need though and because of the shortage they spend a fortune on B&B's.

NAT said...

'What is saved in B&B costs could be eaten up in Housing Benefit'.

Not if the B&B's themselves are payed by Housing Benefit.

However the Council, which is charged with making the best use of its assets would appear to have its hands tied by not being able to act like a rational agent in borrowing against their value to fund their repair.

Fattyfattybumbum said...

I gave serious consideration to buying one of these as at the guide prices I thought 'Ker-ching, that's cheap!'

However as previously mentioned the guide price is just an attention grabbing bargain, deliberately set below market value to get bums on seats in the auction house. In reality these would more than likely sell for double the guide price. Looks like this pricing strategy backfired on Savills this time!

Separately as also mentioned already it should be noted that there is a provision in the sales documents which states that the purchaser must acquire the houses as their primary home, i.e the houses cannot be tenanted.

In a refurb situation (like this one), the renovated houses must be sold to individuals buying to occupy as their primary home.

So I guess the Council was at least trying to help families who don't qualify for state housing onto the property ladder by increasing availability and helping neighbours by not allowing more buy-to-lets.

Personally I don't think the Council should allow its houses to deteriorate into such an awful condition anyway. Tenants should make at least the minimum effort to keep the houses orderly. I mean just because its free (or v cheap) doesn't mean you cant be house proud surely.

Lou Baker said...

@max

A significant reason for the 'shortage of affordable homes' you bemoan is because swathes of the population expect to live in subsidised housing.

They grow up with the ambition of having their own council house. How sad that so many people do not aspire to actually get something for themselves. As a country we do not stand up to these parasites.

I am not talking about the geuinely needy. Those who need temporary help. This is what council housing should be for. To assist those in the most need WHILE they're in need.

As it is people move in and never move out. With the impact being that hard working poor people end up subsidising the housing of non-hardworking poor people.

The solution to housing shortages is this.
1) a complete audit of all council homes in the country - anyone in a property to big for them is evicted.
2) an end to council properties for life. You get them for a maximum of one year - renewable for a maximum of one more year.
3) rent controls on private properties
4) inspections of all rental properties and fines, prison sentences and seizure of the assets of any landlord failing to provide acceptable standards of accommodation.
5) empty homes seized after 6 months.

max said...

Your solution sounds a tad Stalinist.
I'd rather allow local authorities to charge according to the income of the occupant and allow them to reinvest the receipts in housing. That'd also relieve some pressure from the private sector and we'd all be better off.

Bill Ellson said...

All social landlords (councils & housing associations) sell off properties that are regarding as difficult to refurbish. It has to be remembered that in order for a local authority or housing association to let a property it has to conform to far higher standards than the private sector. Secondly I strongly suspect that the weirdos at the Treasury would regard any monies spent on refurbishing these properties as 'revenue' spending which for some reason is bad.

Even the duffers at Lewisham Legal should be able to get the occupiers out of the properties in under a week, but I hope LB Lewisham will be open and transparent about why the properties are up for sale and ensure that their criteria for such disposals are up to date and fit for purpose.

Ben said...

@Lou Baker

A sizeable chunk of London can be described as working poor. People who choose to work full time instead of living off benefits, this despite the fact it renders them considerably worse off.

You try living on £6 and hour in London and privately renting a home at the market rate for your family.

Something has to give, either the government raises the minimum wage so people can actually live off their income (the right wing moans jobs will go abroad) or we continue to subsidise poorly paid workers and in turn very well paid fat cats like Tesco whose business model is built on slave wages.

Since retailing has the government in their pocket and is doing very well out of it all don't expect things to change soon.

Anonymous said...

I agree with the general sentiment and desire to house people but despite the regular assertion that families "could move in now" or "could move in soon" when clearly there is lots of work to be done on all of these houses.

Yes it should be quicker, easier and cheaper but it isn't. there are certain standards that must be met by councils to house people and i doubt any of these houses are even close to meeting them.

Yes this is a worthy cause and they are doing more than most but they are now causing extra costs which detract from what is available for other services, including housing.

Not saying what they are doing is wrong, i agree with this being a waste but rather than taking this approach and causing extra cost why don't people work with councils and step in as a free consultant - work with them to develop their housing portfolios and get empty housing back in use. Work with them to link in with an apprentiship scheme so young unemployed people get the chance to work on these properties and develop their skills. They clearly have some good ideas so why not go to the council with something they cannot refuse rather than causing them grief.

develop a genuine proposal which
i) cuts council costs
ii) gets houses back into the system for families
ii) links in local trades and business and those looking for work

work with the system and get it changed rather than shouting until they do something to shut you up.

Anonymous said...

Maybe all is not as it seems?

According to council papers Jan 2012....

"The Council owns the freehold interest in 12-26 (Even) Friendly Street SE8, which comprise two terraces of 2 and 3 bedroom houses. The properties at
12-16 (Even) are Victorian houses that are leased to the Brockley Tenants Co-operative by the Council for a term of 35 years from 18/01/78 at a peppercorn rent. The lease expires in 2013."

"The properties at 18-26 (Even)Friendly Street were originally leased to the Brockley Tenants Co-operative under the same lease as 12-14 (Even) Friendly Street, but due to the poor condition of these properties, they were demolished and redeveloped in Victorian style around 1980 by the Brockley Tenants Co-operative in return for the Council accepting a surrender of part of the existing lease and granting the Co-operative a new lease of 18-26 (Even) for a term of 65 years from 22/02/80 at a peppercorn rent and subject to a capital payment of £6,000. This lease expires in 2045."

There is a proposal to sell properties 14-26 to Brockley Co-op.

Anonymous said...

By the way the properties up for auction have a reserve price.

Anonymous said...

sell the properties to families!!! The Council should not own victorian houses, they are and will become very expensive to run with new Building Control legislation coming into place in the next 2 years.

Use the money to buy new apartments, plenty of new developments around brockley.

fabhat said...

All occupied properties were withdrawn from the sale...

Anonymous said...

We could try crowd funding or Crowd Building volunteers that go in and turn that hump into a home for a family. Just like they do on some of these DIY show! Or am I living in Crowd cokoo cokoo land?

THNick said...

Lou - the reason there is a lack of affordable housing is because the market has failed to supply enough of it and because government policy has pandered to the portion of the population that owns housing stock by pushing up prices.
In the past, the government stepped in to address this market failure by providing social housing. Up until 1980 we were happy for this to be the case and a large portion of the country lived in social housing. Then we had a thatcherite revolution and decided that council housing should only be a safety net and that we should rely on the private sector to provide housing. Cue massive rent inflation and a shortage of housing. And blamed on a very small proportion of people who we like to characterise as "parasites".

Fattyfattybumbum said...

@THNick - I think a lot of people including myself are just tired of listening to people wanting something for nothing. Especially in tough economic times.

The papers, the TV and blog sites are full of it.... its endlessly people expecting free money, houses...etc... and complaining they don't get enough. They have a bit of a cheek to be honest.

Anyway in terms of this woeful housing list we always hear about, I suspect the majority of those on the housing list are not living under London Bridge. The majority are families already living in Council homes where the adults keep reproducing and thereby re-adding themselves back onto the list to get bigger places. Its hard to feel much sympathy with that cause.

Anonymous said...

I think a lot of people make the assumption that those on benefits are deliberatly screwing 'hard working tax payers' which is exactly in line with screaming headlines. What about those who have paid tax and national insurance fro years and now fond they need help from the system they paid for? Are they asking for 'free money' or asking fro the insurance to pay out?

Answer depending on your personal politics or world view....

Tamsin said...

The call for an adequate supply of social housing is not people wanting "something for nothing" just affordable shelter.

House price inflation - driven by a shortage of supply and unrestricted mortgage lending - has since the 1980s been way over the "normal" inflation rate. Likewise rents in the private sector. With a result that if you can't get yourself into the very limited supply of council housing most people now are having to spend a far higher proportion of their income on keeping a roof over their heads than would have been the case in the past.

Fattyfattybumbum said...

@ Anon 14:32 - Unfortunately both sets of the claimants you describe exist. The system was created to help the latter but is frequently being pilfered by the former.

So long as those claiming are using it as a temporary insurance then of course no problem. Its the millions that claim unashamedly with no end in sight to their 'poor fortune' endlessly whining that they want more showing zero gratitude who should be forced to earn their free money.

@ Tamsin - that's correct in that you and I and indeed everyone is having to pay more for our housing. Its a supply and demand thing, largely caused by over-population. In which case, given I am not immune to this problem, why should I subsidize others to get cheap housing? Especially in areas like Westminster, Kensington and even Greenwich where I cant afford to live? I am not saying we shouldn't help the poorest but generosity has its limits. People need to move to where they can afford - its why most of us long-timers came to SE4 after all.

Anonymous said...

of course they exist. Always have, always will. is that a reason to demonise every claiment? and 'frequently'? yes, thats the received wisdom. See my earlier point.

According to the Department of Work & Pensions, who after all know than both me and you, they stated in 2010...

"Across the £148 billion of benefits administered by DWP, a total of £1 billion was lost to fraud, £1.1 billion to customer error, and £1.1 billion to official error. The total sum lost is 2.1 per cent of overall benefit expenditure"

so frequent in your world is anything over 2%? Unceptable of course but get some perspective. After all most of us are only a pay packet or two away from being a scrounger.

Anonymous said...

Getting something for nothing, now let's see.

Buying former council housing at knock down prices. Could that be described as getting something for nothing?

Len said...

Thanks for getting back to one of the key points raised by the protest. Unfortunately it is the most flawed. The financial case for renovation made to support the core argument is simply wrong.

As a local resident who had an interest in the fate of a long term squatted property, Albyn Road, and many years vacant property, Friendly St, I attended the viewing. Both require major renovation work to make properly habitable. Having undertaken similar work on my home I can attest to the 'can of worms' that these houses actually are. It is foolhardy to pretend that they do not require virtual gutting and starting afresh.

In addition and as pointed out by many the guide prices would be exceeded substantially, the amount of buyer interest was clear.

Anybody who thinks a quick buck can be made here are kidding themselves, be they cynical onlookers or enthusiastic first time buyers. It seems entirely reasonable that the council is looking to off load the properties, operating as they do in an extremly risk averse environment. They should be applauded for insisting that the houses can only be sold to owner occupiers.

Let them be sold, be refurbished by new owners who will make them their home and contribute to the community.

Anonymous said...

I'm fed up with people trying to circumvent the democratic process by engaging in protests such as this. Why should they force their views on the rest of us?

Anonymous said...

"I'm fed up with people trying to circumvent the democratic process by engaging in protests such as this. Why should they force their views on the rest of us?"

A healthy democracy allows room for protest and civil disobedience. Relax.

Anonymous said...

'A healthy democracy allows room for protest and civil disobedience.'

What rubbish! How long did it take you to come up with that?

Brockley Nick said...

Maybe they got it from Thoreau, Ghandi or Martin Luther King?

Anonymous said...

you're quick to try and belittle things you know nothing about Nick

Brockley Nick said...

Could you expand on that?

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