Property: Cemented into the poverty trap of the Nineties

Click to follow
AS MINISTERS work themselves into a frenzy over single mothers living off the State, they are raising the rents on social housing, locking tenants more firmly into the poverty trap.

Grants to housing associations - now almost the sole source of homes for people who cannot buy - are being slashed as the Government encourages use of private capital. This will push up rents by 75 per cent, says the National Federation of Housing Associations. Housing benefits cover most of the increase, but fall sharply if tenants find work.

A woman with one child paying pounds 42.50 a week rent would need to find a job paying more than pounds 170 a week to escape this poverty trap, says Steve Wilcox of the University of Wales in an analysis for the Joseph Rowntree Foundation. Those working part-time have no incentive to increase their hours, as raising earnings from pounds 80 to pounds 120 a week would generate only pounds 3.40 more income.

In a report on the Housing Corporation last week, Conservative and Labour members of the Commons Environment Committee reached the same conclusion. People will be trapped in social housing, unable to take jobs, said its chairman, Robert Jones.

Meanwhile, fears are growing that these policies will create 'sink' estates, crammed with unemployed tenants. This was one problem that housing associations were meant to eliminate when they took over from local authorities. Associations were suppose to build homes indistinguishable from those produced for owner- occupiers and integrated into the rest of the community. The House Builders' Federation points out that cutting grants from 72 per cent last year to 55 per cent in 1994 will force a reduction in standards and produce property more suited to Sixties council estates.

MY REPORT a couple of weeks ago that home owners facing repossession would be better off selling before the eviction notice arrives, sparked a huge response. Nick Pearson of the Leyton Advice Group had said that two-thirds of these homes were sold at a loss, leaving huge debts, yet owners could probably have got a better price by doing it themselves.

Other debt advisers, and several solicitors, have pointed out that a large number of cases are currently pending against building societies which refused to allow sales at less than the value of the mortgage, but accepted far less money after repossession. One family in the North lost more than pounds 10,000 because of this intransigence.

No one will go public at this stage, but one solicitor says lenders could face an embarrassing wave of court cases over the next year. 'Even more will emerge if they begin chasing former owners for old debts,' he adds.

STEPHAN Miles Brown stirred up a furore by speculating about the homes that could replace nine London hospitals threatened with closure. Save, the conservation group, exploded with fury, calling his ideas 'outrageous'. Yet Mr Miles Brown, head of the residential development section at Knight Frank & Rutley, seems to have done more to help than hinder the case against closing several major sites.

He pointed out that ministers should think again if their intention was to raise money for centres of excellence by selling off sites to developers. Only three hospitals would interest builders - St Thomas's in Westminster, the Royal Marsden in Chelsea and the Queen Elizabeth in Hackney. And all those are in areas where local residents would prefer health services to extra housing.

Closing Barts, which has produced more headlines than all the others put together, would be pointless as it has little alternative value. It is not a prime housing area, developers would worry about having to preserve historic buildings and commercial redevelopment is out of the question with so many offices standing empty in London.

Old hospitals provided builders with most of their big sites in the boom years, but now they want small areas in prime locations, says Mr Miles Brown. He questions whether the Government has done feasibility studies on the money it could raise on the threatened centres before announcing its closure plans.