Opinion Archives - Capital Letters

We welcome the announcement from Angela Rayner that £500m will ‘top-up’ the affordable homes programme, enabling councils and Housing Associations to fund the building of more social homes. However, there needs to be greater recognition that building alone will not solve the housing crisis in the short and medium term.

In urban environments where space is at a premium and costs are high, we need increased funding for Local Housing Allowance (LHA) rates and measures to keep good landlords in the Private Rented Sector.

London Boroughs collectively spend £114m a month on temporary accommodation (TA) for the 65,000 households who are experiencing homelessness. That figure is increasing month on month and building new homes will not solve this any time soon.

In April ’24 the last Conservative Government increased Local Housing Allowance (LHA) to return it to the level it should have been – covering the lowest 30% of an areas rental market. It was both immediately frozen, and immediately outpaced by rent inflation. In London 5% of homes advertised for rent are now affordable on LHA rates – 7 months after the increase.

At the end of the last parliament the Renter’s Reform Bill died as the election was called, and it’s now been resurrected as the Renter’s Rights Bill, which is all but identical. We completely support the bill and agree that the PRS needs to have greater protections for renters and landlords; however, it comes at a time when smaller landlords, who are more likely to rent to households at the lower end of the market (i.e using LHA), are leaving the sector. The drain began because of the economics, the fiscal environment, the post Truss mortgage rates on buy-to-lets, the maturing of a lot of buy-to-let products, but continues as it looks more difficult and costly to be an ’accidental’ landlord – those who may have inherited property and wanted to use it for income. The PRS sector is shrinking as a result.

It’s not just costly to be a small landlord, but it feels increasingly hostile – as borne out by recent London Councils, Trust for London and Savills research.

Yes, we need to build, let’s get homes for everyone that needs them, but that’s a multi-year, multi-parliament project, even with expedited planning, and grant allocation, and building we are years away from making a significant dent on the waiting lists let alone the 117,450 households currently experiencing homelessness and living in TA in the UK. And it relies on a construction industry that is ready to step up to the challenge.

We need to have an annual increase in LHA rates to get families out of TA. We need to incentivise smaller landlords to stay in the sector, with tax breaks and with help to implement the Renter’s Rights Bill provisions. We need to recognise that smaller landlords, more likely to let to those claiming LHA, are a hugely important piece of a housing journey. We need to create the right environment that encourages others to enter the PRS market to increase the number of homes available and chip away at the thousands of households that are languishing in TA.

Capital Letters is committed to addressing the housing crisis in London by supporting innovative solutions that increase the supply of affordable rental homes.

The “Get SMEs Building Again” report provides a robust framework to address some of the current issues with building and providing affordable rental homes for those that need them most. The future of affordable housing in London could be improved by the SME housebuilding sector.

Supporting SMEs: A Key to Solving the Housing Crisis

The report highlights that SMEs now build just 10% of the UK’s housing stock, a significant drop from the 40% they contributed in the 1980s. This decline has been exacerbated by a complex planning system, high upfront capital requirements, and limited access to land.

We recognise that revitalizing the SME sector could be one of the keys to meeting the government’s target of building 300,000 homes annually. Like Capital Letters, SMEs have the agility and local expertise to develop smaller, often overlooked plots of land, which are ideal for affordable housing. By supporting the initiatives outlined in the report, we believe we can create more vibrant, sustainable, and mixed economy housing that benefits all Londoners.

Key Sections of the Report: Paving the Way for Affordable Housing

Several sections of the report stand out for their potential to help drive the building of more affordable rental homes in London.

Empowering Homes England to Support SMEs
The report calls for new ways to help Homes England to provide tailored support to SMEs, including innovative funding solutions. SMEs need to overcome the financial barriers that currently hinder their participation in the housing market. By creating a more supportive financial environment, SMEs can take on more projects, particularly those focused on affordable housing.
Small Sites Planning Policy
This policy would introduce a presumption in favour of development for small brownfield sites, streamlining the planning process for SMEs. The report estimates that this change could unlock up to 110,000 new homes within walking distance of public transport in London’s largest urban areas. We strongly support this initiative. As we become a large scale landlord, good quality urban development will drive our housing stock, giving real affordable rental homes.
Implementing Quotas for SME Housebuilders in the Local Plan Process
By ensuring that a percentage of sites in local plans are allocated specifically to SMEs, this policy would help level the playing field and encourage more small and medium-sized enterprises to enter the market. This would not only boost competition but also diversify the types of housing available, catering to a broader range of needs.

Capital Letters’ Commitment to Action

We believe that by fostering a supportive environment for SMEs, we can directly contribute to increasing the supply of affordable homes in London. We are ready to collaborate with government, local authorities, and SMEs to implement these recommendations and drive meaningful change.

By supporting SMEs and adopting the proposed policies, we can make significant strides towards creating a housing market that is inclusive, affordable, and sustainable.

Since Capital Letters was created, we have been calling for a fairer and more economically connected benefits policy.

We campaigned for an increase in Local Housing Allowance (LHA) to help the thousands of Londoners stuck in Temporary Accommodation (TA) into a safe, secure and affordable home. However, we also campaigned for a commensurate rise in the Benefit Cap – including the two-child cap – so that the LHA increase didn’t inadvertently cause homelessness, as families hit the top of their benefits and couldn’t afford the rent shortfall.

LHA rates were increased.

The benefit cap was not.

We are extremely hopeful that the Governments Child Poverty Strategy, due to be published in the spring, will address the two-child benefit cap. ‘The Times’ reported that the taskforce working on the strategy “would consider ending the two-child limit”.

The two-child limit and the benefit cap combined, are both preventing families who are experiencing homelessness finding a safe, secure, and affordable place to live, and more worryingly, the two benefit caps risk of making more families homeless.

We need a joined-up holistic economic policy that includes benefits and housing connecting the Treasury, DWP, MHCLG, all departments involved in the lives of people who need us the most.

London boroughs collectively spend £90m a month on TA, the effect of dissonate policies. The benefit cap traps some families in TA. It’s like squeezing a balloon moving the air around to achieve savings in one area, increasing spending in another… There is only one pot of money but competing departmental targets have resulted in policy that keeps squeezing the balloon in apparently random ways.

There are long term unintended economic consequences – If a child spends time living in insecure TA, their education outcomes are worse than a similar child who lives in secure housing, health outcomes are worse, employment outcomes are worse, their life-long economic outcome could be worse, and that costs the economy. This isn’t just about increased benefit reliance but about what that person can’t add to society – lost income tax, increasing reliance on the NHS, lost tax on savings, with a reduced disposable income there’s lost VAT… However, people aren’t economic entities, they are people and a child who spends time living in insecure TA may not achieve their full potential, their dreams, their whole life could be affected by their childhood of not knowing when they would have to move… again.

That’s the biggest loss.

As a socially responsible, not-for-profit housing organisation we are calling on the Government to have a joined-up, cross departmental approach to not just benefits, but the whole of the economy and, as a start, we would welcome the removal of the two-child cap.

Sue Edmonds, CEO Capital Letters

Because of Capital Letters’ unique pan London scope and experience we have seen the issues facing both our member London boroughs, and the families that we help out of homelessness and Temporary Accommodation (TA), at first hand.

We have been campaigning on behalf of our members and the tenants that we support to try and change the system since 2019.

The National Audit Office (NAO) report into the last Governments Homelessness approach has simply told us what we already know.

We know that “periodically capping and freezing the Local Housing Allowance (LHA)” affects council budgets and the move on rate from TA.

We know that “a lack of housing for social rent (that is, at a cost well below typical market prices) is a driver of homelessness, since households are instead pushed into the private rented sector which is typically more expensive and provides a less secure tenancy. The ending of a private rented sector assured shorthold tenancy is one of the biggest drivers of homelessness, accounting for around 23% of households owed a prevention or relief duty in Quarter 3, 2023-24.”

We know that “[a] lack of housing for social rent limits the routes out of homelessness for households who find themselves in temporary accommodation, as local authorities often cannot find them private rented sector properties in the local area that are affordable.”

And our response is….

We have to make it better.

We could give a long response about seeing just 0.8% of homes in London being even advertised at LHA rates let alone being let at that rate – with 17 people bidding for each property there’s little to no chance of that… We could share the experiences of our member boroughs, who, because of the rising, unaffordable rents are seeing more and more new homeless families in addition to those who are already trapped in Temporary Accommodation (TA). They are now using, on average 61% of their total housing budgets on TA; collectively London boroughs are spending a whopping £90m a month on TA. It’s unsustainable.

First and foremost, there’s not enough homes of any tenure, but the most acute problem is the lack of social rent, affordable rent, or LHA rate rent. The poorest in society are feeling the effects of limited investment in too many aspects of their lives, from the reduction in SureStart centres to housing.

Capital Letters should not need to exist.

In a perfect world, where everyone has access to the housing they need, and can afford, we wouldn’t exist. But the issues facing housing in the UK and especially London are going to take generations to fix, and we will be here trying to change the model, trying to make housing in London affordable for those who need it with our unique partnerships and investments helping Londoners find safe, secure, and affordable homes.

Because a home changes everything.

The biggest barrier to good quality affordable housing is infrastructure.

Actually, it’s planning.

No, it’s funding.

The biggest barrier to good quality affordable housing is the system.

The Chancellor of the Exchequer, Rachel Reeves, has set out the Governments plans for housing over the next parliament, with an ambition to build 1.5 million new homes, and whilst there are questions being asked about the funding of the needs of social and affordable housing, it does look like some of the systemic issues are starting to change, which is a welcome start .

The most significant change is the re-designation of low-quality green belt land as “Grey Belt” this is halfway between brownfield – former industrial / commercial land often in urban or intraurban environments – and green belt – the bucolic pastoral countryside that needs protecting.

This redesignation, or more importantly, the recognising that there is not in a binary good/bad development land situation hopefully will enable quicker and better planning decisions that benefit those in need of a home.

However, there are other ways to effect essential systemic change; no solutions should be discounted.

New development is costly, lengthy, and always needs to be supported by infrastructure. The post war building recognised that you don’t just build houses you build communities. However, our collective national housing memory forgets the good and concentrates on failures. For every “Ronan Point” there were countless successful communities built where people needed to be which included shops and schools and medical centres and buses. We don’t think about those, because why would we? They aren’t as exciting as failure.

Now we need to find better ways to go back to the days of integrated communities, where infrastructure and services interlock with housing.

The Government has really exciting plans for New Towns – filled with the needs of a community, but what about existing infrastructure?

Take London, for example.

Nearly 65,000 households are living in Temporary Accommodation. These families have somewhere to sleep, but they are homeless. The accommodation they are in is often unsuitable, unpredictable, and unwanted. Families need a stable, secure, safe and affordable home. They need a home near transport links, and schools, and medical facilities… Building on “Grey Belt” land will alleviate some need, but there will be increased outlay on new community facilities.

What if there was another way?

What if there was a way to create high quality, safe, secure, and affordable homes where the facilities already exist?

In 2023 we supported the joint APPG Inquiry into Rethinking Commercial to Residential Conversions. The report that came out of the enquiry had some clear recommendations that amount to – Add conversions into the local housing plan and make sure Permitted Development Rights do NOT apply to these conversions, ensure conversions meet “Healthy Homes” standards, place them where communities already exist not on an industrial estate away from schools, transport, shops… and work in partnership with local councils.

There are hundreds upon hundreds of possible conversion sites in London, they are where people live, and work, and spend their lives, they are all sorts of buildings from offices and light industrial to commercial, and local authority buildings. As work and shopping habits have changed, the dead spots where shops and offices used to be could become a range of affordable housing options. Some forward thinking councils are already exploring this option – so it can be done, and done successfully.

We don’t need to find all the solutions by looking outwards from our urban environments, we can look inwards. Conversion is one option to reinvigorate the existing built environment, another is how we bring empty homes back into productive life – I’ll look at this in another blog.

The exciting part is that with the right oversight, the right standards, and the right political will, we could transform the lives of families experiencing homelessness.

Capital Letters, the unique not-for-profit owned by London boroughs is calling for more financial support for tenants, landlords and boroughs who have been hit by the rental crisis in London.

Capital Letters, the unique not-for-profit owned by London boroughs is calling for more financial support for tenants, landlords and boroughs who have been hit by the rental crisis in London. 

Sue Edmonds, Capital Letters CEO said “The latest government data shows that 104,510 households were in temporary accommodation in Q1 of 2023. This is the highest number on record and a significant increase on the pre-pandemic average.” 

“To prevent the homelessness crisis worsening and to prevent the Private Rented Sector from collapsing we need urgent Treasury intervention.” 

Capital Letters are experts in the private rented sector across London and have seen the impact that a lack of supply is having on affordability and in turn rates of homelessness, we are calling on the Government to: 

Increase Local Housing Allowance rates to reflect market rents and track these into the future. The latest government estimates suggested that the cost of increasing LHA rates to the 30th percentile would be £700m for the financial year 2023-24 across Great Britain. In 2021/22, local authorities in England alone spent more than double this figure, £1.6bn, on the provision of temporary accommodation for homeless households. 
Apply a commensurate increase to the benefits cap to ensure that those in London with higher rents are not penalised.  
Encourage landlords to stay in the market and invest in upgrading their properties including through introducing incentives for landlords to increase the energy performance of their property through a tax restructuring to allow energy performance improvements to be deductible against rental income. In addition, low or no interest loans should be introduced to
Look at ways to bring empty homes and buildings back into use to boost supply in the short-term, providing there are appropriate safeguards in place to ensure that these are high quality and are delivered with local authority input. Government data shows that there are nearly 90,000 vacant dwellings in London currently. Grants should be made available to bring these back into use and improve their energy efficiency.

“The market is failing the vulnerable” Sue Edmonds commented “By that I mean an ecosystem of interlocking vulnerabilities – financially vulnerable landlords who are working with increased regulation and increased tax burden and mortgage rates, financially vulnerable local authorities who, across London as a whole, are paying £60m a week for temporary accommodation, and most importantly ordinary Londoners – Londoners who are affected by the cost of living crisis unable to pay their rent or mortgage and are facing homelessness, who are experiencing homelessness, and those who are trapped in Temporary Accommodation – Each part of this ecosystem will be helped by our 4 priorities.”

Section 21 allows “no fault” evictions, leading to family homelessness. While some landlords use it as a last resort, others misuse it for arbitrary evictions. The delay in the Renter’s Reform Bill could cause more pre-emptive evictions, especially during holidays. Both landlords and tenants need protection. The urgent need: end Section 21 evictions.

By Sue Edmonds

Section 21 is the largest cause of family homelessness. A family living in rented accommodation is given notice to leave with “no fault” – it’s not arrears, it’s not a breach of tenancy, it’s “no fault”, and they are now homeless as a result.

Section 21 is a double-edged sword used as a last resort – the nuclear option – by good landlords who have been pushed to the end of a difficult relationship with a tenant; there may have been continuous low-level issues, spikes of ASB, arrears accrued and then paid off before action is taken, sometimes for years, and a landlord may just want the tenant to move on.

It’s sometimes quite difficult being a landlord.

However, Section 21 is used on a whim by unscrupulous landlords who don’t care about the tenant, they just want them gone, to raise the rent, to pause letting, to flip a property, or because the tenant complained about something that the landlord should have sorted but didn’t want to.

It’s sometimes quite difficult being a tenant.

Some good tenants have horrible stories about bad landlords…

Some good landlords have horrible stories about bad tenants…

No matter what the reason Section 21 often means one thing – homelessness.

The second reading of the Renter’s Reform Bill this week saw the Government kick the idea of banning Section 21 evictions into the long grass of “the justice system needs to be fit for purpose”, an indefinite delay that will mean more families will experience homelessness.

As an organisation that works with landlords, and as a landlord ourselves, we know that there needs to be protection for landlords who want to safeguard their livelihood and their property. As an organisation that works to support tenants, we know there needs to be protection from arbitrary eviction.

The bolstering of the guidance around evictions where arrears, breeches, ASB are present is welcomed. It gives landlords a clear roadmap, but there also needs to be a pragmatic approach to ensure good landlords aren’t punished, and good tenants aren’t disadvantaged.

The delay in banning Section 21 may have a more practical immediate knock-on though.

There is an increased and immediate risk that landlords who are concerned about the uncertainty and the implications for them, or landlords who are confused by what is coming could use the nuclear option now as some sort of pre-emptive strike – resulting in tenants being evicted “just in case”, resulting in more households become homeless in the lead up to Christmas…

Section 21 evictions need to end now. We’ve been waiting too long.

With the second reading of the Renter’s Reform Bill, we’re calling on the government for balance in support of tenants and landlords.

Sue Edmonds CEO of Capital Letters said, “We welcome the removal of section 21 or ‘no fault evictions’. These have been one of the largest drivers of family homelessness and have forced many into temporary accommodation. The removal of section 21 gives renters greater protection from unscrupulous landlords; however, we are already seeing unintended consequence of good quality, responsible landlords (the landlords that we work with) leaving the sector due to a perceived lack of powers and an increased risk.”

Recent by research by Savills and LSE co-commissioned by Capital Letters, London Councils and Trust for London found that smaller landlords, at the affordable end of the market were more likely to leave the sector because of increased legislation. Rented accommodation supply in London is down 31% since the pandemic.

“The increased powers for landlords to protect their property from antisocial tenants is a welcome move, though, as ever, there will need to be nuance in the enforcement…” Sue Edmonds continued.

“Capital Letters is both a landlord and a member of a redress scheme; we fully support the introduction of an Ombudsman, and landlord registration. Greater openness and support for both tenants and landlords will improve the experience on both sides.

Capital Letters, in our role of procuring leased properties, and supplying our own homes for London boroughs, currently supply to a higher standard than the proposed minimum and are experts in advising landlords on how to reach those standards. We would urge the Government to go further on minimum standards to ensure families in the UK have better quality, safe and affordable homes.

We feel that this Bill is about improving the experience for tenants and landlords. Protections are needed on both sides, but a robust and pragmatic approach will be required around enforcement and reporting.”

The average London rent is at a record high of £2,627 per calendar month according to property site Rightmove.

Commenting on this figure, Daniel Thwaites, our Head of Housing and Property Income said “There is a huge affordability gap in London. The average household income in London is £2,868 per month – and that leaves Londoners with less than £250 a month for every other necessity. The system needs to change.”

Figures released in July this year from our co-commissioned Savills and LSE research found that only 2.3% of homes on Rightmove were advertised at LHA rates.

Amy Cowan, our Head of Acquisitions and Tenancy Sustainment said: “We know that the 2.3% figure is falling, and we can only see what homes are advertised at, not what the agreed rent is – and as BBC research suggests that up to 30 people are bidding on each home – the final rent is probably beyond LHA.”

To counter the market, we’re working with member boroughs to find better ways of supplying affordable housing to Londoners.

Amy went on to say “We are the change we want to see. We recognised that traditional affordable housing procurement was becoming more difficult, so, with the support of our members, we are offering ethical lettings, leases, management, and procurement.”

Daniel Thwaites added, “Landlords, big and small, want to positively affect society and the communities in which they live and work, and our approach means that they see great ESG returns as well as a robust financial result. We are a landlord in our own right, which means our expert team of housing and lettings professionals can take on lease arrangements at guaranteed rent, management contracts across properties, and broker traditional affordable housing straight to our member boroughs. Our unique approach means more affordable homes for our members as we cross-subsidise from our surpluses.”

Our statement about the Government white paper, A New Deal for Private Renters, published by the Department of Levelling Up, Housing and Communities on 16 June 2022.

Sue Coulson, Chief Executive, said:

“Capital Letters welcomes the publication of the Fairer Private Rented Sector White Paper, which will lead to the end of no-fault evictions and finally make “no DSS” discrimination illegal.

“For too long vulnerable tenants at risk of homeless have been unfairly treated by a few bad landlords in the private rented sector. They have been prevented from renting simply because they are on low incomes and claim benefits. Or, when they do find a home, they do not feel secure in their home because of the threat of eviction if they complain about sub-standard accommodation.

“The white paper shows that the government is serious about ending the unfair treatment of tenants, and we look forward to supporting the development and implementation of the proposed new policies.

“We will continue to work with the majority of responsible landlords so more families can move out of temporary accommodation or avoid the stress of insecure or unsuitable accommodation by finding good quality homes in the private rented sector.”

Capital Letters was set up in response to London’s homelessness crisis. We find private rented properties so families can move out of temporary accommodation or avoid being made homeless. Capital Letters is owned by two-thirds of the councils in London and is funded by the government.