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Below is an older version of the 'Case against transfer' article. It is out of date so be careful - however it does contain useful additional references.

The Case against transfer (download as document)
Transfer threatens tenants' rights. The transfer of council housing to a Registered Social Landlord (a housing association or similar company) means higher rents, more evictions, a less democratic housing service, and big pay rises for senior managers. Most importantly, it means that our homes will be privatised - transferred into the private sector where banks and building societies are in control, into a consumerist and market-driven world.
More Evictions, Higher Rents and Worse Services
Council tenants' secure tenancies are replaced with less secure 'assured' tenancies, making eviction easier. 16.5 percent of RSL evictions involved the use of automatic powers under controversial 'Ground 8' (which cannot be used against council tenants) according to a National Housing Federation survey of 116 RSLs. Evictions by RSLs (Registered Social Landlords) have risen by 36 percent.
Figures from Communities Scotland show the number of housing association evictions has risen by 64 per cent in two years to stand at 522 in the year 2000 to 2001. That equates to 3.7 in every 1,000 tenancies, compared to what Shelter says is 2 in every 1,000 for councils. (Inside Housing 19 Feb 03)
RSL rents are higher than councils - 17 per cent on average, and the gap is growing despite attempts to close it. Other service charges push up costs, as tenants are forced to pay for the higher cost of borrowing and repairs. The RSL only makes rent guarantees for five years after transfer - not long; and as many as 17% of RSLs break the guarantees anyway.
One third of RSL tenants' homes will not reach a decent standard by 2010. Transfer RSLs have housing management costs a full 39 percent higher than local authorities. Their chief executives receive fat-cat salaries.
"A housing association boss, who was given a one-off payment of £65,000 by his employers to move house, has become what is thought to be Britain's highest paid public service chief executive. David Bennett, managing director of Sanctuary Housing, one of Britain's biggest housing associations, received a total pay package of £213,000 last year." (Guardian 27.8.03)
On the other hand, ordinary workers lose out after housing privatisation. Many RSLs are anti-union or have very limited recognition agreements with unions. Dissatisfied staff leads to worse services for tenants.
Privatisation and the Market
RSLs are classified under law as private companies. "Large Scale Voluntary Transfer is a private-sector landlord in legal terms" (Gwynneth Taylor, then Head of Housing at the Local Government Association, 2002). A recent attempt to classify them as public companies under European law lead to outrage from RSLs, the Housing Corporation and the British government. RSLs borrow directly from private lenders at higher costs than councils. They function increasingly like businesses, with mergers, takeovers and lenders in the driving seat. The biggest run more homes than most councils, and are keen to become 'for profit' landlords. Acton Homes has already transferred the 'security' of some tenants' homes to the Prudential!
The Housing Corporation, watchdog over Registered Social Landlords, actively encourages mergers and takeovers (Rationalisation and Restructuring, Housing Corporation Nov 2002).
John Belcher, chief executive of £185.8 million turnover Anchor Trust, says 'We're a business and all our divisions are expected to make a surplus' (Guardian 8.1.03) They make it at our expense.
David Cowans, chief executive of Britain's largest housing association, Places for People group (turnover £164.5 million) says he would consider converting to a plc (Inside Housing 20.12.02)
Less Democracy, Less Tenant Participation, Less Choice
Direct accountability of council landlords is lost. Transfer landlords often cross council boundaries and cannot be held to account locally, affecting services to the homeless, joint waiting lists and nomination rights. Politicians say housing privatisation offers 'choice' to tenants. In reality a few big money-makers are dominating ever-more of the growth industry around housing privatisation. Many tenants who accepted transfer to a local housing association set up especially to manage their homes suddenly find themselves (without warning, and without a ballot) the tenants of a completely different landlord who manages stock all over the country and has no interest in their local concerns at all.
Very few RSLs have effective tenants' associations. Some have tenants on the board but they are not legally allowed to act as representatives of other tenants. The Housing Corporation now allows board members to be paid, making them more like the directors of commercial, profit-making companies. A study by Liz Cairncross for the Housing Corporation found that RSL boards are "increasingly dominated by professionals", leaving tenant board members "marginalised". (See Changing Boards: Emerging Tensions report and DCH summary for more details on tenants' involvement in boards).
Expensive Waste of Public Money
Transfer wastes public money and diverts funds from where they are most needed. The National Audit Office produced a report on stock transfer in which it criticised the high cost of improving homes after transfer - £1,300 per home more than the cost under local authority management. The Commons Public Accounts Committee also looked into the value of stock transfer (March 2003) and concluded "The additional cost of transfer is likely to be larger than the £1300 per home calculated by the Office"… transfer has "led to the undervaluation of the homes transferred so far, resulting in a greater contribution from the taxpayer than was necessary to deal with, for example, the backlog of repair." The PAC report is also sceptical about the government's justification of the extra cost of stock transfer, arguing "achievement of aims such as greater tenant choice, participation and increased tenants satisfaction are less clear." Select Committee Final Report, Summary of Report. Also DCH Synopsis of Report and DCH Evidence to original National Audit Office inqury.
"The government's policy of transferring council homes to housing associations is costing the taxpayer billions of pounds and delivering questionable benefits, MPs said today… faulty assumptions in the complex calculation of how transfers are valued has meant that the government has underestimated the price of the policy to the taxpayer, the committee warned." (Guardian 24.7.03)
Government argues that stock transfer brings in extra money from the private sector, but in reality it's just an accounting fiddle. It makes government spending invisible by moving the borrowing out of the public sector and "off-balance sheet". The costs may be hidden, but they're still there. The government spends millions of pounds subsidising transfer. It budgeted £800m last year to write off debts left after the housing stock had been sold. It has handed over billions to housing associations to take on "negative value" estates. The high interest levels charged by banks and building societies have to be paid from somewhere. Tenants pay - through higher rents; and the taxpayer pays - through higher housing benefit (£240 million a year higher, according to UNISON's calculations).And what has all this achieved?
'stock transfer' has taken place generally in the least deprived local authority areas (Source: Hansard, written answers, 4 July 2002, col 563W)
The number of new homes built in Britain over the last five years is lower than at any time since the second world war. 'The biggest loss of new homes is in the social sector…caused by the ending of the local authority housebuilding programmes' (Roof magazine July/August 2003)
Further background information

1. Rents Up
Councils trying to persuade their tenants to accept transfer used to make rent guarantees which lasted for five years. But new research done for the House of Commons Council Housing Group shows that despite these guarantees, fifteen of the 20 fastest-increasing housing association rents between 1997 and 2004 were in districts which have undergone large scale housing transfer.
For example, in Vale of the White Horse (where there was a large-scale transfer in 1995) rents increased by 47% between 1997 and 2004. In 1996 3,000 homes were transferred from the borough of Wyre, in Lancashire, where there has been an average rent rise of 56% over the same period. In Tunbridge Wells, Kent, where council housing was transferred in 1992, the increase was 43%. These are all way above the average RSL rise in England of 24%. Information from 'RSLs rent by district from 1997'
The five-year rent guarantee did not work. The National Audit Office found that 17% of transfer associations had broken rent guarantees.
The Government's new "rent convergence" policy now replaces the five-year rent guarantee. This is intended to limit increases to inflation plus 0.5% a year. But the five-year guarantees didn't stop rents rising. Why should we believe their promises now?
On top of this, the new rent formula does not cover service charges. This means that if an RSL calls part of the rent a 'service charge', there are no restrictions on those charges. (See Guiness example in East London).
Two tenant board members of Canalside Housing, a transfer association in Hackney, were dismissed from the board for speaking out against rent hikes and the breaking of promises:
"after the stock transfer vote happened, we were both elected as tenant representatives on to the board that was meant to be running the stock transfer company. What happened was, after a couple of years they began to have financial problems, and so they decided a number of things that were breaking promises that they had made. First of all they decided to increase rent by £10 a week for new tenants. They also took 47 homes that had been left empty and decided to turn them into a key-worker scheme that had rents £50 a week higher than the original rent. And these changes were made at secret meetings, and then the board was allowed to comment on them. We came out against those decisions and for our troubles were suspended from the board." Nick Strauss, former tenant board member of Canalside Housing, Hackney; oral evidence to MPs enquiry 8.3.05)
There are real pressures on RSLs to make the Business Plan stack up. In Brighton in the run up to the (failed) transfer ballot the ITA, council and government were caught out colluding to try and find a solution.
2. Security Lost
After transfer tenants have to exchange their 'secure' tenancy for an 'assured' tenancy.
"Most tenants of local authorities enjoy security of tenure as secure tenants, protected by arguably the most generous charter of rights available in the residential sector. That security is lost on transfer." (Large Scale Voluntary Transfer: not all honey and roses', Jan Luba QC, (2000) 4 L.& T. Rev. 6)
There are a number of differences in law between the two tenancies.
"If the council wants to evict you, they must prove both the ground for possession (e.g. rent arrears, anti-social behaviour) AND that it would be 'reasonable' to evict you…. A RSL can seek to evict you without the court having to consider 'reasonableness' in 8 out of 17 grounds for possession. For example if you are more than 8 weeks in arrears of rent on the day of the court hearing, the court will have to make a possession order even if the arrears are not your fault. (Ground 8)." (Stock Transfer: Essential Reading Before You Choose, Tower Hamlets Law Centre)
Councils claim that the new landlord will write additional rights into the new assured tenancy contract which will make it the equivalent of a secure tenancy. Of promises written into RSL tenancy agreements the Law Centre say:
"RSLs are likely to honour the agreements they have made. However, if an RSL wants to ignore the promises they have made in a tenancy agreement, and rely instead on the weaker rights set out in law, they may be able to do so. In a leading court case a judge found that a housing association were entitled to override the promise they had made to always give notice before issuing proceedings, because this was allowed by statute."
In addition, there is no guarantee that new tenants moving in after transfer will be given these extra contractual rights. "This may lead to two classes of tenants living side by side on the same estate."
3. Public Housing Not Private Profit
Councils claim that transfer is 'nothing to do with privatisation' because RSLs are 'non-profit making' organisations. But because RSLs borrow on the private market, transfer means that banks make a profit out of what used to be a public service. Housing associations behave like any other private company - increasingly commercialised, they are under pressure to make surpluses and many of them are aggressively expanding into the private marketplace.
"housing associations, and particularly stock transfer associations, are increasingly consumerist in their practice and their language. … Walker (2000) characterises housing associations as behaving increasingly like private sector organisations 'property-driven' and managing stock as an asset to maximise returns" Changing Boards: Emerging Tensions, Liz Cairncross, Oxford Brookes University, Spring 2004)
Many transfer associations, not long after they are formed, set up a group structure of their own, so they can enter the world of private housing - market renting, new development and selling luxury houses (see box). With board members now being paid in many RSLs, fat-cat salaries for senior executives, and banks and lenders in the driving seat, it is easy to see why transfer is the privatisation of our homes.
Sunderland Housing Group, which was formed to take the transfer of Sunderland's housing in 2001, set up a profit-making subsidiary called Emperor Properties, which builds new homes for sale on the private market. The amount of affordable housing in Sunderland is being massively reduced, and widespread demolition in the name of 'regeneration' has devastated the city, as the recent MPs enquiry heard. In the lead up to transfer, SHG claimed they would build 4,000 new affordable homes in five years. They say they have actually built 26. At the same time landlord management costs in Sunderland have shot up. While homelessness grows, SHG has built itself new headquarters called Emperor House, and former housing director Peter Walls has seen his salary double to over £140,000 since he became chief executive.
Councils claim that the new landlord will write additional rights into the new assured tenancy contract which will make it the equivalent of a secure tenancy. Of promises written into RSL tenancy agreements the Law Centre say:
"RSLs are likely to honour the agreements they have made. However, if an RSL wants to ignore the promises they have made in a tenancy agreement, and rely instead on the weaker rights set out in law, they may be able to do so. In a leading court case a judge found that a housing association were entitled to override the promise they had made to always give notice before issuing proceedings, because this was allowed by statute."
In addition, there is no guarantee that new tenants moving in after transfer will be given these extra contractual rights. "This may lead to two classes of tenants living side by side on the same estate."
4. Democracy and Tenants Power Become Unaccountable Boards
As tenants of a local council we get to elect our landlord. If we don't like the way they run our housing we can vote them out every four years at the ballot box. But this direct democratic relationship is lost after transfer, PFI or ALMO.
"I as a Ward Councillor have tremendous problems dealing with case problem issues with housing associations. They don't respond to councillors, they don't think you're important, so getting something done for a tenant on an RSL is very difficult. With my local authority it's not a problem." (Cllr Graham Harvey, Labour Group Leader and Spokesman on Housing, Portsmouth City Council, oral evidence to MPs enquiry, 12/05/04)
The strong tradition of independent tenants organisation among council tenants is not replicated with RSLs. The government claims that housing associations and ALMOs are more accountable because they have tenants on the boards. But recent research for the Housing Corporation shows the role of tenant board members is "primarily symbolic, providing a fig leaf to cover the unpalatable fact that the real power lies elsewhere." (Changing Boards: Emerging Tensions, Liz Cairncross, Oxford Brookes University, Spring 2004)
Tenants on boards are bound by company law and, even if they have been elected, will not be able to represent the tenants who elected them. 'At the time of transfer, tenants are often led to believe that they will have an explicit role in representing the interest of their fellow tenants on the board. This is not compatible with the accepted principle that dictates that as a board member they have to work for the interest of the organisation.' (Audit Commission Housing: Improving services through resident involvement, Audit Commission, June 2004. See also DCH Synopsis of Report)
"As you are aware I have declined to continue as one of the Council's nominated Board members after the changes in governance come into force, as I have no confidence in the Boards management of the Association.
"RSLs are likely to honour the agreements they have made. However, if an RSL wants to ignore the promises they have made in a tenancy agreement, and rely instead on the weaker rights set out in law, they may be able to do so. In a leading court case a judge found that a housing association were entitled to override the promise they had made to always give notice before issuing proceedings, because this was allowed by statute."
The high level of remuneration to be paid to the Board members (£4,000/yr) and £10,000/yr for the Chairman was justified to tenants in newsletters on the basis that Board members currently work 7 hours each week for KHA, however this is not borne out by my own experience, which suggests that 5 hours a month would be a more realistic figure. Having queried the 7 hours claim made to tenants at the Shareholders meeting, I now find myself accused by you in recent e-mail's of undermining the board. If I am aware that decisions are being made using misleading or incorrect information, which in my opinion is clearly the case here, I have a duty to the Association and its beneficiaries, to point that out.
What is of more concern to me is that at the same shareholders meeting, Independent Board members who are also shareholders, having already voted as Board members to pay themselves, then voted as shareholders to pay themselves. …This would appear to be a clear conflict of interest…
I see little evidence to suggest the Board is influencing the direction of the Association, merely responding to proposals from the Senior Management Team…the most depressing aspect of Board meetings is the predictable response from most other members. Throughout my time on the Board it has become obvious that the Board is not receptive to ideas from non-housing professionals, the phrase, "that's not the way things are done in the housing sector", could be the Association's motto…
As I pointed out at a recent meeting, tenants in my own ward have become so disillusioned with KHA's poor performance that they have now refused to attend tenant meetings… I believe my own time will be better spent supporting them to achieve a change in KHA's attitude, rather than in wasting any more time at Board level" (Councillor Ian Tilbury, letter of resignation from the board of Kingfisher HA, 4th June 2005)
5. Loss of Localism
"There is a merger mania just now that is being fuelled by the Housing Corporation saying future development cash will be concentrated on fewer and fewer associations." Talks aim to create joint biggest housing association, Derek Joseph, Managing Director, Tribal HCH (Society Guardian, 09/05/05)
Housing associations, like all private companies, are under pressure to expand and grow. There have been 35 full scale mergers over the past two years, with more becoming a subsidiary within a larger group, and many of these affect transferred tenants (see box).
Research has shown that 60% of all English transfer landlords in existence in 2001 were part of group structures. (Maturing Assets: the Evolution of Stock Transfer Housing Associations, Pawson and Fancy, 2003)
There is a big risk that a merger or takeover after transfer will put an end to that local, accountable organisation that tenants were promised. A significant number of associations get into financial trouble (one fifth of transfer associations have had to be placed under supervision) and many of those have to be taken over to survive. There are also huge pressures on associations to get bigger in order to increase their efficiency and compete in the private marketplace.
"We can compete with some of the bigger house builders. In order to buy into a supply line you do need some volume. The bigger the partnership the greater the volume you can get." Steve Coleman, Development director, Genesis Housing Group (Inside Housing, 05 Aug 2004)
Anglia Group recently merged with Circle 33. Their Chief Executive told Inside Housing "that the creation of the new organisation would assist
"Put a couple of housing association chief execs together and the chances are the talk will soon turn to mergers. 'Are you thinking about it?' and 'Who are you talking to?' are the big questions on everyone's lips. This week's Harrogate conference has been dominated by the topic. But is the merger mania sweeping the association sector really a good thing? …now questions are starting to be asked about whether mergers are really in associations' - and their tenants' - best interest, or whether they are fuelled instead by a rush for growth, chief executives' self-interest or simply a fear of being left behind." (Inside Housing, 24th June 2005)
When RSLs get taken over or merge tenants do not get any say in the matter - there is no right to a ballot when transferring from one housing association landlord to another. Not only do tenants who were promised a local organisation responsive to local needs lose out. Worse still, the take-over RSL is under no legal obligation to keep promises made at the time of transfer:
"the mortgagee exclusion clause… means that if the RSL gets into financial difficulties and as a result the funder takes control and transfers to another RSL, the "new" RSL is not bound by any of the promises made to the tenants." (Housing Today, 21/01/05)
"Tenants definitely won't be told that the company they eventually get could be totally different from the one they vote for. In 1993 East Cambridgeshire council tenants voted for what they were told would be a cosy little 'local housing company' called Hereward, just to run their 4,000 homes. Now, since April 1st this year, Hereward has joined the huge, 34,000-home Sanctuary Housing Association to become its east region subsidiary." (from a letter in the 'Cambridgeshire Times' 20/05/05)
"Amicus and Horizon housing groups have revealed merger talks are underway in a move that would create one of the largest landlords in the country.…The announcement is the latest in a string of proposed deals as housing associations increasingly look to join forces as part of the drive for efficiency in the sector." (Inside Housing, 14/04/05) Tenants who transferred from Hastings, Swale and Rother councils will all be affected by this merger.
Merger talks are underway between Liverpool-based Riverside Group and London-based English Churches HA to create England's joint largest association with 52,000 properties, operating in 200 council areas. This will affect ex-council tenants all over the north west who will see their landlord become so big even a regional identity is lost.
6. Poor Performance
More than one in five large scale transfer associations has had to be placed under supervision by the Housing Corporation. 'Such action, which involves the appointment of external experts to the board of the association, is only triggered by poor performance or serious management irregularities,' (Guardian 25/05/05)
Despite the millions of pounds spent on housing after transfer, the Public Accounts Committee found that there was only a slight increase in tenant satisfaction. They found there was only a 3% increase in tenants satisfied with the condition of their home (81% from 78% before transfer). Only 85% of tenants considered that housing services were at least as good as before transfer; while satisfaction with the quality of repairs went down (63% against 68%). (Improving Social Housing Through Transfer, 2003 and DCH Synopsis of Report)
Tenants have very little redress if transfer RSLs break promises, because offer document promises are a contract between the RSL and the council, not with the individual tenant.
"the question that tenants need to be asking is whether these promises are legally enforceable.… the RSL, backed by the funder, will try to limit the RSL's obligations to "reasonable efforts" to keep the promises. And what reasonable efforts are, particularly for a charitable RSL, depends on the context at the time delivery is required." (Housing Today, 21/01/05)
"We were promised a community centre… and refurbishment of the children's play areas (the money for it was ring-fenced) five years ago when we transferred. We are still awaiting work on that to start as they are trying to force us to have something else built that we don't want… [they] want to build a new area office… plus flats for shared ownership which we don't want built…they are already doing away with one children's playground and garages and replacing them with another 16 new properties." (Fred Hunt, Secretary, Minerva Estate TRA, Tower Hamlets; written evidence, 12/03/05)
7. We need joined-up thinking not a separate housing service!
The government claims that forcing councils to separate overall strategic housing responsibilities, with separate companies (whether an RSL, ALMO or PFI consortium) taking on day to day management and maintenance, leads to better services. But they have never shown any evidence to support this.
A study by Heriott-Watt University did research into the effects of separation after transfer to housing associations. Alistair McIntosh, from the Housing Quality Network who commissioned the report, said "There doesn't appear to be a lot of empirical evidence suggesting that the only correct route is to make a split between the strategic enabling function and the landlord function. It's been carried on without any research or rationality underpinning it." (Inside Housing 11 January 2002).
The select committee which oversees the Office of the Deputy Prime Minister found:
"the committee heard evidence to suggest that there is no clear positive correlation between a separation of the two tasks and excellence in either strategic management or stock management…The Audit Commission indicated that the issue is not as straightforward as the Government would have us believe… The Chartered Institute of Housing (CIH) came to much the same conclusion arguing that there is no theoretical or practical reason why Local Authorities cannot handle both the strategic management of housing policy as well as managing a portfolio of social housing at ground level… The Committee is not convinced that ALMOs and stock transfer RSLs necessarily lead to better tenant participation and satisfaction. There is no reason to suggest that the same results and management innovations could not be achieved under Council management, given equal resources." (ODPM Select Committee Report on Decent Homes 7 May 2004)
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