Lime Legal

The house doctors

Published 01 January 2024

It's amazing what a coat of paint can do. Chris Wood and William Grosvenor explain how to make a little private sector renewal money go a long way

Would-be homeowners looking for something vaguely affordable to buy in London might end up in Newham, one of the capital’s poorer eastern boroughs. Driving around the ranks of Victorian and Edwardian terraces, they may also be reassured by the impression that this area is ‘up and coming’.

All the signs are there. Some homes are obviously undergoing renovation. Scaffolding is up in many of north Newham’s busier thoroughfares. Money is definitely being spent sprucing up private homes in some of the most deprived parts of the borough – places where the 1999 stock condition survey showed an average level of unfitness nearly three times the national average at 18 per cent. Whilst the overall position is improving a recent neighbourhood renewal assessment in the north east of the borough showed that over 40 per cent of homes failed to achieve the decent homes standard

To an outsider, parts of Newham look very ‘up and coming’. But this spate of renovation it isn’t all down to an influx of wealthier homeowners investing money in their properties. Much of it is, in fact, due to the council’s Group Repair and mini Group Repair Schemes, an effort to stimulate more private investment into the area – spending now in the hope that it will encourage others to spend private money on home improvements. This investment is combined in targeted areas with strong intervention and enforcement work.

While many councils are preoccupied with meeting social housing decency targets, developing stock transfer and other methods of financing the refurbishment of public stock, Newham has tended to give equal weight to the quality of privately owned homes, using a combination of the tools available – grants and enforcement.

The government’s Communities Plan stipulated 210,000 privately owned or rented homes must be made decent by 2010 – and 80,000 of them by 2015. The Housing Regulatory Reform Order gave councils control over grant schemes for private homes from July this year, on condition that they publish a written policy on renewal. Councils must clearly seek to target grant money on vulnerable households.

In Newham it is agreed that spending should be focussed on the most deprived homes and areas. In the past, responding to individual applications for grant meant investment has been spread thinly throughout the borough.

In London, 117,600 private sector dwellings are considered to be unfit for human habitation – about 8 per cent. In Newham that figure is still the highest in the capital. It would cost an estimated £1 billion to make all London’s unfit dwellings into habitable homes. This year, the London Housing Board has set aside £11 million for all local authorities to spend on private sector housing renewal in the capital. That’s peanuts: in Newham, we could spend it in a week. In 2012-03 we invested £7 million in the borough.

But renewing private sector housing is a complex business which needs to be tackled in a sophisticated way. Even if the government was willing to foot the huge bill, pouring truckloads of money into the problem is not necessarily the way to solve it. Rather, we found that coordinated and vigorous intervention, with housing investment working closely with environmental health officers, using enforcement and statutory measures, can be more effective than capital expenditure alone.

For example, we use a lot of compulsory purchase orders (CPOs). Around 25 per cent of all CPOs in London are in Newham. At our last mayoral proceedings we signed off 60 CPOs, and we do that two or three times a year. They are mainly Houses in Multiple Occupation (HMO) like bedsits, but some are commercial properties illegally converted to homes.

But CPOs are just the starting point for dealing with unfit homes. Passmore Urban Renewal is a company set up by the council and five local housing associations. It operates in the north east of the borough, in the Forest Gate Single Regeneration Budget (SRB) area, where there are two active renewal areas. We CPO a property, and sell it on to Passmore. The money goes back into our account on the same day, so each process is more or less cost neutral for the council, apart from legal fees.

Passmore is funded until March 2016 with £8.3 million from the SRB. The five shareholding partners have invested £450,000 each; and we have an £8 million private finance loan facility from the Abbey National. Setting up a regeneration company has enabled us to overcome housing associations’ traditional resistance to refurbishment of street properties. Generally, they would much rather get hold of some land and build something new. This partnership has already worked in some of the worst accommodation in the country. For example, an illegal conversion above a shop in Forest Gate was home to eight people – including one family with a small child – living in a collection of bedsits. The only shower was behind a curtain in the main corridor. The electrics were dangerous, and the plumbing inadequate, with the waste pipe flowing out onto the flat roof at the back. The council negotiated with the landlord, and then took statutory action. Passmore renovated the property, which is now rented to keyworkers. This is a good example of how private sector renewal can help resolve another critical London housing problem, lack of supply.

Newham has focussed private sector renewal schemes and intervention strategies on declared ‘renewal areas’. We have enhanced statutory powers in these areas. We believe it would be less effective to spread limited investment across the entire borough – we simply can’t afford to do it everywhere. One of the problems with relying on grants to help homeowners keep their properties up to scratch was that the investment was pepperpotted around the borough. Targetting investment in renewal areas and group repair schemes within them can make a difference to whole neighbourhoods, not just the odd house.

But the hurdles to successful renewal are not just financial. Negotiating with reluctant landlords is difficult. In an ethnically diverse borough like Newham there are often communication problems. Sometimes, the ownership of a property can change several times during the CPO process, often for cash in the local pub. It is therefore essential that housing teams work closely with colleagues in environmental health when it comes to private sector renewal. Newham environmental health officers are based at the local office of our regeneration company, Passmore, and funded by SRB money – at least until it runs out in 2016. They have good intelligence about their area: walk around Forest Gate with them and they know what’s happening in every street.

No government is going to invest the massive level of investment the Chartered Institute of Housing estimate is required to achieve total private sector renewal in the UK, and refurbishing homes alone doesn’t guarantee the successful regeneration of a neighbourhood. Newham’s policy is to ensure that limited funds are invested wisely for maximum impact, but we know that really significant renewal of private sector homes will only be happen where private individuals have the money to do it.

Newham’s approach to private sector renewal reflects this. We target public money at homes where the improvements we make will be most obvious, in the hope of stimulating inward private investment.

But the real solution to private sector deprivation in Newham cannot be found in the housing department, new planning legislation or reformed tax laws. It won’t be the result of a bit of cosmetic renovation on a Victorian terrace in Forest Gate. Real renewal will come if London wins its bid to bring the Olympics to this borough. Then watch the scaffolding go up.

Chris Wood is director of housing at LB Newham (and chair of the directors’ group of the London Regional Housing Board). William Grosvenor is head of housing investment.