“This is a widespread problem across Hackney and across London,” said a tenant of Hoxton’s New Era housing estate last week, pledging to fight any huge rent hikes a new landlord might impose. “People are being pushed out because they don’t earn enough money.”
She’s right, of course, and it’s a story as old as the City’s Big Bang. When I set up home in a different part of Hackney in 1982, most of the borough was disreputable and dirt cheap - just right for wide-eyed social deviants making their way in the urban jungle. But even then gentrification’s tide was rolling east from Islington and north from the Square Mile. It swept “conspicuous thrift” - stripped floorboards, lentil bakes, Guardian journalists and all that - into Stoke Newington and floated rough old Hoxton’s property boat.
A curious thing about the New Era homes is that their present residents weren’t washed away long ago. It’s 20 years since Hoxton became hip. Its “edginess” was embraced, its art scene was admired and its “trendies” were insulted by class warriors. The new affluence has seeped north from Hoxton Square and the whole neighbourhood is now a real estate opportunity connecting swinging Shoreditch and the near-mansion tax terraces of De Beauvoir Town. It’s bordered to the north by Regents Canal. New housing developments are strung along this waterway like beads. Joggers and cyclists populate its towpath. There’s still council housing, but the area is sold as “City fringe”.
Many private renters will have been priced out over the years. But the longer-established of New Era’s 90-odd households have been helped to stay because “uplift” seems to have passed their rent books by. Private flats for let on adjoining streets are advertised at £330 a week for a one-bed, £450-£500 for a two-bed and around £500 for a three-bed. New Era’s residents were paying an average of £133, £150 and £163 respectively when their dwellings went on sale. When I quoted these figures to a local estate agent, he dropped his phone.
The estate was built in the 1930s with philanthropic goals. Ownership was passed down the family line until spring this year. Eight decades on, the now former owner says he doesn’t accept that selling to Westbrook Partners, an American company whose methods have attracted criticism elsewhere, has left his former tenants in a tight spot. And some evidence suggests he didn’t leave everything in great shape.
The marketing literature says new windows had been installed in the estate ten years ago and that the buildings had been re-pointed and some guttering replaced more recently. But “major opportunity to refurbish” does sound a bit like “has potential”. Housing consultant and social housing campaigner Colin Wiles writes: “It looks as though it’s suffered from a lack of investment over the past few decades.” I’m told there are “issues” with the condition of several of the properties.
This sounds typical of too much of London’s private rented sector, albeit with the benign side effect of rents that aren’t so very much higher than the Hackney council house weekly average of £113. And now, here come those far off Americans, accused of planning to unleash the full backlog of market forces that the New Era tenants seem to have mostly avoided so far.
The campaign to prevent this is righteous and brave, but has its work cut out. The early departure from the scene of the Benyon Estate, a family firm which owns 300 properties in De Beauvoir and has a Conservative MP as a director, was hailed as a Russell Brand-inspired triumph at the time but, if anything, may have made things worse. Benyon had a stake in the Westbrook enterprise and was to manage the estate. There are worse landlords in London, and at least Benyon provided a human point of contact close to home. Rents were initially raised by 10% and there were fears they would soon go much higher. Hackney mayor Jules Pipe was critical. But an informal agreement that there would be no further increase for two years has been withdrawn since Benyon cut its ties.
How can a happy ending to this distressing story be arranged? Hackney Council has been doing what it can to moderate, but is unlikely to take up the suggestion of making a compulsory purchase, a complex and costly option at the best of times (and, for local government, the present ones don’t qualify). Colin Wiles has challenged London’s biggest housing associations, not short of a few bob, to buy the property from Westbrook. That would be a good result, but if it happened there would probably still be changes that not all would applaud. With government grant slashed, housing associations have to asset manage like never before in order to provide new sub-market priced homes while still balancing their books. It’s hard to imagine New Era rents not going up more or more affluent residents not being sought.
An irony in all this is that Westbrook manages the pension funds of US public sector workers. UK companies in the pension field are seen as potentially desirable investors in London properties for private rent, being blessed with the resources to professionalise a sector over-stocked with bandits and buy-to-let amateurs. In booming London, where private renting is growing as home ownership falls, steady, long-term returns should be achievable without treating people heartlessly.
Boris Johnson has recently hailed the London Pensions Fund Authority putting money into turning a car park in the Royal Docks into 200 homes, including 137 for private rent. He stressed the need for longer tenancy agreements to give renters more security. The Resolution Foundation, a think tank working to improve the lot of people on low to middle incomes, has produced an economic model for keeping such properties affordable. The New Era scenario is different in that the land concerned is not publicly owned and housing already exists on the site. But might it be in Westbrook’s interest to look at ways of making its investment pay that don’t involve cold-eyed evictions and all the shaming publicity they would attract?
Standard procedure would entail pricing or less subtly shifting the tenants out, not by Christmas – it seems that’s never really been on the cards – but perhaps from the middle of next year. The dozen households protected by the 1977 Rent Act would be the hardest to move, but in such cases a blend of pressure and inducements is often brought to bear. Once that job was done a major refit or redevelopment would go ahead and much wealthier people would move in.
An alternative approach would be to treat the existing tenants sympathetically, draw on their local knowledge, make money by letting or selling homes that become empty of their own accord at higher rates to people who can afford it. Humane rent rises could still occur – it’s worth bearing in mind that the current ones could be almost doubled and still fall below the area’s private housing sector benefit cap – and some tenants might not mind if it meant their homes and the estate were improved as a result. Ideally, new tenants’ contracts could take up Shelter’s stable rental idea, an attempt to reconcile the goals of affordability, quality, security and financial return.
Yes, this may be imperfect and for the birds. But persuasion is surely worth a try. The mayor, though ever loath to obstruct laissez faire, has asked his housing deputy Richard Blakeway to try to find a way to keep the tenants in their homes. Blakeway is one of the best of the mixed bunch that makes up Johnson’s team. With the mayor’s full and conspicuous authority behind him, he might be better placed than anyone to broker an acceptable deal.
Westbrook has yet to say what its plans for New Era actually are. Might the company prefer to emerge as a beacon of good practice in London’s flawed private rented sector - and prosper accordingly – rather than be reviled as a pitiless predator? In this wrangle, they have the greatest power. That means they have the most choices too.
Update November 26, 2014 As expected there will be no evictions before Christmas. As informed by the marketing literature for the estate, this article originally said that the new owner might be able to enhance their profits “by building extra layers of flats on top of the existing ones”. I’ve since been advised that this will probably not be possible.
