Open letter to Genesis

Dear Genesis,

On 17 November, you spoke to Inside Housing magazine about our housewarming party at your Stratford Halo development.

We’re sorry not to have heard from you directly, but are pleased to hear that our concerns are misplaced.

Did you mean that we’re mistaken about the two bedroom flats being let for a minimum of £1,700 per month, meaning that they’re only affordable to families with an income of £76,000 or more per year? That would be good news, because the average income in Newham is £26,681.

Or perhaps you mean that you will be withdrawing your application to the government’s Build to Rent scheme instead of cashing in on subsidised finance for the privately rented flats you’re planning in Colindale, Ealing and Upton Park, at an estimated cost of a couple of million quid to the public purse*? That’d be great too!

Apologies for not contacting you beforehand – but we weren’t sure whether you’d be up for a party. But now we’re in dialogue, we look forward to you confirming how our original comments were inaccurate.

Yours sincerely,

Let Down Renters

* We estimate that the Build to Rent programme will cost the taxpayer at least £90m. 45 developers have been shortlisted for the main tranche of funding, with Genesis applying for finance for three different developments.

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Renters occupy luxury flat development

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15 private tenants from 7 local tenant action groups across London
held a ‘housewarming party’ at a development of newly built private rented flats in Stratford, east London, in protest at soaring private rents and the government’s failure to tackle the problem. London rents have been rising at around 7 per cent per year. [1] 10 others held a solidarity protest outside the Genesis tower block (see photo below).

The flats are built and let by Genesis [2], which has been shortlisted to receive funding through a government subsidy scheme [3] for private rented housing in three developments in London [4].

Housewarming card

Rents in the occupied development, marketed as ‘Stratford Halo’, start from £1,700pcm for a two bedroom flat, the minimum size needed for a family with children – of which there are now more than 1.3 million renting from private landlords in England [5]. Based on figures published by Shelter, these rents would only be affordable to families with an income of £76,000 or more [6].

Emma Bradshaw, one of the activists, said:

“Private renting is expensive and gives people no security – the last thing we need is more of it. Rather than supporting developers to build expensive private rented housing that is only affordable to the very wealthiest, the government should bring in measures to keep rents under control and invest in good quality genuinely affordable social housing that gives ordinary people the security they need.”
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In total, £1bn is being made available to developers to build new private rented properties as subsidised finance at an estimated minimum cost to the public purse of £90m. [7] The government claims that the first £700m of the funding “has the potential to deliver between 8,000 and 10,000 new homes”. [8]

If the £1bn was used to build social housing on publicly owned land, around 10,000 new homes could be built [9], with money recovered through the rents. This would also help to reduce the housing benefit bill, 40 per cent of which now goes to private landlords as one in four private tenants currently needs housing benefit to afford their rent. [10]

Check out the photo gallery here

See leaflet here

For further information, images, footage and interviews, please contact letdown.action@gmail.com.

The protest was organised and supported by the following private tenants groups:
Advice 4 Renters (Brent)  –  Camden Federation of Private Tenants  –   Digs (Hackney Renters)   –  Haringey Private Tenants Action Group   –   Lambeth Renters  –   Southwark Tenants   –   Tower Hamlets Renters

All groups are also members of London Renters, a coalition of private tenants groups
The London Renters network aims to share resources for taking action on private tenants issues; support people to set up new private tenants groups in their borough and campaign together against developers, landlords, letting agents, government or anyone profiting from or exploiting our basic need for housing. Contact londonrenters@riseup.net for more information and to sign up for regular announcements.

Notes to editors

1. Figures published by LSL Property Services found that London rents rose 7.9 per cent in the year to March 2013 – eight times faster than wages.

2. According to its 2012-13 financial statements, “Genesis aims to be a leading property based service provider”, providing housing for sale and rent (at both social and market rents). The company had a turnover of £293m and made £36.7m from sales of property in the year to March 2013. It also received £34.3m in grants. In ten years time (2022-23) the company is projecting an operating surplus of £73m.

3. The Built to Rent fund provides subsidised finance (through loans or equity) to private developers for privately rented homes which will be let at market rents. £1bn is being made available through the scheme, with 43 companies with a total of 45 bids currently being assessed for the first £700m of finance – an average of £15.6m per project.

4. A Freedom of Information request to the Greater London Authority, which is assessing the bids for Build to Rent funding in London, reveals that the following three Genesis developments have been shortlisted to received funding through the Build to Rent fund:

  • New Hendon Village, Colindale (zone 4), London Borough of Barnet
  • Madeley Road, North Ealing (zone 3), London Borough of Ealing
  • Springboard House, Upton Park (zone 3), London Borough of Newham

A total of 15 London developments from 12 developers have been shortlisted to receive funding through the scheme.

5. The English Housing Survey 2011-12 finds there 1,306,000 households with dependent children renting privately.

6. Shelter’s Private Rent Watch studies are based on rents being affordable if they take up no more than 35 per cent of net income. At a rent of £1,700 per month, the cheapest two bedroom flats in the Stratford Halo development would only be affordable to households with a monthly net income of £4,857, or £58,286 per year. This equates to a gross income of around £76,000 per year (assuming two earners with equal salaries, claiming child benefit for one child and having no other income).

7. Calculation based on funding provided through loans to developers with A-AAA credit ratings and normal collateralisation for a ten year period, with annual interest payments and the principle repaid at the end of the period. At current interest rates, developers will pay 1.74 per cent interest (source), yet the government pays 2.66 per cent (source). The minimum cost to the government of the loans (excluding operating costs for the scheme) is £92m (lending money at 0.92 per cent below their cost of borrowing £1bn over the ten year period). The effective subsidy to the developers is estimated at around double this figure, as the developers are able to benefit from access to loans at a considerably lower rate via the government than they would be to access themselves directly on the market.

8. Source: DCLG

9. Based on building costs (excluding land) of £100,000 per home (source: New Economics Foundation)

10. Source: English Housing Survey

Letting agents ignore new rules on fees transparency

Back in September we highlighted how the Advertising Standards Authority (ASA) had introduced new rules requiring letting agents to come clean about their fees: they must now “ensure they prominently include information about non-optional fees in their ads for rental properties”. The deadline for meeting these new requirements was today – but it looks like they’ve been widely ignored.

For example, a visit to one of the offices of Leonard Leese in south London today showed that there was no information about fees on the ads in their windows. Maybe that’s because they don’t charge tenants fees – like all letting agents in Scotland? Sadly not. On their website the information simply says “Details of our fee structure for rental properties will be shown here shortly”. Going into the office to ask, it transpires that they charge tenants at least £300, or one week’s rent if this is higher. But when asked about the new rules, the first agent appeared to know nothing about it, while the second just made some vague claim about the information coming “soon”.

No fees at Davis & Gibbs?

No fees at Davis & Gibbs?

Just down the road, Davis & Gibbs was pretty much the same story. No information on the ads in their window, and no sign of anything on their website. Stepping inside, the dream of a fee-free move was shattered again: £300 minimum fees, plus “some landlords have different arrangements for inventories and check-in, so there might be extra charges for this”. But this lot were more on the ball on the new rules about publishing the information – sort of. “It’s happening as we speak” claims the agent. “It’s just the IT guys don’t know how to do it”. Not impressed – if your IT team can’t add information to a website at two months notice, it’s probably time they got some extra training…?

We don’t think these are the only ones. If you’ve spotted other letting agents who are breaching the new rules, we’d love to hear about them: please post your stories in the comments below. You can also complain directly to the ASA using their online form.

Of course, it’d be simper if letting agents didn’t charge fees for tenants, who already face outlays often in the thousands when moving into a new home. Legislation in Scotland bans fees for tenants – and instead forces letting agents to compete on the fees they charge to landlords, who are completely free to shop around for the best value offer on finding a new tenant. It’s time the same happened here – and that’s what we’re demanding.