Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Memoranda

Memorandum by The Housing Foundation (HOU 01)

*ab  Whether the funds in the Comprehensive Spending Review will achieve the Government's target of a decent home for everyone by 2010:

  Clearly the Government's substantial funding package must have some effect, but there is substantial confusion over who and where the funding will apply and of course the conditions which will attach to its allocation.

Affordable housing for sale

  PPG3 has clearly set out the guidelines and it is to be hoped that those conditions will be adhered to with some slight modifications. Of paramount importance is that homes provided under whatever initiative are affordable in perpetuity. Current qualification criteria and the rigid interpretation of the cascade effect of those who qualify must be amended, as the present guidelines do make the availability of mortgages very tenuous, being seen by most major lenders as far too restrictive, which would indicate that re-sales or possible repossessions would be very difficult to achieve.

  Building Societies are sympathetic to the tenets of affordable housing, but quite understandably they are very loathe to lend where they see a real and quite unacceptable risk in the longer term of achieving sales in a reasonable period.

  The Housing Foundation has been working with most District Councils in the South West and our 999-year leases, which protect affordability in the long-term, in perpetuity, are seen as an ideal model. Homes are available without any form of public subsidy at no more than 65 per cent of their genuine market value, and always at least 30 per cent cheaper than renting in the private sector.

  If we can provide quality homes without access to Government subsidy, we are bound to ask the reason for any more public subsidy other than for homes for rent, which will always be necessary to cater for affordable rents at the bottom end of the need. To provide Government funding for affordable housing to sell on a shared equity basis is unnecessary and probably ineffective. Homes for key workers in its widest interpretation are perfectly possible within the guidelines of PPG3 without subsidy.

  What is, however needed is clear guidance to District Councils on the proactive stance that they should adopt in encouraging exception policy permissions where local need is clearly demonstrated. Sadly, this has not been our experience, although it is fair to say that the enormous publicity of the serious need for affordable housing for key workers to sustain local communities has certainly focused the minds of some Councils who hitherto had been far from supportive.

  There must be a very serious doubt that the simple expediency of providing money will achieve a decent home for everyone by 2010, and certainly there should be very serious discussion between Central Government and those of us on the ground who are fighting often lonely battles to bring the ideals to fruition.

*ab  How spending of the new resources should be balanced between social housing and options for owner occupation for those who cannot afford to buy (including shared ownership) and the mechanisms to be used for their distribution

  The balance between social housing and options for home ownership is absolutely critical.

  Social housing grant to Housing Associations for the provision of rented accommodation is obviously grant dependent and an increase will undoubtedly provide more rented housing. I argue, however that a large proportion of local people seeking housing for rent are precisely the same people who seek to own their own homes if only such homes can be provided which are affordable.

  Local Councils define affordability as the ability to purchase a home at a price which represents three times the average income of a family. In reality this means, in the West Country, providing new quality homes at no more than £60-£65,000. We can achieve this by working within the guidelines of PPG3 on exception policy sites which can be acquired at about £50-£70,000 per acre, giving a plot value of about £5,000. Clearly, at such land values, affordability within the criteria is perfectly possible, but it requires more Companies such as the Housing Foundation to be prepared to operate at minimal profit levels and, as importantly, to ensure that rent payable on the retained equity does not take the monthly repayments above the affordable level.

  Many shared equity schemes charge a disproportionate rent linked to market rents and this is unjustifiable. The Housing Foundation charge a rent equal to just 2.5 per cent of the value of the retained equity and this is pegged at a maximum of £20 per week. All of this is clearly achievable and Government should, in my opinion, recognise more publicly the role that well-intentioned private sector Companies can achieve.

  The practise to assume that Section 106 provisions on development sites can only be achieved by Housing Associations providing rented homes must be challenged, as clearly the provision of affordable homes to buy is the preference of most young families who otherwise will have no alternative but to seek a home to rent.

*ab  The role of planning obligations in providing affordable housing:

  I have touched on the role of Planning Authorities, who frequently do not have sufficient dialogue with their Housing Departments, who do seem to support our contentions in the main, but we see large numbers of Section 106 agreements which do little to provide the realistic provision of affordability and frequently give developers the opportunity to buy their way out of the obligations.

  I do not seek to suggest that there are any simple solutions to the problems, but legislation through PPG3 exists and is far too often resisted by Planners. It probably takes us in excess of two years to achieve planning on exception policy sites due to the resistance of Planners. Reliance on brown field sites in rural areas is a non-starter, they do not exist other than the odd site for perhaps two or three homes. I do not advocate the wholesale release of agricultural land, but one cannot escape the fact that it is the shortage of development land which causes the escalation of land values and hence high property prices and the release of land as exception sites must be more widely used.

  As I have already stated, more use could be made of Section 106 agreements on conventional development sites to achieve a mix of tenure by permitting affordable housing for sale as well as social housing for rent. The current practice of Local Authorities devising their own Section 106 agreements should be discouraged. House builders who currently attempt to resist Section 106 agreements would clearly be more amenable to an agreement of which they were aware before committing themselves to land purchase and then wasting their own and Council time endeavouring to negotiate an acceptable agreement.

  I have recently attended two Planning Inquiries into affordable housing and the Inspector in both cases criticised the Councils for their lack of any realistic policy on this subject, stating that a non-policy of waiting for some organisation to suggest a scheme is very far from a policy. I believe that the current climate will eventually bring about an increase in interest in the subject of housing which is affordable and maybe it will no longer just be an irritant, which is how it is perceived by some Authorities.

  I hope I will be forgiven for suggesting that Central Government could make massive strides if people like ourselves could have access to the policy makers, to at least present the facts as we experience them day to day.

*ab  The effectiveness of the Housing Market Renewal Fund in tackling housing needs in areas with low demand:

  As we only operate in areas where there is a chronic shortage of housing, I am not qualified to make any observations on your question other than to confess to a confusion as to why the Fund needs to be used in such areas, other than perhaps to clear the many unwanted terraced industrial based homes to replace them with the sort of property for which there may be a reasonable demand. We did, for example, purchase large numbers of boarded up empty properties, refurbish them and leased them back to a registered social landlord, but this was also an area of high demand, in Plymouth.

*ab  How the quality of new affordable housing can be ensured and the poor design of previous housebuilding programmes avoided:

  Surely the quality of new housing is a function of planning and building control and I certainly would welcome realistic controls. We do not see the answer to affordability in reduced standards and it is interesting that the guidelines in PPG3, indicating 17 homes to the acre, does little to aid good design and good living environment.

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