Memorandum by The Chartered Institute
of Housing (HOU 32)
The Chartered Institute of Housing (CIH) is
pleased to make this submission on Affordable Housing to the Select
Committee. This evidence should be seen to add to, rather than
replace, the evidence that we have already submitted for the Transport,
Local Government and the Region's Select Committee inquiry into
affordable housing in May.
Regarding the role that planning obligations
in providing affordable housing, CIH has made a separate submission,
jointly with the Local Government Association, the National Housing
Federation, Royal Town Planning Institute and Shelter.
WHETHER THE
FUNDS IN
THE COMPREHENSIVE
SPENDING REVIEW
2002 WILL ACHIEVE
THE GOVERNMENT'S
TARGET OF
A DECENT
HOME FOR
EVERYONE BY
2010
The PSA target for 2010 relates to achieving
the decent homes standard (DHS) in the social housing sector;
it will still leave a considerable deficit in the private sector.
The question can be posed separately in relation to local authority
(LA) and housing association (HA) homes.
Local authority housing:
There are four main ways in which LAs can aim
to meet the PSA target:
— retain their housing stock and use
credit approvals, major repairs allowance and other available
resources;
— retain their stock and bid for extra
resources by setting up an ALMO (Arms Length Management Organisation);
— retain their stock and raise funds
through the PFI;
— transfer their stock to another social
landlord which can raise funds from outside the public sector.
In practice PFI seems unlikely to have a significant
impact due to the small scale of the schemes in the pipeline.
Consideration therefore focuses on the other three options.
CIH (with Graham Moody Associates) carried out
an assessment of the likelihood of the 10-year target being achieved
in LA housing, prior to the SR 2002. The conclusion was that,
given reduced expectations for stock transfer, with the possibility
of a maximum of 1.1 million homes being transferred, some 1.8
million homes would be left in the LA sector by 2011. This would
require the funding levels for the LA sector, totalling about
£1.7 billion in 2003-04 (in the previous SR 2000) to be maintained
for several more years.
Detailed allocations for LA housing following
SR 2002 have not yet been announced. The Treasury would have expected
to be able to reduce these allocations, and levels of the major
repairs allowance, in step with falling LA stock levels. To meet
its target, the Government will have to maintain a higher level
of resources. Our calculation was that it would cost the Exchequer
some £1.9 billion more in the period up to 2010.
To achieve the 10-year target, more resources
may well be required, unless stock transfer can be made more attractive.
CIH has made proposals to Government about increasing the attractiveness
of partial transfers and making transfer more clearly centred
on empowering tenants. They will be considered in the current
"PSA Plus" review.
It should be noted that there are several difficulties
in reaching a firm conclusion about the likelihood of achieving
the target:
— the "baseline" figure of
homes failing to meet the DHS is uncertain: forthcoming figures
from the English House Condition Survey will improve the estimates;
— initial LA business plans for their
housing showed considerable shortfalls against the target—later
rounds of business plans should show an improvement;
— there is uncertainty about the extent
to which initiatives like transfer will help to meet the target—a
proportion of transferred properties will already meet the standard;
— if the Government increases funding
for an initiative such as ALMOs (however desirable), it may need
to raise the total amount available for LA housing (because ALMO
funding is more generous than normal funding).
There is no doubt that there is considerable
uncertainty as to whether the 10-year target can be achieved in
LA housing. The uncertainty is particularly acute in large urban
areas (Birmingham, Manchester, Sheffield) where full stock transfer
is not "on the agenda".
Housing Associations
The initial estimate of the shortfall in the
HA sector was 500,000 homes. There has been uncertainty about
this figure, however, due to be clarified shortly through returns
being made by individual HAs. Several HAs are likely to have difficulties
in meeting the 10-year target, particularly those with large numbers
of pre-1919 properties acquired during earlier urban renewal programmes,
which now require reinvestment. The problems are exacerbated by
the effects of rent restructuring, which will reduce rental income
for many associations, and hence their ability to fund major investment
in their existing stock from their own resources.
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
A range of housing options are needed for those
who, whilst not normally qualifying for social housing, are unable
to buy on the open market. The type of housing provided to meet
these needs should not be limited to home ownership, but should
include housing for rent at less than market levels.
The reason why housing is unaffordable to those
on moderate incomes in some parts of the country is that demand
far outweighs supply in these areas, pushing prices up. Any public
funding that is made available for intermediate housing should,
therefore be used to build new housing, adding to the overall
supply of housing in the area. Loans or grants that enable the
purchase of existing properties on the open market only serve
to increase competition for housing, increasing prices further.
The relative needs for social housing compared
with low cost and shared ownership options will vary considerably
between areas. Because of this we believe that techniques to analyse
housing markets need to be employed at local/sub-regional level
and interpreted in such as way as to determine the projected need
for the different types of market and sub-market housing. Local
authorities then need to be able to have access to ear-marked
funds that enable them to provide reasonably for the range of
needs for sub-market housing.
In some areas it may be appropriate to develop
an "intermediate housing market" of significant size
to meet the needs not only of key-workers, but of working people
on incomes that prohibit them from renting or purchasing suitable
accommodation at a price they can realistically afford in that
area.
Planning mechanisms are also needed so that
local authorities are able to specify the type of housing they
require on sites, differentiating between housing that is affordable
to those on low incomes and "intermediate" priced housing.
For this reason we suggest that two separate definitions of affordable
housing are now required, and this is covered in our separate
response relating to planning obligations jointly with other organisations
that have a concern for delivering housing through the planning
system.
THE ROLE
OF PLANNING
OBLIGATIONS IN
PROVIDING AFFORDABLE
HOUSING
The CIH has made a separate submission on planning
obligations jointly with the Local Government Association, National
Housing Federation, Royal Town Planning Institute and Shelter.
THE EFFECTIVENESS
OF THE
HOUSING MARKET
RENEWAL FUND
IN TACKLING
HOUSING NEEDS
IN AREAS
WITH LOW
DEMAND
At the time of writing, a total of £25
million has been made available for some early work on the housing
market renewal pathfinders. In its Spending Review 2002, the Government
made it clear that substantially more money will be available,
but the level of funding has not yet been decided. In the submission
to the 2002 Spending Review, the Chartered Institute of Housing,
together with the National Housing Federation and the Local Government
Association calculated that, to address the range of problems
in these areas, funding should be phased in from £100 million
in 2003-04 to £200 million in 2004-05, and up to £500
million in 2005-06, and sustained at this level for a period of
10 years.
Housing markets have become dysfunctional in
a range of types of areas. The problem is more often associated
with urban areas, but it also exists in some rural settings. Former
coalfield villages are a good example of rural housing market
failure where restructuring of the stock is necessary.
Early work on the pathfinders has already raised
some important issues relating to the range of activities involved
in market renewal, and the funding requirements.
Some demolition will be inevitable and the question
of how to provide suitable housing for those displaced from their
current homes is an important one, since a substantial part of
the current problem is the current mismatch between people's needs
and aspirations and the types and quality of housing in the area.
There will be a need for a variety of types of new high quality
housing, including both market and affordable housing, to meet
needs and aspirations of displaced households. Types of new housing
include, for example;
— bungalows and level access housing
for elderly people and people with long term illnesses (of which
there are relatively high proportions in many market renewal areas);
— family housing to retain families
that would otherwise leave the area;
— larger housing for large BME households
and for better off working people, depending on how economic strategies
are expected to affect particular neighbourhoods.
It will, therefore, be important to ensure that
sufficient capital funding for new affordable housing is made
available. The timing is also crucial, so that sites where demolition
has taken place are quickly reused and are not left for long periods
of time as an eyesore. Funds through the Approved Development
Programme (ADP) need to be well co-ordinated so that this kind
of scenario is avoided.
It is essential that people living in these
neighbourhoods are involved in the process of deciding what happens
to their communities. Market renewal will only be successful if
local people are encouraged to remain and settle in the area that
is undergoing change, and this will only happen if they feel their
concerns are being dealt with adequately. Part of the market renewal
process, therefore, must be to find out the aspirations of people
living there and go at least some of the way towards meeting them.
An example of this working in practice is the Homeswap scheme
pioneered by the Seedley and Langworthy partnership which was
worked up and shaped by residents to meet their needs. Community
consultation, engagement and involvement will be very important
activities and need to be adequately funded.
It must also be recognised that many people
living in these areas are in need of various types of support
to enable them to live independently. Homelessness in these areas
is not due to the lack of supply, as it can often be in high demand
areas, but is a consequence of lifestyles that are often chaotic
resulting in an inability to access housing and sustain tenancies
or ownership of that housing. There are also high levels of drug
problems and infirmity in these areas, often related to industrial
disease. Many of these people need support to either to help them
settle in permanent accommodation, or to enable them to continue
living independently, which requires revenue rather than capital
investment. It will be important to co-ordinate the market renewal
programme with the Supporting People strategy, so that the true
nature and levels of these needs are known and catered for.
It is anticipated that a wide range of activities
will be necessary and require funding, not limited to those above.
These will include, for example:
— renovation and environmental improvement;
— stock swaps where sustaining housing
is not possible;
— loans/grants for improvement, de-conversions,
affordable warmth, minor works etc;
— clearance and demolition leading
to a reduction in the numbers of empty homes;
— enhanced neighbourhood management
services;
— social support for elderly and vulnerable
residents.
Given the range of activities required to achieve
market renewal, the Market Renewal Fund must be a flexible fund
that can be spent on a range of revenue and capital activities.
Co-ordinating it with other mainstream funding streams is very
important, but it is also important that proceedings are not held
up because of a lack of resources forthcoming through other budgets.
In some instances it will be appropriate to use the fund as a
substitute for other sources of funding, at least in the short
term.
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