Memorandum by National Housing Federation
The National Housing Federation represents nearly
1,400 independent, not for profit social housing providers in
England. The Federation's members include housing associations,
co-ops, trusts and stock transfer organisations, and they own
and/or manage more than 1.8 million homes provided for affordable
rent, supported housing and low cost home ownership, and deliver
an increasingly diverse range of community and regeneration services.
The large majority of the Federation's members are registered
with the Housing Corporation. The Federation welcomes the opportunity
to submit evidence to the Select Committee's Affordable Housing
The Urban Affairs Sub Committee and the ODPM
Select Committee are undertaking three major inquiries that are
core to the future work of housing associations and housing providers
generally. Whilst the inquiries are interlinked, there are clearly
discrete issues that the Committee wishes to explore. Each issue
is important and warrant the inquiry called, but the Federation
believes that there are common policy themes that bond the three,
which are as follows:
housing and regeneration resources:
a fair, rational and transparent allocation process;
planning for mixed, balanced sustainable
decent neighbourhoods: management
In the text that follows, evidence is submitted
on the specific questions asked, in the context of the broad themes
set out above.
Whether the funds in the Spending Review 2002
will achieve the Decent Homes Standard by 2010
The Federation supports the Government's objective
of all social housing being of a decent standard by 2010. There
is still some detail to be announced that will allow a better
analysis of whether the Decent Homes Standard (DHS) will be achieved
by 2010. Any such analysis should not obscure the need for further
resources needed in future spending reviews. Increased resources
to local authorities and housing associations will make the target
more achievable, but there is not sufficient detail on how many
non-decent homes actually exist, beyond the number estimated in
the 1996 English House Condition Survey; where the non decent
homes are; and the level of resources available to social landlords
to deliver the decency standard.
The Federation believes that the delivery of
the DHS and broader house building objectives will depend on the
following four factors:
1. A TRANSPARENT
At the end of the last round of negotiations
around the construction of the Housing Needs Index (HNI) and General
Needs Index (GNI) it was agreed with the Government that a moratorium
on further changes would be in force, pending more radical changes.
As part of our response to the last consultation round (and also
as part of our Spending Review 2002 submission), we proposed a
set of radical changes, designed to deal with some of the perennial
problems to do with the indices. The problems include:
Lack of transparency in how HNI and
The difficulty in balancing the allocation
of resources between widely differing housing needs using a single
set of indices.
Stemming from the above, that invariably
the "empirical" outputs of the HNI/GNI calculations
are subject to political manipulation in order to get the "right"
Our proposal is that resources available are
placed into three "pots", each with a clear and different
function, and based on identified policy priorities. The amount
and balance of how much went into each pot would be a Ministerial
decision, based on Government's assessment of the relative importance
of each policy area. Once agreed, the funds would be distributed
on a regional (at least) basis, using specific indicators and
measures associated with the separate pots. This approach would
solve all three problems noted above: there would be a clear and
obvious relationship between identified needs and resources; the
balance of resource allocation between needs would become a political
decision, not a statistical side-effect; and post facto
political manipulation would become unnecessary, as the political
prioritisation process would have been overt from the start.
The pots and their measuring indices that we
A new supply housing fund: geared
towards the provision of new affordable housing, for rent, for
low-cost home ownership, for supported and specialist accommodation
for vulnerable people, and for "intermediate" market
A social housing stock condition
fund: geared towards the capital elements of major repairs (excluding
those elements covered by the Major Repairs Allowance) and improvements
to social housing stock.
A regeneration fund: geared towards
bringing housing resources (in tandem with other resources) to
bear on the problems of low demand, abandonment and neighbourhood
regeneration in deprived areas, using demolition, clearance, private
sector improvement and area-based renewal among other tools.
The construction of these three pots mirrors
the three main housing priorities expressed by the current government,
in the Housing Green paper and the subsequent Housing Policy Statement;
the Public Service Agreement targets as set by the Spending Review
2000, incorporating the Decent Homes Standard; the New Commitment
to Neighbourhood RenewalNational Strategy Action Plan;
and in the Secretary of State's April announcements on regeneration
and low demand, launching the Housing Market Renewal pathfinders.
It incorporates the priorities identified in the Housing Corporation's
National Investment Strategy for 2003-04 and their objectives
for the ADP: the provision of new affordable housing, facilitating
regeneration in the most deprived areas, and the provision of
specialist accommodation for vulnerable people. Clearly, the ADP
and HIP will have different levels of resources attached to each
fund. Once the headline resources for each of these funds are
established, they should then be distributed using substantially
revised sets of indicators for each heading.
The Federation believes that the introduction
of the three pots approach will lead to a fairer, more rational
and transparent approach to housing and regeneration resource
allocation, and would call on the Government to introduce this
for 2004-05 to distribute resources announced in the Spending
2. CREATION OF
The Government is committed to supporting council
stock transfers to housing associations of up to 200,000 homes
per year. Whilst the stock process continues in many places, there
is some uncertainty about whether the stock transfer can be sustained
in urban areas where:
the housing does not meet the decency
major work and improvement costs
are high; and
a community regeneration approach
is required in tandem with the housing investment.
An assessment entitled Can the Ten Year Target
for Council Housing be Achieved? commissioned by the Chartered
Institute of Housing, carried out by Graham Moody suggested that
the 2010 decent homes targeton the basis of resources announced
in the Spending Review 2000could not be met unless 1.5
million homes were transferred to new landlords with access to
private sector resources. An updated assessment will be needed
to consider the impact of the Spending Review 2002 resources,
but the scale of private finance required to deliver the decent
homes standard is clearly substantial, and beyond the reach of
public finance available (under the Spending Review 2000).
In order to facilitate transfer, adequate provision
should be made for outstanding debt, including breakage costs
for authorities transferring negative value stock. The Federation
in its Spending Review submission recommended the creation of
a dowry fund of up to £250 million per annum, and we look
forward to its inclusion in the forthcoming Communities Plan.
3. ASSET MAINTENANCE
The Government estimate that between 280,000
and 600,000 housing association homes do not meet the decent homes
standard. The recent Spending Review announcement however failed
to announce additional resources for housing associations to help
achieve the target. Housing associations do not hold substantial
reserves for repair purposes, and the Government's programme of
rent restructuring is limiting housing associations' ability to
use rental income to undertake major repairs. The Federation is
working in partnership with the Housing Corporation to ascertain
the level of non-decent housing in the housing association sector.
This work will involve organising seminars; issuing good practice
publications; and undertaking in depth surveys in conjunction
with housing associations to inform a register of decent standard
data that is both robust and easy to maintain.
In the Federation's Spending Review submission
to the Treasury, a recommendation was made to create an Asset
Management Fund, at a total cost of £2.17 billion. With housing
associations' ability to raise private finance against the public
subsidy, the Asset Management Grant fund could be limited to £70
million per annum over 10 years.
4. FISCAL MEASURESREDUCING
TAX (VAT) ON
VAT is a major additional and unnecessary expense
to housing associations undertaking work to existing stock. Recent
ODPM funded research on Fiscal policy options to promote affordable
housing written by the Cambridge Centre for Housing and Planning
Research supported the reduction of VAT on renovation work to
housing association property to 5 per cent as means of increasing
and improving the amount of affordable housing available. The
Federation supports this proposal as a precursor to a reduction
to zeroalongside the VAT rate for new buildto help
increase and improve the quality of affordable housing provided
by housing associations but also deliver the decent homes standard.
How spending of the new resources should be balanced
between social housing and options for owner occupation for those
who cannot afford to buy (inc Shared Ownership) and the mechanisms
to be used for their distribution
The Federation recommended in its Spending Review
submission that to meet housing need, £1.7 billion additional
funds be made available to help build an additional 40,000 new
social homes annually above baseline production. This is in the
context of research by Alan Holmans published by the NHF, TCPA
(detailed in the Federation's earlier Affordable Housing Evidence)
that forecast a need for between 80,000-85,000 additional affordable
homes per year between 1996-2016. We recognised that this figure
may prove politically difficult for the Government to accept,
given competing priorities, and submitted a revised option that
would create an additional 20,000 new social homes annually.
We would stress that any longer term programme
needs to be balanced between the requirements of key workers,
some of whom may be able to afford low cost home ownership and
sub market rents, and the continuing need for conventional rented
We would see the Challenge Fund announced for
2003-04 as a vehicle for this dual approach and would recommend
that half the 4,000 units produced should be for key workers,
with the other half for conventional housing.
As regard to the core Approved Development Programme
(excluding the Challenge Fund), we welcome the restoration of
resources to northern and midlands regions and the additional
£68 million on 2002-03 figures for 2003-04.
Broadly speaking, we estimate that the core
programme will build around 19,400 units. However, we would emphasise
that even when the Challenge Fund and Approved Development Programme
are put together, the total number of additional homes it will
produce will not make a significant inroad into the need for 40,000
additional homes per annum we have identified.
Shared ownership and other rented options involve
the construction of additional units by housing associations.
Other forms, such as Homebuy and the Starter Home Initiative involve
financial assistance for key workers and others to buy a home
in the private sector, which does not usually involve the construction
of additional homes. Though these initiatives are cheaper per
unit, they do not address the net deficit in affordable homes.
The decision on how resources should be balanced
should rely on a robust housing needs assessment that considers
current demand for all tenures of housing within the local planning
authority boundaries, and use those considerations to estimate
future demand. There will be considerable local information available
that will enable local authorities to gather in the relevant information,
such as the local authority's housing register (which will include
people in temporary accommodation), local land and house prices,
key worker needs, etc.
Regional agenciesprincipally Regional
Planning Bodieshave a role to play in deciding the strategic
regional needs for individual local authority areas and they must
be considered accordingly. The Government's recent support for
annual regional planning house building targets to be met is welcomed,
but there must be similar support for the social and economic
infrastructure that new communities need. This will be a crucial
to the sustainability of the significant housing investment that
the Government is committed to both in the strategic sites in
the south and the housing market restructuring areas of the midlands
and the north.
Therefore, the balance should be primarily driven
by the present and future local needs of an area, with attention
given to regional priorities. However, research has shown that
many housing needs assessments are not robust, and have failed
to take account of the popularity of low cost home ownership schemes.
Similarly, it is likely that assessments would not have taken
into account the recent support for key worker accommodation.
Striking the right balance will involve taking account of local
needs as evidenced by the assessment, the strategic priorities
of the funding agencythe Housing Corporationand
the ability of housing associations to identify sites for particular
uses. Over-riding these factors should be a commitment to developing
and sustaining mixed, balanced sustainable communities. Mixing
tenures of new housing is a singularly important means to achieving
In the context of the Spending Review announcement
and focus on the four strategic sites in the South East, we have
concerns that other areas of high demand will be neglected. The
strategic sites may present problems of access for new communities,
particularly for those who are unwilling to move from their familial,
social and employment networks. We would recommend the inclusion
of smaller scale development areas in a wider southern geography
that relies more on existing infrastructure, as well as the longer-term
strategic development of the proposed sites, with the associated
The role of planning obligations in providing
The Federation in partnership with other housing
and planning organisations has submitted separate evidence to
the Select Committee on the role of planning obligations in providing
The effectiveness of the HMRF in tackling housing
needs in areas with low demand
The Government is committed to a Housing Market
Renewal Fund (HMRF) and has already identified and is funding
nine pathfinder schemes' inception work in the midlands and the
north. It is too early to evaluate how successful the HMRF approach
is. However, the Federation believe that the following key factors
will be instrumental for its success:
Coordination of strategies, ensuring
that all strategies for the area are effectively co-ordinated
in order to maximise outcomes.
Planning guidance, ensuring that
decisions made by pathfinders dovetail with regional and local
strategies for the relevant areas.
Effective delivery vehicles with
powersor at least strong influenceon issues such
as compulsory purchase orders, planning, highways.
A strong focus on social outcomes,
ensuring that socially excluded people benefit from the major
investment that the housing market renewal approach will bring.
Adequate resourcesa minimum
of £500 million over the next three years is required, together
with a longer term commitment in future Spending Reviews.
How the quality of new affordable housing can
be ensured and the poor design of previous house building programmes
New affordable housing provided by housing associations
is of a high and durable standard. Proposed house building schemes
that seek funding from the Housing Corporation are required to
address the Scheme Design Standards set out, and periodically
updated, by the Corporation. Issues concerning poor design and
quality of new housing are being debated, because of the new emphasis
on off site manufacturing (OSM) systems for new housing and the
need to use land more efficiently via higher density housing.
OSM systems for new housing do offer the opportunity
for the quick delivery of new affordable housing. However, any
proposed development will still need to be rigorously tested to
ensure that it meets future tests of the decent homes standard,
and will still be subject of the planning consent process. OSM
should also be subject to lifetime costing criteria that will
help determine whether the product represents value for money.
On higher density housing, the Federation set
out its views separately to the Transport, Local Government and
the Regions Select Committee's Tall Buildings Inquiry. In summary,
the Federation believes that tall buildings are not intrinsically
good or bad forms of accommodation, but they do require:
intensive housing management, which
may require include a concierge and/or "supercaretaking"
appropriate dwelling mix, appropriate
occupation levels, with sensitive allocation policies that discourage
households with children being allocated high rise housing;
attractive and robust design; and
popular locations with good connections
to the transport infrastructure and other amenities.
In the Federation's evidence, mention was made
of work commissioned by the London Housing Federation to study
how high density housing could work in London. Capital Gains:
Making High Density Housing Work in London has since been published
and highlighted four critical factors for success. Residents valued:
Accessible and attractive locations
with good transport links.
Comparatively low occupancy levels
and child densities.
Effective onsite management of the
development and its environs.
Good housing design that addressed
security; sound insulation; dwelling size; good quality open space;
It is essential that adequate arrangements be
made for appropriate management and maintenance of higher density
housing, otherwise management problems that have characterised
such developments in the past, will happen similarly to those
of the future.