Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 320-339)



  320. You are representing a consortium, are you not, of several districts?
  (Mr Darling) If I can give you the district perspective first of all. A housing needs survey has been carried out within our district and has identified the needs for the next five years and the next 15 years (which Mr Robertson will be able to allude to). That is being replicated throughout the region and it indicates again that in several parts of the region there is an unsatisfied demand for affordable housing. It is a significant demand in certain areas. We commissioned recently a study by CURS (the Centre for Urban and Regional Studies) and that has also indicated that there are some problem areas within the north east. So it is a mixture.

  321. Can we just come back to my own home village where several hundred houses have been demolished, houses that were built in the early 1960's, gardens back and front, three bedroomed, semi-detached, all mod-cons. Then we look to see what is happening in Newcastle. Again several thousand houses being pulled down. The same thing is happening in Sunderland. It is happening right through the north east. So I come back to my initial question, is it a question of quantity or is it a question of quality?
  (Mr Robertson) My own view is that it is an issue not necessarily of housing quality but environment quality, community quality. People do not want to live in communities where they are isolated or suffer social exclusion.

  322. Do you believe we have sufficient houses in the north east?
  (Mr Robertson) In certain parts I would say yes, we have. But in other parts, particularly the rural parts, the answer is no.

  323. Why do we hear that there is still a need for additional housing to meet increasing demand?
  (Mr Robertson) The demographic changes in terms of households drive that because smaller household development in terms of more single people wanting to live alone, couples wanting to live alone rather than with their families.

  324. Would you agree that in the north west housing needs could be almost entirely be met by building on brownfield sites in urban areas?
  (Mr Khan) It can in some areas. The picture is mixed. You have to create some brownfield sites in some areas to try to build housing. In other areas there are simply no brownfield sites available.


  325. Can you give us an example of where there are no brownfield sites available?
  (Mr Khan) Trafford. Where we work in Trafford in some of the outlying towns where people want to live, like Sale and Altrincham, it is very difficult to get brownfield sites that are available at the right cost. Construction costs and land prices are so high that it is very difficult for us to get brownfield sites.

  326. You think that people should be able to get housing there rather than on the substantial brownfield sites that apply in the rest of Greater Manchester?
  (Mr Khan) It depends whether we want to build mixed communities. Do we want to have an aim of having a community where people of all ranges of income want to live? Or do we want to just have some areas which are for the better off and some areas that—

Mrs Dunwoody

  327. You have just said that you do want division of some sort. You say that where ethnic communities want big houses, four or five bedrooms, they will nevertheless—because they want a big a house—always concentrate on a particular area. You cannot do it both ways. If you want a mixed grouping on the basis of income, surely you must also want it on the basis of race and size of accommodation.
  (Mr Khan) I do not think it is as black and white as that.

  328. No, but you are rather implying that the barrier was in the areas that were fashionable where the prices were high and it was difficult to get brownfield sites and that presented you with a problem that you were dealing with by saying that is not an area in which we can develop.
  (Mr Khan) We want to try to develop mixed communities where people of all income levels and all backgrounds can try to live. That is what we are trying to do. I do not think it is as black and white as perhaps I said earlier.

  Mrs Dunwoody: No, but what is the answer?

Chris Grayling

  329. The danger is that you are using resources—and we have heard quite a lot this morning about how many resources are needed across Britain as a whole—to deal with the lack of affordable housing in a number of areas, yet within Greater Manchester, which is, after all, one large community, you have, as Mrs Dunwoody has just said, large brownfield sites, you have areas that are more run down. I just find it difficult to grasp that it is socially desirable—desirable from the point of view of the interests of the whole of the Manchester community, and valuable use of resource—to concentrate on trying to create affordable housing in difficult areas rather than take advantage of the resources that are available to the whole city.
  (Mr Khan) We are trying to work across boundaries. People do not want to move five miles down the road in some cases, they do not want to move from one village to the next because that is where they were brought up, that is where their family and their ties are. I think we have to have some mixture of approaches varying from having affordable housing in areas of high demand towards reconfiguring some of the markets where they are failing, and also towards developing some affordable housing in rural communities. Those are the three things that I would like to see us trying to do.

Mr Cummings

  330. Do you think that local authorities should attempt to meet the aspirations for home ownership? If so, how would this be achieved?
  (Mr Robertson) Yes, I think we have a duty to ensure—we have used this word already this morning—social diversity, but it is an issue of affordability. In my own district, for example, someone on an average wage would have to have a mortgage nearly 5.5 times their household income to afford an average house price. There is an issue for people who are going to aspire to home ownership to have some sort of equity in the house in which they live.

  331. Is this the view in the north west as well?
  (Mr Muir) Not quite. There is an aspiration among virtually everyone to become a home owner. There certainly are not the mechanisms to achieve that in the communities of each individual's choice. Whether we want to do that and can afford as a country to achieve the aspirations of every individual, I would doubt. There are some people who can afford to buy the whole of a property; there are some people who, probably because of a low income or lack of secure income, will never be able to buy even a five per cent share of the equity of their property. However, we do not at the moment have systems that are flexible enough to allow variable rates of equity sharing by someone who wants to be a part owner of their property. The systems are one way or the other: you are either a home owner or you are a tenant. There are very inflexible arrangements for equity sharing within that.

  332. So you do subscribe to the role of shared ownership to meet these needs?
  (Mr Muir) I think the current system of shared ownership which the Housing Corporation uses could be a lot more flexible than it is. The Right to Buy, for example, allows for local authorities either to have a property which has a tenant in it or a property which has been bought. There are no equity sharing arrangements for local authority tenants. It is one thing or the other. There are different arrangements for charitable housing associations and non-charitable housing associations, schemes that are funded by the Housing Corporation after 1988. So there is a whole range of different mechanisms and I think a lot could be gained from having one flexible system that cuts across all social rented tenants to give them greater choices.

  333. How do you believe that could be achieved?
  (Mr Muir) One quite radical proposal would be that instead of a council tenant having the option to purchase their property with a large discount or not being able to afford to purchase, they could perhaps purchase a tranche of that property. They could perhaps buy 20 per cent and go up to 90 per cent over time according to their incomes, or even come down again to a lower level of equity that they own according to their economic circumstances over their life, perhaps. The local authority would hold on to the remainder of that equity to secure the future role of that property when that tenant moves out or they move to another area and want to sell.

Mr Betts

  334. On the Right to Buy you just mentioned a possibility of the local authority giving an equity in a partially sold property. If properties are totally sold in the Right to Buy do you think there should be conditions put on future resale and should those conditions be restricted to certain areas? Should they apply generally? Or should there be total prohibitions on the Right to Buy altogether?
  (Mr Muir) I think the practicality is how would we manage that sort of system. There does not seem to be any basis in law to administer something like that.

  335. Presumably one of the ideas might be to change the law.
  (Mr Muir) Yes. We have, for example, section 106 agreements at the moment which are a planning tool for properties that need planning approval, either new build properties or properties that are converted. There is no similar system at the moment for properties that do not need planning approval such as a property that sells through the Right to Buy. Personally I feel that the most effective way of doing that would be if the local authority or housing association held back a small tranche of the equity of that property so there would always be a charge on the property and the housing association or the local authority could then have a say over who bought that property when the first purchaser moved on. The first purchaser would get a substantial profit from the increase in value of that property—if there was one—and the housing association or the local authority could then have a choice when the property is sold of who would buy it and perhaps change the level of equity so it could go right back to being a rented property or again sell on an equity share basis.

  336. Just looking at the body language either side of you, is that view shared?
  (Mr Darling) One of the problems that we have is that the Right to Buys, certainly in our district, are running at 40 per cent since the Right to Buy was brought in; in an adjacent council their Right to Buys are running at 50 per cent. What you are failing to achieve through the Right to Buy in certain villages is the mixed and sustainable communities. These properties are being lost on second sales not to the original tenant of the property, the original purchaser, but sold on on the open market. We have recently looked at a Right to Buy because our shared tenants have been given a guarantee that they can continue with the preserved Right to Buy, fairly similar to secure tenants of councils. We have had our first Right to Buy valuation coming through at £85,000 of an existing property. An adjacent local authority has just had a council house with the Right to Buy valuation of £100,000. I think it is a peculiar situation that we find ourselves in, having been with the local authority transfer in 1999 where we were selling properties through the Right to Buy with an average valuation of around about £41,000 (the sale price, including discount of around about £23,000). We were encouraged by the local authority, where we are finding difficulty in our development programme of either brownfield site development or greenfield site development, to purchase and repair back properties that were sold under the Right to Buy provisions at around about £60,000 to £70,000 including the repair works to them.

  337. So the solution is?
  (Mr Darling) The solution is, I again come back to the local authorities themselves should be given some flexibility within certain guidance areas set nationally to ensure that they sustain balanced communities within their areas. I think there is a limit as to how many properties they can lose within areas of their districts through the Right to Buy. They need to have the facility to preserve properties for social rented affordable housing.

Ms King

  338. So you are saying suspend it in some areas?
  (Mr Darling) In some areas if the pain threshold has been breached, yes.

Mr Betts

  339. The issue of the planning which you mentioned in section 106, it seems in the north generally there are not many affordable houses being produced out of this planning system. Is that because the system itself is not any good or because the local authorities themselves are not up to using it properly?
  (Mr Muir) I think it is not a very effective system. One of the issues is that once a section 106 agreement has been placed on a property there is very little administrative arrangement to ensure that future owners do comply with the agreement.

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