Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by Dr Nick Gallent (AFH 05)

  I am currently completing two research projects on second homes and affordable housing for the National Assembly for Wales and the Countryside Agency (both with Dr Mark Tewdwr-Jones and Mr Alan Mace from this University). I think it would perhaps be more useful to draw "evidence" from this work, rather than make general comments on the wider subject. We are certainly addressing some of the issues set out in your Press Notice, though the work is focused on non-metropolitan "rural situations."

  On the issue of defining "affordable housing", there seem to be two questions here: first, what type of housing (tenure/size etc) is assigned this label and second, how is "affordability" defined—is there, for example, a formula for relating housing costs to incomes locally? On the first question, there appears to be a significant rift between rhetoric and reality. Authorities tend to set out "tenure neutral" policies in line with government guidance. But in reality, there are big differences in the type of housing many would prefer to see built. Some are more "hands off" and will argue that sufficient affordable housing is supplied simply when two-bed semi-detached properties are offered for sale; though given the strength of the first-time buyer market in many areas, these are often far beyond the price range of many homebuyers. Others display a preference for low-cost rental housing under the long-term management of an RSL or shared equity where a council or RSL retains the "golden share" in perpetuity.

  In other words, our research revealed no clear view on the form that affordable housing should take. On the second issue, few authorities define a relationship between local income and the cost of a home. The assumption often made in rural areas is that there is a "low wage farming economy" that fixes an "income threshold" that few local people surpass. However, the precise relationship between incomes (and their variance) and housing affordability is rarely made clear. This means that all too often local debate (and policy) draws on political speculation rather than hard evidence. This has been a particularly important issue for us given that the focus of our current work has been second home purchasing and other "distortions" within local housing markets.

  Our research has focused across England and Wales and therefore offers some pointers as to the scale and location of affordable housing need. At a local level, we were faced with huge differences. Some authorities and RSLs expressed the view that it would be impossible to let more rented accommodation hinting at the saturation of the local market. But others pointed to significant shortfalls. We have collected no national data on the need for affordable housing, but case study examples (10 in England and five in Wales) suggest strong housing demand rippling out from the South East and having a particularly pronounced effect on more scenic parts of the countryside. There was found to be strong "external" housing demand in the Cotswolds, for example, and this focused around rail links back to London. This and other examples suggested that South East households are seeking second homes or commuting bases ever further from London, often drawing on wealth derived from equity growth during the 1990s. This process places significant pressures on the rural housing stock for two reasons: first the buying up of a very limited number of rural properties, and second, incomer resistance to further house building. In the Cotswolds, the arrival of new households from London was often accompanied by an increase in objections to new affordable housing development. The same was true in other areas and particularly in the English National Parks.

  Overall, our work suggests that housing pressure—and the consequent need for more affordable housing—is extending further away from London as people resign themselves to having to live further away from the Capital either because of spiralling house prices or other urban push factors.

  The quality of affordable housing was not found to be an issue of particular concern in our rural case studies. There is some concern however that Total Cost Indicators do not adequately reflect the greater costs involved in developing smaller rural schemes or those where there are particular design or material requirements. And this is despite the National Park allowance made for some authorities. There is a view that the TCI (or a future replacement) is in need of revision. Unsurprisingly, authorities quickly identified a shortage of affordable housing as a problem in the countryside, though it was not the objective of our research to place a figure on this shortage. However, one interesting point emerged in terms of resourcing. Participants in the English case studies tended to suggest that resourcing for affordable housing was adequate. Any shortfalls in supply were thought to be a result of planning constraint or—in terms of planning and affordable housing—the way in which the Social Housing Grant bidding time-frame can be out of sync with the sudden arrival of development opportunities. In some of our case studies for example, it was suggested that a good number of "exception" sites emerge during the course of the year (and also a limited number of gain sites). However, because of the prescribed bidding cycle for SHG, only sites that emerge at the beginning of the cycle can be developed. Others have to wait until the following year, or may not be developed for affordable housing at all. The suggestion was that resourcing is sufficient but the inflexibility of funding rules often means that these resources cannot be fully exploited. Inflexibility—with regards to both planning and funding—appears as the biggest barrier to affordable housing supply in many rural areas.

  The link between capital funding (SHG) and planning gain emerged as being critical in the rural case studies. But it is also important to note that the gain approach is limited in rural areas by general planning constraint (ie few large sites with gain potential are developed in many predominantly "rural" authorities). This general issue, and not the operation of "planning and affordable housing", seems to be more significant. However, a move towards development tariffs, largely replacing section 106 obligations, could bring additional problems. Political resistance in local councils may gain strength if tariffs are introduced, allowing councillors to set high tariffs as a means of warding off more "social housing". Officers in several of our case study areas expressed this concern. A more general point, however, is that planning and affordable housing—particularly the general approach—yields fewer units where large market developments are fewer and far between. This is a general problem/issue in the countryside, suggesting that planning gain is more of an "urban" solution. In our recent study in Wales, we suggest that gains should be pooled and targeted at particular communities. This breaks the link between development and gain, but seems fair and logical if certain communities—with a proven need—look unlikely to ever benefit from the present system.

  On the issue of different social housing options, it needs to be accepted that a preference for ownership has been created over the last two decades. The desire to own is now part of the collective psyche and it is increasingly difficult to convince people of the virtues of renting their homes. Rented housing—whether in the private or social sector—is viewed as a transitional tenure, perhaps more suited to the requirements of younger households that have not, as yet, put down permanent roots. (There will also, of course, be a wider role for renting determined by household wealth and income.) But because it serves this transitional role, particularly in large urban areas, there seems to be an obvious need for continued and further investment in social renting, particularly in London where the private rental market is overheating.

  But related to investment in different forms of social housing, we unearthed serious resistance to social (particularly rented) housing in some areas. Though perhaps of less relevance here, there were cases in Wales where local officers dismissed the need for social rented housing (arguing that it would be resisted by local people) despite acknowledging the existence of strong demand for low-cost housing. They often attributed this resistance to the view (amongst some local people) that social housing is a "Trojan Horse" for "problem families from elsewhere" (quote). It needs to be remembered that in some areas a stigma remains attached to social housing and that this drives politicised resistance.

  As some of the pressures creating/negating the need for affordable housing appear regional in scale and nature, it would appear sensible to introduce regional targets. These should refer, of course, to other policy objectives, such as the need to deal with low housing demand in the North West or wider economic considerations and determinants of future demand. The targets would probably need to be scenario-based with scope for amendment judged primarily against these economic considerations. They may well be expressed as proportions of general demand rather than independent and absolute figures. They might also make reference to relative investment in different forms of affordable housing, reflecting different regional needs including the importance of increasing rental opportunities (for the young) or assisting young families to purchase homes for the first time. Judging from our recent work, I think that regional targets would bring positive benefits in some rural areas where the need for affordable housing is too easily suppressed beneath local concerns. A stronger regional framework alongside targets might be used to support the case for sustainable village growth.

  This is probably as far as our current research takes us in terms of the general affordable housing debate, as much of work focuses on broader housing market issues and second home purchasing. I would end, however, by saying that obvious barriers remain to be overcome. The planning system is rarely employed in a positive way: more time needs to be spent by local planning authorities in defining a local vision for sustainable growth. At the moment, inadequate resourcing of local authority planning means that the system is dominated by (or has entrenched into) the development control function. It merely reacts to development proposals under the direction of members who see little political gain in being "forward thinking", and prefer simply to represent the views of a vocal and often anti-development minority. This view is frequently dismissed as conjecture, though it was confirmed in our recent English case studies. I would view this political/planning restraint link as critical in terms of the delivery of affordable housing.

  On the issue of mixed communities: this is clearly not being achieved in rural areas where planning constraint coupled with a more competitive market is resulting in many parts of the countryside becoming socially unbalanced, dominated by the old, the rich or a combination of the two. But in many instances, general market distortions would appear to defy resolution through any conventional policy response. Free reign to provide sufficient affordable housing would result in significant growth in some areas, and would court strong opposition. The introduction of tariffs could worsen the situation in terms of social mix, giving the opponents of growth (or social mixing itself) a new means of preventing development. The current system of planning obligations might work reasonably well in London (where authorities do not resort to accepting commuted sums in lieu of on-site contributions) but such mechanisms have less bite in the countryside.

  Our rural (stress) case studies suggest an urgent need for further green field development if rural communities are to meet a mix of housing needs now and in the future. It is also the case that many of the issues/problems I have described above are being played out at Stevenage West in Hertfordshire. Despite a great deal of up-front pre-proposal investment by Stevenage Borough Council, the automatic resistance to green field development poses a serious threat to meeting future housing need in this part of the South East. It is interesting to note that the same people who oppose this type of development tend to worry about the spiralling cost of housing and the effect this will have on their children in 10 years' time. Research reveals a great deal of contradiction, often between the housing that people think is needed nationally and what they would be prepared to accept locally. This is nothing new, but continues to be a major barrier to housing affordability.

  Market distortions, local resistance and planning constraint are causing a shortage of affordable housing in many parts of rural England, and particularly in those areas more accessible to London. This is a key message emerging from our work for the Countryside Agency.

Dr Nick Gallent

Senior Lecturer in Town Planning

The Bartlett School of Planning

University College London

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