Memorandum by Surrey Local Government
Association (SLGA) (AFH 12)
This memorandum is submitted by the Surrey Local
Government Association which represents the County Council and
all 11 boroughs and districts in Surrey.
1. BACKGROUND
The provision of affordable housing and housing
for key workers has become a major concern in Surrey. The county
is subject to considerable development pressures arising from
a position of sound economic success—it is a major economic
engine and a disproportionate contributor to the GDP. Land values
are very high with the highest property prices of any county outside
London (with some average house prices over 38 per cent higher
than the regional average). This is leading now to significant
difficulties in recruiting and retaining key staff. Despite being
generally relatively affluent, the county has pockets of acute
deprivation and social exclusion; and there are enormous development
pressures because of proximity to London and Europe. Yet one of
the main reasons why businesses and people want to locate in Surrey
is the attractiveness of the physical environment.
Surrey, like many other areas of the Home Counties,
has been significantly affected by the rapid increase in house
prices. In the South-East they have risen by 54 per cent over
the past three years—13.1 per cent in the last twelve months
and 292 per cent since the commencement of Halifax Index in January
1983. This substantially outstrips the figures for the National
Index, which stand at 244 per cent for the same period.
2. THE SURREY
REPORT
Against this background the 12 authorities in
Surrey came together to undertake some detailed work on tackling
affordable housing. The Committee may be interested in our report
which was published in the Autumn of last year under the heading
"Housing to Underpin Economic Success". It identified
some 60 actions required not only of local authorities, but other
stakeholders and Government. This was further complemented by
a practice document produced by Housing & Planning Practitioners
in Surrey under the title "Making Affordable Housing Happen".
Copies are being sent to the Clerk for members of the committee.
Amongst the key recommendations were the following:
— the need for unambiguous planning
policies;
— complementary land disposal policies
of public agencies;
— new planning Use Class for affordable
housing;
— phased release of Right to Buy receipts
to underpin new push on shared ownership initiatives and achieving
the Decent Homes Standard;
— procuring affordability in perpetuity;
— a more credible financial framework;
and
— substantially lower thresholds for
affordable housing obligations.
A key difficulty has been how to secure "affordability"
in perpetuity rather than simply creating a large capital gain
for the first purchaser which so often happens in high value areas
such as Surrey. We have stressed to Government the need urgently
to consider a separate Use Class for affordable housing, which
we believe would achieve this.
3. THE SELECT
COMMITTEE'S
QUESTIONS
Turning now to the specific issues raised by
the Select Committee, we would offer the following comments:
3.1 The Definition of "Affordable"
The Government defines affordable housing as
encompassing both low cost market and subsidised housing (irrespective
of tenure, ownership—whether exclusive or shared—or
financial arrangements) that will be available to people who cannot
afford to occupy homes generally available on the open market.
About 18 months ago the Government published
guidance on housing needs assessment. This set out a method of
calculating the type of housing that would be affordable within
an area. It took account of local incomes and accommodation costs.
Most Housing Authorities use this method in undertaking their
housing needs surveys. Securing a national definition of affordable
housing almost certainly would not work, as it would have little
regard to the existing housing stock and tenure, and the differing
socio-economic structures that will vary from area to area.
3.2 The scale and location of the Demand for
Affordable Housing
The Regional Planning Guidance for the South
East (RPG9) sets out a provisional figure for affordable housing
in the region of 18,000-19,000 homes per year, 46-49 per cent
of the total annual housing requirement. However, the sub-regional
variations are significant. The latest Halifax House Price Index
(First Quarter 2002) identifies average semi-detached house prices
in the South East at £153,992. However, this masks significant
variations and, for example, in Surrey the figure is some 38.6
per cent higher than the regional average at £213,450. Inevitably
therefore, the scale and location of demand is concentrated in
those areas of high economic activity and house price inflation
that exceeds earnings growth. In this connection, London and the
Home Counties experience particular pressures.
3.3 The Quality of Affordable Housing
A requirement for Housing Authorities to undertake
stock condition assessments is highlighting any shortfall in the
standards of affordable homes, particularly in the rented sector.
The Government's proposals to demand a new "decent homes
standard" is to be commended, but resources will need to
be made available in the public and private rented sectors to
secure the new standard in a reasonable time scale.
3.4 The Adequacy of the Existing Supply and
the Amount of Resources Available
In many parts of the South-East residential
land value exceeds £1.5 million—£2 million per
acre. Affordable provision is therefore either very difficult
or impossible to secure. Despite all the major residential developers
claiming typical consented land banks of between three and a half
and four and a half years supply, the changes in society (eg divorce,
single people living longer and the reluctance of home owners
to trade down as their needs change), all conspire to generate
substantial demand.
In Surrey, currently only 16 per cent of all
new housing is affordable. Even if the small numbers of houses
purchased from within the existing stock are added, the provision
of affordable housing in Surrey is nowhere near meeting actual
need. Very significant increases in resources to local authorities
and Registered Social Landlords would be required to enable them
to compete effectively with the private house builders for the
land required to increase the supply of affordable housing.
3.5 Capital Funding for New Provision
Both via local authorities and the Housing Corporation
funding is inadequate and significantly constrains the availability
of Social Housing Grant (SHG) necessary to make most rented schemes
affordable.
Consideration should be given to the phased
release of capital receipts to fund new provision.
3.6 The extent to which Planning Gain can
fund the level of affordable housing required
Stronger and less ambiguous Government Guidance
on the provision of affordable housing through the planning system
is required. The present thresholds (one hectare or more than
25 units) allows the vast majority of sites in urban areas to
escape from making an affordable housing provision. Whilst Regional
Planning Guidance 9 suggests that local authorities can adopt
a lower threshold of 15 dwellings or half a hectare, a significant
local justification is required. This provides an opportunity
for conflict and challenge. If the obligation were put beyond
doubt it would influence the whole supply chain, and particularly
the crucial matter of determining land values and the purchase
price for land. For example, the urban capacity study undertaken
in Surrey suggests that up to 35 per cent of new housing will
come from sites of less than 10 units or 0.4 hectares. Where the
25 or 15 unit thresholds are set, there is already evidence that
developers manipulate numbers and site development proposals in
order to get in under these figures and avoid any affordable housing
obligations. It will therefore be necessary to reduce site thresholds,
increase the percentage of affordable housing on all sites and
lessen the uncertainty that protracted negotiation and legal challenge
presently cause.
Relying upon the planning system will not deliver
the Government objective for the provision of a decent home for
all, without substantial changes in planning legislation, accompanied
by significant increases in public resources devoted to affordable
housing provision.
3.7 How resources should be balanced between
Social Housing and Options for Owner Occupation for those who
cannot afford to buy (including Shared Ownership) and whether
any additional tMechanisms are required to bring forward Share
Ownership type schemes
Ensuring there is a mix of tenure options is
crucially important, both for balanced communities and social
cohesion in the future. Credible options provide applicants with
an appropriate housing solution and relieves some of the pressure
on the social rented sector. The Government have, in the past,
said that the shared ownership scheme (Do It Yourself Shared Ownership)
is to be withdrawn. This should be avoided, as it provides a very
effective mechanism, particularly in higher cost areas for securing
that all important first step on the home ownership ladder. Shared
ownership and particularly DIYSO should be commended as it brings
private units into the affordable housing stock and provides better
social balance. It is more affordable than the Government's "Homebuy"
scheme and bridges the gap between outright ownership and social
rented dwellings. Perhaps most importantly, it provides applicants
with an informed choice that can have regard to their personal
circumstances and avoids automatic reliance upon traditional social
housing. In summary therefore, shared ownership should play a
much more significant part in Government and Housing Corporation
Policy.
3.8 Whether targets in Regional Planning Guidance
are appropriate
RPG9 contains an indicative requirement for
affordable housing—the proposed target of 40 per cent was
struck out at the public examination stage. However, a regional
target would give a very clear signal of the overall level of
need and provide a firm policy base for Structure and Local Plans,
which could then set local targets reflecting more local circumstances.
House builders have shown themselves very skilled at lessening
or removing affordable housing obligations, either through commuted
payments or through carving sites up, so that the units produced
come below any threshold figure. An absolute obligation to provide
affordable housing on all sites would put beyond doubt the obligations
and expectations of all those operating in the housing sector,
and particularly vendors of developable land.
3.9 Whether targets on decent and affordable
housing will be met by central and local Government
Each local housing authority is required in
its housing strategy to set out how the targets for affordable
housing will be achieved. Unfortunately, there is no linkage between
this evidence based work of local housing authorities and the
capital allocations from DTLR/Government Offices and the Housing
Corporation. Unless policy and resourcing change, Central Government
and most of Local Government will fail to meet the targets on
affordable and decent homes.
3.10 Whether current policies and practices
are leading to the creation of mixed communities
It has to be recognised that mixed tenure schemes
are unattractive to the traditional home owner. Increasingly house
builders are selling not just a home, but a lifestyle. Many schemes,
even relatively modest priced ones, now exist in secure, gated
environments, providing both isolation and exclusivity, and often
with a range of leisure and related support facilities for that
residential community alone. Whilst often attractive in marketing
terms, these are divisive and lead to a polarisation in communities,
not only as between tenures, but also in relative perceptions
as to what services are required within the community as a whole.
The house builders argue that the provision of affordable housing
adversely affects sale prices on new homes and, where affordable
housing is provided, it is increasingly physically separated from
any market housing on the site.
Many public agencies who are owners of land
and premises surplus to requirements, will typically sell the
highest value sites for home ownership, whilst the more moderately
priced area is, by its very nature, already likely to have mixed
community and social and tenure terms. This results in further
polarisation in terms of tenure. Only unambiguous affordable housing
obligations on developers will lessen this trend.
3.11 Whether more Green Field development
is needed to meet housing need
There are no suggestions that a major release
of Green Belt lands will result in a substantial easing of supply/reduction
in prices. An analysis of the major house builders' company reports
will demonstrate that most boast between three and a half and
four and a half years consented supply and many hold strategic
sites (owned or under option) stretching over five to 10 years.
3.12 The cost to individuals, businesses and
the economy, resulting from any shortfall in the provision of
decent affordable housing
The demand for labour in Surrey and the Thames
Valley is high and with particular professions this has created
skilled shortages. This, however, results not only from high labour
demand, but also from high housing costs. Access to suitable housing
to rent or buy has become an obstacle to those who want to locate
or remain in the area to work. The impact of this is that those
who wish to work in the area but are unable to find suitable accommodation
need to commute into the sub-region. This adds to the road congestion
that is already exacerbated by those travelling through the area
on the main arterial roads (M25, M3, M4 and the "A"
roads), or within the area. It also has a damaging effect on the
maintenance of a reasonable social and family life, with travel
to work times amongst the longest in Western Europe.
There is some suggestion from the business community,
evidenced in our own area, that new investment decisions and company
expansion plans are constrained by recruitment difficulties and
the very tight labour market (0.8 per cent unemployment) resulting
from high house prices for those seeking to move into the area.
The skill shortage has a marked effect in several
areas, but combined skill shortage and lack of affordable housing
has had particularly significant impact in the public sector.
4. CONCLUSION
This issue is of crucial importance in the development
of our county, which in its turn acts as an economic driver for
the region and the country as a whole. We have done considerable
work here on what is required to tackle it.
We would be happy to provide any further information
for the Committee and to give evidence to any of your meetings
about our work if that would be helpful.
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