Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by North West Housing Forum (AFH 23)


  This document is submitted to the Select Committee on behalf of the North West Housing Forum. The Forum represents the views of housing providers in the North West of England, and membership comprises local housing authorities, registered social landlords, and representatives of the Chartered Institute of Housing, the Council for Mortgage Lenders, the House Builders Federation, the Local Government Association, the National Housing Federation and the Northern Housing Consortium. Many of our members will be submitting their own views to the Committee, based on the detailed experience and understanding they have developed from their own activities in relation to affordable housing. This submission is intended to take a broader regional view of the issue of affordable housing in the North West.


  The North West of England is a diverse region, stretching from Crewe to the Scottish border, and including large rural and semi-rural areas as well as the more familiar industrial and post-industrial urban areas. While there may be a perception that low property values and a surplus of housing make affordability a non-issue in the North West, this is far removed from the true picture. The North West Regional Housing Statement[19] points to the need to meet "the continuing need for affordable housing", backed up by the conclusions of Draft Regional Planning Guidance[20]. Studies of housing markets in the region have drawn attention to the existence of failed or failing housing markets in some areas—those same studies also point to healthy, high value housing markets oerpating in much the greater part of the region. It is clear that affordable housing is a key concern.

  The needs for affordable housing, and in particular new affordable housing provision, in the North West can be categorised as follows:

    —  Providing affordable homes for households on relatively low incomes living in affluent high cost areas, often in communting distance of the major conurbations and employment centres, where the maintenance of balanced and mixed communities is threatened by high housing costs (for example in southern parts of Greater Manchester, Cheshire, around Carlisle and in south Lancashire).

    —  Providing affordable homes in high cost but relatively low income areas, where housing markets are driven to a significant degree by demand from outside the immediate area (for exemple in Cumbria, especially, but not only, around the Lake District) and where, again, balanced and mixed communities become increasingly difficult to sustain.

    —  Providing different types of affordable housing in lower cost areas where the fragility of the housing market is caused partly by the unsuitability of existing affordable housing stock for modern requirements.

  Within those categories, the particular issues faced in rural settlements should be recognisd as often especially difficult (or expensive) to resolve.


  Affordable housing can be rented, owner-occupied or based on the various models of shared ownership evolved in recent years—tenure per se is not the key factor. What is crucial is the relationship between housing costs and household incomes. This is recognised in the Government's rent restructuring framework, which is based partly upon a measure of income, albeit an imperfect one (see below).

  However, the costs of some new developments, although subsidised from the public purse to reduce the housing costs of the residents, are sufficiently high that they can no longer be described as "affordable". Two examples illustrate different aspects of the problem.

  In their submission to this Inquiry, Trafford MBC quote a new shared ownership scheme being developed in Stretford with an RSL partner. Based on 50 per cent shared ownership, households will pay £387 per month for a 2-bedroom house. Figures gathered for Trafford's recent Housing Needs Study show that this effectively places this "affordable" housing development beyond the reach of somewhere in excess of 65 per cent of Trafford's households.

  The Cumbria Rural Housing Trust[21] give details of a housing association development in the Lake District National Park, funded by Housing Corporation grant (£190,000), mortgage (£190,00) and a contribution from the association's own reserves of some £207,000. Despite this substantial extra injection by the association, rents currently stand at £63 per week, and under rent restructuring will rise to £92.81 per week. Average incomes in the area are £290 per week (approximately £15,000 per year)—if new RSL tenancies stretch the resources of those on average earnings, where do households on below average incomes look for accommodation?

  The latter example is an example of the impact of the move to restructure rents within the social rented sector, based on a combination of market values for property (30 per cent) and county average manual household income (70 per cent). This explicitly drives social rents higher in high cost areas, through the impact of the 30 per cent link to property values, regardless of the income of the target groups. There is also a particular concern in Cumbira about the income figure used, which is considerably inflated by two specific large employers (BNFL at Sellafield, and the BAe Systems shipyard at Barrow-in-Furness), and bears little resemblance to the earnings of most households in the county, where much employment comes from the (low wage) agriculture and tourism sectors.

  This points to the fundamental need for affordable housing to be defined in relation to the income levels of the households most likely to need it—those on lower incomes in each locality. This will vary in line with the labour markets in each area, but to a much lesser degree than property values/house prices. Strategies for central and local government, registered social landlords and other agencies, should be aimed at ensuring a range of housing which is affordable to all parts of the community.


  By definition, affordable housing is required everywhere, but it is in areas where the mismatch between housing needs and households' ability to meet the cost of fulfilling those needs is greatest that the need for clear strategies for intervention to achieve sufficient affordable housing is crucial to the sustainability of balanced communities. The nature of local housing markets is therefore at the heart of the demand for affordable housing provision. As noted earlier, there are broadly three types of areas where this mismatch occurs in the North West.

  Firstly, there are areas where economic success, high employment and increasing earnings have fuelled rising house prices. Much of Cheshire, parts of the Greater Manchester and Merseyside conurbations and parts of Lancashire and Cumbria fall into this category. The problems in these areas are essentially identical to the much-publicised issues facing other prosperous parts of the country, including the South East of England. While most benefit from the rising tide of prosperity, there are inevitably some households whose income does not keep up with the rest of the community—the economically inactive or those on low wages. However, these areas are likely to have lost a high proportion of their social housing stock through Right to Buy sales, and they have longer waiting lists for what remains. Investment in new provision of affordable housing, whether for rent, sale or shared ownership, has failed to match the decline in the social housing stock. To use the example of Trafford again, for 2001-02, 38 units of affordable housing of various types were provided. During the same period 204 units were lost through Right to Buy sales—while the discounts applied may render these "affordable" to their current occupiers, once sold they are unlikely to remain so.

  Secondly, we have mainly rural areas where the market is set by purchasers coming from outside the local employment market—whether to retire, or to buy second or holiday homes. The clearest example of this is in Cumbria, particularly in the Lake District National Park and the areas surrounding it. Here, the costs of providing new affordable housing are magnified by the combination of additional planning requirements inherent in the National Park structures, increasing competition for any sites or potential conversion opportunities which do become available, and a defensive culture toward new development—often articulated most forcefully by more recent economically mobile arrivals. Combined with the grants available from the Housing Corporation being limited by Total Cost Indicators which fail to reflect the reality of market conditions, it is unsurprising that RSLs are making fewer and fewer bids for schemes in the National Park—it is simply impossible to make them financially viable. With the denial of planning permission for one small scheme in Windermere last week, it now seems unlikely that there will be any new affordable housing provision in the Lake District National Park this financial year.

  Right to Buy sales continue to erode the declining stock of social rented accommodation (eg South Lakeland has lost almost half of the council stock—in fact there are 4,600 second homes in the district, and only 3,600 council houses[22]). At the same time, incomes from jobs servicing the tourist industry are low, often at the minimum wage, seasonal and/or part-time—43 per cent of households in South Lakeland have an annual income below £15,000. With even ex-Right to Buy properties fetching an average of £55,000[23], large portions of the population are excluded from the housing market, and dependent upon the shrinking social rented sector to meet their accommodation needs.

  Thirdly, there are the areas where the costs of existing housing are low, but the available property is unsuitable for the patterns of demand. In the private sector, this might mean a surplus of 2-bedroom terraced property when demand is for larger homes. In the social rented sector, it may be too many flats or sheltered bedsits. These issues contribute to the well-documented issue of low demand and empty property, as outlined in the Select Committee's report on Empty Homes. The solutions may well include strategic demolition and radical redevelopment of neighbourhoods, but this redevelopment will often include a requirement for development of new affordable housing provision of a different nature, meeting the identified needs of the remaining local community. This issues emerges in especially stark terms in some of the Black & Minority Ethnic communities in the North West, where (for example) problems of overcrowding in small terraced property remain all too common. The housing aspirations of younger generations of BME households need to be assessed carefully, but it seems clear that, with continuing gaps in income levels, investing in affordable housing provision will be a continuing requirement, even beyond the need to invest in upgrading existing stock to meet (or exceed) the Government's decency standard.


  There are a number of barriers to the provision of sufficient and appropriate affordable housing. Some relate directly to the costs of developing affordable housing schemes where demand is the highest—high costs of land (or existing buildings for conversion), high construction costs (especially where traditional local materials are required to meet heritage/conservation objectives), and the inadequacy of grant rates/Total Cost Indicators. Grant rates in particular must relate back to the achievement of an affordable rent/price as the starting point for funding a scheme, rather than the rents reflecting the "residual" amount required to fill the funding gap. These issues are, in the final analysis, down to the amount of funding available. Other issues do require attention, however.

  Proposals for the reform of the planning system have been put forward in the recent Green Paper. Their precise impact is difficult to gauge. Particularly in rural areas, there is a view that current planning policies are not delivering the housing needed in terms of type, quantity or location. A new approach is needed within the plan led system, to enable local planning authorities to allocate sites to meet proven housing needs. The Countryside Agency are developing a concept of "Sites for Social Diversity", which would be identified in Local Plans where there was robut evidence of both local housing need and an imbalance of income levels and housing costs, and where other planning considerations would not lead to open market release of the site for development. This seems to offer a potential way forward, and may fit with some of the proposals in the new Planning Green Paper for local "Action Plans" for villages or parishes, sitting beneath "Local Development Frameworks" linked strongly to Community Strategies. Where shortage of affordable housing provision is an important local issue, a Community Strategy would need to include plans for securing that provision, and this would have to be reflected in the new planning framework being proposed. All of this should be underpinned by better and more up-to-date information about housing demand and an understanding of local housing markets.

  We also need to look at improving the partnerships working towards the delivery of affordable housing—working for example with private landlords, with other local government functions such as economic development, or health services, linking with broader regeneraton strategies. The role of other public agencies with significant landholdings (eg Ministry of Defence) can be extremely significant in particular localities, and they should be obliged to respond positively wherever possible.

  The impact of Right to Buy sales on the availability of affordable housing has been mentioned several times. In rural areas this impact can be multiplied by the small numbers involved—if in a village there are only half a dozen council houses to begin with, the loss of two or three (or more) has a huge impact on the chances of local people being able to remain within their local community. But even in larger centres and in parts of the conurbations, losses of social housing via the Right to Buy are hugely significant. This points to the need to re-evaluate the impact of Right to Buy, and consider whether it might be operated differently. One suggestion is that a suspension of the scheme in settlements below a certain size is needed. Alternatively, it may be that some ability to locally adjust the terms available (perhaps in relation to discount levels, or even with conditions similar to those used in Section 106 of the agreements) is now required to safeguard what is a vital and rapidly disappearing asset for the community as a whole.

  By contrast, in the lower value areas, there may be a need to develop new models to allow the development of affordable new homes for owner occupation, for example as part of a managed programme of neighbourhood renewal. Here the issue is one of dealing with the costs of site assembly and construction being higher than the final market value of the new property—while the new homes are needed, the local housing market is too weak to make a scheme "stack up" using existing models—a way is needed of filling that gap.


  What, then, are the consequences of a lack of appropriate, good quality affordable housing?

  Firstly, there is a failure to meet the housing needs of individual households. This can mean homelessness, the proliferation of "concealed households" (ie those forced to share with others, whether family members or not, when they would rather be housed separately), or simply households living in the wrong kind of accommodation—too small, too big, or in the wrong place (ie distant from work or school, or family connections). The plight of "key workers", much reported recently, is one aspect of this, and applies in parts of the North West. "Key workers", of course, are in the eye of the beholder—there is strong anecdotal evidence of workers in the health, social care, tourism and other sectors in the heart of the Lake District being bussed from the West Coast of Cumbria because they are unable to afford to live closer to their work places. No funding from the Starter Home Initiative has found its way north of Bedford thus far, but the problem does exist in the North West.

  More broadly, lack of affordable housing makes the achievement or maintenance of balanced, mixed communities ever more difficult. If there are no local services and poor transport facilities then people, particularly young adults, are likely to move away. This has had the effect in some rural areas of creating new "surburbia". Some rural villages have become places to live, rather than to work, and house mainly better off households. Where jobs do exist they are mainly low paid service industries where employers struggle to fill vacancies. This major social change may now be irreversible in some areas. In urban areas, there is a form of ghetto-isation, where only the better off can afford to live in particular areas—social exclusion has increasingly clear geographical boundaries, based largely upon income, with some ethnic dimensions too. This runs contrary to the Government's stated objectives around the creation of mixed communities and urban renaissance. So, while the greatest needs of the North West relate to the socially excluded, economically disadvantaged urban communities which require comprehensive housing market renewal, there does need to be a balanced approach. Social inclusion is not aided by the inevitable economic exclusion of lower income households from large parts of the North West which follows from the inadequate provision of truly affordable housing.

19   North West Regional Housing Statement 2001 Update (Government Office North West, Housing Corporation, North West Housing Forum, North West Regional Assembly, 2001). Back

20   People, Places and Prosperity. Draft Regional Planning Guidance for the North West (North West Regional Assembly, 2000). Back

21   Can we still be providers of affordable housing? (Cumbria Rural Housing Trust, 2002). Back

22   Draft Housing Strategy 2002-06 (South Lakeland District Council, 2002). Back

23   Can we still be providers of affordable housing? (Cumbria Rural Housing Trust, 2002). Back

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