Memorandum by Liverpool City Council (AFH
25)
OVERVIEW—RESTRUCTURING
HOUSING MARKETS
NOT AFFORDABILITY
1. The Inquiry begins from the premise that
meeting the Government's target that all social housing meets
set standards of decency by 2010 will only be possible if decent
houses are made affordable and affordable houses are made decent.
Of the two elements of this premise it is decency which is the
problem in Liverpool not affordability.
2. The housing problems in Liverpool are
not the well publicised problems of London or the South East,
prosperous rural areas or the more affluent parts of the North
West such as the southern parts of Greater Manchester and Cheshire,
where there are shortages of affordable accommodation for people
on low or average incomes.
3. In Liverpool radical housing market restructuring
is required to secure a wider and better range of housing stock,
which meets modern housing requirements and expectations. On a
city wide level we have an over supply of affordable accommodation.
However, too much of our housing stock is low value, in low demand,
in poor condition or obsolescent and accordingly we certainly
have a problem of making affordable housing decent. At a city
wide level there is clear evidence of obsolescence and market
withdrawal in both public and private sectors, with falling property
prices and little demand, and these trends are likely to accelerate.
Substantial housing market restructuring is therefore required
in specific geographical areas of the city principally the City's
Inner Core over the next 10 years and beyond.
4. However, Liverpool has significantly
differing local housing markets with areas of housing market strength
as well as low demand areas. In high demand areas principally
the City Centre we have identified a need to promote a wider range
of housing types and affordability to sustain or develop balanced
communities.
THE CASE
FOR A
HOUSING MARKET
RENEWAL FUND
5. Liverpool has argued consistently that
a significantly improved policy and resource framework is required
to address the scale of problems of cross tenure housing market
failure evident in the city. Liverpool has contributed significantly
to the lobby for a dedicated Housing Market Renewal Fund to turn
around areas blighted by low demand in the North and West Midlands
in conjunction with the Key Cities Housing Group, the National
Housing Federation and the Northern Housing Forums.
6. Accordingly we welcome the announcement
in April that Merseyside would be one of nine national pathfinders
to work with Government to "provide lasting solutions for
communities blighted by derelict homes through investment and
innovation". The Merseyside pathfinder encompasses inner
Liverpool, south Sefton and parts of Wirral.
7. We recognise that housing market failure
is not contained within local authority boundaries and must be
dealt with on a cross local authority basis. We are currently
working with Sefton and Wirral Councils to develop the Housing
Market Renewal Fund initiative on the basis of an established
formal agreement to co-operate. The HMRF initiative will also
build upon work well established to prepare a strategic framework
for the comprehensive regeneration of Liverpool's Inner Core.
HOUSING MARKETS
RESEARCH
8. Liverpool's Housing Strategy which is
promoting a radical restructuring of housing markets in the city,
is a fundamental integral part of the city's regeneration strategy.
It is based upon a thorough understanding of the dynamics of housing
markets, which has emerged from possibly the largest programme
of housing market research in the country conducted in conjunction
with the Centre for Urban and Regional Studies at the University
of Birmingham. This has involved a series of research reports
including the following:
— Measuring the Sustainability of Neighbourhoods
in Liverpool;
— Private Rented Housing in Liverpool:
an Overview of Current Market Conditions;
— Stabilising the Population of Liverpool:
Employment Markets and Housing Choice;
— Changing Demand: Making the links
between Housing and Planning across Merseyside;
— A Comprehensive Regeneration Framework
for the Eastern Fringe Estates; and
— Renewing Housing Markets in Liverpool's
Inner Core.
9. Copies of our research reports are available
on request. The intention is to summarise the findings of the
whole research programme in a local housing markets study which
will then in future be produced on an annual basis.
PROFILE OF
LIVERPOOL'S
HOUSING STOCK
10. The city's housing stock is currently
significantly unbalanced, with over 80 per cent of homes in Council
Tax bands A and B, resulting in substantial over supply at the
bottom end of the rented and owner occupied market and real shortages
of better quality homes in Council Tax bands C, D, E and above.
The result is a polarised housing market with some of the lowest
property prices in the UK at the bottom end of the market and
rapidly rising prices in higher Council Tax banded property. This
restricted choice at the higher end of the market is encouraging
outward migration of households from the city. The danger that
the city faces is therefore that an improving local economy and
economic prosperity will lead to further population decline.
11. Empty residential property in Liverpool
is currently 9 per cent of stock against the North West regional
average of 4.3 per cent and a recognised healthy average of 3
per cent. Empty property is disproportionately located in Council
Tax band "A" property, in specific geographical areas
(particularly the Inner Core and Eastern Fringe) and in particular
property types (pre-1919 terraces and council homes). Vacancy
rates in the Inner Core are double the city wide average and in
excess of 20 per cent in some neighbourhoods. 16 per cent of private
dwellings across the Inner Core are vacant and these are predominantly
concentrated in the pre-1919 terraced sector.
12. Poor condition is evident in both public
and private sector housing stock, with an outstanding disrepair
and unfitness bill, which exceeds over £1 billion at present
day prices. Almost 9 per cent of the city's housing stock is assessed
as below the statutory fitness level. Two thirds of Liverpool's
Council stock, almost 24,000 dwellings fall below the Decent Homes
standard at present.
13. The City Council's Private Sector Stock
Condition Survey 2000 indicates that 8.6 per cent of the private
sector stock is unfit and a further 10.3 per cent is in poor repair.
The cost of remedying private sector unfitness and poor repair
across the city is put at between £436 and £653 million.
While on a city wide level 18.9 per cent of the private stock
is unfit or in poor repair, in the Inner Core 27.9 per cent is
unfit or in poor repair and the repair costs represent 63 per
cent of the total city wide repair costs.
INADEQUACY OF
EXISTING RESOURCES
14. The City Council is pursuing a twin
track policy of decommissioning redundant stock and developing
stock transfer options with tenants and RSL partners to draw down
the necessary capital for investment in the more sustainable stock.
In conjunction with the City's Strategic Housing Partnership we
are developing a toolkit of new measures to rationalise and improve
housing markets. We have already developed a number of successful
initiatives including new regeneration vehicles such as our first
local housing company South Liverpool Housing and Include Neighbourhood
Regeneration Ltd, a national Housing Corporation pilot housing
regeneration company in the Dingle. We have secured overwhelming
tenant support to transfer 13,000 Council homes in the Eastern
Fringe of the city to three new housing associations in autumn
2002.
15. However, the resources available to
the City Council are insufficient to provide appropriate levels
of investment in a reasonable timescale to respond to the problems
of market failure and poor housing conditions in Liverpool. Our
Housing Capital Programme for 2001-02 was £34,783 million.
Our Housing Investment Programme allocation for 2002-03 is £18,506
million. At the present level of resources we will not be able
to reach the target of bringing all Council housing up to the
decency standard by 2002.
16. Although we will try to use as fully
as possible the new flexibilities offered for private sector renewal
through the Regulatory Reform (Housing Assistance) Act 2002, our
problem in regenerating private sector housing with the present
level of resources is even more daunting. We have particular problems
in retaining in owner occupation, owner occupiers in low demand
areas that will be displaced by clearance who have low incomes
and little or even negative equity. This problem is significant
because Liverpool's owner occupied rate at 52 per cent is well
below the UK average of 68 per cent (1991 census). At present
we are developing Home Swaps initiatives to help displaced owner
occupiers who do not wish to become social housing tenants.
PLANNING POLICY
ISSUES
17. In planning policy terms the key issue
for Liverpool is not to seek to create mixed communities by enabling
affordable housing to compete in buoyant land and housing markets.
The key issue is to devise and apply planning policies to encourage
the further provision of middle and upper market housing particularly
in areas currently dominated by social and lower market housing.
Unsurprisingly Liverpool has no experience of applying planning
gain to fund affordable housing.
18. The issue of setting affordable housing
targets in Regional Planning Guidance is of little direct relevance
to Liverpool given that current guidance (as expressed in Draft
Regional Planning Guidance for the North West) sets an indicative
target for the region as a whole, and the fact that there is a
substantial oversupply of social and lower market housing in the
city. As a general principle, however, such indicative targets
serve little purpose; it being more appropriate for targets to
be set locally depending on local authorities' interpretation
of their own circumstances.
19. Liverpool contains a substantial brownfield
development resource in the form of vacant and derelict sites,
vacant and underused buildings, and vacant and underused existing
housing. If it can be realised, this supply is more than sufficient
to meet the city's own housing needs and potentially, accommodate
needs arising within surrounding parts of the conurbation.
AFFORDABILITY IN
SPECIFIC LOCATIONS—THE
CITY CENTRE
20. Whilst there is an oversupply of affordable
housing across Liverpool, in specific locations principally the
city centre where city living is buoyant the provision of affordable
homes as part of balanced residential provision is an issue. In
the city centre a number of developers are pitching their prices
from £65,000 to £110,000 wherever they can and RSL shared
ownership schemes have proved popular. Diversifying housing choice
in the city centre by encouraging affordable housing for sale,
shared ownership and rent which corresponds with local need will
ensure that a balanced city centre population is maintained and
a range of housing provision is available. There is a significant
shortage of family accommodation and additional family homes would
help to secure a more balanced population mix and sustain local
education provision.
THE COSTS
TO LIVERPOOL
OF THE
SHORTFALL IN
BETTER HOUSING
21. With regard to the costs of the shortfall
of the provision of decent affordable housing you may be interested
in the assessment of the costs to Liverpool of population loss
of almost 154,000 people in 35 years (equivalent to almost 67,000
households) linked to the non-availability of higher and middle
range accommodation in the city. Our research study Stabilising
the Population of Liverpool: Employment Markets and Housing Choice
provides clear evidence that the likelihood of a household living
outside Liverpool is directly linked to its income.
22. The above study demonstrates that during
the year 1998-99 using average disposable income the "lost"
67,000 households would on average have produced £1.51 billion
of expenditure per annum. Additionally, if each of these households
had purchased an average value property in the city (£57,000),
then an additional investment of £3.8 billion at 1994 prices
would have been made in housing over the period.
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