Memorandum by Harvest Housing Group (AFH
27)
1. THE NORTH
IS NOT
A "ONE
PROBLEM/ONE
SOLUTION" PLACE
The Sub-Committee's work on Empty Homes was
extremely valuable. It focused attention on the complexities of
housing market failure and highlighted the misery being suffered
by people left behind in neighbourhoods undergoing abandonment.
We welcome the Government's response to the report and the proposal
for housing market renewal partnership pathfinders. We hope substantial
funding can be made available to support this work.
However, it is important to note that market
failure is not the only housing issue in the North. There are
areas of high demand where the cost of entry to owner-occupation
is beyond the means of people in low-paid employment. In places
such as Trafford and Stockport, for instance, young people are
having to move away from their home areas if they are to compete
in the housing market. Ironically, these areas are within a few
miles of neighbourhoods in East Manchester and Salford which are
in chronic decline. There are also rural areas where local people
are finding it increasingly difficult to compete in the local
housing market—the Lake District is a particular example.
Also, there are areas where demand exists but where stock condition
remains a major problem.
Resources are needed in the North to address
these problems in addition to those associated with housing market
failure.
2. STOCK REINVESTMENT
Stock condition is a problem for many RSLs in
the North. Harvest Housing Group has for several years been investing
in programmes to upgrade and modernise its older stock. We have
used ADP grant from the Housing Corporation for this whenever
possible but this source has become very restricted. Increasingly,
we have used our own resources (planned surpluses) and borrowing
but the extent to which we can use these resources in future will
be constrained by the limits placed on rental growth by Government
policy. The objectives behind this policy—affordability
and making sense of rents across the RSL and local authority sectors—are
supported but the impact will make it difficult for many RSLs
in the North to achieve the Decent Homes Standard.
We feel it is essential that an increased quantity
of ADP resources is made available for reinvestment projects.
Failure to maintain the existing stock only means that it needs
to be replaced more quickly. Public sector property has suffered
from this syndrome for decades.
We suspect that the key performance indicator
by which the Housing Corporation is measured is new units completed.
This is unhelpful and does not encourage prudent property asset
management. We believe a greater proportion of the Corporation's
resources should be applied to maintaining and improving the existing
RSL stock. A new performance measure should be devised based on
the number of units brought up to the Decent Homes Standard through
ADP investment.
3. RURAL HOUSING
A Harvest subsidiary—Derwent and Solway
Housing Association—operates in Cumbria. There is unmet
demand for rented and shared ownership accommodation from local
people in places such as Keswick and Cockermouth but the current
funding regime makes it difficult for us to provide any additional
housing.
We suggest there should be a review of the Housing
Corporation grant system as it applies in rural pressure areas.
In Cumbria, part of the problem is that low cost areas on the
West Cumbria coast distort the funding system which does not make
sufficient allowance for high land values in the National Park.
4. PRIVATE SECTOR
STOCK CONDITION
There is still a substantial quantity of older
terraced accommodation in the private rented sector. In areas
of market decline, more stock is going into this sector and it
provides some of the poorest accommodation. It also provides some
of the poorest managed accommodation. Some owner-occupied housing
is also in very poor condition and this particularly applies to
a number of deprived communities including some with high proportions
of BME residents.
To make real progress with these problems the
Decent Homes Standard should be applied to both rented and owner-occupied
private sector housing. Also, there is a definite need for increased
regulation of private sector landlords.
5. STOCK TRANSFER
AND THE
DECENT HOMES
STANDARD
Stock transfer is seen as a major route to achieving
the Decent Homes Standard. This is based on the assumption that
following transfer the new RSL will be able to borrow money and
use it to fund repairs and improvements. The reality is that Rent
Restructuring will make this difficult for many transfers in the
North.
This particularly applies to partial transfers
of urban stock. These tend to involve property in poor condition
and where there are high costs associated with estate remodelling
to put right design defects such as "Radburn" layouts.
This means that the transfers can go through at low or negative
value but with high borrowing needs to fund reinvestment. Traditionally,
borrowing has been financed by rent increases significantly above
inflation (which tenants have accepted through positive transfer
ballot results because they want their homes and estates improved).
With Rent Restructuring such rent increases are not possible.
The danger here is that transfer business plans
will be trimmed so that they can "work" on paper but
in reality there will be insufficient funding for the scale of
improvement these estates need.
For a short period of time the Estate Renewal
Challenge Fund (ERCF) provided the means to achieve viable business
plans for these estates. A similar measure is needed now to deliver
the Decent Homes Standard in these areas.
6. PLANNING GAIN
Planning gain can make a significant contribution
to funding affordable housing in areas of the North West where
there is a strong housing market and developers are active. We
are currently working with developers in such areas.
We support the proposals set out in the Planning
Green Paper.
The situation is different in areas such as
the Lake District where development is restricted. Positive action
is needed to provide affordable housing sites for local people
and additional ADP resources are needed to cover high land costs
and the costs of meeting special planning requirements.
We also feel it is anomalous that planning gain
can be charged against affordable housing developments when affordable
housing is intended by Government policy to be a major beneficiary
of this system.
7. DISTORTIONS
IN THE
GRANT REGIME
The system of calculations for Social Housing
Grant is very complicated but also mechanistic. Such systems run
the risk of creating distortions which prevent them delivering
outcomes which are, in common sense terms, desirable. One of these
is that the system works against "works only" schemes
whereby an RSL builds on a piece of land already in its ownership.
This could become a major issue in the future as RSLs redevelop
sites in Housing Market Renewal Areas to replace stock no longer
needed with a mix of property which matches forecast demand.
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