Memorandum by Bellway Homes Ltd (AFH 34)
INTRODUCTION
Bellway Homes is the principal trading subsidiary
of Bellway PLC and, is a major national house builder operating
through fourteen regional divisions. Founded in 1947 the company
builds and sells a wide range of houses and apartments, for all
market segments, throughout the country.
The Company has always been involved in urban
regeneration and partnership housing, working in partnership with
local authorities, housing associations, residents groups and
other stake holders.
Over 60 per cent of the Company's output is
built on brownfield sites. The provision of affordable housing
through Section 106 agreements is becoming an important element
and often a constraint on existing and future business.
Bellway is involved in significant mixed use
developments including Barking Reach in the Thames Gateway and
the Manor and Castle in Sheffield.
We are pleased to offer evidence to the Urban
Affairs Sub-Committee and set this out using the questions in
Press Notice No 57 of Session 2001-02, dated 16 April 2002. We
request an opportunity to appear at the hearing of the Sub-Committee
to expand on the comments set out below.
THE DEFINITION
OF AFFORDABLE
HOUSING
Bellway defines affordable housing as, housing
that is available to rent or purchase by those unable to afford
the market cost of housing. Affordable housing therefore involves
some form of subsidy. Different areas will have differing requirements
based on earnings and market conditions occurring in that area.
This definition covers a range of need. It is
a failure of the system that, to often affordable housing is seen
only as social renting with rent levels set at Housing Corporation
rent caps. This undoubtedly assists local authorities in their
seeking to house those in the greatest housing need, the downside
is that it doesn't assist those needing a lesser level or a different
form of assistance. Unless the subsidy from what ever source can
be increased the higher level required for social renting inevitably
means less affordable housing in total can be provided.
THE SCALE
AND LOCATION
OF THE
DEMAND FOR
AFFORDABLE HOUSING
Bellway are concerned that the priority given
to identifying the demand for affordable housing is obscuring
the primary issue, which is, the failure to meet the demand for
all types of housing in areas where people need and want to live.
This has to be linked to the continuing provision of affordable
housing in areas of low demand and market failure.
A situation where demand exceeds supply inevitably
leads to an increase in prices forcing more and more people into
a situation where affordable housing subsidy is required. This
same mismatch will also force up the price of land. This latter
point will be discussed later.
It is surely the responsibility of regional
and local government, working within national policies and guidance
to undertake the surveys and analysis necessary to identify the
scale of demand for all types of housing. Bellway share the concerns
expressed by others at the adequacy and robustness of some of
the work carried out in the recent past. The house building industry
can assist in identifying market demands and, particularly in
advising on the impact of housing plans and policies on meeting
that demand.
THE QUALITY
OF AFFORDABLE
HOUSING
This issue cannot be considered in isolation
from questions of allocation and management. What is of concern
is the growing perception of affordable housing, as social housing,
and therefore as a tenure of last resort and an undesirable neighbour.
It is suggested that the design and finish of
affordable housing has more to do with allocations to maximise
occupancy and the desire to minimise maintenance. The house building
industry has, over the last few years, had to learn how to respond
to the demands and expectations of its customers who can purchase
from another firm or on the second hand market. There is growing
interest in the use of a demand led approach to affordable housing
and this is commended as offering the opportunity for consumers
of affordable housing to be treated and perceived in the same
way as the consumers of market housing. This approach also leads
to a more positive attitude from consumers of affordable housing.
THE ADEQUACY
OF THE
EXISTING SUPPLY
AND THE
AMOUNT OF
RESOURCES AVAILABLE
Recent research and evidence presented by amongst
others the Joseph Rowntree Foundation and the House Builders Federation
have demonstrated that the current rate of house building is and
has been falling for some years. The situation is now that, with
the growth in households, we have or, are just about to find that
the number of households nationally is greater than the number
of dwellings. In this situation, measures which alter the balance
between different types of housing, without increasing the supply,
must merely transfer disadvantage from one group and tenure to
another.
This is true even though there are areas of
market failure. Housing in these areas adds nothing to the overall
provision as it is not desired, whether for rent or purchase.
Complete neighbourhoods or estates suffering from market failure
need radical action. Refurbishment often fails to bring about
sustainable and long term change. Demolition is likely to be the
only solution, paving the way for the eventual creation of new
neighbourhoods.
The supply of all types of housing must be increased.
Decisions on location, type and tenure need to be based on demographic
trends, changing life styles and the existing stock as well as
need and demand. For example, in an area with a high level of
social renting new housing should be for owner occupation.
THE EXTENT
TO WHICH
PLANNING GAIN
CAN FUND
THE LEVEL
OF AFFORDABLE
HOUSING REQUIRED
There is no simple answer to this question.
The Three Dragon study is for the Mayor of London attempted to
construct a model. The principle and actual model was flawed because
it failed to take into account the unique nature of each development
site and the requirements of the persons and organisations involved
in any development.
For a development to proceed the revenue it
generates has to cover or exceed the:
— the land price acceptable to the
site owner;
— the cost of preparing the site for
development, which can be considerable for contaminated brownfield
sites;
— the cost of construction;
— management and marketing costs;
— acceptable profit levels, assessed
in relation to risk; and
— planning gain requirements, which
increasingly include more than those items arising from the development
in question.
Bellway as an experienced and responsible house
builder accepts the principle of planning gain, there has to be
genuine dialogue and flexibility to ensure that demands for planning
gain do not frustrate needed development. In London and the South
East a rule of thumb would probably be 25 per cent affordable
housing at prices equating to Total Cost Indicators as published
by the Housing Corporation is normally achievable.
HOW RESOURCES
SHOULD BE
BALANCED BETWEEN
SOCIAL HOUSING
AND OPTIONS
FOR OWNER
OCCUPATION
As noted above many local authorities, responding
to what they see as priority housing needs seek to restrict all
or the majority of affordable housing provided through planning
gain to social rented housing. This approach ignores the clear
preference for home ownership expressed in national and local
surveys. It also requires the highest level of subsidy.
Bellway consider that a more flexible approach,
responding to public preference and utilising the well understood
shared ownership and fixed equity schemes would enable affordable
housing to be seen in a more positive light, would enable more
groups like key workers to satisfy their housing demands and,
because of the subsidy implications would see more affordable
housing provided.
Nationally home ownership is around 70 per cent,
policies which encouraged market sale and low cost home ownership
at this level on a neighbourhood rather than site specific basis
would appear appropriate. Our own experience confirms the unsatisfied
desire for shared ownership and fixed equity housing. This particularly
is an area where house builders can take a more active role.
WHETHER TARGETS
IN REGIONAL
PLANNING GUIDANCE
ARE APPROPRIATE
Targets at regional level, if based on current
surveys and robust analysis are considered important, setting
the context in which local provision of housing of all tenures
should be planned for. These targets must not however be used
to justify blanket site specific requirements. As described above
these can at worst prevent sites coming forward for development.
They can also prevent creative solutions linking sites together
to achieve more affordable housing.
WHETHER TARGETS
ON DECENT
AND AFFORDABLE
HOUSING WILL
BE MET
BY CENTRAL
AND LOCAL
GOVERNMENT
On the evidence available through our own developments
and recent reports and surveys the answer has to be no. The planning
system is not releasing enough land for housing. Insufficient
grant is available and the attempt to use land value and house
builder profit to bridge the gap is as already described forcing
more people into needing affordable housing.
In a situation of inadequate land supply ever
increasing demands for planning gain will force developers to
maximise revenue and minimise costs if they are to succeed in
offering the best price for land. This process tends to prevent
the type of mixed communities and design led, sustainable homes
that government policy is seeking to encourage.
WHETHER CURRENT
POLICIES AND
PRACTICES ARE
LEADING TO
THE CREATION
OF MIXED
COMMUNITIES
Responses given above show that current policies
and practices are not leading to the creation of mixed communities.
Affordable housing is seen as social housing
and this is seen as housing of last resort by both its consumers
and people contemplating or having to live next to it. This is
a real issue which requires urgent attention if we are to avoid
today's affordable housing provision becoming the sink estates
of the future.
WHETHER MORE
GREENFIELD DEVELOPMENT
IS NEEDED
TO MEET
HOUSING NEED
The answer has to be yes. Meeting the government's
target still leaves 40 per cent of housing on Greenfield sites.
Additionally, not all brownfield land is situated where people
want to live, without compulsion market demand must require green
field land releases in areas where there is insufficient, genuinely
available and economically developable brownfield land.
THE COST
TO INDIVIDUALS,
BUSINESS AND
THE ECONOMY
RESULTING FROM
ANY SHORTFALL
IN THE
PROVISION OF
DECENT AFFORDABLE
HOUSING
The Company is aware of the views expressed
by others and believe these are true.
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