Memorandum by Royal Institution of Chartered
Surveyors (AFH 63)
INTRODUCTION
The Royal Institution of Chartered Surveyors
(RICS), represents the views and interests of 120,000 chartered
surveyors worldwide covering all aspects of land, property and
construction. Under the terms of its Royal Charter, RICS is required
at all times to act in the public interest.
RICS welcomes this opportunity to submit evidence
to the House of Commons Select Committee on Transport, Local Government
and the Regions on affordable housing. If the Government is to
ensure that all social housing meets set standards of decency
by 2010, then it is imperative that decent houses are made affordable.
We remain committed to the principle of affordability
across all sectors and tenures and RICS has recently undertaken
specific research into how this can be delivered through the planning
system. In addition, RICS' recent response to the proposals outlined
for the London Plan contains some purposeful reflections on prospects
of achieving a target of 50 per cent affordable housing. It is
within this context that we wish to submit evidence.
We would like to comment on the following issues:
THE DEFINITION
OF "AFFORDABLE"
We have undertaken a survey to examine whether
local authorities have a common approach to defining affordable
housing for planning purposes and it is clear that a wide range
of approaches and language are currently in use. On the supply
side, definitions vary from "less than minimum market price"
in East Northants to "low cost market" in North Dorset
and "subsidised irrespective of tenure" in Birmingham.
However, in places such as the London Borough of Camden, low cost
market or shared ownership schemes will often not be affordable
to local residents. In other areas, such as parts of Teeside and
North East Lancashire, the local private housing market has failed,
with the result that subsidised housing can be priced at or above
alternatives available on the open market ie. it is neither low
cost nor less than market price.
In short, the way in which affordable housing
is defined starts from different premises and varies widely according
to local housing market circumstances. There is considerable variation,
and little apparent consensus in approaches to quantifying affordability.
Central government approaches to clarifying what is meant by affordability
have provided little practical help at the local level. This position
may improve as the Government takes a more prescriptive role in
setting sub-market, and housing benefit supported, rents. It should
use these developments to review the extent to which it can assist
local authorities in the development of their definitions of affordability.
Most local authorities have much less detailed knowledge of income,
rent, and house price data sources and the inter-relationship
between housing costs and welfare benefits. Government assistance,
however, can, and should, stop short of eroding local discretion
in the setting of local affordable housing policies.
THE SCALE
AND LOCATION
OF THE
DEMAND FOR
AFFORDABLE HOUSING
Currently, there is insufficient knowledge of
the level of demand for affordable housing. Local Authorities
need to research more rigorously and update local requirements
for additional affordable housing provision. Ideally this will
involve forecasting, for different time periods, the number of
households who are unable to either meet their reasonable housing
requirements in the market or from the flow of existing affordable
housing.
The issue of affordable housing is too often
equated with demand and supply issues in London and the South
East. The problem is equally relevant in many other areas of the
country and is particularly acute in rural areas where the influx
of second or holiday home owners have pushed up house prices to
unsustainable levels.
THE QUALITY
OF AFFORDABLE
HOUSING
There should be no trade-off between quality
and affordability in housing provision. If new affordable houses
are to be built then they must be in the right place, be suitable
for a variety of needs both now and in the future and make the
most of sites and contribute to their surroundings. New affordable
housing should lift the spirit of an area and should be sustainable
in terms of management, maintenance, the environment and what
it contributes to the wider community. In the past, new housing
has too often failed these tests.
While new build affordable housing is generally
of good quality, the older stock requires far more re-investment.
The Government is supporting large scale transfers of the older
housing stock where tenants support such a move. Where, however,
such transfers do not take place it is essential that local authorities
are allowed to borrow to fund repairs and refurbishment. RICS
supports the setting by government of stock condition and improvement
targets (including energy efficiency) both for the private and
social housing sectors, together with demolition and replacement
targets for the stock as a whole.
THE ADEQUACY
OF THE
EXISTING SUPPLY
AND THE
AMOUNT OF
RESOURCES AVAILABLE
The current supply of affordable housing (and
housing in general) is inadequate. The UK's gross fixed investment
in residential buildings as a percentage of GDP is globally low—it
appears to have rested on earlier laurels gained through significant
investment in the first two thirds of the Twentieth Century.
With demand for (affordable) homes outstripping
supply, Local Authorities need to review the local financial framework
in which affordable housing is provided as part of the planning
system. This review should be based on the range of needs for
affordable housing, what funding is available to meet these needs,
and the extent to which Social Housing Grant is needed to bridge
funding gaps.
THE EXTENT
TO WHICH
PLANNING GAIN
CAN FUND
THE LEVEL
OF AFFORDABLE
HOUSING REQUIRED
RICS supports the use of the planning gain to
meet affordable housing requirements. However, there are shortcomings
in the way the system works at present. Many of these were identified
in the report produced last year by RICS and the Housing Corporation,
"Delivering Affordable Housing through the Planning System".
That report, a copy of which is attached, pointed to various ways
in which local planning authorities and central government can
improve the present system. Priority should be given to:
— improving the quality and evidence
underpinning future affordable housing requirements, both locally
and possibly via some "industry-standard" approach to
housing demand forecasting;
— developing and refining corporate
working within local authorities, at member and officer level,
on planning led affordable housing issues;
— increasing the clarity of affordability
definitions used in local policies and the types of households
targeted. Again central government has a role in bringing together
and distilling, for local use, the views it takes on affordability
across government;
— assessing the relative merits of
affordable housing products to be developed on-site, off-site,
or via a commuted sum. The presumption in favour of on-site provision
should be reviewed as housing authorities' comprehensive strategic
role comes even more to the fore;
— reviewing procedures for local authorities
and developers choosing their RSL partners for affordable housing
schemes. Partners are chosen, more or less competitively and formally,
for a range of joint commissioning, stock transfer, and regeneration
tasks. Choosing affordable housing partners should reflect these
other local systems and the lessons from them;
— reviewing the local, and where relevant
the national and regional, terms on which SHG and other forms
of public subsidy are to be made available to support the provision
of affordable housing under the planning system; and
— reviewing the scope of section 106
agreements, not least the development and use of standard clauses
and the detail of Mortgagee in Possession clauses.
Whilst the planning gain system can make an
important contribution, attempts to extract unreasonable amounts
of affordable housing will backfire. RICS is strongly of the view
that a blanket target of 50 per cent affordable housing in new
developments, as proposed in London, will prove counter-productive
if rigidly interpreted at local level. It is highly likely that
the effect of a single prescribed target would be to reduce the
amount of land coming onto the market for housing, particularly
in less desirable areas.
A 50 per cent allocation may be achievable in
certain central and waterfront sites, for example, Imperial Wharf
at Fulham. In other locations—even in the same borough—this
will not prove to be the case. Under such a policy sites would
be subject to endless wrangling and appeals, or would not even
be brought forward for housing development in the first place.
Over the longer term this may lead housing development companies
to seek opportunities elsewhere in the south east rather than
endure further frustrating delays in London.
We suggest the adoption of a more targeted and
focused approach. The GLA should seek to agree with each London
borough, or at least with a sub-region of two to three boroughs,
a range of affordable housing targets which reflect local needs
and comparative land values and property prices. Flexibility needs
to be built into the system to reflect cycles in housing values.
What is affordable in today's market might be quite different
in three to four years time, as a result of which lower quotas
may be needed.
Other shifts in policy that we believe would
improve the flow of affordable housing include:
— the targets for additional housing
will only be met if higher residential densities are adopted.
The UK has some of the least dense residential areas in the world.
It is perfectly possible to increase residential densities whilst
maintaining a high quality urban environment. The publication
in June of the comprehensive guidance on identifying and implementing
Transport Development Areas is crucial in this respect. The guidance
(drawn up by RICS with the backing of most other relevant professional
bodies, the GLA, the Local Government Association, Scottish Enterprise
and others) shows how higher densities can be achieved in the
most logical and sustainable locations, ie around transport nodes;
— in areas of housing shortage there
should be a comprehensive review of all potential sites, both
public and private. The review should include outmoded industrial
areas which are unlikely to be used again for employment purposes;
and
— public organisations with key worker
shortages (NHS Trusts, Metropolitan Police etc) should be encouraged
to provide staff accommodation, in conjunction with housing associations,
from their own land and property resources, as happened in the
past, rather than disposing of sites on the open market on an
ad hoc basis.
HOW SHOULD
RESOURCES BE
BALANCED BETWEEN
SOCIAL HOUSING
OPTIONS AND
OPTIONS FOR
OWNER OCCUPATION
FOR THOSE
WHO CANNOT
AFFORD TO
BUY?
Resources can most effectively be directed at
the social rented sector which can provide affordable properties
in perpetuity. Assistance directed at enabling key workers to
move into owner-occupation can be helpful but the overall amounts
available are unlikely to make much impression given the scale
of the problem. Moreover, extensive help to key workers does run
the risk of adding to house price inflation with implications
for all those struggling to buy at the lower end of the market.
The area that should not be overlooked is the
private rented sector. For too long the private rented sector
has been seen as a small sector catering for those with specialist
or temporary housing needs rather than as one capable of meeting
main-stream housing needs. In this context we strongly back many
of the recommendations in the recently published Joseph Rowntree/Shelter
report, "Private Renting: A new Settlement". Some key
themes in that report are:
— a long term increase in the number
of smaller households will translate into increasing demand for
good quality, well managed private rented properties;
— in principle the private rented market
could be an attractive proposition for developers and institutional
investors, but both are holding back at the moment;
— investment by individuals would be
encouraged through the reform of the taxation of small landlords—so
that they are treated the same as other small businesses
— more flexible use of development
subsidies and the planning system would encourage institutions
and others to invest;
— the private rented sector is accommodating
an increasing number of people in housing need. Current support
for tenants and landlords is patchy. Action is needed on housing
benefit, to help people to secure their tenancies, and to provide
appropriate housing management support;
— private landlords and private tenants
should be recognised as key stakeholders in community regeneration
and be given support through more local private rented sector
projects; and
— a cultural change is needed so that
all local authorities recognise the importance of working with
the private sector.
ARE TARGETS
IN REGIONAL
PLANNING GUIDANCE
APPROPRIATE?
RICS supports the setting of regional targets
in line with demographic changes. However, the Government must
address the lack of a standard methodology for forecasting which
is seriously inhibiting the potential of RPG. There should also
be a greater requirement on Local Authorities to adhere to regional
guidance in relation to the quantity of affordable housing to
be provided.
WILL TARGETS
ON DECENT
AND AFFORDABLE
HOUSING BE
MET BY
CENTRAL AND
LOCAL GOVERNMENT?
It is evident that the UK is failing to meet
the demand for additional housing caused by demographic change
and economic growth. The UK consistently spends less on housing
investment than our EU neighbours and has above EU average rates
of housing unfitness and disrepair.
Whilst there are problems of housing shortages
in many areas those in London are among the most acute. A report
from the Mayor's Housing Commission highlighted the need for 43,000
additional units per annum, 27,000 of which should be affordable.
The current estimated provision of 19,000 per annum for all types
of housing clearly falls short of this target by a considerable
margin. The GLA has set a target of 23,000 units. This 20,000
unit difference in target needs to be addressed.
RICS believes that there is a need for Government
to set output targets (including affordable housing output targets)
to help meet the projected shortfall of homes.
ARE CURRENT
POLICIES LEADING
TO THE
CREATION OF
MIXED COMMUNITIES?
The creation of mixed communities is a key mantra
of Government policy. However, the concept is often unclear—how
mixed? mixed use? mixed tenure? mixed income? mixed race? Nonetheless,
however mixed communities are defined it does appear to be the
case that they are more sustainable than homogenous ones.
In 1999 a report by the Demos think tank caused
a stir by seeming to suggest that mixed tenure did not stimulate
the development of strong communities. However, that report missed
the point. We agree with the conclusions drawn by Anna Minton
in a recent article in The Guardian. The point is not that mixed
communities are ideal communities but that they avoid the downward
spiral of communities that are universally poor. Whilst there
is a need for more empirical evidence, there is a widespread view
among housing providers that mixed communities help to raise the
aspirations of those from poorer backgrounds. As Peter Redman,
Chief Executive of the Notting Hill Housing Trust put it: "We
see that families who've had a rough ride and move into a mixed
street tend to do much better. It's not about who helps you directly;
its about having aspirations and not being a victim of postcode
prejudice".
When new communities are created it is important
that the need for a social mix is addressed. Attempts to do so
range widely from that of the Duchy of Cornwall at Poundbury to
the Guinness Trust scheme at Caterham Barracks. In the latter
a conscious attempt has been to pepperpot the scheme by intermingling
private with social housing and building both to the same standards.
Whilst new schemes are important the overwhelming
need must be to bolster existing mixed communities and to encourage
the growth of successful mix communities where this does not already
happen. Government can help in this by:
— ensuring that a proportion of housing
in new housing schemes is "affordable". Where land prices
are high it may sometimes make economic sense for such provision
to be made off-site. However, off-site provision can work against
the building of mixed communities;
— greater scrutiny of and intervention
in failing neighbourhoods to ensure that such areas are turned
around before the decline becomes irreversible;
— a recognition of the crucial role
that the performance of local schools play in creating and maintaining
mixed communities; and
— a review of Right to Buy policies
which are resulting in a loss of affordable housing in high cost
areas.
IS GREENFIELD
DEVELOPMENT NEEDED
TO MEET
HOUSING NEED?
Development on brownfield land should nearly
always be preferred to development on greenfield if we want to
achieve an urban renaissance. Brownfield land is not, in itself,
difficult to develop. The issue is wider, ie how to achieve sustainable
urban development. Some sites remain undeveloped for a variety
of reasons such as market failure, high costs, poor existing infrastructure
and fragmented land ownership.
In much of the midlands and north the brownfield
land target should be 100 per cent initially until all the major
regeneration challenges are addressed. The sequential approach
to planning should be at a regional or sub regional level. If
authorities on the edge of conurbations run out of urban land
and start giving permissions to develop on greenfield sites this
fatally undermines the efforts of central urban authorities with
large supplies of urban land. Sustainable extensions to urban
areas may have a limited application in some very specific and
constrained locations. However the negative impact of these can
spread over a very wide area—development in Milton Keynes
has a negative impact on Leicester, for example, and even on inner
London.
The main two barriers to the greater use of
brownfield land are the awarding of planning approvals for greenfield
sites and the difficulty of assembling land in urban areas. If
local authorities stopped giving "out of centre" planning
permissions and started carrying out CPOs on good regeneration
sites we could transform our urban areas. We very strongly endorse
recent government proposals to allow CPOs for regeneration purposes
and to introduce better levels of compensation.
If there are favourable market conditions relating
to a site and the costs of bringing it back into use, then the
development will be achievable. If the costs are greater than
the potential end value then public funds should be deployed to
prevent the site from remaining derelict. But this kind of funding
has dried up since the Partnership Investment Programme that provided
gap funding was judged by the European Commission to be in contravention
of its state aid rules in 1999. One of the funding schemes recently
developed by the UK government partially to replace gap funding
covers housing development on brownfield sites. However, this
has not yet been approved by the Commission and only applies to
housing for owner-occupation. The scheme should be extended to
cover housing for rent.
WHAT ARE
THE COSTS
TO INDIVIDUALS,
BUSINESSES AND
THE ECONOMY
RESULTING FROM
ANY SHORTFALL
IN THE
PROVISION OF
AFFORDABLE HOUSING?
For individuals working in low paid professions,
a lack of affordable housing imposes considerable restrictions
in relation to housing choice. If the demand for certain professions
is at its greatest in areas where housing is prohibitively expensive,
then local economies will suffer. This problem is particularly
acute for low paid key workers in areas of London and the South
East who cannot afford to live near their place of work. This
will significantly affect the provision of public services and
raise the prospect of a loss of skills in vital sectors (as key
workers relocate).
As a lack of affordable homes spills into the
labour market, employers may be forced to raise wages in order
to retain their workforce even if this is not economically viable.
Business competitiveness will therefore inevitably suffer.
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