Memorandum by the Chartered Institute
of Housing (CIH) (DHB 33)
1. INTRODUCTION
The Chartered Institute of Housing (CIH) welcomes
this pre-legislative scrutiny of the draft Housing Bill by the
ODPM: Housing, Planning, Local Government and the Regions Select
Committee. Our members are involved in a range of activities that
contribute to the development and management of sustainable housing
and environments and we are please to make this submission to
the Committee.
2. RIGHT TO
BUY (PART
6, SECTIONS 153-156)
We understand that the changes to the right
to buy that are included in the draft Housing Bill are primarily
intended to reduce exploitation by individuals and companies.
The CIH is very much in favour of these changes to:
— extend the qualification period;
— extend the post-sale period during
which landlords may require owners to repay some or all of their
discount (while making it clear that landlords have the discretion
to waive repayment); and
— changing the basis of repayment to
a percentage rather than a flat rate.
However, we believe that more fundamental reforms
than are planned in the draft Bill are necessary. The CIH and
the Institute for Public Policy Research (IPPR) jointly staged
a symposium late last year. A briefing paper setting out the key
messages and making suggestions for further reforms has since
been prepared and is available from the web on: http://www.cih.org/section6/sub4/rtb1.pdf.
A hard copy of the paper will also be sent through the post along
with a hard copy of this submission.
Conclusions from the debate suggested that the
right to buy policy works against a number of Government policies,
including:
— The target to halt bed and breakfast
use for families—councils are renting ex-right to buy properties
from previous tenants to sub-let to homeless families and housing
associations are buying them from residents for the same purpose.
— The aim to narrow the gap between
deprived neighbourhoods and he rest of the country through the
implementation of the National Strategy for Neighbourhood Renewal—the
right to buy continues to remove the better properties from the
council stock, giving less choice to prospective tenants and concentrating
poorer households in the remaining poorer quality stock in poorer
environments.
— Sustainable communities—there
has been a reduction in the length of tenancy prior to purchase
and also in the length of time households stay in their properties
post-sale. The right to buy also adds to the problem of disadvantaged,
low income social housing tenants being concentrated in particular
areas (ie those with less attractive stock that is not sold).
— The drive to develop more affordable
housing in areas of high demand including rural areas that is
one of the drivers behind current reforms to planning policy.
Suggestions for more fundamental changes to
the right to buy, to make it more consistent with other strands
of Government policy are made in section 2.2 of this submission.
2.1 Provisions in the draft Bill
Adopting the proposals in the draft Housing
Bill will help to reduce the scope for exploitation, although
one loop-hole remains that will allow companies to continue to
exploit the policy. Companies that enter into agreements with
tenants frequently draw up sub-letting agreements for the period
during which the discount has to be repaid, enabling them to have
access to the property (to rent out) without buying it. The Bill
does not contain any provisions for preventing this from happening.
CIH therefore suggests that additional provisions
are added to the Bill. These should require purchasers who do
not occupy the dwelling as their main or principle home during
the first five years post-sale to repay a portion of the discount—even
if they do not dispose of the property. This could also be at
the discretion of the landlord.
Other changes have recently been made by order
to limit the maximum discount available in 41 local authority
areas in the south east to £16,000. CIH was disappointed
that the reductions were applied to such a small number of areas.
Many places outside London and the south east are experiencing
high demand for affordable housing (evidence in research for the
Joseph Rowntree Foundation published May 2003). At the same time,
the most recent figures on the right to buy show a substantial
increase in sales in all regions, in comparison with the same
quarter last year, with the exception of London which has decreased
(see table).
| Region | 2001-02 (Q2)
| 2002-03 (Q2) |
| North East | 1,711 | 2,287
|
| North West | 2,706 | 3,475
|
| Yorkshire and Humberside | 3,247
| 4,449 |
| East Midlands | 2,341 | 2,486
|
| West Midlands | 3,099 | 4,436
|
| East | 2,295 | 2,536
|
| London | 5,258 | 4,842
|
| South East | 1,836 | 1,898
|
| South West | 1,284 | 1,425
|
| England total | 23,777 |
27,834 |
There is a case for reducing the maximum discount available
in more areas. The criteria applied when deciding which regions
should qualify should be revisited and maximum discounts should
be reviewed on a regular basis.
2.2 Scope for further reforms
Whilst we are in favour of the reforms proposed in the draft
Bill, they amount only to minor modifications to adjust outcomes.
As explained above, we believe that much more fundamental reforms
to the right to buy are necessary to prevent it working against
achieving other important objectives. This conclusion was drawn
from a debate that was attended by politicians, policy makers,
practitioners and leading academics.
In line with many of the Government's policy directions,
it was considered that the overall aims of reforms to the right
to buy should be to:
— Raise the image of social housing to make it a
more attractive housing choice and to support the creation of
sustainable communities.
— Achieve greater fairness between tenants, including
those living in different areas and property types, those able
to access different home ownership schemes and those who buy and
those who remain as tenants.
— Reduce the scope for various types of exploitation.
— Avoid reducing local authorities ability to fulfil
their homelessness and housing duties.
— Promote social inclusion and support neighbourhood
renewal.
In addition to the relatively minor reforms proposed in the
draft Housing Bill, two further types of reform have been identified
that would help to achieve these objectives. They are not mutually
exclusive: it would not be a case of either or, and it would not
be necessary to remove the right to buy to introduce any of them.
They are set out more fully in the briefing paper, and include:
More flexibility to achieve strategic outcomes
Local authorities could be given more freedom to act strategically
in relation to all tenures, giving them more scope for working
around the right to buy and compensating for its more negative
effects. A range of freedoms should be considered:
— Exempting certain properties from the right to
buy and giving these tenants equivalent cash sums if they wish
to purchase other properties.
— Purchase on a shared equity arrangement, ensuring
the property remains available at lower than market cost in the
long term.
— Right to pre-emption to allow social landlords
to re-purchase right to buy dwellings.
— Giving local authorities greater financial freedoms,
to enable them to make cost effective decisions in meeting housing
need.
— Measures for reinvesting a higher proportion of
capital receipts in housing.
Giving tenants a bigger stake in their community
Promoting full home ownership is only one way of giving people
a stake in their communities. There are ways of extending these
benefits to tenants who, after all, have rights that allow them
to occupy the property for life in a similar way to owners. Giving
tenants who meet certain conditions a financial, or equity, stake
related to their tenancy is one way of doing this. Tenant incentive
schemes that offer other types of rewards to long-term tenants
present another means for stabilising the sector.
CIH and IPPR produced a joint report A Stake Worth Having
that looks at the feasibility of a variety of models for equity
stakes. ODPM has since produced its own research on equity stakes
for tenants. While we are aware that ODPM is not currently looking
at this, we firmly believe there are elements that warrant further
investigation.
Equity stakes could help to promote financial inclusion and
a sense of responsibility. Some of the models investigated, relate
the stake directly to the value of the property and could, therefore,
be considered to be a form of shared-ownership. Other models could
be considered as a saving scheme, indirectly related to the property
value. Equity stakes and tenant incentives schemes would not necessarily
require removal of the right to buy. The two could run alongside
each other, giving choice to tenants.
Until equity stakes schemes are tested on the ground it is
not possible to know whether they will work, what will work best
or how much they will cost. CIH and IPPR recommend that money
is made available to undertake a series of pilot schemes in a
number of local settings.
3. HMO LICENSING (PART
2)
CIH welcomes the proposals to introduce HMO licensing as
a means of raising property and management standards.
3.1 Definition of HMO
We are in general agreement with the definition of an HMO
given in the draft Bill (sections 164-170). We are pleased that
there is to be a mandatory element (the criteria for which are
presumably set out in secondary legislation) as well as a discretionary
element. A number of practitioners have suggested to us that many
two storey HMOs are high risk, and that a different definition
for high risk "mandatory" properties might be more appropriate.
Having the legislation set out in this way will give Ministers
flexibility to change the definition if it becomes apparent that
many high risk HMOs fall outside the mandatory category and are
not, therefore, being licensed. This will also allow local authorities
to make judgements about the severity of risk in HMOs in their
areas and action that should be taken on non-mandatory HMOs, in
line with their strategic housing role.
3.2 Licence-holders
CIH supports the sections of the draft Bill relating to licence-holders
being fit and proper persons. We agree that the definition should
be focussed, as it is, on offences that potentially relate to
the wellbeing of tenants (section 72 (2)).
We also welcome the decision to only grant licences to "relevant
individuals", as opposed to organisations or agencies. In
our opinion, these individuals should also be required to be resident
within the UK which would help to solve some of the problems of
absentee landlordism. Where the owner or person responsible for
financing works to the property is not the licensee, the individuals
concerned should be required to set out their respective roles
and responsibilities in a legal document or contract. The owner
or funding body must agree to provide sufficient funds to keep
the property up to standard.
There is scope for more involvement of the Independent Housing
Ombudsman (IHO) who has a good track record in facilitating resolution
of complaints and conflicts. We believe that compelling landlords
to sign up to the IHO as a requirement of gaining a licence would
be a very positive move. This would go some way to demonstrating
that the individual is "fit and proper".
3.3 Licences and licence fees
We agree with the statement that "no licence shall be
in force for more than five years". This is a reasonable
maximum period. However, we also believe that there may be merit
in operating shorter licence periods in borderline cases or where
it is considered that there is a risk that the license may be
breached. The length of licence should depend on the conditions,
standards and risks associated with the property (section 68 (9)).
HMO licensing will need to be adequately funded. We suggest
that the fees should be sufficient to allow the scheme to be self-funding.
3.4 Implementation and enforcement
The success or failure of licensing schemes will rest largely
on how well they are implemented. A mandatory HMO licensing scheme
is already in place in Scotland and lessons should be learned
from this. Research conducted by Heriot Watt University showed
that one year after the introduction of the scheme in Scotland,
relatively few licences had been granted. The reasons given point
to problems relating to implementation, suggesting that care must
be taken to make the scheme work well on the ground.
More clarity is required on, for example:
— The date by which high risk HMOs will need to
be licensed.
— Whether local authorities will be required to
inspect dwellings before issuing licences.
— Whether self-assessment by landlords will be acceptable.
— Monitoring arrangements.
Also, there are no transitional arrangements for landlords
who are already licensed under an existing scheme. Local authorities
that already run HMO licensing schemes must make it very clear
to landlords that are already signed up, what the new requirements
are (whether discretionary or mandatory), and whether or not they
already meet these standards.
We recommend that guidance is published and that officers
responsible for HMO licensing are encouraged to undertake training.
4. SELECTIVE LICENSING
(PART 3)
CIH is broadly in favour of the approach being taken—to
allow local authorities to introduce licensing of the private
rented sector in selected areas. We are not in favour of licensing
for licensing's sake, but for intelligent use of appropriate powers
to achieve certain outcomes. For this reason we agree that there
should be conditions for designation.
We also believe that local authorities should be given tools
to prevent future owners from letting out the property if they
believe this will prevent problems occurring in the first place.
This might be possible, for example, through a legal covenant
on the property.
4.1 Designation of areas
The draft Bill makes it very clear that the area must be
an area of low housing demand, or one that is likely to become
such. Certainly, licensing would be helpful in areas where house
prices are very low and that have experienced high levels of house
purchase at low prices by opportunistic landlords. It would help
to tackle problems of poor management (and poor property condition)
in this kind of instance and could also provide a means for local
authorities to engage with all private landlords in an area, to
achieve positive strategic outcomes for the area.
However, we consider that there may be other specific circumstances
in which licensing might be helpful in improving areas that are
in decline, but where the housing is not necessarily in low demand.
For example, some parts of inner London could benefit from licensing
schemes that form part of a wider strategy for improvement. Licensing
might also be helpful in areas where large numbers of students
live or for former local authority estates where investment in
social housing can be undermined because of high levels of privately
let former right to buy properties. We therefore suggest that
the actual conditions set out in section 82 are changed to include
a wider range of areas.
4.2 Property condition
The proposal is to licence landlords rather than individual
properties, and the Bill concentrates on landlords' management
responsibilities particularly in dealing with their tenants' anti-social
behaviour. CIH believes that this is too narrow an approach, since
the problems vary hugely between different areas. In particular,
local authorities need to be able to include property condition
elements within the licensing requirements if they believe it
is appropriate. In some areas property condition is a major problem.
Local authorities will be able to achieve much stronger strategic
and operational links between their housing condition enforcement
activities and licensing if they are permitted to do so.
Allowing local authorities to include a property condition
element in the licence could have a number of advantages including:
— drawing stronger and more strategic links between
traditional enforcement activities and licensing—there is
a danger with the current proposals that licensing and enforcement
remain essentially unrelated;
— being a stimulus for local authorities to deal
with enforcement in a more proactive fashion, whereby authorities
advise landlords of the works they need to do before granting
a licence, rather than simply enforcing the law;
— helping local authorities to identify where the
poor condition properties are and where to focus their attention;
— making more strategic use of grants and loans
to landlords; and
— reducing the costs of inspection and enforcement
as visits by local authorities to validate landlord declarations
could include a property condition element.
4.3 Timescales
We have concerns with the length of time the draft Bill proposes
it will take to get an area designated for selective licensing.
As well as the time taken for consultation and for the Secretary
of State to confirm designation, Section 83 (5) proposes that
designation cannot come into force until at least three months
after confirmation. We cannot comprehend the reason for introducing
this additional waiting period and suggest that consideration
is given to removing this requirement from the Bill.
4.4 Pilots
Once the legislation is in place, the Government should make
provision for pilots to be run in order to provide some valuable
feedback to inform future schemes.
5. SANCTIONS FOR
NOT OBTAINING
A LICENCE
(S66, 67 AND
S87, 88)
Sanctions are proposed for dealing with unlicensed properties
that should be licensed, but are not, under either an HMO or a
selective licensing scheme. These are (i) a fine of up to £20,000
and (ii) no rent is payable by the occupant.
We consider that a fine of up to £20,000 is acceptable
for an offence relating to licensing. However, this should be
set out in secondary rather than primary legislation so that it
can be more easily reviewed. When considering individual cases,
the courts must be required to take on board the number of properties
a landlord has that falls short of the licensing standards, otherwise
small landlords with one or two properties will be discriminated
against compared to landlords that own a large number of properties.
The sanction of not requiring rent to be paid on unlicensed
premises is based on a legitimate principle. We much prefer this
approach to reducing or terminating housing benefit, which would
discriminate against benefit claimants. It is, though, of some
concern because of the potential for landlord harassment of tenants
and possible illegal eviction.
If the principle of "no rent payable" is to be
adopted as a sanction, then adequate support mechanisms for tenants
will be necessary. There is a key role here for Tenancy Relation
Officers (TROs). They will need to follow up all instances in
which a licence is not granted, or is revoked, and provide the
appropriate information to landlords and support to tenants.
CIH suggests that there may be an alternative approach that
may be a more positive way of dealing with the matter. This would
involve the Rent Service setting a lower rent that would depend
on the condition of the property. This would be accompanied by
agreeing timetable to bring the property up to standard. We believe
that this approach, using positive enforcement techniques rather
than sanctions, may be more likely to win the support of landlords.
6. MANAGEMENTS ORDERS—INTERIM
AND FINAL
We are in general agreement with the principle of management
orders. However, their relationship with the sanction of imposing
a fine is not clear. Will the landlord first be fined and then
have an IMO imposed? Or will the fine be used as a first stage
and an IMO a later stage in the enforcement process?
A form of management order is already in use. "Control
orders" are used initially as a threat to back up an order
asking owners to remedy a breach of the fitness standard. However,
local authorities do not often use control orders because they
have substantial resource implications. They tend to be an option
of last resort.
In regard to licensing (both HMO and selective), we suggest
that enforcement should be a process with a series of sanctions
that bite at different points, and each of which gives the landlord
an opportunity to comply with the licensing requirements. As it
is currently drafted, the Bill misses out useful stages of the
process. The Bill needs to make it clear what this process is
and how the different elements interrelate. Management orders
should be a little used, final sanction.
7. HOME INFORMATION
PACKS (PART
5)
7.1 Improving housing standards
CIH supports the introduction of home information packs principally
because they will be a useful tool in the drive to improve house
conditions. Streamlining the process of buying and selling homes
will help to reduce stress for those involved and contribute to
the competitiveness of the economy by aiding mobility.
In particular, we anticipate that the requirement to include
a home condition report in the home information pack should encourage
sustainable home ownership. While good conditions exist in much
of the owner-occupied sector, low income home owners often face
severe problems. Over 800,000 owner-occupied homes are classed
as unfit for human habitation in England and Wales. Many others
are in serious disrepair.
The point at which homes are bought and sold is an important
one in influencing the condition of the stock. At this stage,
lenders seek to assess the condition of properties through surveys
and will frequently seek to ensure repair works are carried out
prior to sale. Purchasers take more of an interest in repair and
improvement works before and after sale. It is at this point that
buyers will aim to determine the scale of works required and assess
the resources available to improve their new home.
Nevertheless, Government research shows that many potential
home owners do not currently give enough thought to the physical
condition of the home they are buying. Home condition reports
should help to ensure that house prices more accurately reflect
the condition of the stock bringing to light any "hidden"
costs that are particularly problematic for those on low incomes.
Making it the responsibility of the sellers will encourage them
to rectify problems before putting their property on the market.
7.2 Achieving decent homes
In addition to the contents proposed in the ODPM consultation
paper, we believe that the home condition report should include
a statement as to whether the dwelling meets the Governments decent
homes standard (DHS). In cases where a home does not meet this
standard it should include a further statement of any works which
are required to bring the home up to standard.
Including information relating to the DHS would support the
Government's drive to achieve decent homes. It would provide data
against which to assess progress towards achieving the overall
objective of a decent home for all that would supplement that
collected through the English House Condition Survey. It would
also help to spread the "decent homes" message abroad
and should, over time, provide an incentive for existing owners
to maintain their property to a decent standard.
7.3 Energy efficiency
Requiring the home condition report to include an energy
audit, including SAP (Standard Assessment Procedure) ratings will
help towards meeting the Government's targets to reduce fuel poverty
and improve energy efficiency. Unexpectedly high fuel bills can
also contribute towards difficulties in being able to meet mortgage
payments particularly amongst low income home owners.
7.4 Sanctions
We support the government's intention in the draft Bill to
make home information packs compulsory. The benefits of the pack
will only be fully realised if all parties in the chain use it.
If this is to be effective then it needs to be underpinned by
some form of sanction which is easy to administer and difficult
to evade.
We have some concerns about the use of civil sanctions if
this will result in appeals building up in the courts.
7.5 The Home Information Pack in low demand areas
In line with the findings of the research regarding the views
of those who would be directly affected, we are not in favour
of any special treatment of low demand areas. Lenders and investors
are likely to avoid areas where exemptions are in place, effectively
"red-lining" them. This is likely to result in an accelerated
rate of decline of the area.
7.6 Leasehold properties
Careful consideration needs to be given to the additional
material required where leasehold properties are being sold, in
particular in relation to estimates of service charges. Leaseholders
will be dependent on the efficiency of their managing agent in
providing some of the information and may be disadvantaged in
respect of other sellers if they experience delays because they
are waiting for their managing agent to respond.
The original consultation paper (DETR, 1999) referred to
the possibility that the Law Society should develop a form containing
a summary of the information from the documents in plain English.
This would be particularly helpful in making sense of some of
the complex documents to be provided by leaseholders.
7.7 Application to Right to Buy (RTB) sales
We understand that the requirement to provide a home information
pack does not apply to "right to buy" sales by social
landlords to sitting tenants. This is appropriate given that the
sale can only occur between two parties—landlord and sitting
tenant—and that the council has no option but to sell the
property.
Right to buy tenants must already be provided with information
relating to the value of the property and of any structural defects
of which the landlord is aware. In the case of RTB tenants of
flats they also have a right to an estimate of future service
charges for repairs and improvements which is binding on the landlord.
The relevant minister also has the power to intervene in the case
of undue delays.
There would be advantages, however, in encouraging buyers
in such circumstances to carry out a home condition report before
buying their home. Some right to buy purchasers falsely assume
that when buying from a social landlord they are "covered"
when things go wrong. A report would help potential purchasers
to better understand the responsibilities and obligations of home
ownership and may help to prevent subsequent calls on the local
authority to buy back properties when structural problems or the
need for major repairs become apparent. The local authority could
arrange for a home condition report to be carried out and could
add these costs to the sale price.
CIH has called for the RTB to be reviewed and modernised
to create a more flexible system linked to local housing markets
and local housing strategies. Measures to encourage surveys prior
to sales could be addressed as part of this wider review.
8. TENANCY DEPOSIT
SCHEME
CIH suggests that legislative provisions for a scheme or
schemes to safeguard private tenants' deposits could be included
in the Housing Bill. This has already been the subject of consultation
and we understand that the responses from landlords and letting
agents did not give any signs that introducing such a scheme would
cause problems to the sector.
Pilots have also been undertaken, the verdict being that
the scheme has been successful in achieving its main objectives—to
secure tenants deposits and provide a cost effective dispute resolution
mechanism. The main problem with the scheme is poor take up, with
the majority of landlords and letting agents declining to join
a voluntary scheme. The Government appreciates that probably the
only way to ensure landlords sign up to the scheme would be to
make the scheme(s) obligatory.
There is also a logic to introducing legislation sooner rather
than later. Some momentum has been gained through the pilots and
it is important that those involved are encouraged to build on
this. Much has been learned from the pilots and it would be more
difficult to set up a statutory scheme from scratch than from
the current position. For example, it has become apparent that
there is a need for giving advice to landlords (and tenants),
and ways for doing this are starting being explored. This kind
of activity would inevitably be put in hold and in time the lessons
learned would be lost if there was nothing to replace the pilots
when they come to an end.
It would not be necessary to enact legislation even if it
were introduced at this stage. Statutory provision could be put
in place that allows the scheme to be phased in over a period
of a number of years as the detail is developed. This would also
allow time for administrative elements of the scheme, such as
adjudication arrangements, to be put in place.
9. HOUSING HEALTH
AND SAFETY
RATING SYSTEM
It is not possible to provide full, meaningful comment on
how the HHSRS will work in practice, because a number of reports
have not yet been made available. These include version 2 of the
technical guidance and the enforcement guidance.
Compulsory purchase of housing will be an important activity
in the restructuring of housing markets that is planned, particularly
in the nine Housing Market Renewal Pathfinder areas. New criteria
for compulsory purchase are set out in section 56 of the draft
Bill. These require "each of the residential buildings in
the area to contain one or more category 1 hazard" (unless
they are "dangerous or harmful to health or safety . . .
as a result of their bad arrangement . . .").
During the Fundamental Review of the Laws and Procedures
Relating to Compulsory Purchase and Compensation the CIH made
the point that, where housing markets are weak, the reasons for
demolishing properties may not always rest on their being unfit.
In some instances, dwellings are effectively obsolete, and therefore
extremely unpopular, because they do not match the aspirations
of people today.
The provisions in section 226 of the Town and Country Planning
Act are being revised in section 73 of the Planning and Compulsory
Purchase Bill, and this could provide another way of achieving
market restructuring. This will enable local authorities to compulsory
purchase where the development, redevelopment or improvement is
likely to contribute to the achievement of economic, social or
environmental "well-being" in the area. However, there
is no established definition of "well-being". If they
rest on this legislative route to achieve housing market restructuring,
local authorities will need greater reassurance that they would
be able to defend their case at Public Inquiry.
We believe that the criteria set out in section 56 need to
be much more flexible, and should refer to obsolescence as a valid
criterion for compulsory purchase.
10. SOCIAL HOUSING
GRANT TO
DEVELOPERS (CONSULTATION
PAPER)
Section 6 of the ODPM consultation paper, "Increasing
the effectiveness of powers to regulate Registered Social Landlords"
proposes to give Social Housing Grant (SHG), which supports the
provision of new social housing, to developers. To date SHG has
only been available to Registered Social Landlords (who are principally
housing associations) and who are subject to the regulation of
the Housing Corporation.
Registered Social Landlords (RSLs) have to comply with the
Housing Corporation's Regulatory Code which sets out what is expected
of an RSL in terms of:
The Housing Corporation has considerable powers to take action
against RSLs who are failing to deliver in any of these areas.
Indeed some of the other proposals in the consultation paper increase
the powers of the Housing Corporation to act effectively in such
circumstances.
A proposal to give SHG to profit making bodies not subject
to the code is therefore a significant step, yet the consultation
paper is sketchy about the arguments for this and how it will
operate. There may, for instance, be a case for SHG being given
to developers in certain limited circumstances where they are
attempting to incorporate social housing into a new estate they
are developing. The argument in the consultation paper does however
stress that this is to be done, not to facilitate such approaches,
but to challenge "housing associations to compete with private
developers on price" suggesting a potentially wide role for
developers in the provision of social housing.
The consultation paper argues that whilst developers will
have to meet the Housing Corporation's rules in terms of development
standards and rents, the subsequent management of the properties
will be "secured through contracts, as they would not be
subject to the Corporation's regulatory regime". There are
three key areas which CIH believes the ODPM needs to clarify its
position:
— To date SHG has been given to RSLs on the understanding
that their contracts with developers for housing development is
on the basis of competition. Thus the SHG is given to RSLs and
the competition is then between developers, principally on the
basis of price. How will competition arrangements work if developers
get the SHG and how will the Housing Corporation ensure that value
for money is being achieved? Given that developers currently undertake
the development work, where does ODPM see savings being made and
what is there evidence for this?
— In developing properties RSLs receive SHG on the
basis of both development and the long term management and maintenance
of the properties. The proposal seems to go against other areas
of government policy, such as PFI schemes, as it seeks to separate
out the development and long term management of the properties,
rather than ensuring that they are both fully considered at the
time of planning and development. How will the Housing Corporation
ensure that developers design for the long term management and
maintenance of the properties, particularly if they do not have
to meet the aspects of the Corporation's Regulatory Code relating
to service delivery?
— If the aim is for competition between developers
and RSLs then the proposals do not set a level playing field.
RSLs will still be subject to the long term need to meet the Housing
Corporation's regulatory requirements, with the on-going costs
of compliance which RSLs will still have to bear, but developers
will be free from these. If genuine competition is to be achieved,
is the aim to move RSLs away from full compliance with the Housing
Corporation's Regulatory Code? If so what comfort can be given
to tenants that the long term service and governance of RSLs will
not decline?
CIH does also have a concern that at a time when there is
a need to focus on the delivery of the ambitious development proposals
set out in the Communities Plan, there is to be uncertainty about
the arrangements for delivering the social housing aspects of
the Plan. We consider that the focus of effort should be on fully
encouraging and enabling those bodies who currently have the experience
and expertise to develop sustainable properties.
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