Annex 2
THE CONTINUING DECLINE IN THE SUPPLY OF SOCIAL
HOUSING
1.1 There has been, and continues to be,
a decline in the supply and stock of social housing. There are
a number of reasons for this.
SUPPLY
1.2 The new build targets have not been
met in recent years and land acquisition is accepted as the principal
difficulty faced by Housing Associations in developing schemes.
Historically, Housing Associations have not been funded to acquire
land in advance and this has been identified as a major problem
that prevents early starts on site. Under current funding arrangements
it is not in the interest of the Associations to "land bank",
except at their own expense and risk, in order to secure land
for future development. The result is that Housing Associations
have been expected to purchase land, secure planning permission,
appoint a contractor and start on site, all in the 15 month period
from issue of the new build programme to end of financial year.
This has been a major obstacle in delivering the annual social
housing programme targets.
ACTIONS TAKEN
TO ADDRESS
PROBLEMS WITH
DELIVERY
1.3 New arrangements introduced by the Department
to facilitate the advanced acquisition of land and an in-year
review of the Total Cost Indicator (TCI) are intended to alleviate
some of the difficulties associated with securing land for social
housing development. The TCIs applicable to the 2003-04 programme
show an increase of some 8% on the previous year, this increase
is attributable to increasing land and other building costs. By
comparison the Retail Price Index (RPI) increase was 2.9% for
2003.
1.4 The major problems identified as affecting
the successful and timely delivery of the programme are land acquisition,
planning, rising costs, (ie costs are rising at a rate higher
than the annual uplift in the budget so the number of starts that
can be achieved has to reduce) and the backloaded programme.
1.5 The actions taken to address the problems
include:
(i) A review of the Net Stock Model to establish
the need;
(ii) Setting up New and Improved Structures
eg
— An informal Joint Departmental/
Housing Executive Group that made a large number of mainly administrative
recommendations, all of which have been addressed.
— A Tri-Partite Working Group,
comprising representatives of the Department, Housing Executive
and Housing Associations, to focus on the major problems.
— A New Build Steering Group involving
senior officials from the Department and Housing Executive to
monitor difficulties with particular emphasis on NIHE transfer
schemes.
— A Formal Liaison group set up
between the Planning Service and the Department to address delays
in the planning process (including roads problems).
(iii) Programme Management. The three-year
programme has for the first time been rolled out to a five year
programme. This will provide Housing Associations with a longer
lead in time.
(iv) Building cost increases are being identified
more accurately and earlier to permit bids for additional costs
to be made to cover the difference between actual building cost
increases and the RPI inflation rate allowed by H M Treasury.
1.6 The DTZ Pieda Review into the Needs
and Effectiveness of the Housing Programme identified rising social
housing costs as an issue requiring further investigation. The
Department commissioned research to determine how and for what
reasons social housing costs have risen. The data have shown that
the cost of providing a new social home in Northern Ireland has
increased by some 95% in the last 10 years (62% in the last five
years and 26% in the last three years). The work in reviewing
the rising costs of social housing will have implications for
the resources required if the Department is to meet the levels
of new build recommended by the Net Stock Model and local information
on need.
STOCK
1.7 The NIHE began selling housing in the
1970s when the Department approved sales of certain categories
of properties. Since the scheme's inception the NIHE have sold
113,661 dwellings and has, in cash terms, generated approximately
£1,294.9 million to support housing investment in new home
construction, and capital improvement of the existing housing
stock. The NIHE may keep the receipts from sales up to the annual
target figure but any surplus funds arising from sales above that
figure must be returned to Central Government. The highest levels
of house sales tend to be in stable areas, which normally have
had low levels of turnover for re-let and the impact on the availability
of houses for re-lets initially tends to be minimal. The scheme
has been particularly successful in promoting mixed tenure in
areas traditionally associated with social housing and it helps
address affordability issues in certain areas by providing access
to low cost home ownership. House sale prices have increased considerably
over the last two years, and in 2002-03 the increase in the average
selling price rose almost 20%. The average selling price is approximately
£25,000 per dwelling for 2003-04.
1.8 With the extension of the House Sales
Scheme to housing association tenants and, in light of the decline
in social housing stock, the Department is currently reviewing
the Scheme to determine what, if any, changes should be made to
it.
ROLE OF
PRIVATE RENTED
SECTOR
1.9 As the decline in the supply of social
housing continues it has become necessary to look at alternative
ways of offering housing to those in need. In this regard the
private sector will play an increasing role. However the private
rented sector is complex and there are a number of issues to be
addressed to ensure that the sector can offer good quality affordable
accommodation to those in need. The private rented sector plays
an important role in meeting housing needs in Northern Ireland
by offering a choice and a flexible and speedy option for those
who, for whatever reasons, are not ready to buy their own homes.
It also provides an alternative for those living in areas where
there is a high demand for social housing; the sector now accounts
for 7.6% of the total housing stock.
ROLE OF
CO -OWNERSHIP
1.10 The Department for Social Development
part funds the Northern Ireland Co-Ownership Housing Association
which provides assistance to those on marginal incomes, and who
would not be eligible to obtain a full mortgage, to allow them
to become home owners. Participants join on a 50/50 equity sharing
basis and then purchase further tranches of equity at the prevailing
market value, as and when their circumstances permit. Since its
inception in 1978 the scheme has enabled 17,500 participants to
gain a foothold on the property ladder through its equity sharing
scheme, over 13,000 of whom eventually moved to full home ownership.
Many of these participants would, in the absence of the scheme,
have sought accommodation in the social housing sector.
PRESSURE ON
THE BUDGET
FOR THE
PROVISION OF
NEW SOCIAL
HOUSING
1.11 The budget for the provision of new
social housing is subject to a number of competing demands. The
requirement to supply a target number of new dwellings has to
be balanced with the need to provide Small Adaptations Grant (SAG)
to housing association stock and to provide recompense to housing
associations that dispose of a property to a sitting tenant at
a discounted rate. Under the terms of the SAG, the Department
has given an undertaking to fund, on a retrospective basis, small
adaptations, such as disabled showers and access measures, where
need has been established and supported by DHSSPS occupational
therapists. The process is demand driven. If Health and Social
Services Boards increase the number of referrals through the allocation
of increased resources, or otherwise, then the impact will be
an increase in the demand for adaptations. Health policies such
as Care in the Community encourage people to remain at home with
the resultant impact that those homes have to be modified to provide
appropriate accommodation evidenced by the increasing demand for
assistive technologies. In addition, NIHE awareness campaigns
and word of mouth have changed public perceptions and generated
increased demand. There are substantial cost benefits in this
approach rather than having to provide specialist supported housing
schemes.
1.12 The Voluntary Purchase Grant Scheme
(VPG) was introduced in 1998 to enable Registered Housing Associations
(RHAs) to receive recompense when they dispose of their social
housing for rent at a discount to their sitting tenants. Proceeds
from the sale of the properties, including grant previously received
by the association and which would have been recovered by the
Department at the time of sale together with VPG claimed plus
any surplus equity, must be paid into the Disposal Proceeds Fund.
This is a restricted reserve and can only be used for the purposes
of providing replacement stock or bringing long-term voids back
into use. The demand the scheme has placed upon the overall housing
budget is largely due to both an increase in the awareness of
sitting tenants of the facility and in the number of associations
participating in the scheme. The increase in average payment from
£14,736 in 1999-2000 to £20,442 in 2002-03 is primarily
due to the buoyancy of the housing market and the increase in
value of the houses purchased.
1.13 In addition to the pressures on the
budget outlined above the application of resource accounting to
the new build programme produces a number of unique challenges
focused around the complex interaction of developmental timetables
and evaluation of funding requirements.
CONCLUSION
1.14 Government policy to facilitate and
encourage home-ownership has had a major impact on the numbers
of social housing stock (available for rent). The replenishment
of the stock is subject to the competing demands on the housing
budget and the difficulties in recent years in delivering the
new build programme to agreed levels. The Department is reviewing
policies and strategies to ensure that the necessary stock levels
are in place to cope with current and anticipated demand. The
projections of demand from various analysis (the NSM, the Cambridge
Model and the Regional Development Strategy) agree that demand
will continue to grow with at least 1,400 new units per year required.
The Department has developed a number of responses, some of which
are outlined above, to ensure that demand can be satisfied. This
includes measures to promote co-ownership and to stimulate and
support the private rented sector as viable options for persons
considering social housing.
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