Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Written Evidence


Memorandum by the Peabody Trust (DEC 64)

INTRODUCTION

  Peabody Trust whole-heartedly supports the principle of setting a minimum standard for social housing and welcomes the Government's determination to improve the quality of existing social housing. Peabody Trust has a substantial stock of some 20,000 homes in London many of which are over 100 years old and in need of considerable and continuing investment.

  In our view, the key issues are:

    —  the standard itself;

    —  the scale of investment required to meet the standard within the prescribed timescale;

    —  the inconsistent approach to funding.

THE STANDARD

The Decent Homes Standard is not comprehensive enough

  Crime and fear of crime are regularly identified as a concern in social surveys and our tenants consistently prioritise security as their top concern but the Decent Homes Standard does not reflect this. Another high priority for tenants is sound transmission between dwellings which is particularly relevant for tenants living in flats. While this can be addressed reactively by Environmental Health Officers through the Environmental Protection Act, it is disappointing that it is not part of the Standard. Another omission is the provision and quality of external spaces around the home, particularly significant for tenants who live on estates.

  The proposed Housing Health and Safety Rating System, which will eventually replace the statutory minimum standard criterion in the Decent Homes Standard, will broaden the scope of the standard to include some elements of the above and this is welcomed. However, we do have concerns about the administrative burden that this will place on housing providers since it will require further data to be collected and further changes to information systems.

The Standard does not make use of existing methodologies and tools

  Over many years, housing providers and their professional consultants have developed standard methodologies for stock condition surveys and energy profiles. The standard approach for measuring stock condition is the residual life of components which is understood across the industry. It is difficult to understand the added value of the approach used by the Decent Homes Standard to measure reasonable state of repair which is defined as a function of the age and condition of components. And while there appears to be no added value in using a different methodology to measure stock condition, there is a real cost to housing providers to convert their existing datasets to this new format. There may also be unnecessary costs incurred in replacing components in good condition, purely on the grounds of age alone.

  Similarly the criterion for reasonable degree of thermal comfort has not made use of the industry-wide Standard Assessment Procedure [SAP] for assessing energy performance of housing. Again, housing providers already have SAP profiles of their stock since this is required for the annual Housing Energy Conservation Act [HECA] returns by local authorities and Regulatory and Statistical Returns [RSR] by housing associations. The methodology taken by the Decent Homes Standard appears less sophisticated than SAP [and certainly the National Home Energy Rating System—which could have been a viable alternative] and again, there is a real cost to housing providers to convert their existing datasets to this new format.

Parts of the Standard are still open to interpretation

  The Standard is a strange hybrid of very prescriptive criteria, eg a kitchen installation will not be considered modern if it is older than 20 years, and criteria that are open to subjective judgement, eg adequate insulation from external noise. On the one hand, it could be argued that terms such as adequate and reasonable enable housing providers to exercise some flexibility, within the spirit of the Standard, in their assessments of Modern Facilities. However, the reality is that in order to make this assessment, housing providers have to define the parameters for these criteria and collect data. Peabody Trust has invested considerable time and resources working on these assessments in conjunction with its consultants and to the best of our knowledge, we have made more progress here than most. We have worked closely with our IT system provider to clarify exactly what constitutes adequate space and layout. However, this activity is being duplicated by other housing providers which is an inefficient use of scarce resources for the sector as a whole. Additionally, the Government and its Regulators should be concerned that the parameters adopted may vary from provider to provider.

SCALE OF INVESTMENT REQUIRED

  Fifty-nine per cent of Peabody's stock presently meets the Decent Homes Standard, leaving some 6,400 properties which require investment in order to meet the standard by 2010. We have calculated that this will cost £153 million.

  Peabody's stock is unique in terms of age, design and location. Over 5,700 properties were built before 1900 and 2,300 of these were built before 1875. They were not generally purpose built as self-contained accommodation but as lodging rooms off corridors in stone-floored walk-up tenement blocks, with WCs and running water on staircase landings and communal baths and laundries. Very basic modernisation was undertaken in the1950s and 1960s to create self-contained flats with private kitchens and bathrooms, but to a standard that now appears very low. For example, it did not include sound insulation between dwellings nor good means of escape in case of fire. Accordingly the Trust began a comprehensive modernisation programme in the early 1990s and has succeeded in modernising some 2,000 homes to a high standard since that time, in addition to its planned maintenance programmes.

  There remains a significant quantum of work to be carried out to the remaining unmodernised properties. In 2000, the Housing Corporation was briefed on the scale of investment required to bring the remaining sub standard properties up to standard at a cost then estimated at £220 million. The work required far exceeds the current Decent Homes Standard which appears to be geared around low-density post-war housing. The Trust and its tenants consider that improving sound insulation between dwellings is a high priority, particularly given the high density of our stock. We also consider that improving means of escape in case of fire to modern day standards is a high priority and installing lifts in blocks of 5+ stories. Given the disruptive nature of this type of work, we would aim to carry out work at the same time as undertaking the more modest improvements required to meet the Decent Homes Standard. For many of the Trust's properties, improving a property to the Decent Homes Standard will not be cost-effective if that property is on the fifth floor of a block with no lift access, with noise transmission from the flat above through the hollow timber floors insulated only with lath and plaster, and with means of escape that requires the occupant to escape from their property in a fire by travelling through a series of habitable rooms to get to their front door.

  It is a dilemma whether to reduce the scope of our current modernisation programmes in order to achieve the Decent Homes Standard within the Government's timescale and then return after 2010 to carry out more comprehensive works to our own standard, or whether to retain our existing standard and accept that not all our properties will have been modernised within the next 7 years, not least because of the need to decant residents to carry out the works.

  We have calculated that to improve our stock up to a realistic modern standard, taking into account its unique design, will cost in the order of £212 million (inclusive of the £153 million above) by 2010, with significant further investment required beyond that date.

FUNDING FOR DECENT HOMES

  The Government has established a funding regime for local authorities to meet the Decent Homes Standard in the form of stock transfers and Arms Length Management Organisations. No funding has been made available for housing associations to meet the Standard. Yet most local authority housing stock was built after the second world war and is less likely to have a problem meeting the Decent Homes Standard than the older housing Trusts much of whose stock was built in the century before last.

  The Trust has a unique portfolio of social housing in central and inner London. We are determined to improve our housing stock to a high standard, beyond that of the current Decent Homes Standard. However, we cannot afford to fund even the level of investment required to meet the DHS by 2010 without new funding streams. We are constrained from increasing rents beyond the current Government rent restructuring formula, notwithstanding that our rents are low. We have exhausted our capacity to raise private finance since we are already servicing loans of £175 million taken out over the last 15 years to fund previous investment in our existing stock. That leaves property disposals or grant funding.

  In the absence of grant funding, we have calculated that in order to fund our Decent Homes programme within the required timescale, we will have to dispose of around 1,000 homes. These homes would be permanently lost to the social housing sector. This appears to conflict with the interim findings of the Barker Review of Housing Supply which has highlighted the need for more affordable housing.

  If the Government is serious about improving both the quality and supply of social housing, it needs to provide funding to ensure that its target can be met and the existing supply of social housing in areas of high demand is conserved.


 
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