Memorandum by the Office of the Deputy
Prime Minister (EMP 01)
EXECUTIVE SUMMARY
1. Since the Committee's last inquiry into
empty homes and low demand in 2002, a great deal of progress has
been made towards resolving both of these related problems. Nine
of the areas where low demand and abandonment are worst have become
housing market renewal pathfinders. By March 2008, low demand
areas will have received over £1.2 billion from the new Housing
Market Renewal Fund. Eight of them have already agreed schemes
up to 2006, while a decision on the ninth is expected in Spring
2005. Prospectuses covering the years 2006-10 will be developed
during 2005.
2. The pathfinders are making good progress,
both in terms of dealing with the physical manifestations of low
demand and building stakeholder partnerships that can deliver
lasting solutions. They are still near the start of a 10 to 15
year programme, however, and all parties involved with the pathfinders
will need to raise their game still further if they are to transform
weak housing markets. Challenges ahead include increasing the
availability of people with the right skills and maximising the
involvement of the private sector.
3. However, understanding of low demand
has advanced quickly and there has been rapid movement from identifying
the problem to delivering solutions. Work in pathfinder areas
and other places where empty homes are a problem will be made
easier by local authorities' new powers under the Housing Act
2004 and the Local Government Act 2003.
4. Homes for All, ODPM's five year
housing strategy published in January 2005, sets out its plans
for dealing with low demand outside the pathfinders. Extra market
renewal funding will be available to Regional Housing Boards for
investment in additional sub-regions with significant problems,
while the Regional Housing Boards will also continue to invest
in smaller areas of low demand.
INTRODUCTION—PROGRESS
TO DATE
5. The first of the main recommendations
in the Committee's 2002 report suggested that:
"Radical intervention is needed in some
inner urban areas where the housing market has collapsed to make
them attractive to a broad range of existing and potential residents.
The housing market renewal approach needed to achieve this must
be on a large, conurbation-wide scale. It will take a long time
and so must be started as soon as possible and will require significant
additional funding, of the order of hundreds of millions of pounds
per annum."
6. The Government's response has been prompt
and has displayed its strong commitment to resolving the problems
associated with low demand housing.
7. In April 2002, the then Secretary of
State for Transport, Local Government and the Regions announced
that nine areas with acute low demand problems had been invited
to work with the Government to establish pathfinder projects to
tackle low demand. Each pathfinder comprises two or more authorities
to allow the problem to be tackled on an appropriate scale. £25
million was made available to help the pathfinders develop schemes
to achieve market renewal and establish their presence by achieving
some quick wins.
8. The Sustainable Communities Plan, published
in February 2003, set out the Government's proposals for a new
£500 million Market Renewal Fund, which would provide the
pathfinders' core funding up to March 2006. With the additional
money allocated through the 2004 spending review, the Fund will
provide a total of over £1.2 billion to help deal with low
demand housing to for the five years to March 2008. This substantial
level of funding will deliver transformational change in places
where it is most required. It will also help to rebuild confidence
in areas of severe low demand and reconnect them with more prosperous
parts of towns and cities.
9. Homes for All, ODPM's five year
housing strategy, was published on 24 January 2005. Chapter 6
reiterates the key messages about low demand from the communities
plan, while setting them in the context of the current, rapidly
changing, housing market. It also explains ODPM's new proposals,
supported by £65 million new funding, for dealing with low
demand outside the pathfinders and proposes clear outcome targets
for the pathfinder programme.
10. All of the pathfinders have now submitted
their prospectuses to ODPM and eight have agreed schemes and funding
(the exception is Gateway, the pathfinder for Hull and the East
Riding, with which ODPM is currently in negotiations). Copies
of the executive summaries of each prospectus have been provided
to the Committee separately.
11. The agreed schemes cover the initial
stages of the programme to 2006. All of the pathfinders are different
and ODPM decided that it would be inappropriate to stifle innovation
by providing detailed guidance. The agreed schemes reflect this
diversity. However, independent scrutiny of prospectuses by the
Audit Commission has helped to ensure that the programme is robust
and deliverable.
12. In February 2005, ODPM will write to
each pathfinder inviting them to submit updated prospectuses,
setting out detailed plans for 2006-08 and outline proposals for
2008-10. These prospectuses will inform the distribution of SR04
market renewal funding to 2008.
13. The work of pathfinders and other local
authorities faced with the problems associated with empty homes
will be facilitated by a number of important legislative changes
that have been enacted since the Committee's last report. These
include the introduction in the Housing Act 2004 of new legislative
powers for local authorities to make management orders in respect
of long-term empty homes and to license privately rented accommodation.
14. While the generally buoyant housing
market over the last few years has clearly helped efforts to deal
with low demand and empty homes, there have been some encouraging
early signs that the tide is turning. There has been a small but
steady decrease for each of the last five years in the total number
of homes in England vacant for more than six months. And the number
of homes reported as being in low demand in the North and Midlands
has fallen from almost a million in 2002 to around 850,000 in
2004.
15. Measures are now in place to deliver
long-term programmes of renewal and replacement of housing, improving
both quality and choice. Progress so far has been promising. Despite
the fact that many of the pathfinders have been fully funded for
less than a year, they are beginning to make a real impact. Not
only are they starting to tackle the physical manifestations of
low demand housing, they are bringing together the regional and
local players whose support will be imperative to deliver sustainable
solutions.
16. The pathfinders and other programmes
to deal with low demand are still near the beginning of what is
likely to be a 10 to15 year programme. Everyone concerned will
need to raise their game still further if they are to succeed
in achieving the step change necessary to transform weak housing
markets. ODPM will provide strong support to help them to meet
this challenge.
PARTICULAR ISSUES
RAISED BY
THE COMMITTEE
(a) The scope and scale of the initiatives
proposed and underway in the Government's Housing Market Renewal
Pathfinder areas and other areas with problems of empty homes
17. In 2004, local authorities reported
that around 850,000 homes were in low demand. The pathfinder authorities
cover around 60% of this total. The intervention areas agreed
with pathfinders to cover the large majority of problem areas
within their authorities cover approximately half of all low demand.
18. The agreed outputs for the pathfinders
to March 2006 include:
— Over 3,000 new homes constructed
and occupied.
— 24,000 homes refurbished, repaired
or improved.
— Almost 10,000 properties demolished.
19. It will be for the Regional Housing
Boards to propose exactly which areas should benefit from the
new funding to tackle low demand outside the pathfinders, announced
in Homes for All. However, the sub-regions mentioned in
the strategy as likely recipients—the Tees Valley, West
Yorkshire and West Cumbria—account for around 15% of low
demand in England. Other projects, including those funded by Regional
Housing Boards from their single pots, will ensure that a still
higher percentage of low demand housing is subject to some sort
of strategic intervention.
20. The pathfinders and wider low demand
schemes are essentially capital programmes which can deliver improvements
to the housing offer and rebalance supply and demand. However,
it is clear that housing measures alone will not lead to transformational
change and sustainable communities.
21. Some pathfinders are providing support
to projects designed to support communities through transition,
such as neighbourhood warden schemes. Nevertheless, if they are
to succeed, it will be vital for pathfinders to continue to build
links with other service providers, notably community organisations,
the police and education departments, as well as other regeneration
bodies, and ensure that their activities are aligned.
22. There are already some good examples
of this sort of approach emerging. For example, in North Staffordshire,
Renew, the pathfinder and the RDA funded regeneration zone are
co-located, work within the same geographical areas and are working
towards linked delivery structures.
(b) The commitment and contribution
of all Government departments and other agencies to tackling the
underlying causes of empty homes
23. There has been good cooperation across
Government as solutions have been sought to the varying and complex
issues that contribute to low demand. ODPM and the Home Office
have jointly organised a community cohesion seminar for pathfinders,
while the Department for Transport has agreed that low demand
can be taken into account when allocating discretionary funding.
ODPM is also working with the Department for Education and Skills
to ensure that proposals to rebuild communities are taken into
account in Building Schools for the Future and education provision
more generally.
24. Two of the pathfinder Chairs recently
gave presentations on the programme to a Central Local Partnership
meeting attended by Ministers from ODPM, DfES, the Department
of Health and a number of other departments.
25. English Partnerships, the Housing Corporation
and the Regional Development Agencies, all of which receive funding
from ODPM, have each made a strong contribution to dealing with
low demand, through both their expertise and resources. Between
them, they are likely to contribute over £100 million to
the pathfinders' activities this year. The Commission for the
Built Environment (CABE) has also made an important input to the
programme and has provided support to all pathfinders, while leading
a successful design task group and seconding staff to Elevate
East Lancashire. CABE has also worked with English Heritage and
ODPM on the need to retain and make better use of high quality
buildings in pathfinder areas.
26. The need for a strongly coordinated
approach to dealing with low demand will increase as pathfinder
and other activity escalates. ODPM will continue to take the lead
in ensuring that all relevant Government departments and agencies
are aware of developments and contribute, where possible, to success.
The Joseph Rowntree Foundation is organising a seminar on low
demand for senior civil servants from across Whitehall, which
will take place in February 2005.
(c) The availability of resources outside
the pathfinder areas and the development of strategies to deal
with weak housing markets
27. The pathfinder programme is intended
to both tackle the most severe instances of low demand and to
draw out lessons that will benefit other areas suffering from
low demand. A number of non-pathfinder sub-regions have already
started to work in partnership to develop strategies for tackling
the particular problems they face. Many of these have received
funding from their Regional Housing Boards. An example is the
West Yorkshire Housing Partnership, which is developing strategic
solutions to the diverse housing issues faced by West Yorkshire
authorities.
28. In other areas, funding has been attracted
from other sources. An example is the Meden Valley, a former coalfield
area in the East Midlands. Here, a special purpose vehicle, Meden
Valley Making Places, has been set up to tackle low demand housing
in a semi-rural area. MVMP is jointly funded by English Partnerships
and the East Midlands Development Agency.
29. However, the Government accepts that
transformational change in some of the worst affected non-pathfinder
areas will only be achieved with the injection of additional funding.
Homes for All therefore announced that £65 million
will be set aside for further sub-regions where there is a clear
need for investment and the capacity to succeed. This money will
be distributed through the Regional Housing Boards, although the
Government expects that the main beneficiaries will include the
Tees Valley, West Yorkshire and West Cumbria.
30. The Government expects Regional Housing
Boards to continue to support sub-regions that receive this new
funding with additional resources. The Government will also look
to the recipient areas to attract financial and other support
from other partners, including those in the private sector. Meanwhile,
the Regional Housing Boards will continue to fund projects in
smaller areas of low demand, for example some former coalfield
areas.
31. The planning system enables the supply
and location of housing to be controlled and is a powerful tool
for use in strategies to deal with low demand. The recently reformed
planning system will help by emphasising integrated spatial planning
at both regional and local levels, enabling a joined up approach
to economic development, transport and housing, all of which are
critical to tackling low demand. It will also requiring community
involvement and assessment of social, economic and environmental
impacts of policies to give a greater voice to those in low demand
areas.
(d) The dissemination of good practice,
innovation and co-ordinated interventions within and outside pathfinder
areas
32. There have been good links between pathfinders
since the inception of the programme. A high level working group,
with director-level representation, meets on a bi-monthly basis,
while sub-groups discuss more detailed issues. ODPM has organised
three pathfinder conferences, dealing with issues of particular
interest to the pathfinders at the time. A fourth will take place
in February 2005, focussing on the development of revised prospectuses.
In addition to these events, and a number of major commercial
conferences, the Audit Commission has run several seminars dealing
with issues that have arisen from their scrutiny and critical
friend activities.
33. ODPM has recently commissioned an evaluation
of the pathfinder programme, which will be a major source of best
practice advice. This work will provide early and regular outputs
that will not only allow lessons to be shared, but will also help
to shape future market renewal policy.
34. There is now clearly an increasing need
to ensure that wider low demand areas can benefit from this exchange
of experience and knowledge. Representatives of a number of non-pathfinder
areas were invited to the recent launch of our home ownership
solutions work. More importantly, a wide range of people involved
in wider low demand work have been invited to ODPM's February
pathfinder conference. As work outside the pathfinders gains momentum,
ODPM will look at the need for additional seminars for sub-regional
partnerships working on wider low demand.
35. On the wider issue of empty homes, ODPM
published comprehensive guidance on Unlocking the Potential of
Empty Properties in 2003. This includes numerous examples of good
practice from around the country. It is also supporting the Empty
Homes Agency in offering training and disseminating good practice
through regional empty property practitioner fora.
(e) Whether Councils have sufficient
powers to tackle the problem of empty homes in their areas
36. The Government considers that local
authorities already have strong powers to deal with empty homes.
These will be further enhanced once the provisions of the Housing
Act 2004 are fully in force. Some examples of recent changes are
described below.
EMPTY DWELLING
MANAGEMENT ORDERS
37. The provisions in the Housing Act 2004
on Empty Dwelling Management Orders (EDMOs) stem directly from
the recommendations of the Committee's report in 2002. The new
powers will enable local authorities to assume management control
of unoccupied dwellings where it can be demonstrated owners have
no intention of bringing them back into use.
38. The legislation will operate alongside
existing procedures for securing occupation of empty homes such
as leasing arrangements operated by some local authorities and
Registered Social Landlords. ODPM is working with the Empty Homes
Agency to support this approach. The Government aims to commence
the provisions in October 2005, following further consultation
on the detail of their operation.
SELECTIVE LICENSING
OF PRIVATELY
RENTED ACCOMMODATION
39. As house prices fall and owner-occupiers
find it difficult to sell their properties there is often an increase
in the private rented sector. Some landlords, particularly where
demand is weak, are unconcerned who they let to or how their tenants
behave. This leads to an increase in anti-social behaviour, which,
in turn, further exacerbates the difficulties facing these areas.
It is this spiral of decline that can lead to widespread abandonment
of homes and which selective licensing is designed to address.
40. The Housing Act 2004 contains powers
for local authorities to selectively license privately rented
properties in areas of low housing demand, subject to local consultation
and government approval of schemes. Landlords operating in these
areas will be required to have a licence—if they do not
they will be committing an offence and subject to fines of up
to £20,000.
41. Licensing will ensure that landlords
are fit and proper persons and that proper arrangements for the
management of their properties are in place, including requiring
them to take steps to deal with anti-social behaviour by their
tenants. Failure to comply with licensing conditions may result
in a licence being revoked and the licence holder can be prosecuted
and fined up to £5,000.
COUNCIL TAX
42. The Local Government Act 2003 enables
local authorities to determine locally the rate of discount that
applies to long-term empty homes. Local authorities can set council
tax discount rates that take into account housing market conditions,
particularly in areas of weak demand. New provisions allowing
council tax data to be shared across local authority departments
stem directly from a recommendation of the predecessor Committee's
report.
COMPULSORY PURCHASE
43. Local authorities have long had compulsory
purchase powers which can be used to acquire empty properties.
In addition to their various Housing Act powers, the changes made
by the Planning and Compulsory Purchase Act 2004 to the wording
of the compulsory purchase power in section 226(1)(a) of the Town
and Country Planning Act 1990 to link the use of that power to
the "well-being" requirement in the Local Government
Act 2000 should help authorities in justifying using that power
to acquire empty properties.
(f) The priority given to the demolition
of homes and the consideration given to effective methods of refurbishment
44. Demolition will be a significant component
of the programme but it is not the only response. Over the next
two years we will be funding about 10,000 demolitions through
market renewal funding, compared to around 20,000 refurbished
properties. This is a relatively small part of a wider package
including refurbishment, improving public space and providing
the conditions for the new housing to be built.
45. Pathfinders should only undertake demolition
only where there is clear evidence that the type of housing is
not the sort that people want or where the majority of homes are
unfit or not decent and the costs of improving them would be unsustainable.
Where demolition is necessary, there should be full consultation
with the community and every effort should be made to rehouse
people in the location of their choice and with the minimum of
disruption to their lives.
46. Nevertheless, it is important to bear
in mind that much urban housing has been substituted in recent
decades by housing in suburban or rural locations. At the same
time, there has been no strategic approach to addressing the housing
that "has been left behind". This has led to some of
the problems of reduced demand in pathfinder areas.
47. There is a mismatch in low demand areas
between the available housing stock and the number of households
who are seeking accommodation. The rate of new housebuilding often
exceeds any growth in households. Vacancy rates across the pathfinders
are over twice the English average with higher concentrations
in particular places. Refurbishment alone therefore cannot solve
low demand.
48. Removing existing housing is a necessary
part of any strategy to tackle the underlying housing market weaknesses.
The careful rationalisation of some stock can also help to ensure
the future long term viability of similar houses.
49. Typically, demolition will be focused
on the worst quality housing, where maintenance to a decent standard
is not economically viable for owners. However, some housing does
not meet people's aspirations. It may be the wrong size or in
the wrong place or the wrong type of housing. This could be older
terraced accommodation, but equally it could be more modern accommodation.
50. Some places suffer from social problems
that the current mix of housing and environment contribute to,
for example by exacerbating concentrations of worklessness. Without
encouraging more mixed communities by changing the provision of
housing and the quality of the environment over the long-term,
regeneration of these areas will be incomplete.
51. Our urban areas are becoming more popular
and the Government strongly supports the work of the Core Cities
Group. Improving the housing conditions in our cities is a key
component of the urban renaissance and ensuring its continuing
success. To make the most of this, transformational change is
necessary.
52. Many of these points were articulated
in the Northern Way report, which emphasised the need to accelerate
the rate of housing replacement in the three Northern regions.
While the Government would not necessarily subscribe to the levels
of demolition proposed by the Northern Way, it accepts the underlying
rationale for increased levels of replacement. The new, more flexible
planning framework will help by concentrating new housing in the
right places and taking into account the need for replacement
housing and demolition.
(g) The availability of the necessary
skills and training to support staff promoting projects to tackle
the needs of areas with weak housing markets
53. The Government recognises that the availability
of skills in both the public and private sectors is a risk to
the delivery of market renewal. It is taking decisive action to
ensure that sufficient people with the right skills are available
to take forward the sustainable communities agenda.
54. In April 2004, the Deputy Prime Minister
announced that he would be taking forward the key recommendation—to
establish a new National Centre for Sustainable Communities Skills.
The Government response to the rest of Sir John's recommendations
was published in August 2004. Planning for a National Centre for
Sustainable Communities Skills is underway.
55. It is likely that the National Centre
will focus on improving generic skills, such as leadership, project
management and others identified by Egan, in a sustainable communities
context, while promoting skills development across a very wide
range of occupations involved in planning, maintaining and delivering
sustainable communities.
56. More specifically, ODPM and the Audit
Commission are aiming to raise skill levels among market renewal
practitioners through their programmes of seminars and learning
events. Apart from the examples described in paragraph 32 above,
ODPM ran a successful seminar on the better use of CPO powers
in 2004.
57. However, the Government recognises that,
even with these measures in place, it needs to keep ahead of the
game and ensure that barriers due to skills shortages are avoided.
To that end, ODPM will work with stakeholders to consider the
particular skills required to deal with low demand and ensure
that these are raised with the National Centre.
(h) How housing market renewal is addressed
in other strategies including local and regional plans and other
regeneration programmes
58. The alignment of regional and local
strategies with pathfinder and other programmes to tackle low
demand and empty homes will be vital to the success of housing
market renewal. A good start has been made, but continued close
working and commitment will be essential.
59. The need to deal with low demand housing
was firmly embedded in the first Regional Housing Strategies for
all regions where it is a significant issue. The Regional Housing
Boards are proving to be strong partners in delivering the changes
that are needed.
60. The planning system has a key role to
play in delivering solutions to low demand. PPG3 aims to ensure
that new homes are of the right type, in the right place and provided
at the right time to meet housing need. As national planning policy
guidance, PPG3 adopts a broad approach to ensuring sufficient
housing is provided to meet the housing requirements of communities,
whether this be in low or high demand areas. However, its policies
are fully supportive of the low demand agenda in terms of:
— requiring regional planning to have
regard to the particular needs and circumstances of different
areas, including low demand for housing;
— requiring regional spatial strategies
and local development frameworks to take explicit account of low
demand issues;
— ensuring close co-operation between
housing and planning professionals at both the regional and local
authority levels, thereby ensuring consistent approaches are taken
to low demand in relevant areas;
— encouraging more efficient use of
land, which can make retail, transport and other public services
viable in deprived areas. This will make such areas more sustainable
as well as promoting social inclusion; and
— promoting development upon brownfield
land. Much of the development potential in low demand pathfinder
areas will be on brownfield sites. PPG3 sets out a sophisticated
approach to the use of brownfield land in low demand areas, underpinned
and informed by a good evidence base in terms of housing demand.
61. ODPM is currently finalising policy
updates to PPG3 in the light of the responses to consultation
in 2003. These changes are alive to the sensitivities of low demand
areas.
62. Low demand is also increasingly being
reflected in the emerging Regional Spatial Strategies. For example,
the draft RSS for the North East includes, for the first time,
indications of the numbers of homes that should be repaced for
each local authority, rather than simply setting out levels of
new build.
63. Similarly, Regional Economic strategies
stress the importance of our urban areas to economic success.
Senior officials in ODPM meet with their opposite numbers in the
RDAs on a regular basis to discuss the ways in which RDAs can
contribute to delivering sustainable communities.
64. Urban Regeneration Companies are working
hard to co-ordinate town centre and business land improvements
with wider masterplanning. Most of them are clearly aware of the
need to tackle housing issues as part of their overall strategy.
For example, West Lakes Renaissance, which covers West Cumbria,
is taking a leading role in the work to regenerate housing markets
in the area.
(i) How Pathfinders are seeking to
involve the private sector in their long term planning and programmes
65. The close involvement of the private
sector in pathfinders' schemes will be vital if they are to deliver
effectively and efficiently. Public sector funding will prime
the pump and help to boost market confidence. But, over the life
of the programme, the majority of investment in pathfinder areas
will come from private sector sources. The pathfinders are keenly
aware of this and have all included private sector representatives
on their boards, to inject different perspectives and expertise.
For example, the Chair of Bridging Newcastle Gateshead is a former
Chief Executive of Northern Rock.
66. The private sector can contribute to
the success of the pathfinders' schemes in a number of ways—not
least as developers, funders, lenders and providers of construction
services. All of these groups need to be kept abreast of the pathfinders'
proposals to ensure that they can take up the opportunities offered.
The pathfinders are working on ways of making this happen. For
example, each of them has a developers' forum.
67. Close working with private sector can
also aid efficient delivery. Various pathfinders are entering
into partnering arrangements with construction firms and developers
through which efficient working practices can yield dividends
for both parties. For example, in East Lancashire, Elevate is
aiming to entering into partnership contracts to secure maximum
efficiency while also helping to meet social and economic goals.
Elevate is also looking to appoint lead developers that will work
with the local authorities to prepare a deliverable master plan
for a particular area.
68. The Government's decision to allow capital
receipts to be retained by pathfinders has facilitated close working
with the private sector. For example, they have rather more flexibility
to enter into joint working arrangements and to develop innovative
products to help people move to a home of their choice.
CONCLUSION
69. In the three years since the Committee's
last report in this area, nine pathfinders have been set up and
had (with one exception) schemes agreed and funded. A total of
over £1.2 billion has been committed to the Market Renewal
Fund, with additional resources from a range of other public and
private sector sources. Local authorities have new powers to deal
with empty homes. Delivery on the ground is now starting in earnest
and funding is being extended to additional areas.
70. There is still a very long way to go
to eradicate the problems associated with low demand, the aim
for 2020 set in Homes for All. But the impressive performance
of the pathfinders and other stakeholders to date suggests that
it is an aim that can be achieved.
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