Memorandum by The National Housing Federation
(EMP 19)
BACKGROUND
1. The National Housing Federation represents
nearly 1,400 independent, not for profit housing providers. Our
members include housing associations, co-ops, trusts and transfer
organizations. They manage more than 1.8 million homes for affordable
rent, supported housing and low cost home ownership, and provide
an increasingly diverse range of community and regeneration services.
The Federation's iN Business for Neighbourhoods programme promotes
inclusive communities and neighbourhoods, and a commitment to
supporting people and diversity, and developing mixed, sustainable
communities.
General
2. As the Federation argued in its submissions
to the 2002 and 2004 Spending Reviews, restructuring housing markets
to tackle dereliction, abandonment and combat low demand is a
long-term project, requiring long-term political will over a number
of spending cycles. The continuing commitment to the programme
has been welcome and, although still in its initial stages, significant
progress has been made by the Pathfinders.
3. Additionally, since the predecessor Committee
last reviewed empty homes in 2002 a number of policy changes have
been instigated in recent legislation and guidance that encourage
intervention to tackle empty homes across the country, not solely
in the Pathfinder areas. Stronger mechanisms now exist to enable
agencies to resource the investment options for the re-use of
empty homes. Measures include the new Empty Homes Management Orders,
reforms to Compulsory Purchase Orders and proposals for landlord
licensing. The Federation welcomes these measures
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
4. As recognised in the 2004 Spending Review,
low demand impacts on communities outside the Pathfinders, and
the earmarking of additional resources to tackle additional areas
was welcome. The joint proposal from the Federation, the Chartered
Institute of Housing and the LGA for a national strategy to tackle
housing market restructuring identified a range of different types
of issue and degree of market failure, to which different responses
are appropriate. Using the resources identified to tackle these
additional areas in a strategic way will be a start to making
the response to low demand a nationwide initiative.
5. In terms of the resourcing available,
whilst the scale of funding is welcome, it is clearly not proportionate
to the overall size of the task. In Merseyside alone, for example,
the plan is to clear 15,000 to 20,000 properties which could cost
upwards of £500 million before allowing for expenditure on
anything else. It will be critical over the coming years to monitor
the degree to which public investment stimulates private sector
involvement to fill the gap. However it is recognised that the
Pathfinders need to be seen to be delivering and to justify their
use of the resources already allocated.
6. As noted, to ensure this long term programme
comes to full fruition, government commitment to resourcing across
Spending Reviews and over an extended period of time is essential.
It also requires a mature political commitment, that recognises
that in early years evidence of positive outcomes may be very
limited; this needs to be reflected in the ODPM's monitoring and
audit approach.
7. There are also dangers of the funding
already committed being spread too thinly, within individual Pathfinders.
Again, political commitment at a variety of levels is essential
if transformational impact is to be achieved.
Commitment and contribution of all government
departments and other agencies to tackling the underlying causes
of empty homes.
8. The starting point for cross- and inter-agency
partnership should be assessments of whole housing market needs
by local authorities. This should underpin a more sophisticated
approach to spotting trends and early warning signs across all
housing tenures. In turn this analysis needs to drive regional
housing and planning strategies.
9. In terms of housing associations and
the funding framework in which they operate in the Pathfinders,
feedback from our members indicates that the grant formulae and
subsidy frameworks from the Housing Corporation are inadequately
supporting acquisition and development schemes. Due to market
factors it costs more than anticipated to acquire houses and fund
rehabilitation of street properties. Properties in low demand
areas may have low market value that do not support bringing it
back into use because of its limited borrowing potential.
10. The principle of using brownfield sites
first (with empty homes viewed as part of this supply) before
greenfield sites can be appraised is critically undermined when
VAT rates for new build remains at 0% and standard repairs at
17.5%. The Federation has been seeking a harmonised VAT rate of
5% to rectify this imbalance.
11. Where mainstream services—education,
health, police and housing—are perceived to have "failed"
it is very hard to persuade residents that the area will improve.
Concentrations of empty homes are an obvious manifestation, among
others, that the neighbourhood is in decline. We would therefore
argue that more work needs to be done on bending mainstream service
provision and investment programmes to support the objectives
of housing market renewal. Otherwise, there is a risk that the
initiative will become another housing regeneration funding stream
(albeit a very significant one) rather than a framework for transformational
change.
12. Most fundamentally, questions remain
focused on how the move towards mainstreaming regeneration funds
will provide on-going revenue for neighbourhood management—including
maintenance and refurbishment works—in deprived areas. This
is of particular concern where major regeneration investment is
taking place and the initial funding on physical improvements
is completed. Specifically, supporting individual households and
communities facing displacement and rehousing is a revenue-intensive
activity.
Whether Councils have sufficient powers to
tackle the problem of empty homes in their areas
13. The new Empty Homes Management Orders
represent an opportunity to stem areas at risk of decline by re-using
empty homes, as a short to medium term approach while a longer-term
strategy is developed. "Shortlifing" empty properties
in low demand areas, whilst they await regeneration strategies,
must be seen within the wider context of what is best for the
existing community. Neighbourhoods already facing multiple deprivation
may find this exacerbated by the increase of new vulnerable residents
moving into areas already struggling with a lack of public services
and resources.
14. We support the idea that rental income
should pay most of the costs related to an Empty Homes Management
Order where possible. A combination of factors exist to make the
re-use of empty properties less cost effective in low demand areas:
high works costs, low rental values, high turnover of tenants,
arrears in housing benefit payments, expensive conversions and
dilapidation and maintenance costs exceeding expectations. In
order to make the management orders viable consideration needs
to be given to:
— a capital grant scheme;
— housing benefit revenue stream; and
— existing regeneration funds to pump
prime this work.
The priority given to the demolition of homes
and the consideration given to effective methods of refurbishment
15. Demolition and clearance of existing
stock is an essential intervention in restructuring local housing
markets where abandonment and low demand are rife. However, it
should never be undertaken without full option appraisal, because
of its potential social impact. It is important to ensure that
a market assessment of both the location and character of properties
potentially scheduled for demolition is carried out, allied to
a realistic view of the resources available for refurbishment.
Where stock is obsolescent, where market conditions are such that
a revival in popularity is unlikely and where, fundamentally,
there is little prospect of a population growth of the right type
(for example of small households or young single people) to match
the current stock profile, then demolition is appropriate. Refurbishment
for the sake of purely preserving local character will end up
in "mothballing" and in the long-term further dereliction.
16. However, where there is a business case,
based on realistic assessment of markets now and in the future
that refurbishment, or remodelling (for example "two into
one") is a viable option, this will be appropriate. Again,
the relative costs of refurbishment/remodelling v. demolition,
clearance and reuse will be an essential consideration.
17. The temptation to take the "easy"
option of short to medium term repairs and refurbishment should
be resisted if not well-justified even if this is locally unpopular.
There is evidence from previous investment programmes into terraced
stock (for example in Castlefields Estate, Runcorn) that though
short term investment may lead to a temporary increase in demand,
it is difficult to sustain in a market that is purely aspiration
driven.
The availability of the necessary skills
and training to support staff promoting projects to tackle the
needs of areas with weak housing markets.
18. The general shortage of skills in the
regeneration field is reflected in the Pathfinders. This is not
just in the social sector. There is also evidence of a capacity
issue within the private sector. The pool of experienced project
managers with quality regeneration experience is very limited.
This has meant that it has been important to forge early partnerships
between housing associations and the private sector, as well as
other partners. Further work to develop innovative approaches
to joint ventures is needed.
How housing market renewal is addressed in
other strategies, including local and regional plans and other
regeneration programmes
19. At the regional level, there needs to
be greater energy from Regional Development Agencies, Regional
Housing Boards and Regional Planning Bodies to ensure corporate
strategies are firmly linked together for maximum collaboration.
20. At central government level, as noted,
long-term commitments are required; there is a critical need to
avoid different regional targets which result in separate economic
and housing priorities. It is worth noting that the recent consultation
on PPS11 (Regional Spatial Strategies) omitted a link to the Regional
Housing Strategy. This was rectified in the final version but
illustrates the point.
21. At the local level, there remains a
need to secure adequate technical and delivery resources for Local
Strategic Partnerships (LSPs). LSPs are in a position to ensure
empty homes strategies work on the ground, avoid a piecemeal approach
and instead integrate them into wider neighbourhood interventions,
eventually becoming "mainstreamed". The NRU have a critical
role to play as the Neighbourhood Renewal Fund could be used,
with match from the Corporation, to pilot more pump-priming of
empty homes initiatives.
22. In terms of a regeneration programme
approach, the Federation believes that the ODPM should build on,
and go further than the Local Area Agreement (LAAs) concept and
rapidly bring together proposals for the integration of as many
streams as possible across Ministries into a "Neighbourhood
Challenge Fund" (as promoted in our 2004 Spending Review
submission). Guidelines for access would be drawn up based on
neighbourhood-determined priorities rather than service specific
initiatives. Some concerns have already been raised that the LAAs
omit integrating physical regeneration themes alongside social
and economic ones.
How Pathfinders are seeking to involve the
private sector in their long term planning and programmes
23. As noted earlier, private sector involvement
is an essential ingredient for the long-term success of the Pathfinders.
There is strong evidence of Pathfinders seeking to involve the
private sector in delivery of long term programmes—for example
in the Merseyside OJEU approach. However, there is less evidence
of the involvement of the private sector in long term planning
and involvement at the strategic level. Some Pathfinders are implementing
a "preferred developers" approach which should enable
a greater degree of involvement at the strategic level, moving
away from the competitive contractor model.
24. More generally, the Pathfinders' investment
policies should be highly effective levers for improving standards
in regeneration and sustainability within the private sector.
25. With the rise in land values that have
already begun in some Pathfinders, there have been suggestions
of short-term speculative investment. Although in some ways a
positive sign of regeneration, some form of landlord accreditation
may be desirable, to promote positive landlord practice and discourage
poor standards. Housing associations, regulated by the Housing
Corporation, have a role to play as intermediaries between the
statutory and private sectors.
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