Memorandum by East Midlands Development
Agency (SRH 09)
INTRODUCTION
1.1 Achieving balanced housing markets and
supporting the development of sustainable communities are among
the key strategic priorities supported by regional development
agencies in both their Regional Housing Board and broader roles
in relation to social inclusion.
1.2 Looking at the range of issues to be
examined by the Inquiry into the Supply of Rented Housing, this
response focuses on two main issues:
— the need for further investment to
meet social housing needs; and
— the relative funding priority being
given to social rented housing as opposed to shared ownership
and other forms of below market housing.
REGIONAL ISSUES
1.3 The Evidence Base[4]
for the East Midland's regional economic strategy recognises that
access to high quality housing and the creation of balanced housing
markets are key elements in the region's attractiveness to both
employees and investors and is crucial to enhancing economic competitiveness,
promoting social inclusion and supporting sustainable communities.
1.4 The Evidence Base identifies affordability
as a key concern for the region with house prices almost doubling
in the past five years; a much higher rate of increase than in
England and Wales as a whole. The Regional Housing Strategy has
identified many parts of the region such as the Peak District,
parts of Northamptonshire and Lincolnshire and parts of many urban
areas where affordability is an increasing problem. The current
Regional Spatial Strategy has set a target of 25% of all new dwellings
to be affordable. However, less than 10% of all new houses built
in the region in 2003-04 were defined as affordable. In the same
period, the number of priority need households living in temporary
accommodation in the region increased by 27% and the number of
households on local authority waiting lists rose by 34%.
1.5 With 43% of total dwellings in the region
located in rural areas, the performance of rural housing markets
is of particular concern. The percentage of rural housing stock
in local authority ownership fell from 13.4% in 1997 to 7.6% in
2003 and there has also been a slight fall in rural housing stock
owned by other public sector organisations. This change has been
compensated to some extent by the rise in the percentage of housing
stock provided by registered social landlords which increased
from 1.8% to 5.3%. In attractive rural settlements such as Derbyshire
Dales and High Peak, increasing the stock of affordable housing
has become a major priority due to a combination of loss of council
housing through Right to Buy and the growing numbers of second/holiday
homes.
1.6 In their recently completed study into
affordable housing to inform the new East Midlands Regional Plan,
[5]the
Cambridge Centre for Housing and Planning Research shows that
across the region's housing market areas, interim estimated annual
targets for the provision of social rented and intermediate market
housing as a percentage of all new dwellings range from 26% in
North Northamptonshire to 54% in Peak Dales and Park. The overall
average affordable housing target for the region has increased
from 25% to 32% of all new dwellings completed. Of the 32% target,
the majority (27%) should be for social renting with 5% for intermediate
housing such as shared equity products and intermediate rented
housing.
NATIONAL ISSUES
1.7 From an RDA perspective, house prices,
range and quality of housing, and the availability or lack of
affordable housing have implications for regional economies in
relation to recruitment and inward investment. The Barker Report
also identified a clear relationship between housing supply and
rising prices and the impact on the economy.
1.8 While there is a need to ensure that
housing systems respond to markets, it is also important to have
an associated not-for-profit sector to address increasing levels
of homelessness, meet the housing needs of low income and disadvantaged
households, and also meet the needs of those households which
are unable to buy without some form of support such as shared
ownership schemes.
1.9 In relation to asset-building, there
is also an argument for further exploration of new ways of allowing
existing tenants in social rented housing who cannot participate
in Right to Buy or other shared equity programmes, to benefit
from the increased value of their homes. There is also a need
to examine ways of ensuring that subsidised shared equity housing
is available into the longer term to subsequent purchasers.
1.10 There may also be a case for removing
the Right to Buy from areas with severe affordability problems
such as rural settlements, and for local authorities to be given
a first option to buy ex-Right to Buy properties which come back
on the market for sale.
2. Affordability and the Supply of Housing,
ODPM: Housing, Planning, Local Government and the Regions Committee:
Related to the need for further investment in
social rented housing, the relative priority given to shared ownership
and other forms of below market housing, some useful observations
have been made by the recent report from the Housing, Planning,
Local Government and Regions Committee: [6]
— The Committee recognised that
there is an overwhelming need for social rented housing to make
up for the shortfall in supply and to recoup significant losses
in social housing that have occurred over the last 15 years and
to tackle the increased numbers of families living in temporary
accommodation or in overcrowded conditions.
— Although government funding
to the Housing Corporation has increased considerably since 1998,
a significant proportion of this additional funding is now being
spent on shared ownership and equity share schemes. As well as
expanding equity share schemes such as the new Homebuy initiative,
the Committee recommends that equal importance should be giving
to increasing the supply of social rented housing. Up to 2002,
the proportion of funding spent on social rented was relatively
constant at about 80-90% of the Corporation's total investment
programme. In 2003, the Corporation's expenditure was increased
by £787 million but the share of funding spent on social
housing fell by 12%. In the last two years, more than 40% of the
homes completed with funding from the Housing Corporation have
been shared ownership or equity share, compared with 25% in 2002.
— Research by Glen Bramley and
Professor Steve Wilcox for the Housing Corporation's Home Ownership
Task Force suggests that of all newly forming households, less
than 40% could afford to buy outright in the local market.
— However, in areas affected by
high house prices, the benefits of intermediate housing schemes
can be limited where they are only affordable to a small group
on the margins of homeownership.
— While low cost home ownership
programmes can meet the housing requirement of specific groups
which housing authorities wish to retain or attract to particular
areas, the Committee recommends that the government ensures that
they operate in such a way as to support increases in overall
housing supply rather than intensifying pressure on existing supply.
The benefits arising from the public subsidy of low cost home
ownership also should be passed onto future purchasers.
— The Committee recognised that
there will always be a sizeable number of households which either
cannot afford to buy or choose not to.
— In relation to increased levels
of consumer debt, the Committee recommends examining opportunities
through the Housing Corporation for homeowners to reduce the equity
they own in their homes to avoid losing them.
— The buy to let market is attracting
additional investment and new opportunities for private renting
in many town and city centres. In some areas, however, the transient
population living in the private rented housing adds to the instability
of the area; the activities of investment funds can skew, albeit
temporarily, any indicators of affordability as the house prices
reflect the expected financial return rather than what the local
population can afford. Certain socio-economic groups within the
local area can thus be excluded from homeownership. The Committee
recommends local authorities to take account of the potential
impact of housing developments being used as buy to let schemes
when giving planning approval.
4 East Midlands Development Agency, The East Midlands
in 2006-Evidence Base for the East Midlands Regional Economic
Strategy 2006-20, http://www.emda.org.uk/res/docs/TheEastMidlandsin2006evbase2.pdf Back
5
http://www.emra.gov.uk/regionalplan/documents/AHS-Report-Aug06.pdf Back
6
House of Commons, ODPM: Housing, Planning, Local Government and
the Regions Committee, Affordability and the Supply of Housing,
Third Report of Session 2005-06, Volume 1. Back
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