Memorandum by the British Urban Regeneration
Association (BURA) Steering and Development Forum (SRH 16)
INTRODUCTION
BURA's Steering and Development Forum is pleased
to respond to the Select Committee's inquiry into the supply of
rented housing. The SDF believe that social rented housing plays
and important part in meeting the shortage in affordable housing
within the United Kingdom and as such it should be provided with
the relevant funding and legislation in order to deliver increased
provision.
RESPONSE TO
INQUIRY QUESTIONS
Are the current levels of public funding provided
sufficient to meet social housing needs?
Housing investment has been focused upon bringing
council housing up to standard by 2010 through the Decent Homes
Programme. The forthcoming Comprehensive Spending Review offers
the opportunity to discuss whether the focus should change from
refurbishing current social housing to the decent standard criteria
or investing extra money in building new affordable homes.
The Government has set itself a target under
the Decent Homes Programme of improving the quality of local authority
housing stock by 2010. The Government's self imposed target for
2010 is laudable and shows the strength of its desire to make
early gains.
The SDF recognises that the quality of the homes
in which people live is an important component of what makes communities
sustainable: creating places in which people truly want to live
and work. However, it is important not to lose sight of the overall
objective of meeting housing need and building sustainable communities
nationally. This is not likely to be achieved if the initiatives
for driving up the quality of housing stock are viewed in isolation,
and resources are directed away from new building of affordable
homes as part of a programme of significant housing growth.
There are now acute market pressures which need
to be resolved urgently as the gap between housing growth and
housing need continues to widen. At a basic level, this affordability
problem is dictated by the current imbalance between supply and
demand. Planned housing growth on a significant scale will address
that problem and bring equilibrium to the market quickly and effectively.
At the same time, thriving communities will help create the economic
wealth for reinvestment in other areas to improve housing standards
for all.
If a decision has to be taken on the respective
funding merits of the Decent Homes Programme or new build affordable
housing, then in our view housing growth should be the immediate
priority. Whilst the Decent Homes Programme is extremely valuable
in improving the lives of existing tenants and must be continued
it is unlikely to bring about the rapid step change needed to
address market supply issues which increased house building will
facilitate.
In any event, a significant majority of local
authorities have now achieved the Decent Homes targets, or have
put processes in place to do so by 2010. BURA recognises that
maintaining Decent Homes standards is something of a moveable
feast that will require a continuing funding stream into the future;
however it is now imperative that funds are directed to address
the extremely pressing market supply issues raised by Kate Barker.
There is clearly an opportunity to balance the
two objectives even if fewer resources are made available in the
next spending round. More importantly, in our view, what must
occur is for policy makers and those involved in development to
take a broader view on what sustainability really means. Giving
greater emphasis to outright housing growth is not incompatible
with the aims of the Decent Homes Programme, even if resources
are shifted towards meeting other priorities at the expense of
the 2010 targets.
In our view, what is needed is more joined-up
thinking. The Government has recognised the dangers of the "silo
mentality" when it comes to dealing with sustainability issues.
It is encouraging partnership working, has set up the Academy
of Sustainable Communities in Leeds and has recently created the
new Department for Communities and Local Government to reflect
the importance of taking a wider view on these issues.
The use of assets funded by past public investment
is essential in the delivery of housing growth and the creation
of sustainable communities. The work of English Partnerships in
the use of former government land and the development of land
portfolios in order to facilitate regeneration is an excellent
example of this approach.
What should the funding priority for social rented
housing be as opposed to shared ownership and other forms of below
market housing?
The government's aims to provide increased options
in order to allow more people to own their own home are laudable.
However social rented housing is crucial in the provision of homes
for those on low incomes. The government's commitment to increasing
home ownership should not be at the expense of social rented housing.
For some groups the ability to own their own homes through shared
ownership and below market housing is not possible. The size of
the social rented sector continues to shrink, with sales through
the right to buy (75,000 a year) outstripping supply (under 20,000
a year), and arising need (48,000 a year) 31[31]
going unmet. Other forms of market housing such as shared ownership
and below market housing cannot fully meet this requirement as
there will always be those members of society who are unable to
afford the costs of home ownership. Funding for social rented
housing must be a priority if provision for disadvantaged groups
is to be maintained.
When considering what types of intermediate
affordable housing (shared ownership, discounted market rent and
discounted market housing) should be funded by governmental resources
the government should assess the potential of increasing the intermediate
housing options on offer from developers and RSLs, including providing
more flexible and innovative products in order to increase access
to home ownership without increasing its risk to those on the
margins.
Is the geographical distribution of subsidies
for affordable housing correct?
There is concern that the government's attention
is focused upon the shortage of housing in London and the Southeast.
With potentially fewer resources available in the next spending
round, regional programmes to address housing market failure and
intervention in the Midlands and North could receive less funding
from central government. It is essential that the review does
not become blinkered and consider merely housing growth. The regeneration
of declining northern towns and communities throughout the Midlands
is equally important to economic development in England and funding
for these programmes should not be curtailed in order to increase
resources in the southeast.
What is the future role for local authorities
as builders and managers of social housing?
The over-reliance of the government on the private
sector to provide social housing is worrying. Given the Government's
reliance on the private sector to provide large numbers of affordable
homes, in the event of a housing market slowdown there would almost
certainly be a reduction in the amount of affordable homes provided.
In addition, marginal sites will not be brought forward and it
would become harder to negotiate large numbers of affordable housing
with developers if their margins are being squeezed. In addition,
it is likely that developers would wait until the market revived
before building on-site, causing a reduction in the levels of
affordable housing provided by Section 106 agreements.
If affordable housing is to be provided through
methods other than Section 106 agreements, the government could
provide housing associations and local authorities with increased
funding to enable them to develop and build their own housing
schemes, potentially in partnership with the private sector. It
is contended that it is cheaper for housing associations to borrow
money as the Government, via the Housing Corporation, already
supports their activities. This reduces the risk incumbent on
housing associations, allowing for more cost effective provision
of affordable housing.
Housing associations are broadly enthusiastic
about the option of developing their own housing stock and many
already have development programmes. They emphasise that these
developments must be mixed tenure to, first, create a sustainable
community and, secondly, to cross subsidise affordable housing
through private sales. Working in partnership with a developer
to jointly develop a site is a preferred option for some housing
associations. This option shares risk and also provides housing
associations with increased control over the housing provided.
Local authorities tend to agree with this view
by suggesting that there should be increased partnership working
between housing associations and house-builders in order to maximise
fully on each organisation's skills Some suggest the ideal approach
would see a coupling of house-builders' experience in delivering
housing with housing association's social management expertise.
Aside from joint ventures with housing associations, mixed communities
could also be created by breaking up existing mono-tenure social
housing estates and increasing the amount of intermediate housing
on these sites and improving the quality of life on estates. Private
sale could be used to cross subsidise improvements to the existing
housing stock. In addition, this intermediate affordable housing
would provide housing for existing residents to aspire to, and
move into, rather than subsequently moving away from the area.
In terms of local authorities developing their
own housing stock, there is concern that they no longer have the
expertise or capacity to do this, non-private sector development
is mainly through developer housing associations. However if the
local government white-paper provides local authorities with increased
powers including fiscal powers, large cities may be able to play
a role in developing their housing stock in the future.
What role should the role of private rented housing
be in meeting housing needs and how effective will this be?
The private sector has a crucial role to play
in meeting housing need. Many private sector landlords are individuals
or small scale investors, in order for the private sector to provide
high quality regulated housing it is essential that institutional
investment is encouraged by the government. Real Estate Investment
Trusts (REITS) provide an opportunity for increasing investment
in the private rental sector from large institutions. REITS could
deliver a guaranteed rental stream and increase the supply of
accommodation where it is most needed. Attracting large institutional
investors is essential in the delivery of increased numbers of
social rented homes. Indeed if the correct financial conditions
are created developers may consider retaining a portion of their
homes for management within a REIT, this will have the effect
of reducing the number of multiple landlords in a development
and could provide greater accountability.
However there are a number of current policies
that must be changed in order to increase private sector investment
in rented housing. Currently stamp duty imposed on investment
transactions for large investors creates considerable costs. The
large investor suffers stamp duty on the aggregate value of the
transaction, rather than the charge related to the housing unit
value. This means that the volume investor pays a much higher
rate than a unit by unit buyer and provides a disincentive for
investment.
How effective is the planning system, including
Section 106 agreements in the provision of rented housing and
securing mixed tenure housing developments?
The planning system plays a crucial role in
the provision of rented housing and securing mixed tenure housing
developments. Currently Section 106 requirements remain the most
effective method for the provision of affordable housing. These
agreements secure affordable homes on sites that, in the past,
would not have contained a mix of affordable homes. This facilitates
the creation of sustainable mixed communities. However, subsidy
is often an important element alongside S106.
Section 106 agreements must not be regarded
as the only method through which affordable housing can be provided.
It is also important that the direct role of housing associations
as developers of affordable housing is considered.
Areas have conflicting housing needs, requiring
different types and tenures of affordable housing. In addition,
different areas can only sustain specific proportions of affordable
homes dependant upon the housing profile of the locality. A requirement
for affordable housing on new developments is needed in order
to create mixed communities. However, this requirement must be
decided on a site-by-site basis through the use of economic and
social data such as local housing need assessments.
Government policy provides the framework for
the provision of affordable housing and the creation of sustainable
mixed communities. Practitioners are in broad agreement with these
aims. However frustration remains regarding the provision of effective
tools to put these polices into practice. Conflicting priorities
and complex layers of bureaucracy hamper the effective implementation
of policy and can lead to delays.
What is the effectiveness of housing benefit as
a means of providing access to rented housing to those in need?
In addition what is the impact of the operation of Council Tax
Benefit on the affordability of rented housing
Housing Benefit (HB) and Council Tax Benefit
(CTB) are essential to enabling access to rented housing. However,
their separation from the main state benefit system leads to problems.
Taking steps towards employment carries inherent
risks with the fear of losing housing benefit near the top of
the list. Avoidance of these risks becomes a pre-occupation of
life. Since recalculation is the most risky event in any claim
(due to potential errors and delays) as well as a serious administrative
burden for both claimant and bureaucracy, any changes that might
lead to recalculation are viewed with suspicion.
Sometimes the separation of housing benefit
from income benefits generates disincentives. For example, while
people on Incapacity Benefit are allowed to earn up to £88
per week in "permitted work" on top of their IB payments,
this "permission" does not extend to the HB/CTB system
so the money is then clawed back through an 85% reduction in HB/CTB
payments. Not only does this contradict the policy to encourage
take-up of work opportunities which can act as a bridge into work,
it can easily lead to substantial rent debts if the claimant is
not aware of the claw-back for some weeks. This can then lead
to hardship, stress and even eviction and homelessness.
Thus, while benefits to meet the costs of housing
and local services are an essential element of the welfare system,
their administration by local authorities physically, culturally
and politically distant from the central DWP/JC+ can lead to problems.
Even in the best Local Authority areas, which meet their targets
for reducing processing and payment delays and errors, the housing
benefit system tends towards increasing dependency rather than
helping people to build independent lives. People facing multiple
disadvantage need stability and transparency in their housing
benefit status in order to take brave and difficult steps towards
independence.
31 BILL, Peter (ed) 2006. More Homes for Rent: Stimulating
Supply to Match Growing Demand, Smith Institute, London p
26.
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