Select Committee on Communities and Local Government Committee Written Evidence


Memorandum by the North West Housing Forum (SRH 18)

1.  BACKGROUND TO THE NORTH WEST HOUSING FORUM

  1.1  This response has been prepared by the North West Housing Forum and is endorsed by the North West Regional Assembly in their capacity as Regional Housing Board. The North West Regional Housing Forum is an inclusive and independent body which represents strategic housing organisations and a range of other stakeholders who have a shared interest in influencing policy and maximising resources to meet the housing and housing related needs of the Region. It was established in 1999, and since that time has gone on to be recognised as the independent voice of housing in the region.

  1.2  The Forum was a Member of the original North West Regional Housing Board, and continues to be a major player in the new structure under the North West Regional Assembly offering both sub regional representation and technical expertise.

  1.3  The North West Regional Assembly is now the Regional Housing Board. The Regional Housing Group has been established to provide high level strategic advice and support to the Assembly's Executive Board in order to carry out its role, as Regional Housing Board. The Executive Board has strengthened its membership, increasing from 18 to 21, to provide a balance of 70:30 between Local Authority and stakeholder partners. This reflects the balance of the Full Assembly as the statutory regional planning body. The role and membership of the Regional Housing Group has been established and includes the original Regional Housing Board members together with sub-regional representation and technical expertise.

  1.4  We welcome the opportunity to submit a joint respond to this inquiry, particularly at a time when so much emphasis is being placed on the future direction of social housing. However, it is crucial that the outcomes from the inquiry as considered alongside the wealth of consultations/reviews ongoing at the moment including the DCLG discussion paper "from decent homes to sustainable communities" and the Professor Hills review of social housing. Indeed in our response to the former we have urged DCLG to pull together recommendations emerging from all of these various consultations into a coherent strategy for moving forward.

  1.5  Our response to the questions raised in the inquiry can be found in the following section. However, we would also ask the Committee to take into account the additional comments raised in section 3 which gives some additional context to the debate. We would particularly ask the Committee to recognise the need and role that social housing has to play in the delivery of sustainable communities. We do not wish to return to the days of developing large social housing estates, indeed we have learnt the lessons from the past. Increased social rented housing must be about communities that are more economically active, not welfare dependant. There is, however, an urgent need to consider the crucial role than social rented housing has to play in developing mixed communities.

2.  RESPONSE TO THE INQUIRY

  2.1  The level of public funding required to meet social housing needs: We would recommend that a significant level of public subsidy is required to meet social housing needs. This should be seen in the context of current housing market conditions and increasing problems of affordability (across a range of property prices), together with the need to supply a mix of housing tenures to suit the needs of all, and specifically to support vulnerable residents. Furthermore, consideration needs to be given to some of the other drivers which are likely to increase the need for social housing, such as increased life expectancy and relationship breakdown.

  2.2  Although in some circumstances we need to accept that social renting is a tenure of last resort, we also need to recognise that social rented can be a tenure of choice; indeed we can evidence that in some areas social housing is indeed the rented market, ie no private rented market. Social Housing does provide an essential backdrop for many of the most vulnerable in society and for those on limited incomes. Therefore we need to ensure that good quality social rented housing is a top priority for public sector investment, which in turn will continue to support other Government priorities including cultivating social cohesion and eradicating inequality and deprivation.

  2.3  In parts of the Oldham and Rochdale Housing Market Renewal Pathfinder area there is evidence that shows displaced owner/occupiers and tenants of private landlords are choosing to rent in the future from a public landlord. In the region of 42% of the more than 300 referrals, from owner/occupiers or private and RSL tenants, have chosen a First Choice Homes Oldham (local ALMO) publicly rented property. Many owner/occupiers have chosen this because continued owner-occupation is not affordable. Many of these owners could be described as "marginal owner/occupiers" where the market value compensation for their home enables debts to be repaid and a new start to be made as a tenant of a social landlord.

  2.4  Furthermore, we can show that in areas where the image of social housing has been changed this has increased the popularity of the stock. Where ALMOs and stock transfers have delivered both the capital investment and the service improvements we have seen demand rise and the level of voids and hard to Lets fall. Local Authorities are also addressing the issue of breaking down the large concentrations of social hosing and introducing mixes of tenure, which in turn makes the remaining social rented stock more popular. This can be evidenced in Langley in Rochdale, an estate of 4,000 houses with 1,000 empty and un-lettable houses three years ago. Following stock transfer the estate was remodelled, 800 properties demolished, 300 homes for sale developed and sold to-date with more being built and a waiting list of over 600 people applying for rented homes on the estate. This demonstrates that we need to be moving towards ensuring that social rented housing is pepper-potted across neighbourhoods, rather than the development of large social rented estates. This, however, can only be achieved on any scale by buying existing housing, repairing/improving and then renting out, which needs to be resourced.

  2.5  Ultimately, we accept that levels of investment in social rented housing has improved over recent years; however, we are still playing "catch up" from decades of under investment, and current levels are insufficient to compensate for this.

  2.6  The relative funding priority being given to social rented housing as opposed to shared ownership and other forms of below market housing: The Forum would suggest that it is legitimate for the social rented market to have the greatest share of public funds as opposed to shared ownership, for a number of reasons. There is a need to recognise that shared ownership is still a relatively untested market and as such we are unable to judge the future market for the sale of equity shares. Shared Ownership can also prove to be a very costly form of purchasing a property. When you consider the need to find a deposit, pay a mortgage and in many instances pay rent on the remainder of the value of the property, then (as publicly funded opportunities for buying are currently constructed) this no longer becomes a viable option for many on low incomes. Indeed, it could be argued that in some instances this actually encourages debt in marginal owners. Although we support shared ownership and the role it has to play in increasing choice, we do, however, feel that there is a need for the Committee to consider the current level of debt in the UK, which has recently risen to one trillion pounds. Although we acknowledge that opinion is split on how far the servicing of this debt is a problem, we would suggest that there is a moral question around public subsidy being used to push those on relatively low incomes to take on mounting debt to purchase their home. Furthermore, it can be evidenced that in pathfinder areas particularly the elderly have not opted for this model, with many older owner/occupiers choosing to rent, as this has relieved them of the burden and hassle of home ownership and all that goes with that in terms of property maintenance.

  2.7  In the North West Region 26% (£53 million) of Housing Corporation funding through the National Affordable Housing Programme (NAHP) for 2006-08 has been allocated to new-build home-buy to deliver 1,573 units. A further £9.7 million has been allocated to deliver 340 units through open market home buy. A grant of £200.8 million is allocated to provide 3,811 new and refurbished home32[32] showing that funding through the Corporation has an important role to play in the provision of new/refurbished social rented housing, which needs to be balanced against an increasing emphasis on products for sale which are needed to increase choice within the region.

  2.8  We can also evidence that social rented housing has a history of providing value for money from the public purse. It is a long term investment for the Government, and not only provides a roof over peoples heads, but the contribution that it makes to other Government agenda's including health, social care and education cannot be underestimated. We would add that it provides a "safety net" for unforeseen personal circumstances.

  2.9  Furthermore, in support of the greatest share of resources being directed to social rented housing, we would maintain a view that any market products should be supported by increased private sector investment. Ultimately, market products will be expected to bring increased profits, but these will not be to the benefit of the public purse and therefore we need to encourage the private sector to take a holistic approach to development which includes the subsidising of below market products.

  2.10  We would also ask the Committee, when considering the levels of investment required, to give consideration to where money can be more effectively spent on improving properties for rent, rather than the current emphasis on new build. In many instances in this region, where there is still a demand for the types of older housing that need investing in, this would allow for better value for money, using existing stock for remodelling or improvements and bringing both the properties and indeed the wider neighbourhoods up to a decent and desirable condition (as shown in 2.4). We recognise that there are implications in terms of higher grant rate for refurbishment, which is an issue for regions such as the North West. However, if we take into account all costs associated with demolition and new build (plus the more difficult to quantify but important environmental and social costs) rehabilitation does become a better value for money option, and offers the opportunity for the wider regeneration of existing communities.

  2.11  Ultimately, however, we would support an approach that enables decisions over the relative funding priorities to be made at a sub regional and local level. Therefore once decisions have been made around the national split of resources, decisions should be made locally about the best use of public funds in intervening in local housing markets to ensure that they address gaps that are left in housing need. Furthermore, in our opinion, national decisions about the split should themselves by influenced by an aggregated picture of the local assessments of need for rented and owner occupied. In our view, markets are still very localised and therefore an aggregated view of local assessments should provide a very robust basis for national and regional decision-making about the best way to allocate resources designed ultimately to make the housing markets work effectively.

  2.12  The geographical distribution of subsidies for affordable housing: We would argue that subsidies should be targeted at those who need it most, to maintain sustainable communities. Affordability issues arise in both high demand and low demand areas, as affordability is about the relationship between price and income rather than price alone. Even in a perceived affluent county such as Cheshire, many households will struggle to purchase even a 50% share of a property. Consideration needs also to given around the need for people to be able to take the risk of investing money in low quality and low value areas. Without support for this there is a real risk that these areas will not regenerate and meet the aim of them becoming attractive places to live and therefore a valuable part of the housing offer of the region. It is important that rather than seeing imbalances of supply and demand or stock condition as separate issues, we start to take a more joined-up approach to decision making. Addressing stock condition can actually help to tackle problems of supply by making low demand areas more attractive and so help to take some pressure off high demand areas, as well as giving more people a chance of a decent home and neighbourhood.

  2.13  In the North West region we took a significant hit through the Single Housing Pot last year, with changes to the formula and indicators which skewed investment towards high value property areas specifically in the South, whilst removing many of the regeneration indicators. Therefore we would suggest that it is not about where but about how that need is defined. During last year's consultation we put forward detailed arguments on the impact of the changes in this region and the need for any national formula to support the development of sustainable communities across the whole of the country. It is our understanding that a further consultation is expected during the Autumn regarding future funding through the Single Housing Pot, and we will once again be providing a strong evidence base to highlight the need for subsidies to reflect the differing issues of affordability including acknowledging the need for regeneration of existing communities as just as important to the affordable housing debate as the need for new supply/growth.

  2.14  We would add to this that we need to give consideration to how the "value" created is redistributed to target those in most need, especially as more home ownership created by Government initiatives results in more of it being created and released. With ever increasing property prices it is crucial that we explore ways of ensuring that this increased value can be reused to support the continued need for affordable housing provision.

  2.15  The future role for local authorities as builders and managers of social housing: The Forum represents a wide range of enablers and providers, and we support the roles that they all have to play in the development of Sustainable Communities. With regard to whether local authorities should in the future be builders and managers of social housing, then we would argue that these decisions should be made at a local level and not directed by the centre. However, at the present time this is not an economically realistic option, and changes need to be made to the rules which would enable these choices to be made. We support the need for similar rules for all, whether it be local authorities, ALMOs or housing associations, in terms of this being tied to performance and based on a strong business case. We would also support the need for a strong evidence base to enable these decisions to be taken. Part of this evidence base [specifically for Local Authorities] would be to demonstrate that building and managing homes would not distract from their enabling and strategic role. Ultimately, however, the important issue for any organisation is that they invest not just in housing, but that they have a long-term interest and make the necessary investment into the development of neighbourhoods. It is also important for decisions to be made about balance between increased pluralism in providers and economy/efficiency that can be achieved by limiting number of developers.

  2.16  The effectiveness of different social housing models including traditional local authority housing, ALMOs, housing co-operatives and housing associations: We strongly believe that all organisations are more effective where mature partnership working has been developed, which brings with it knowledge and expertise and choices for residents. You cannot, however, compare the individual organisations as you are not comparing like for like. For example, housing associations offer value for money as every £1 of public subsidy is matched by private investment. However, unless the rules are changed to allow local authorities and ALMOs to access private finance we are not looking at a level playing field, and many believe that with this level playing field we can increase the effectiveness of delivery.

  2.17  Once again we would argue that this needs to be closely linked into local decision making, rather than prescription from the centre. Generally we believe that the sector is performing well, however, further subsidy is still required to enable the delivery of more units.

  2.18  The role and effectiveness of private rented housing in meeting housing needs: The private rented sector certainly has a role to play. However, its role and effectiveness very much depends on the market in which it operates. We should not, however, lose sight of the fact that the objective of the private sector is to make a profit, and although they do meet a housing need (across the spectrum of households) this is often by default and not design. This said, increasingly the production of new housing units by the private sector is having less impact on meeting housing need, due to many new homes built being bought as an investment rather than as a home to meet a household's requirements.

  2.19  We would support the need, in some parts of the market, for regulation and licensing to ensure that standards are high and that low income and vulnerable households are not left in sub standard and poorly managed properties.

  2.20  The priorities and effectiveness of the Housing Corporation, English Partnerships and the Regional Housing Boards in responding to housing needs: In the North West region the Housing Corporation, as a Member of the Regional Housing Board, is committed to the regional priorities as set out in the Regional Housing Strategy. However, the ability to respond to these priorities can be hampered by a lack of flexibility in response to locally agreed priorities when working within a national framework. Examples from Members of the North West Housing Forum are quoted below:

    —    Bolton received extra resources from a commissioning bid which was aimed at looking at new tools for refurbishment. Part of the bid included acquisition for demolition to be supported through Social Housing Grant, however, two years later they are still waiting for a decision on whether this will be supported as it does not fit with the Corporations financing model (a decision which now can only be made by central Government). The frustration here is that the bid was all about innovations and seeing what could be done outside of the existing framework.

    —    Members can evidence that whilst not across the board, in some parts of Cumbria an informal cap on grant rate of £100k has been applied which just does not work, specifically in areas such as Eden where it is impossible to purchase properties for less than £150k.

    —    An example of the above in Cumbria is a scheme in the Lake District National Park for the conversion of a former school building into three units for rent for local people. This scheme attracted no less than four multipliers: pre 1919; conversion; Lake District National Park Authority; and rural. The grant required was £200k per unit which was naturally rejected by the Corporation. Looking to reduce the grant rate to £100k would have put the scheme in deficit for over 40 years. We would argue that there needs to be recognition in areas such as this that high property and land values together with a need to provide subsidised rent schemes in turn create a need for high grant rates. This informal cap on grant rates mean that in these areas it is virtually impossible to achieve the priority of affordable homes for rent in these rural areas.

  2.21  Furthermore, we can evidence that more flexibility can enable delivery. The North West Regional Housing Board made available a relatively small amount of funding (£12 million) for affordable housing schemes in the region. The aim was to encourage innovation in delivery, and the results have been very positive. Those who made the decision to receive the funding directly, rather than via the Housing Corporation, believe that approach is what has enabled them to deliver effectively. For example, in Cumbria there are specific problems around planning permission within the Lake District National Park resulting, on occasions, with the failure of schemes to actually deliver. Without the normal restrictions under this funding pot, they were able to simply reallocate the resources themselves rather than losing a failed scheme and having to bid again for resources for any new development. We welcome the increased opportunities that this flexibility has given us and look to working with partners such as the Housing Corporation to explore whether these flexibilities can be developed further using NAHP funding.

  2.22  This is not a criticism of the priorities of the Housing Corporation, indeed we work closely with the North West regional office and they are committed to targeting investment to the agreed regional priorities; rather our criticism is of the rules under which they work, which does in turn impact on how they can effectively respond to new and innovative proposals. This question obviously relates very closely to the Government's current review of housing and regeneration, and specifically to future role of the Housing Corporation and English Partnerships, therefore our key response to this issue would be to advise that the challenge of any institutional reform is to address these issues.

  2.23  Along with the Housing Corporation, English Partnerships is also an important Member of the Regional Housing Board, and it is fair to say that much closer relationships have been developed over recent years. Indeed, a positive contribution has been made to the work of the Board by English Partnerships; however, they are also an organisation that is driven by the centre, and therefore by national rather than regional priorities. For example, it is felt that English Partnerships could have an effective role to play in the regeneration of rural areas through the development of affordable housing and employment opportunities, but this does not seem to fit with the national priorities. The Forum therefore believes that the current roles of both organisations, regardless of the make-up of any new agency, can only work effectively if they are strongly tied into the regional agenda and regional structures.

  2.24  The emergence of Regional Housing Boards has been broadly welcomed in the North West. The development of a Regional Housing Strategy which identifies the fundamental needs and priorities of the region builds on many years of close working across the region. Naturally, in a region as diverse as the North West, it will not be possible for the Board to gain the support and agreement of all, although working closely with the Forum they have attempted to be as inclusive as possible, whilst having to make difficult decisions over funding priorities. Unfortunately for this region, we have been badly hit by funding allocations from the centre (as outlined in 2.13) which in turn has impacted on decisions taken by the Board. We are currently in a position where we are moving towards a stronger evidence based strategy which will in turn inform both investment and policy decisions not just for the Board but for partners. There is a clear commitment to aligning the Strategy with the Regional Economic Strategy and the Regional Spatial Strategy, and although these changes do take time positive moves have been taken which will have clear benefits to the region in the future. Therefore we would suggest that the Government allows these relationships and structures to mature. Regional bodies by their very nature are much better placed to make decisions about the regions; however, this must be backed up with appropriate policies and resources from the centre.

  2.25  The role and effectiveness of the planning system, including section 106 agreements in the provision of rented housing and securing mixed tenure housing developments: We recognise that the planning system works more effectively in some local authority areas than others, and that we need to be more proactive in making Section 106 agreement work to secure mixed tenure developments, and specifically social rented housing (acknowledging that it is easier to secure low cost ownership properties on sites than social rented). Indeed, we welcome DCLG's commitment to looking at new ways of using S 106 agreements to provide affordable homes, and raising more from planning gain. but feel that more could be done to raise awareness and promote areas of good practice.

  2.26  There is a need for dialogue between housing, planning and developers, and in the North West we have started facilitating these discussions on a regional level. In some areas there is a concern that Local Authority Planners need to recognise that development is not just about numbers, and consider housing need and the mix of properties. This said, there are some good examples in the region of positive joint working between housing and planning. Across Merseyside housing and planning officers do work closely to address issues around the need and type of properties required, and within that sub region the New Heartlands Housing Market Renewal Pathfinder uses a Developers Forum to address design issues in relation to HMR redevelopment issues in Liverpool. With regard to developers, we feel that it is time for Local Authorities to hold their nerve, insisting that the right mix of accommodation is agreed before granting consents. The inquiry needs to recognise the complexities of bringing about the right mix of tenure on any new developments. It is not as simple as the private sector not wishing to provide social rented housing for a number of reasons, including the fact that this provides less return and there is a perception that this will have a detrimental effect on the sale of other properties. Whilst this is certainly a crucial factor we also need to consider the need for public subsidy to support the development and indeed the need for a willing landlord. Therefore we would recommend that any review must consider all the issues and not just part of the problem.

  2.27  We have got a framework within which to work, but it is how individual organisations operate that can have a real impact on the effectiveness of the system. Whilst some authorities stipulate mix of tenure on new developments others advise that tenure cannot be specified. Some examples of the issues faced, and how organisations are responding, from within the North West region are highlighted below:

    —    Eden District Council took a firm stance with developers two years ago over levels of affordable housing on sites, and whilst initially walking away the developers have now come started to come back to the Local Authority to negotiate.

    —    Oldham Council have been using resale covenant schemes with an in perpetuity discount applying to a percentage of properties on a development. However, this needs to be properly resourced as the experience is that with re-sales purchasers are putting forward arguments that they should be allowed to market the properties as normal, and if these arguments are successful then the discount would be lost. As a region we are keen to see how these individual schemes will be brought together with others, such as equity loans and social homebuy, and the impact this will have on increasing the number of units and supporting the development of affordable housing provision.

    —    Cheshire as a sub region has been very effective in the use of S106 agreements in delivering new affordable housing (in 2004-06 grant funded schemes numbered 258 new units with 303 delivered through S106/private finance. This will rise to 450 through grant and 631 through S106/private finance in 2006-08). This should be seen as positive joint-working with developers and planners in terms of using the planning system to deliver affordable housing, and has a valuable contribution to make in meeting housing need in the sub region. However, we also need to recognise that in reality the properties developed using S106 tend to be other forms of affordable housing, with rented properties requiring grant funding on separate sites (for the reasons already highlighted in 2.26). These affordable properties for sale, however, are no longer affordable when sold on due to the high property values, and therefore not really addressing the longer term affordability issue. Flexibility in the use of grant to support S106 developments would make the development of rented housing more affordable, and certainly there is an urgent need for this in many areas. Generally, across the region and the range of housing markets, we need to use the planning process to ensure that we stretch the Housing Corporation allocations as effectively as we can.

  2.28  There is also a need to recognise the specific issues of rural areas. Housing Association Members in Cumbria feel that planning gain is of limited use on small rural exception sites and would welcome more use of CPO powers by planning authorities on redundant and unused building and land. In parts of Cheshire recent guidance from DCLG for planners to use in assessing the sustainability of rural schemes are now causing delays at best and could actually prevent schemes at worst. An example being a scheme agreed by the local and parish council, with evidence of high need for affordable housing, and grant secured by the Housing Association which planners have now raised concerns over with regard to insufficient infrastructure based on the new guidance. Furthermore, Planning Gain Tax is unlikely to have an impact in these areas where it is access to land that is needed.

  2.29  We also support the use of commuted sums through S 106 agreements providing that they are used effectively to provide/support the provision of affordable housing within the same area. However, we know that without these funds being ring fencing for that purpose, in some authorities there is a danger that the monies will be used for other local priorities such as transport and leisure services.

  2.30  The effectiveness of housing benefit as a means of providing access to rented housing to those in need. We would not argue that the system is effective in that is does allow access to housing, but there are a wider range of issues that need to be considered. Whilst allowing access at one level, it can also exclude people from/limit choice. Discretionary housing benefit is not sustainable and therefore can only be used as a short-term measure, ie to enable someone to remain in their home or to help them secure accommodation. This will invariably prevent access to many properties in the private sector where rents may be traditionally higher than the public sector.

  2.31  An unintended consequence of housing benefit is that it can be a disincentive to work, and hence creates a welfare dependant culture, however, any changes to the system would need to strike a delicate balance between this and ensuring there is support for those most in need.

  2.32  The impact of the operation of Council Tax Benefit on the affordability of rented housing. The reality is that the system of Council Tax benefit is too complex. This can be evidenced by the low take up by the vulnerable, and therefore we fail to see how the existing system is supporting the affordability of rented housing. Furthermore, the way the system works means that those who are not entitled to 100% benefit on council tax, eg those working but on a low wage, may still find the payments they are required to make high compared with their relative income. As with housing benefit this then can be a further disincentive to work and another contributory factor to the welfare dependant culture.

  2.33  Overall any system of benefits (either housing or council tax) should be one that allows/supports access to decent housing, whilst also providing an incentive for employment.

3.  OTHER COMMENTS

  3.1  Although not specifically asked in the inquiry we would raise a question to the Committee as to what is meant by the term "social rented housing"? Many feel that the term in itself brings with it a stigma, and would prefer to see this re-branded as public, as opposed to private, rented housing. However, there is a bigger issue and that is around the diversity of the social rented market. It covers a wide spectrum from homelessness; through the desire for people to leave their family home; the necessity to find urgent alternative accommodation as a result of relationship breakdown; the specific requirements of those people with special needs; the particular design demands relating to cultural preferences; including at the opposite end of needs that merge into, or are interchangeable with, aspirations. So, understanding better the complexities of the social rented market—how it is evolving along with what factors influence and shape it not least of which is how its "image" gets in the way of it effectively fulfilling its role, are essential pre-requisites to arriving at informed decisions over the levels of investment required to meet the needs the market throws up.

  3.2  We would also reinforce that if we are to succeed in our aim for truly sustainable communities then we must ensure that there is choice and opportunity for all. We do not wish to return to the days of monolithic social housing estates which we now acknowledge are not sustainable; however, we must ensure that social rented housing is an accessible and indeed desirable option for people. We can show the Committee examples from the North West region where there is a great deal of work going on to this aim. For example, in the Oldham/Rochdale Housing Market Renewal Pathfinder they are ensuring that there is this mix on new developments with approximately 25% social housing and up to 10% intermediate housing, and also importantly that these subsidized homes are indistinguishable from the private properties and not in clusters. Meanwhile, on existing social housing estates eg Langley, they are reducing the numbers of social rented properties in order to introduce a broader range of economically active residents.

4.  CONCLUSION

  4.1  We welcome this inquiry in that it contributes to the wider agenda of sustainable communities of which the supply of rented housing is crucial. The Assembly and North West Housing Forum are committed to increased choice for all within the region, not just those with the financial capacity to purchase a property. This submission to the inquiry highlights only a few of the many examples from across the North West Region where Members are working hard to achieve this aim; however, there are many more which we would be happy to share with the Committee should they require them.





32   Housing Corporation Allocation statement 2006-08 North West (May 2006).
 
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