Memorandum by the Chartered Institute
of Housing (CIH) (SRH 37)
1. SUMMARY
1.1 More could be done to meet people's
needs if there was a greater range of tenure types than the current
dichotomy between owning and renting.
1.2 Greater freedoms and flexibilities for
high performing landlords would help improve delivery. The Housing
Revenue Account mechanism obscures effective performance and should
be abolished.
1.3 The Community Land Trust model is a
promising approach which should be developed further and may encourage
authorities to bring more land forward for affordable housing.
1.4 There is no clear relationship between
performance and any particular model of delivery. There is therefore
a need for a properly co-ordinated system of regulation and inspection
across the sector to guarantee minimum standards and drive up
performance.
1.5 The private rented sector is effective
at responding to investment opportunities in niche markets but
cannot be expected to respond to social needs. Where it does so
it will need the support of local services.
1.6 The planning system can be made to perform
effectively in delivering affordable housing through the use of
clearer planning policies within the suite of planning documents
that comprise the Local Development Framework.
1.7 The Government's strategy for housing
benefit of driving up standards of administration and continued
gradual simplification of the rules is helping to improve claim
processing times. Delays in processing claims affect landlord's
capacity to develop and in the case of the private rented sector
may cause landlords to withdraw from letting to low income households.
2. ABOUT THE
CHARTERED INSTITUTE
OF HOUSING
2.1 The Chartered Institute of Housing (CIH)
is the only professional body for individuals working in housing.
Its primary aim is to maximise the contribution that housing professionals
make to the well being of communities. Membership status is dependent
on completion of a professional qualification and a track record
of professional achievement.
2.2 CIH has over 19,000 individual members
working for local authorities, housing associations, Government
bodies, educational establishments and the private sector.
3. The Level of public funding required to
meet social housing needs
3.1 We estimate that a realistic level of
public funding for homes to meet social housing needs for the
spending review period to 2008-09—2010-11 is as follows:
2008-09, £2.6 billion; 2009-10, £2.8 billion; 2010-11,
£2.95 billion. This would deliver 150,000 social rented units
over the whole period (rising from 46,500 in 2008-09 to 2010 to
53,500 in 2010-11).
3.2 The required number of units required
is based on research commissioned from the Cambridge Centre for
Housing and Planning Research (CCHPR). The costing assumes that
any increase in building costs (estimated to be 6% per annum)
would be delivered as efficiency savings over and above the 11%
already achieved during the 2006-08 national affordable housing
programme.
3.3 The total estimate above excludes low
cost homeownership and other forms of below market housing. The
CCHPR estimated the need for a further 60,000 other units over
the period at a cost of a further £3.25 billion.
4. The relative funding priority being given
to social rented housing
4.1 The combined estimate recognises a strong
theme of mixed provision and the Government's aim to continue
to support home ownership. It does not include other low cost
homeownership programmes which subsidise the acquisition of existing
stock such as Open Market HomeBuy.
4.2 The total programme would be enhanced
by measures to increase the flow of free or below market cost
public sector land to housing associations to build affordable
homes.
4.3 Low cost homeownership is needed both
to support people's aspirations for home ownership but also to
free up space in socially rented units for those in the greatest
need. These two forms of affordable housing provision should therefore
be seen as complementary rather than as being in competition for
meeting people's needs.
4.4 CIH believes, however, that more could
be done to meet people's needs and aspirations if there was greater
diversity in provision rather than the current simple dichotomy
between owning and renting. Greater diversity in form could meet
a wider range of needs aspirations and would help ensure that
resources are spread out more and better targeted.
4.5 Research conducted for the Housing Corporation
in 2004 found that, after taking into account the realistic costs
of ownership only 13% of housing association tenants expressed
a preference for home ownership over the long-term. 102[104]
However, other research has shown a much greater number aspiring
to ownership. Greater diversity is needed because there are many
reasons why people may choose not to buy their home even though
they may aspire to be a homeowner. These include:
— a substantial proportion who have
insufficient income to be able to achieve or sustain home ownership
(including tenants on housing benefit 10.2). Others may be able
to afford a mortgage but at the expense of having little or no
disposable income;
— older tenants are often not able
to raise a mortgage;
— younger more mobile tenants who may
not wish to get trapped in the property they buy which may not
meet their long-term needs;
— for others their current home may
not represent a desirable long term investment (financially or
socially). Many who express a preference for homeownership view
it as means to securing a better home in an area of their choice,
rather than a preference for ownership itself.
4.6 The current balance of funding between
the two programmes (in the ratio of 5:2 in favour of social rented
housing) reflects the limited range of incomes over which homeownership—even
at low cost—is viable. Greater diversity in provision would
allow some of the benefits of homeownership (such as investment
in a capital asset) to be available to those who will continue
to rent. Equally it may also allow some of the benefits of renting
(such as freedom from a repairs burden) to those who are on the
margins of ownership.
5. Future role of local authorities as builders
and managers of social housing
5.1 Very few local authorities have retained
in-house capacity to build new social housing, and in general
their contribution to new social housing has been through the
donation of land for development by housing associations.
5.2 There could be a bigger role for local
authorities as owners and managers of housing in appropriate circumstances
An enhanced strategic role for local authorities, as developed
in the recent CIH publication Visionary Leadership in Housing,
would mean that they would be well placed to coordinate delivery
by a range of partners, including their own role to meet the area's
needs.
5.3 Development should not be pursued simply
due to the prestige associated with it. Quality and efficiency
must be at the heart of development models. There should be greater
freedoms and a flexibilities for high performing authorities to
develop (and manage) housing to provide an incentive for effective
delivery. A similar performance-based approach has already been
applied successfully to the ALMO sub-sector where the option of
additional funding alongside ALMO status was dependent on achieving
two stars. The Hounslow Homes model may enable ALMOs to make a
significant contribution to new social stock.
5.4 It is difficult to identify effective
performance under the current local authority housing revenue
account (HRA) regime. The HRA regime is essentially a means of
redistributing assets and this masks both effective and poor performance.
The HRA system should be abolished and replaced with a more sustainable
system that would make the effective the development and management
of assets more transparent and so encourage more effective performance.
5.5 Land-use models where the local authority
can retain an ongoing stake in its assets may prove attractive
to authorities and encourage them to make more land available
for housing. Currently the choices available to authorities are
limited and they must balance the capital gain of developing a
community facility on council-owned land (from which ongoing revenue
is raised) with the social gain of enabling development of social
housing by other bodies (which necessitates loss of an asset to
the local authority).
5.6 One such model is for is for land to
be retained by the council in a trust so that housing built on
it remains affordable in the long term (effectively a Community
Land Trust). This is preferable to what happens at present where
the first buyer gains from a large subsidy (and subsequent profit)
from reduced cost land.
6. The effectiveness of different social
housing models (local authority, ALMOs, housing co-operatives
and housing associations)
6.1 There is little evidence to link performance
with any one particular model of provision. Any model can perform
effectively and there are examples of both excellent and poor
performers in each sector. Likewise there is no obvious relationship
between size and performance. 103[105]
6.2 Diversity of provision can help promote
choice, competition and innovation in best practice.
6.3 Effectiveness is determined by the quality
of the management team as a whole (ie both at the board level
and the operations level). It requires a contribution of all partners
to deliver strategic objectives. This applies equally to housing
management as it does to development (ie increasing the supply).
6.4 Because there is no clear relationship
between performance and any particular model, this suggests that
what matters is that there is an effective system for regulating
the social housing sector as whole. A properly coordinated system
of regulation and inspection would help ensure a minimum floor
of standards across the whole sector and would also facilitate
the sharing of good practice ideas which originate in each sub-sector.
7. The role and effectiveness of the private
rented housing in meeting need
7.1 The private rented sector (PRS) plays
a key role and is effective in meeting the housing needs of key
groups such as students, migrant workers, young professionals.
It is a flexible option for tenants who are unlikely to stay in
the sector in the medium-long term and is responsive to changes
in demand where landlords see investment opportunities.
7.2 The growth of Buy-to-Let has increased
the quality of the stock available to these groups, although the
vast majority of investment has been in the existing stock and
so has not significantly contributed to the overall supply. In
some localities an overheated Buy-to-Let market has driven up
prices and reduced the availability of more affordable accommodation
for owner occupation.
7.3 However, the ability of the PRS to meet
needs of lower income groups is less clear cut. Firstly, there
are real barriers to access caused by the standard practice of
requiring a deposit and rent in advance, and the reluctance of
many landlords to accept housing benefit (HB) claimants. Local
authorities can build the sector's role as a provider for low
income groups by providing or supporting bond and deposit schemes,
and developing systems for HB claims for private tenants to be
fast tracked. Such schemes can be restricted to accredited landlords
to promote higher standards in the sector.
7.4 Secondly, where the PRS is expected
to house tenants with complex social needs there may be a need
for additional local authority services to support the sector.
In such cases the local authority will need to ensure there is
adequate provision of "floating" support services to
help tenants sustain their tenancies.
7.5 The contribution of the PRS to social
and community needs must be assessed alongside its contribution
to meeting housing need. Where the PRS responds to the needs of
lower income and transient groups (such as students or migrant
workers), problems can arise for the wider community and local
housing market. Responsiveness to investment opportunities can
result in concentrations of rented housing occupied almost exclusively
by these groups (eg students etc) which can lead to areas requiring
more intensive management by local service providers such as universities,
the council, police, and social services. These areas can also
become unattractive for owner-occupiers, which can lead to instability
in the market and decline of mixed communities.
7.6 Whilst the PRS does meet some housing
needs simply by responding to market trends, the points above
show that there is a need for local authorities to work strategically
to monitor, oversee, and intervene in the sector. This way of
working is advanced in some authorities but is still emerging
and needs further development in others. Difficulties funding
non-statutory services, and lack of corporate support for PRS
work need to be overcome so that the additional work needed can
be developed.
8. Priorities and effectiveness of the Housing
Corporation, English Partnerships and regional housing boards
in responding to housing needs
8.1 The requirement of national public bodies
to always get the best consideration for the sale of their assets
may inadvertently drive up the price of land thus reducing the
leverage of public money to directly increase the overall supply.
8.2 We do not have any objective evidence
of the effectiveness of the above-mentioned bodies in responding
to housing need. However, we consider that it is increasingly
being seen as the local authority's role (usually working with
other authorities and with the above-mentioned bodies) to respond
to the wide range of housing needs. A stronger strategic housing
role at a more local level would certainly help to better marry
up provision with local requirements and aspirations.
9. The role and effectiveness of the planning
system, including s106 agreements in the provision of rented housing
and securing mixed tenure housing developments
9.1 The planning system has a clear role
to play in securing provision of social rented housing and mixed
tenure developments. Use of section 106 agreements, as set out
in Circular 6/98, give local planning authorities (LPAs) the powers
needed to deliver social and mixed housing. The effectiveness
of these tools is dependent on their application by LPAs.
9.2 The performance of LPAs in securing
affordable housing can be improved through clearer planning policies
within the suite of documents that comprise the Local Development
Framework (LDF). Without clearly stated local planning policies
section 106 agreements have to be negotiated separately for each
site—the result can be inconsistency and delay. For example
where LPAs do not state in their planning documents that they
will treat contiguous sites as one site they will allow their
stated site thresholds for affordable housing to be undermined.
The Audit Commission's toolkit Securing Community Benefits
through the Planning Process shows how LPAs can develop their
planning documents and processes to strengthen section 106 outcomes.
9.3 A potential reform to section 106 could
be to require councils to apply section 106 policies to all sites
as a matter of course—not only those with over 15 units
(conditions apart). On these small sites developers could be required
to pay a sum of money which could be pooled with others' contributions
to enable further development of rented housing on other sites.
Currently the majority of sites are not subject to section 106
agreements and so effectively have a "free ride" despite
having a cumulative impact on local resources.
9.4 Local Area Agreements are designed to
identify and action local corporate priorities as well as some
national priorities through the requirement to include some mandatory
targets. Whilst in general we would wish to minimise the number
of such mandatory targets, we would suggest that it is reasonable
for mixed communities to be a target that all areas could reasonably
be expected to adopt—even if they already have mixed communities
they will need to proactively maintain them.
10. The effectiveness of housing benefit
as a means of providing access to rented housing to those in need
10.1 Housing benefit plays a key role in
providing access to rented housing for those on limited incomes
by providing a means to be able to afford the rent.
10.2 In the social sector around two-thirds
of tenants rely on housing benefit to pay their rent and around
two-thirds of those on housing benefit receive full help with
their rent. It is therefore also crucial to landlords to being
able to deliver new affordable housing as it is contributing to
more than half of their total rental income stream. Given its
importance local variations in the way that the service is delivered
can have a significant impact on landlords performance.
10.3 In theory access to the social sector
is unrestricted by affordability considerations because, except
in a very small minority of cases housing benefit is calculated
on the full rent without any restrictions. However, at higher
rent levels the poverty trap can act as a work disincentive. Further
although the overall take-up rate is around 90% take-up rates
are known to be much lower for in work claimants.
10.4 In the private sector around 25% of
tenants are on housing benefit although take-up rates are known
to be lower than in the social sector. Further, for private tenants
the level of rent on which housing benefit is calculated is restricted
to what is judged to be reasonable and appropriate by reference
to local market conditions. There a number of different types
of restriction which are highly technical in nature and difficult
for claimants and landlords to understand.
10.5 These limits are particularly strict
for claimants aged under-25. Prior to these restrictions being
introduced in October 1996 there were around 177,000 under 25s
on benefit of which 144,000 were expected to be affected. The
latest DWP statistics (February 2006) show that there are just
under 12,000 claimants face a restriction. Even taking account
of changes in unemployment this suggests a large scale withdraw
by landlords from this sub-sector.
10.6 Since landlords are investors rather
than social businesses prompt payment of the full rent is a key
consideration in granting access. Therefore the speed of processing
claims also affects landlord's decisions to let to housing benefit
claimants. The housing benefit rules are notoriously complex and
difficult to administer, partly because of numerous rent restriction
rules which apply to the private sector. This complexity hinders
effective delivery.
10.7 The Housing Green Paper recognised
that, even taking into account the difficulties arising from complexity,
administration was inconsistent leading in some areas to long
delays. Since then the Department of Work and Pensions has worked
hard to drive up performance through a strategy of improving administration
skills (for example through the use of Help Teams) combined with
gradual simplification of the benefit rules and procedures. This
has worked well and there has been a slow but steady improvement
in performance.
10.8 Evaluation of the Local Housing Allowance
suggests that the simplification gains will lead to further improvements
in performance for private sector tenants.
11. The impact of the operation of Council
Tax Benefit on the affordability of rented housing
11.1 Council Tax Benefit (CTB) is assessed
on the same basis as housing benefit and is withdrawn alongside
it. This has the effect of deepening the poverty trap and is equivalent
to an increase in the housing benefit taper over the range of
incomes that both housing benefit and CTB apply. The most extreme
case occurs when the claimant is also entitled to tax credits
such that over a range of incomes they would only gain 4 and a
half Pence of each extra £1 they earned.
104 Bennett and Murray (2004), Aspirations to Ownership,
IPPR, London. The British Social Attitudes (BSA) Survey finds
levels of support for home ownership at around 80%. However the
BSA method allows respondents to express a view based on their
"wish list" which allows for unrealistic expectations-such
as being able to own at the same cost as their weekly rent. Back
105
See Is Big Really Best Or Can Small and Friendly Really Deliver,
CIH, Coventry 2005.
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