Memorandum by the Housing Corporation
(SRH 45)
1. INTRODUCTION
1.1 The Housing Corporation is a non-departmental
public body sponsored by the Department for Communities and Local
Government (DCLG). The Corporation supports communities across
England by investing in the supply and regulating the quality
of affordable homes and associated services for people whose circumstances
make it difficult for them to meet their housing needs in the
open market. This includes the homeless, low income families,
key workers and those in need of supported accommodation.
1.2 During 2006-08, the Corporation is investing
£3.9 billion of public subsidy into housing schemes. This
investment will provide 84,000 additional affordable homes, as
well as support the refurbishment of some existing stock and market
renewal initiatives. The 84,000 new homes will include 49,000
new social rented properties and 35,000 low cost home ownership
homes. The public investment will be boosted by significant additional
private finance. Since the current funding regime began in 1989,
over £30 billion of private funding has been invested alongside
public subsidy—making the programme one of the most significant
Public-Private-Partnerships in the UK.
1.3 We welcome the opportunity to provide
evidence to this inquiry. The scope of the inquiry is extensive.
Whilst our response seeks to address each of the issues identified
by the Committee in its call for evidence, we recognise that there
may be issues that the Committee wishes to explore in more detail.
The Corporation would be happy to provide further information
to the Committee, where that proves helpful to the conduct of
the inquiry.
2. THE LEVEL
OF PUBLIC
FUNDING REQUIRED
TO MEET
SOCIAL HOUSING
NEEDS
2.1 The scale of unmet demand as set out
in the updated work by Alan Holmans for the Barker Review of Housing
Supply suggests that 40,000 new social rented homes are needed
per year. The 40,000 figure is based on the following calculations:
| Net increase in social sector households (based on demographic trends etc)
| 16,000 |
| Additional vacant dwellings allowed for due to the net increase in social sector households
(eg people moving between homes)
| 1,000 |
| To replace lost re-lets due to right to buy
| 18,000 |
| For growing reluctance of private landlords to let to housing benefit tenants
| 5,000 |
| To replace net losses in stock (eg demolition, low demand areas)
| 5,000 |
| Total | 46,000 |
| Total (less 6,000 for overlap with LCHO) |
40,000 |
2.2 In the two-year period 2006-08, the Corporation and
the affordable housing sector will deliver the equivalent of 24,500
social rent homes and 17,500 low cost home ownership homes each
year. This is a real growth in the provision of affordable housing
with 30% more homes provided than in 2004-06, and delivered for
only a 15% increase in resource. Progress has been driven by three
factors—increased Government funding, growing efficiency
within the sector and greater access to private equity investment.
2.3 However, the scale of unmet demand as outlined in
the report of the Barker Review of Housing Supply, and the number
of people still living in temporary accommodation, means that
the need for over 40,000 new social rented homes per year remains
over 10,000 more each year than the Corporation is planning for
2007-08.
2.4 While government has indicated that affordable housing
will be a priority for the comprehensive spending review; it is
clear that the current fiscal environment will place limits on
the ability of Government to increase resources for affordable
housing. Looking forward, we are unlikely to see a spending review
outcome that allows the delivery of the Barker targets at the
current levels of funding per home.
2.5 A key challenge is therefore to look at how further
efficiencies can be achieved in the provision of affordable housing.
In September 2006 the Corporation published "Future Investment
Approaches".[120]
This consultation paper sets out a range of measures that could
be adopted to boost affordable housing supply. We believe there
is significant scope for the sector to respond to this challenge.
Key issues:
— since we opened up social housing grant to non
RSLs, the market for grant-funded affordable housing development
has become more competitive, with major volume developers taking
up the new opportunity for direct receipt of grant. As entrepreneurial
organisations from other sectors come forward—ALMOs, commercial
developers, perhaps local authorities—this trend will strengthen;
— our analysis of capacity within the RSL sector
has identified that there remains within the sector the capacity
to lever more private finance and drive further efficiency in
terms of grant rates;
— our analysis of the work that RSLs are doing to
manage their supply chains shows that there is scope to bear down
on costs and achieve further savings; and
— our continuing dialogue with non-RSLs and RSLs
has convinced us that there is scope for further efficiency if
we more closely align our bidding timetable to fit with business
models in the sector.
3. THE ROLE
AND EFFECTIVENESS
OF THE
PLANNING SYSTEM,
INCLUDING SECTION
106 AGREEMENTS IN
THE PROVISION
OF RENTED
HOUSING AND
SECURING MIXED
TENURE HOUSING
DEVELOPMENTS
3.1 As the wide ranging terms of this inquiry highlight,
successful delivery of affordable housing is contingent on a number
of overlapping factors. However, land supply and planning stand
out as of particular importance.
Land supply
3.2 The Housing Corporation is concerned at continuing
constraints to the supply of land and the impact this has on delivery
of increased numbers of affordable homes. The Barker Report identified
this as a critical issue in increasing housing supply and tackling
affordability. While funding for social housing has increased
markedly, a significant part of this increase has been absorbed
by escalating land prices. Efficiency gains have mitigated some
of the impact, but the supply and cost of land remains a significant
stumbling block.
3.3 As we noted in our submission to this Committee's
inquiry on affordability and supply, an examination of Housing
Corporation total scheme costs by region reveals significant increases
in the cost of the land element of total scheme costs. There are
also strong regional variations in land acquisition costs.
3.4 Housebuilding has increased in London in recent years
and the number of planning permissions has also increased significantly;
there are currently existing permissions for over 140,000 homes.
[121]However, the planning
pipeline is not necessarily leading to increased delivery, one
reason being developers seeking to control the volume of building
to avoid market saturation. In addition, not all permissions are
capable of implementation, and some may not have section 106 agreements
in place. Planning permissions may also be used to increase land
values for speculative purposes, rather than with development
as a primary purpose.
Key issues:
— There is the potential for a damaging ripple effect.
As Kate Barker's report on Housing Supply highlights, the limited
supply of land drives up costs. This in turn reduces the supply
of affordable housing, whilst also increasing pressure on existing
social housing stock from those no longer able to afford homes
outside the affordable sector.
— If housing need is to be met, it is vitally important
that the release of land for housing development is prioritised
at a both a local and regional level.
— However, this must be matched by an increase in
delivery performance on the part of developers, if levels of demand,
in particular in London, are to be met.
Section 106 agreements
3.5 The other key area for addressing supply issues is
through section 106 agreements. Over 40% of the units within the
Housing Corporation's 2006-08 new build allocations have come
about as a result of planning gain. In the South East, East of
England and the South West these are the majority of our new build
programme. They also make up a significant part of our programme
in other areas of the country.
| Region Name | Total units
| Total units on s 106 sites | % s 106
|
| East Midlands | 4,986 | 1,267
| 25.4 |
| Eastern | 9,277 | 5,448
| 58.7 |
| London | 23,899 | 8,766
| 36.7 |
| North East | 1,334 | 200
| 15.0 |
| North West | 4,187 | 8
| 0.2 |
| South East | 17,339 | 10,437
| 60.2 |
| South West | 7,876 | 3,996
| 50.7 |
| West Midlands | 4,210 | 902
| 21.4 |
| Yorkshire & Humberside | 2,893
| 295 | 10.2 |
| Total | 76,001 | 31,319
| 41.2 |
3.6 To make sure that Social Housing Grant is procuring
housing that is additional to that which may have been obtained
anyway without Corporation investment, there is a need to understand
the economics of site development and in particular, its viability.
3.7 The Corporation has developed an economic modelling
tool that can be used to examine the viability of sites and the
level of grant input necessary to deliver additional affordable
homes. The model, which is known as the Housing Corporation Economic
Assessment Tool, is more comprehensive than other models of its
type and can handle complicated mixed use and commercial sites.
Our aim is to encourage local authorities, developers, planners
and housing associations to use the model to help them understand
the potential of development sites and to speed up negotiations
between the parties.
3.8 Sometimes mechanisms may be needed in Section 106
Agreements to address the uncertainty of site economics, particularly
for larger, phased schemes where funding cannot be assured over
time. Cascade agreements are often used to plan ahead and describe
the actions that various parties will take in particular circumstances.
These agreements have sometimes worked well, but there have also
been a number of occasions where they have failed to guarantee
the expected outcomes. The Corporation and English Partnerships
are working together to produce a good practice guide that will
help planners and developers secure cascade agreements that deliver
the outcomes originally intended.
Key issues:
— Developing consistent best practice in section
106 negotiation will help ensure that value for grant is maximised.
— The extent to which the delivery of new affordable
homes is contributed to by s 106 sites means that adverse market
movements have the potential to affect the build out rates on
those sites and affect the delivery of the Corporation's programme.
4. THE LEVEL
OF FUNDING
FOR SOCIAL
RENTED HOUSING
AS OPPOSED
TO SHARED
OWNERSHIP AND
OTHER FORMS
OF BELOW
MARKET HOUSING
4.1 For the year 2007-08 the balance of Housing Corporation
expenditure on the supply of social rented housing is forecast
to be 74% against 26% spent on low cost home ownership. We have
agreed targets with Government for the number of homes to be completed
over 2006-08. These are split between social rented housing, with
a target of 49,000 homes, and low cost home ownership, with a
target of 35,000 homes. This equates to a 58% to 42% split between
the products. The reason for the funding disparity is that grant-per-home
required by low cost home ownership properties is less than that
for social rented housing, therefore its proportion of outputs
is higher than its proportion of expenditure.
4.2 This pattern of expenditure has been set to meet
the requirements of the Government's existing housing policy framework.
It is important to note that other outputs such as local authority
development through Housing PFI also contribute to numbers of
affordable homes, but approximately 85% of development is delivered
through Housing Corporation programmes. The national framework
(set out, in particular, in Sustainable Communities: Homes for
All[122]) does not
give explicit relative weighting to social rented housing as against
low cost home ownership, but sets output expectations for each
product:
— For social rented homes: 75,000 homes completed
in the three years from 2005-06 to 2007-08; and an additional
supply of 10,000 homes in 2007-08 against the level of supply
in 2005-06, taking total outputs for 2007-08 to over 30,000.
— For low cost home ownership homes: 100,000 households
helped into home ownership by 2010.
4.3 Within these targets, the balance of supply between
grant funded rented and low cost home ownership housing at the
regional level is set by Regional Housing Strategies, produced
by Regional Housing Boards (Regional Housing and Planning Boards
for future iterations.)
4.4 For the delivery organisations we work with, the
economics of site development will often require a mixture of
private sale, low cost home ownership and social rented housing.
There is therefore a degree of interdependence between products.
Key issues:
— The Corporation's current programme balance gives
us the ability to ensure that developments give rise to genuinely
mixed communities as we often fund rent and low cost home ownership
provision on the same site. A shift in the balance of funding
towards social rent will mean that different strategies may be
required.
5. THE GEOGRAPHICAL
DISTRIBUTION OF
SUBSIDIES FOR
AFFORDABLE HOUSING
5.1 Within the current system, the Single Housing Pot
is disaggregated on a regional basis by the Department, in discussion
with regional stakeholders. Regional Housing Bodies set the proportion
of this pot available to the Housing Corporation as Social Housing
Grant. The final allocations made by the Corporation are also
dependent on the quality of bids received within a region.
5.2 The sub-regional distribution of social housing grant
is set within Regional Housing Strategies, with final allocations
dependent on the quality and value of bids received. Distribution
between local authorities is largely dependent on the quality
and value of bids received. As such it may be influenced by, for
example, site availability, or a local authorities willingness
to sell land at a discount to affordable housing providers.
5.3 The regional distribution of the Single Housing Pot
has an influence on the total national output of affordable housing,
as a result of significant variations in grant and cost-per-unit
prices between regions (for bids to the NAHP 06-08 the range for
rental housing was £39,563 (East of England) to £100,683
(London)).
5.4 Cross boundary nomination agreements also allow rented
homes provided in one area to help meet the housing needs of another;
however our experience of the implementation of such agreements
(for instance in Growth Areas) has been mixed.
Key issues:
— Distribution of housing capital funding is done
using a formula which is primarily based on indicators of housing
need. In delivering the programme the Corporation also needs to
ensure that the deliverability of affordable housing is a significant
influence. The successful implementation of cross-boundary nomination
agreements will help ensure that we can align delivery at good
value for grant with housing need.
6. THE FUTURE
ROLE FOR
LOCAL AUTHORITIES
AS BUILDERS
AND MANAGERS
OF SOCIAL
HOUSING
6.1 Under 27a of the 2004 Housing Act the Housing Corporation
opened up the affordable housing market to a mixed economy of
providers and is able to award social housing grant to both RSLs
and non-RSLs. Non RSLs include not only private developers, but
also ALMOs and local authorities.
6.2 In our 2006-08 programme funding has been awarded
to unregistered providers for the first time. In future, we see
no reason, in principle, why funding could not be provided to
ALMOs and local authorities. Indeed we have held discussions with
ALMOs considering how they might take forward bids for resources
in future funding rounds and a number of ALMOs have bid for funds
through our current Northern Housing Challenge funding competition.
Our overriding concern in making investment decisions is providing
residents with high quality homes and ensuring best value for
money for the tax payer.
6.3 Similarly, the opening up of the market has also
led to changes in our regulatory approach to housing management.
In June 2006 Pinnacle PSG, a property management company, became
the first ever non-registered body seeking to be accredited by
the Housing Corporation.
6.4 The Housing Corporation's aim is to ensure that the
same high quality of service is guaranteed for tenants, irrespective
of whether their home is built by a housing association or unregistered
provider. Following a consultation in 2005, the Corporation developed
an accreditation framework that will ensure that any non-RSLs
taking on new grant-aided homes who gain accreditation will offer
good quality services to residents. The framework sets out the
processes and minimum standards for what bodies applying for accreditation
hope to achieve. 2* and 3* local authorities and ALMOS receive
automatic accreditation.
Key issue:
— The Housing Corporation has the ability to fund
unregistered providers, including local authorities and ALMOs.
Future funding of local authority or ALMO development programmes
will be dependent on their bringing forward proposals that offer
value for money to the tax-payer.
7. THE EFFECTIVENESS
OF DIFFERENT
SOCIAL HOUSING
MODELS INCLUDING
TRADITIONAL LOCAL
AUTHORITY HOUSING,
ALMOS, HOUSING
CO -OPERATIVES
AND HOUSING ASSOCIATIONS
7.1 As indicated in section 6 above, the Housing Corporation
seeks to deliver high quality homes and landlord services to residents,
irrespective of provider. However, prior to the most recent funding
round, our regulatory ambit has only extended to registered social
landlords.
7.2 The Committee will appreciate that there are a number
of different ways in which effectiveness can be measured, and
the effectiveness of different models will depend on the objectives
against which they are assessed. Factors to consider include supply,
access and use, finance, subsidy arrangements and systems, governance,
service provision and resident satisfaction. We have limited our
consideration to three key areas—tenant satisfaction, financial
performance and the contribution of landlords to wider neighbourhoods
and communities.
Resident satisfaction
7.3 The main indicator for resident satisfaction across
all sectors is Best Value Key Performance Indicator 74a Satisfaction
of Tenants with the Overall Service Provided by their Landlord.
Landlords generally measure this indicator through the standardised
STATUS survey which they are required to undertake every three
years. Drawing conclusions across different sectors is challenging
due to the relative irregularity of surveys and range of ways
the data is interpreted. Having said this, there is little difference
in satisfaction figures across sectors. Figures for 2004-05 show
median satisfaction for the whole Housing Association[123]
and Local Authority sectors at 79%.[124]
Satisfaction was slightly higher for LSVTs[125]
and slightly lower for a relatively small sample of ALMOs. [126]
7.4 While using general satisfaction as an indicator
of success has some value it should not be considered an absolute.
The initial survey of the Housing Corporation's Resident Consultation
Panel showed that demographics and neighbourhood satisfaction
have an impact on satisfaction with the landlords' service. Further
work may be needed to improve understanding of what the key drivers
of satisfaction in landlord performance are. Pawson (2006) notes
that satisfaction is not always consistent with on the ground
performance, pointing to three occasions where inspectors' believed
service had improved but satisfaction had fallen. Landlords have
differing starting points and that ALMOs which have secured capital
investment have already passed through a service quality test
resident satisfaction alone is not currently a reliable test of
landlord performance.
Key issues:
— Resident satisfaction is a useful indicator of
general service quality however without better data on the drivers
of satisfaction it is not on its own a reliable comparative test
of landlord performance.
— The Housing Corporation is introducing Performance
Indicators based on resident satisfaction levels as part of its
regulatory and assessment framework for Housing Associations.
Financial performance
7.5 As noted, a strength of the Housing Association sector
is its ability to leverage significant levels of private finance
to support new supply of affordable homes. The 2005 Global Accounts
show that the gross valuation of housing properties in the RSL
sector is £67.9 billion, with capital grant investment at
£30.3 billion, whilst private finance drawn down is £26.9
billion. For the traditional association sector, average measures
of interest cover are strong and together with measures of gearing
suggest a financially robust sector with capacity for growth.
Trends in profitability ratios similarly show the sector with
a steady profile, responding well to the current financial demands
of increasing investment in its asset base and rent restructuring.
Furthermore, the confidence of the lending institutions in the
stability of the housing association sector and the quality of
regulatory oversight provided by the Housing Corporation, has
lead to margins on debt up to 60 basis points better than equivalent
borrowing by non-registered developers.
Key issue:
— The ability of housing associations to borrow
private funding and keep it off the public balance sheet is likely
to continue to prove attractive to government.
Contribution to neighbourhoods and communities
7.6 Many proactive affordable housing providers play
an active role in delivering more than just homes and landlord
services. As the largest non-profit social businesses in England,
Housing Associations play an important role, above and beyond
their core housing functions. In measuring their effectiveness,
it is therefore important to take into account their wider contribution
to neighbourhoods and communities. In many cases they are now
starting to adopt strategic approaches with local authorities
and LSPs in the management of their assets, using them to both
provide further affordable homes and to invest in community facilities
and services to protect and enhance previous public and private
investment, including the delivery of added-value services such
as neighbourhood management, childcare provision, work around
financial inclusion and tackling Respect.
7.7 This "added value" work by social landlords
can contribute effectively to the provision and maintenance of
mixed and cohesive communities and the wider roles also addresses
issues around social inclusion and helping residents into employment.
By taking the wider view of housing within successful communities,
they can help enhance the environment and the wellbeing of communities
while building social capital and empowered, dynamic communities.
These themes are central to the Housing Corporation's recent Neighbourhoods
and Communities Strategy. [127]Similar
initiatives are taken forward by many ALMOs, and high performing
local authorities will ensure that their housing services are
linked to other social objectives.
Key issue:
— In assessing differing models of housing provision,
and taking a view on the performance of social landlords, it is
important to consider their wider impact on neighbourhoods and
communities.
8. THE ROLE
AND EFFECTIVENESS
OF PRIVATE
RENTED HOUSING
IN MEETING
HOUSING NEEDS
8.1 A healthy private rented sector is an important part
of an effective housing market. The private rented sector plays
an important role as a tenure of choice for groups such as students,
the economically mobile and young professionals who require the
flexibility that private lettings can provide. It also provides
a valuable housing resource for helping those in acute housing
need.
8.2 At present almost 2.5 million homes or 11% of total
housing in England is privately rented. Of these homes, some 19%
(2005) are let to recipients of housing benefit—compared
to 65% of the social housing sector. Supply has grown in recent
years as deregulation has opened up mortgages to individuals wanting
to buy rental properties. This has seen this market expand from
47% of private rented stock in 1994 to 67% in 2003. It has also
seen the median number of properties owned by landlords fall by
about a third—from nine in 1994, to three today. About one
in three landlords let just a single property.
8.3 The Housing Act 2004 has recognised that this can
provide some particular challenges and contains measures aimed
at improving building and management standards, most notably licensing
for larger HMOs. The Housing Corporation strongly supports accreditation,
recognising that the high standards for building and management
set in the social housing sector are not always replicated in
the private sector.
8.4 The introduction of HMO licensing has been a positive
step forward, and the Corporation is pleased that local authorities
can seek ministerial approval for schemes that extend HMO licensing
to smaller HMOs, or selectively licence the private rented sector
in areas of low demand or anti-social behaviour. We also welcome
the ability of local authorities to use management orders and
empty dwelling management orders to be proactive in addressing
concerns about poor management in the private sector.
Key issues:
— The ability of the smaller landlords to maintain
and repair their properties in the longer term;
— The impact of buy to let (and subsequent private
lettings back to local authorities) on developments that are specifically
trying to promote and maintain mixed communities;
— The activities, or lack of activities, of some
private landlords (eg: in tackling anti-social tenants, contributing
to neighbourhood management);
— The amount of housing benefit going into the private
sector through temporary accommodation and the potential of this
as a source of funding for new social provision.
Tackling homelessness—the Settled Homes Initiative
8.5 The private sector also plays a critical role in
enabling local authorities and RSLs to tackle homelessness. Around
half of households in temporary accommodation occupy accommodation
leased from the private rented sector by a local authority or
RSL. The government has a target to reduce the number of people
in temporary accommodation by 50% by 2010 (from around 100,000
in 1994). Initiatives to realise this target include discretionary
housing payments, rent deposit schemes and the "Settled Homes
Initiative".
8.6 The Settled Homes Initiative in London has funding
of £30 million to look at innovative and cost effective ways
of providing good quality accommodation, initially at rents higher
than target rents, but lower than current temporary accommodation
rents, for an agreed period, after which rents will convert to
target rents.
8.7 The pilot is seeking to find ways of providing settled
accommodation from day one (ie the homelessness duty will be discharged),
and to maximise the amount of permanent accommodation which is
provided in the longer term. Alongside innovative funding proposals,
key selection criteria will include the extent to which providers
can demonstrate that they will work with other agencies to maximise
training and employment opportunities for tenants and overcome
poverty trap issues for those who are able to access employment.
8.8 Following the recent announcement of the changes
to the Mayor's housing powers, recommendations and proposals for
funding will be overseen by the Mayor. The recommendations will
be made by a panel including the Housing Corporation, GLA, London
Councils, as well as DCLG. The proposed timetable is to launch
the bids round in October, with bids submitted by December, and
selection in the New Year. Funding will be available from April
2007. Those eligible to bid include housing associations, local
authorities, ALMOs and private sector providers.
Key issue:
— The success of the Settled Homes Initiative may
provide a valuable model for tackling numbers of households in
temporary accommodation in areas of housing need, in particular
London. The Housing Corporation looks forward to the outcome of
the pilot, and any lessons or approaches that can be applied more
widely.
9. THE PRIORITIES
AND EFFECTIVENESS
OF THE
HOUSING CORPORATION,
ENGLISH PARTNERSHIPS
AND THE
REGIONAL HOUSING
BOARDS IN
RESPONDING TO
HOUSING NEEDS
9.1 The Housing Corporation delivers approximately 85%
of the new supply of social rented housing. However, in doing
so, we are reliant on effective partnership working with English
Partnerships, Regional Housing Boards and local government.
Improving homes and communities
9.2 The leverage our investment gives us has allowed
us to make radical improvements to the quality of homes delivered.
The new homes we fund must meet the EcoHomes Very Good standard
and must meet minimum Housing Quality Indicator standards (for
instance on size). We are also delivering larger homes where needed
(35% of our rental programme in London) and working so that proposed
developments are assessed to ensure communities will be sustainable.
9.3 The Corporation's investment programme also delivers
on a range of social policy goals. We are, for example, ensuring
the supply of affordable housing for:
— vulnerable people, including supported housing—more
than doubling our support for affordable homes for vulnerable
groups between 2004-06 and 2006-08;
— people in rural areas—whilst recognising
continuing demand for homes in rural communities, we have succeeded
in meeting targets for delivery of rural homes in recent investment
rounds;
— new communities—working with and through
the BME Housing Association sector and ensuring delivery of more
larger homes, particularly in London;
— supporting regeneration—working closely
with wider regeneration initiatives; in the North East, for example,
60% of our current funding is earmarked for regeneration areas.
Efficient and effective delivery
9.4 Since the 2004 comprehensive spending review settlement,
we have generated significant savings in our programme. This has
particularly been possible through our new approach to working
with a small pool of development partners and most recently the
equity deal with the Council of Mortgage Lenders. Comparison of
pre and post partnering grant show significant efficiency gains
in the delivery of both low cost home ownership and homes for
social rent. While we acknowledge it is difficult to attribute
savings to particular interventions, work for the National Audit
Office indicates that in 2006-07 grant saving of some £300
million has been achieved compared with 2003-04. They concluded
that:
— the bulk of these savings arose from the competitive
grant regime, the new partnering arrangements, the competitive
spur from the private developers and through better procurement
practice;
— use of a value for grant comparator when assessing
bids has given a saving of £30 million; and
— £23 million has been saved (compared to 2004-05)
though use of Modern Methods of Construction.
9.5 We recently agreed a deal with the Council of Mortgage
Lenders and now almost all open market Homebuy equity loans will
be funded 50% by the Housing Corporation and 50% by private lenders.
We estimate that the savings arising from this arrangement will
be significant (these have been recycled into higher outputs across
the Corporation's programmes—both social rent and low cost
home ownership).
| 2006-07 | 2007-08
|
| Savings achieved through CML deal | £62.5 million
| £125 million |
9.6 Together this will ensure the Corporation meets or
exceeds the Gershon efficiency targets as follows:
| 2005-06 | 2006-07
| 2007-08 |
| Gershon savings Spending Review 2004 target
| £130 million | £140 million
| £160 million |
Regional Housing Boards
9.7 Regional Housing Boards set the context within which
the Housing Corporation delivers its investment programme. They
determine the proportion of the single housing pot available and
set geographic, tenure and other priorities through Regional Housing
Strategies. Regional Housing Strategies have improved considerably
in specificity and in their underlying evidence base. However,
we consider there is room for further improvement. The Housing
Corporation has sat on existing Regional Housing Boards, and is
in discussion in each region on our representation on new, merged
bodies. We are currently in the process of reviewing and renewing
protocol agreements with regional assemblies and the Greater London
Assembly.
Local Government
9.8 Effective local authority leadership is fundamental
to the success of local communities. The Housing Corporation works
on a day to day basis with local authorities across the country
to ensure the successful delivery of its programme. Local authority
input has been key to its decision making underpinning the 2006-08
National Affordable Housing Programme, and the Housing Corporation
and local authorities regularly engage to discuss local housing
market issues and the role and delivery plans of Registered Social
Landlords. The Corporation is also a crucial partner in delivering
estate renewal and other neighbourhood regeneration projects.
9.9 The Housing Corporation and the Local Government
Association are seeking to further consolidate that relationship
and are agreeing a national protocol setting out how the respective
roles of the Corporation and local government complement one another.
Alongside this, the Corporation is agreeing local protocols with
key local authority partners. The Housing Corporation appreciates
that local authorities have crucial knowledge on housing association's
performance in delivering good housing management standards, tackling
homelessness and contributing to a wider range of community issues,
and is seeking to build local authority views on association performance
into its assessment framework for housing associations.
9.10 The Housing Corporation will be publishing later
this autumn a Homelessness Strategy which will focus on consolidating
links between housing associations and local authorities to tackle
homelessness and provide support to those families at risk of
losing their homes.
English Partnerships
9.11 English Partnerships and the Housing Corporation
collaborate extensively both at a national and regional level,
with a particular focus on delivering more affordable homes. The
Housing Partnership—a joint initiative between the two agencies—is
a key factor in facilitating and developing that joint working.
9.12 We currently have 12 Joint Strategic Projects that
bring together English Partnerships expertise in land and development
with the Housing Corporation's affordable housing investment and
regulatory expertise.
9.13 They demonstrate how delivery methods, design standards,
sustainability and long-term stewardship can be improved by bringing
together our joint resources and being prepared to develop creative
and shared ways of working. We expect them to maximise the impact
of our investment programmes, achieve economies of scale and produce
a more effective use of public investment, including the delivery
of more social rented homes. These are some of the most complex
projects both organisations work on and demonstrate the benefits
that can be realised by bringing together the collective skills
within both organisations.
Housing Corporation/English Partnership Joint Strategic Projects
Aldershot Urban Extension—4,500 new homes, schools
and community facilities on MoD site. Still at early stage.
Brunwick Road, Gloucester—gateway for regeneration
with Gloucester URC. EP and HC shortlisting to invite tenders.
Want to ensure high quality lon.
Challenge Fund 2—combining EP land with HC grant to
produce 1,300 new homes across the Greater South East. Over 90%
MMC.
Devonport—500 high quality homes, a healthcare centre,
new shops, offices and managed workspace.
Millbay—a mixed development that will reconnect the
area of the city centre and have access to the waterfront.
Ferrier Estate, Kidbrooke—regeneration scheme involving
demolition of mono tenure estate and creation of mixed tenure
sustainable community.
Hanley South, Stoke—bringing forward and helping to
shape a number of housing led schemes to address changing and
low demand in the Hanley South area.
London Wide Initiative—the initiative will increase
the supply of affordable homes in Greater London for key workers
and first time buyers over the next five years.
New Islington, Manchester—regeneration of a neglected
and rundown estate in Ancoats, East Manchester. Facilities will
include scenic canal-side walks, cafes, shops, moorings for narrow
boats, gardens and 1,400 new homes. Development underway.
Northstowe, Cambridgeshire—urban extension will be
built on a former MoD airfield site and adjacent private land
northwest of Cambridge.
Park Hill, Sheffield—largest Grade II* listed building
in Britain and is located in the South Yorkshire pathfinder. The
proposed development will result in a high quality scheme for
the whole of Park Hill.
Upton—sustainable urban extension to Northampton, which
was identified as an area capable of accommodating 30,000 new
homes by 2021.
Housing and Regeneration Delivery Review
9.14 In February 2006, the Deputy Prime Minister announced
a review of institutional structures for housing and regeneration
delivery. DCLG officials have been looking closely at the roles
of the Housing Corporation, English Partnerships and delivery
functions from within the department with the aim of looking at
options for modernisation and structural reform.
10. THE EFFECTIVENESS
OF HOUSING
BENEFIT AS
A MEANS
OF PROVIDING
ACCESS TO
RENTED HOUSING
TO THOSE
IN NEED
10.1 It is estimated that 65% of existing social tenants
are on housing benefit and 67% of households taking up a new tenancy
with a housing association are in the same position. As rent levels
for social housing are in most areas significantly below those
in the private sector, for social tenants, the constraints on
entry to housing relate more to the supply of homes, rather than
issues relating to housing benefit. However, there is one issue
relating to social homes and housing benefit that the Corporation
would like to bring to the attention of the Committee.
Passporting housing benefit claims
10.2 Local authorities and Housing Associations have
been very active in forming CBL partnerships, to promote choice,
improve access and ease letting arrangements, including enhanced
mobility between landlords and across authority boundaries. While
local authorities have been proactive in managing their statutory
duties in relation to lettings, within the streamlined approach
to CBL, we are not aware of any comparable large-scale development
around housing benefit processing. Residents might be able to
get a new home fairly easily through CBL but, if they change authority
district, they will need to make a fresh housing benefit claim.
Moves between landlords within an authority are now treated as
a change of circumstances (rather than a new claim) but, still,
the system is not as agile as it might be. In some areas, housing
benefit processing for several local authorities is undertaken
at a central location.
Key issues:
— Passporting of claims between authorities is possible,
and offers significant benefits, in particular greater choice
and mobility for tenants. We would encourage CBL partnerships
to factor-in streamlined housing benefit processing into scheme
design.
11. THE IMPACT
OF THE
OPERATION OF
COUNCIL TAX
BENEFIT ON
THE AFFORDABILITY
OF RENTED
HOUSING
11.1 The Corporation does not have a formal locus in
the council tax regime. But in practical terms council tax is
inextricably tied to rent, and very many social housing tenants
are either in receipt of Council Tax Benefit or among the number
who are entitled but not claiming. We would tend to agree with
local government colleagues that Council Tax Benefit can impair
the affordability of rented housing, by placing a tax liability
on poor and low income households below the threshold of income
tax.
11.2 Our concerns are with positive outcomes for residents
and fair and stable systems for landlords. In this Council Tax
Benefit can be problematic, especially in its disincentives to
work, to save, and its failure to assist low income households.
Council Tax Benefit claims are most usually bound with housing
benefit, and processing and structural delays create problems
for residents and landlords.
11.3 Withdrawal of Council Tax Benefit can negate the
value of tax credits and create severe financial problems for
those starting work. This is certain to have a knock-on effect
to rent arrears. We look forward to the publication of the Lyons
Inquiry and would support a system with clearer incentives for
employment and financial stability.
12. OTHER ISSUES
12.1 In December John Hills will report on the future
of social housing. We look forward to his findings. Key issues
he may wish to explore include:
— The growing distance in terms of asset wealth
between those in rented accommodation (and in particular social
rented accommodation) and home owners.
— The increasing gap between market rents and social
rents, in particular in London. There is an increasing case for
looking at ways to reduce the divisions between social and market
housing by further expanding the intermediate market, both through
shared ownership and intermediate rent.
— The need to continue to address the optimum balance
between social rented homes and homes for low cost home ownership.
The National Audit Office (NAO) report A Foot on the Ladder
noted that low cost home ownership (LCHO) assistance can cost
the taxpayer less than half the grant needed to house people in
social rented accommodation. The NAO recommended better targeting
of LCHO products at those in, or likely to move into, social rented
homes. This might include looking at innovative ways to deliver
LCHO, to support present and prospective social renters into home
ownership.
— Issues around tenure and targeting—it is
possible that significant numbers of households are benefiting
from social rented housing when they could afford to move into
the market sector, or pay a market rent, at the same time as many
households continue to live in temporary accommodation or overcrowded
conditions. There may be a case at considering whether approaches
might be explored which helped better target a limited resource
at those most in need, whilst remaining consistent with the principles
of mixed communities and the avoidance of residualisation.
— The need to ensure that social rented accommodation
continues to offer appropriate support to those most in need.
As many as 40% of new lettings by housing associations are to
tenants have some sort of support need that means they are very
likely be unable to sustain any other form of tenancy in the long
term.
120
"Future Investment Approaches"-Discussion Paper HC 2006
http://www.housingcorp.gov.uk/upload/pdf/future_ investment_60922112850.pdf Back
121
Pre-publication data supplied by Greater London Authority. Back
122
"Sustainable Communities: Homes for All" ODPM/DCLG 2005
http://www.communities.gov.uk/index.asp?id=1122851 Back
123
BMG Research, Survey of Existing Housing Association Tenants
(prepared for Housing Corporation), 2004. Back
124
Pawson H, Analysis of Local Authority Housing Performance 2004-05,
(Housing Quality Network, 2005) (p 10). Back
125
Housing Corporation Regulatory Statistical Return. Back
126
Housemark ALMO Performance Improvement Club: Quarterly Performance
Indicator Tracking 2005-05 Year End Returns, (Housemark, 2005)
(p 9). Back
127
"Housing Corporation Neighbourhoods and Communities Strategy"
HC 2006 http://www.housingcorp.gov.uk/upload/pdf/Neighbourhoods_20061013162421.pdf
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