Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Written Evidence

Memorandum by Oldham Council and First Choice Homes Oldham (AH 94)

  Following your announcement of the Committee's enquiry on 11 October 2005, Oldham Council and First Choice Homes Oldham would like to submit the following written evidence.

  We note that your enquiry is wide ranging on the broad issues of affordability and the supply of housing. Our evidence will focus particularly on the "relative importance of increasing the supply of private housing as opposed to subsidised housing."

  In a national context, affordability and the supply of housing may be seen as a more crucial issue in regions other than the North West and in towns other than Oldham. However, we hope that from the evidence contained within this note, we would be able to demonstrate that the issue is just as important in the North West and Oldham as elsewhere in the Country.

  Oldham and Rochdale are a Housing Market Renewal Pathfinder and as part of this major regeneration scheme, are aiming to transform dysfunctional housing markets. In doing so the Pathfinder is both seeking to refurbish many of the Victorian terraced homes in the area but also to replace those in the poorest conditions where transformation can have the greatest impact.

  Most of the older homes being cleared are privately owned. To date, owners have negotiated the sale of their homes and moved on.

  What has been most startling in this process is the extent to which owners have chosen to stop being owner-occupiers and to move into rented accommodation. In fact, a third of all private owners and tenants have been re-housed as part of the demolition programme, have chosen a home from First Choice Homes Oldham. It is anticipated that this rate of re-housing by social landlords will increase.

  This is one of the most telling reasons why in Oldham the supply of socially rented accommodation, either by registered social landlords or the Council, should be increased over the coming years. Indeed, in the Pathfinder's Scheme Update, submitted to Government in the summer of 2005, it is expected that the long-term regeneration plans will see a net increase in housing, including social renting, in Oldham of 3,700.

  Undoubtedly, the key driver in coming to this assessment is the affordability of home ownership for many in Oldham. Again, evidence from the Pathfinder's recent Housing Market update demonstrates this clearly. Many existing homeowners living in some of Oldham's older Victorian terraced homes could be described as "marginal owners"—either because of job insecurity; family breakdown and/or debt, as well as relatively high repair and maintenance costs.

  Although the Pathfinder is making strenuous efforts to provide new subsidised homes to buy through shared ownership, home buy and the like, many of these new products are simply unaffordable to the "most marginal" homeowners. Typically borrowing capacity for families considering newly built homes can fall short by 30-40%. Many elderly owners want to take the opportunity to realise their assets and lose responsibility for home management. Few want to take on new debts however attractive the offer may seem.

  On a broader scale, Oldham like many areas in the North of England, has seen a dramatic change in the nature of it's housing markets in recent years.

  In 2000 Oldham Council, in response to difficulties letting some of its Council homes, established "Instant Homes"—it's own estate agency style, first come, first served lettings shop. This service was closed in 2005. That's because demand now exceeds supply in all localities and for all types of accommodation. There is no doubt that a combination of factors has contributed to this rapid change in the market environment in Oldham. Those factors include increases in house prices at rates significantly faster than incomes; a reduction in the number of homes to rent by First Choice Homes Oldham—primarily caused through continuing high levels of Right to Buy. In the three years to 2004, 1000 homes were sold under the Right to Buy scheme. Whilst this has slowed in 2004 and 2005, it is still a significant proportion of a smaller pool of stock. More significantly the skewed nature of our stock sales has been even more dramatic. 70% of our annual sales have been of three bedroom houses but only 25% of our stock is three bedroom homes. In more suburban localities the proportion of family homes sold has reduced the availability to unsustainably low levels with sales reducing family housing stock by over 20% in five years. Newly built homes to rent by RSLs have nowhere near kept up with homes sold. RSL completions in the last four years were under 200.

  The impact of this change in the availability of stock is evidenced by the growth in homeless acceptances here in Oldham—and most dramatically by the use of bed and breakfast accommodation. Prior to 2002, the use of bed and breakfast accommodation in Oldham for homeless families was unheard of; since then, bed and breakfast has been used consistently albeit to a modest level.

  Like many Councils and Arms Length Organisations, Oldham is modernising its approach to letting, based on the very worthy concept of "choice." However, in response to the supply issues we have indicated, choice will only apply in our new lettings procedures where people have both high needs and have been waiting longest.

  There is an inference from the issues set out in the new enquiry, that the supply of housing is most noticeably influenced by the change in the number of new homes being built. Whilst that is undoubtedly important, as the Barker Review indicates, quickly increasing the supply of new housing is fraught with many difficulties. However, improving the usage of the existing supply of homes has potential. In Oldham, vacancies in the private sector are running at something like 6% (three times the rate of socially rented homes.)

  Finding ways to bring many of these existing homes back into use will make a significant contribution to housing supply. One option could be Councils acquiring poorest quality empty privately owned properties to speed up refurbishment and re-use, as well as encouraging other landlords to refurbish or sell to someone who will.

  Our key message from Oldham is that increasing the supply of housing is the key factor whether for private ownership or renting by responsible landlords. In taking this approach, the choices available for people whether they wish to buy or rent will be increased

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