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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