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

Memorandum by the North West Regional Assembly and the North West Housing Forum (AH 96)


North West Housing Forum

  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.

  The key aims of the Forum are to:

    —  Influence policy at a national and regional level.

    —  Provide a strategic direction at both a regional and sub regional level.

    —  Influence and support the development of regional and sub regional housing policies which support the Regional Housing Strategy, Regional Economic Strategy and all other strategies appropriate to the sustainability of communities across the region.

    —  Provide a housing expertise which will influence the joining up of all key Regional Strategies.

    —  Provide housing in the region with a vehicle to influence the work of the Regional Assembly.

    —  Provide evidence to maximise resources coming into the Region.

    —  Provide Members with a strong and influential voice on the Regional Housing Board.

    —  Influence the development of the Regional Housing Strategy.

North West Regional Assembly

  The North West Regional Assembly is a partnership that works to promote the economic, environmental and social well-being of the North West of England. It is an inclusive organisation, with representation from local government, business organisations, public sector agencies, education and training bodies, trade unions and co-operatives together with the voluntary and community sector.

  Cheshire, Cumbria, Greater Manchester, Lancashire and Merseyside make up the North West of England. More than 6.7 million people live in the region. The North West Regional Assembly seeks to represent the rich diversity of the region and is working to improve the quality of life of all its citizens.

  The Assembly's key functions are:

    —  Powers to scrutinise the Northwest Regional Development Agency's £382 million budget to ensure that it delivers economic regeneration benefits for the whole region.

    —  Working with regional housing partners on the Regional Housing Board to develop the Regional Housing Strategy and recommend to government how to distribute a £250 million regional housing pot.

    —  In its capacity as Regional Planning Body undertake its regional planning responsibilities, preparing the draft Regional Spatial Strategy which will influence major planning decisions, which will shape the way the region looks over the next two decades.

Written Submission

  1.  Affordability of housing is a significant and growing issue in the North West. In recent years, the rapid rise in house prices across the region has not been matched, by similar rises in household incomes. Consequently, the ratio of income to house prices has widened. In virtually all parts of the North West (including districts with Housing Market Renewal Initiative Pathfinders) the problem is acute[202] (see Appendix 1 for details). This analysis shows that in many parts of the region, even middle income households are unable to access family type housing which is available on the open market, which has implications for the regions economy and delivery of public services. The continuing growth in the economy of the northern regions may in some cases fuel in migration, increasing pressures on the existing housing supply. The likely impact of future economic growth on the housing market and the implications for future housing provision are currently the subject of ongoing research, which has recently been commissioned by the Northern Way Initiative[203].

  2.  The recent rises in house prices may also have been partly fuelled by speculative demand, rather than demand from potential occupiers, this has an impact on the affordability of housing. Proposed tax changes allowing property as part of pension portfolios may exacerbate the problem. In parts of the region, it is doubtful whether these increases are sustainable; many speculative purchasers who entered the market recently are likely to find it difficult to attract tenants and to obtain a return on their investment. Nor is there any evidence that increasing values in the older terraced stock has led to any increase in investment in repairs or improvements to attract tenants. Elsewhere the growth in speculative purchase to let, has also undermined the mechanism, whereby price rises are limited, by what first time buyers can afford. First time buyers are increasingly in competition with other purchasers using capital accumulated through other forms of investment, who are less constrained by income levels. This has been one of the main factors contributing to the current affordability crisis and may sustain prices in the future or at least prevent significant falls.[204]

  Affordable housing covers a variety of tenures and types. The North West Regional Housing Strategy identifies a variety of forms of provision.[205] The provision of affordable housing needs to ensure that all types of tenure are addressed. In addition, the provision of affordable housing can have an impact on the local economy and long term sustainability of local communities. Research published by Cumbria Rural Housing Trust in 2004[206] reached a number of key conclusions on these issues, which are of relevance to this inquiry:

    —  The ratio of earnings to average house prices is a critical factor and may explain some population migrations to less expensive settlements (hence the loss of children from schools). Local people need a choice of accessible and affordable tenures rather than the Hobson's choice of renting.

    —  There were concerns about the loss from the communities of young skilled labour, which was integral in sustaining the economy and the community. Accessible affordable housing was seen as essential in sustaining the rural economy. Each family that left its community did so for several reasons, but the main one was the lack of affordable housing available.

    —  Registered Social Landlord development was seen as essential in maintaining family and economic links within rural communities. Evidence shows that affordable housing development via social landlords helps to sustain rural communities, because it enables households depending on local incomes to live where they have a local connection. The social housing percentage should be at least 5% of stock, where demand is evident.

    —  There was little diversity in the size and tenure of move-on accommodation; once allocated a tenancy, households would be likely to remain in it for the long term.

    —  Losses through Right to Buy and Right to Acquire are critical and should ideally be no more that 10% of social landlord stock.

    —  The ratio of social housing to second homes is critical and should ideally be 1:1, with both being no more than 25% of the market and no more than 1:10.

    —  When second homes form 20% or more of the market, this appears to affect the sustainability of any village.

    —  Communities considered that the high numbers of people retiring to rural areas, and the increase in second home ownership was altering the population and age profile of the community, reducing the numbers of families and the general population of the settlement as a whole. Concern was raised about the lack of control over the numbers of second homes in attractive locations in and around the National Park.

  4.  These later points could be further intensified by proposed changes to pensions rules which could potential increase pressure to purchase property for second homes (see recent press articles from BBC website set out in Appendix 3).

  5.  The impact of the lack of affordable housing is not just confined to Cumbria though. It is an issue elsewhere in the North West. The Cheshire Housing Strategy[207] states:

    "A reduction in the working population, and an increasingly ageing population is having an impact on the Cheshire economy by either forcing businesses to leave the area and reducing the capacity for wealth creation or by attracting inward migration for jobs. The latter, increasing pressure on the housing market and continuing to fuel house price increases beyond the reach of many local people. Employers are already experiencing difficulty in recruiting to lower paid vacancies which are vital to the local economy. High house prices in areas of employment mean that many lower paid workers have to live some distance from their place of work, thus increasing travel to work time and working against sustainability targets."

  6.  It is also important to highlight that affordability in the North West Region is not an issue exclusive to "traditional high cost areas" such as parts of Cumbria and Cheshire. There is also an increasing problem in areas more recognisable for problems of low demand and in need of regeneration. For example, in areas of Oldham covered by the Housing Market Renewal Pathfinder, typical borrowing capacity for families considering a newly built home can fall short by 30-40% (see Appendix 2).

  7.  There is a concern that the planning system alone cannot deliver more affordable housing, however there are many demands on public subsidy and neither can we be wholly reliant on the public purse to provide affordable housing. The North West Regional Housing Strategy identifies affordability as the biggest emerging issue in the region, and it is crucial that we carry out further work to identify how the planning system can be better used to support the delivery of affordable housing. There are examples that S106 agreements are not currently working in our favour and we need to understand how this can be used more effectively. Furthermore we need to explore the wider role that the Private Sector has to play. Any explorations would need to consider not just how the private sector can contribute financially, but also consider the impact that land banking is having on affordable housing in high value areas.

  8.  However constraining housing provision figures below indigenous levels of household growth will only lead to low levels of affordable housebuilding (due to limited opportunities for cross subsidy). Changes in 2003 to house building targets in the Regional Planning Guidance 13 and cascaded down through the Development Plans, have had a significant impact on the ability to deliver both open market and affordable housing in the Region. A significant amount of new affordable housing being delivered in the region is reliant on S106 planning agreements on open market housing sites,[208] however if the market housing development stops because new house building quotas have already been met (as is the case in many Districts), then the affordable house building will stop too. This is likely to have a major impact on those people seeking affordable housing. Recent levels of house building across the region have exceeded the tightly constrained targets established in Regional Planning Guidance and many of the relevant Development Plans.[209] In light of this, many local authorities have introduced policy mechanisms to limit the future supply of housing, thereby restricting opportunities for market developments across much of the region. Since much of the affordable housing development relies on "quotas" on market development sites, the prospects of delivery of affordable housing have been seriously damaged. The likelihood of land owners releasing land solely for affordable homes is slight, despite the best efforts of our planners, given the recent over heated market in land prices and consequential expectations of its owners.

  9. Boosting the number of affordable units delivered is not the sole issue. It is important to ensure that the right typesize of housing is provided to meet identified needs. In many parts of the North West recent housebuilding has been dominated by the construction of flats in citytown centre locations, boosted in part by government guidance in PPG3 promoting the use of brownfield sites and increased densities of development. Evidence can be found across the region to show the mix of properties required eg in Oldham there has been a massive reduction in social rented 3 bedroom properties through the right to buy, and although there remains a high demand for this type and tenure of property new completions are failing to come anywhere near the numbers required. It is important to ensure that a range of house types are provided in order to meet the affordable housing needs of all sections of the community. It is also worth noting that the increasing costs of regenerating and remediation on brownfield sites[210] restricts the leverage to provide affordable housing through the Section 106 route.[211]

202   Appendix 4 of "North West Household Growth Estimates Study" Nathaniel Lichfield & Partners on behalf of North West Regional Assembly, 2005. (see Back

203   Ongoing research being undertaken by GVA Grimley for Northern Way Secretariat into Locating Homes. Back

204   "Housing Market Trends in the North West of England" University of Birmingham, Centre for Urban and Regional Studies, August 2004. (see Back

205   "North West Regional Housing Strategy 2005" North West Regional Housing Board 2005. Back

206   5 "Housing: An Effective Way to Sustain Rural Communities-Part 1 : the Effects of Affordable Housing on Rural Communities" Cumbria Rural Housing Trust, 2004. (see Back

207   "Cheshire Sub-Regional Housing Strategy 2004-08" Cheshire Housing Alliance 2004. (see Back

208   24% of all affordable completionsacquisitions in 2002-03-Source: Table 7 "The Value for Money of Delivering Affordable housing through Section 106" ODPM July 2005. Back

209   RPG13: Regional Planning Guidance for the North West (March 2003) identified that the annual average rate of housing provision should be 12,790 pa. Back

210   see Chapter 7-Conclusions "The Value for Money of Delivering Affordable housing through Section 106" ODPM July 2005. Back

211   In 2002-03 only 733 units (24% of total affordable new build completions\ acquisitions) were provided through section 106 in the North West compared to 44% nationally-Source: Tables 6 & 7 "The Value for Money of Delivering Affordable housing through Section 106" ODPM July 2005. Back

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