Memorandum by the North West Regional
Assembly and the North West Housing Forum (AH 96)
BACKGROUND INFORMATION
ON NORTH
WEST REGIONAL
ASSEMBLY—NORTH
WEST HOUSING
FORUM
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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