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

Memorandum by the Lake District National Park Authority (AH 21)

  1.  Although we welcome the need to further investigate the affordability and supply of housing, this must be tied into the other inquiries into this issue occurring at the same time- the Affordable Rural Housing Commission and the Commission for Rural Communities research. Our comments relate to our experiences of planning and housing delivery in rural areas, and hopefully illustrate the need for adequate rural proofing of policies. We also suggest the need for "real world proofing" of policies to see if they are likely to have unintended consequences, and the need for policy between ODPM, DEFRA and the Treasury to be joined up. Against this background we would offer the following observations on the specific questions that you raise:


  2.1 We have major concerns about the preoccupation of current government policy in terms affordable housing solutions. The focus on greater owner-occupation and the concentration of resources and solutions on this sector of the market, runs the risk of undermining the government's own policy of decent homes for all. This would not be such a concern if this focus on owner-occupation market-delivered affordable housing solutions meant additional resources overall. However, the redirection of resources from rented to shared-equity that is occurring[47], raises questions about whether public money is being used to help those in greatest need, or merely subsiding an already over-inflated market.

  2.2  For some people, and particularly in low-wage economies like Cumbria, renting is the only realistic option. The gap between incomes and house-prices puts home-ownership out of the reach of many households. They may aspire to ownership, but the financial realities make it an impossibility. Shared ownership and similar types of options need to be better promoted and understood. They can offer a way for those who aspire to, and can afford to, move into partial home-ownership. But without a full range of sub-market options this could serve only to move people "trapped renting" to being "trapped in shared ownership".

  2.3  A one-size-fits-all solutions simply cannot work where the issues of affordability are so diverse and wide ranging. Home-ownership solutions may be the way forward in some areas, but not the best, or most important issue, for other areas. We therefore suggest local solutions to local problems based on local research, as the way forward. This would enable communities to identify what is required to address the imbalances in their housing markets. This requires national planning, housing and funding policies to provide a framework within which local solutions can be developed and delivered.


  3.1  We do not think there is a clear benefit for those on the lowest income levels in home ownership. As mentioned above those in real poverty are most likely to be those to whom shared equity and owner occupancy solutions are least available. These groups are also likely to be most at risk from external pressures and changing market conditions.

  3.2  Our experience would indicate that home-ownership, as currently promoted in the raft of government "affordable housing solutions", does little to tackle social and economic inequalities and could in fact be increasing inequalities and poverty. In making assessments of the costs of renting v. ownership[48] people may look only at the monthly repayments versus the rent, and not consider all the other costs associated with home ownership- maintenance costs, the cost of borrowing, the impact of any potential interest rate rises, the need and cost of mortgage payment protection etc.

  3.3  We are therefore concerned that by focusing on the second and third rungs of the housing ladder- shared equity and discounted housing for sale (market delivered "affordable housing") you could in effect be excluding those in greatest housing need. The latest research[49] indicates that people are being forced to find larger deposits, often by gifts or borrowing from family members, and stretching themselves further to access housing.

  3.4  It may be useful to remember that there are two approaches that could be used to address the gap between house prices and wages. One looks to control house prices and other to increase wages. A better understanding of the linkages between housing at the economy at a national, regional and local level is needed. We would suggest that initiatives like the minimum wage, and promoting training opportunities (such as a University of Cumbria), offer a much better way to address social and economic inequalities and reduce poverty, than home purchase.


  4.1  Clearly the imbalance in the housing market is having a major impact on the sustainability of local communities. We believe that sustainable rural communities should be mixed and balanced. This requires a mix of ages and incomes in each community. This requires the housing stock to offer a mix in terms of type, size and tenure. So, the provision of rented and shared equity properties in our communities is needed.

  4.2  We strongly support the needs for evidence based policies and implementation. The bottom-up housing needs survey methodology developed by the Rural Housing Enabler programme[50] offers a way to appreciate the balance of provision needed. We are using this approach to inform the delivery of our planning policies[51]. An understanding of the existing stock and the gaps in the housing ladder[52] is also essential in order to understand the full implications of any interventions suggested.

  4.3  Research commissioned by Cumbria Rural Housing Trust has shown that the development of affordable housing contributes positively to the sustainability of rural communities[53]. In our view therefore, where local evidence clearly demonstrates a need for a particular kind of housing to be provided, the size, type and tenure of units, as well as their location may need to be prescribed if the planning process is to be used most effectively to correct market failure. Current guidance[54] suggests this should only be done in exceptional circumstances.

  4.4  There does however need to be a recognition of the potential monitoring and resource implications of implementing the kind of policies we need. There is no point spending a great deal of time developing a system that is not monitored or enforced, or is viewed as being easy to get around. We again have anecdotal evidence of breaches or loopholes in the current system that are already being exploited. We are seeking to address some of these, but a general publicity campaign on this issue would be welcome.

  4.5  In America a poster campaign featuring pictures of key workers—fire fighters, teachers etc—with the strap line "we need the people who need affordable housing", was very successful. [55]In our case, key workers are as likely to be working in tourism industry as the public sector. In view of the unbalanced profiles of many of our communities, key workers in the National Park could almost be defined as "anyone who works for a living".


  5.1  In our experience this is considerably more complex than simple economics of supply and demand would suggest. In areas such as National Parks it is simply not possible to build your way out of this crisis. Demand in our area is generated from local, regional, national and international markets. Add to that the desire for second homes, holiday homes, retirement homes, commuter, SIPPs etc. and the demand for housing is likely to be insatiable. We therefore seek to separate those with a real need to live in the Lake District National Park from those who just have a desire. [56]

  5.2  It is important to remember that there are other factors which impact on house prices—the British home-owner culture, the profitability of other types of investments, mortgage interest rates and such like. There also needs to be recognition of the limitations on what the planning system can actually deliver. Planning authorities can only grant planning permissions. They do not build houses. Developers build houses, and using the simple economic logic of reduced supply increasing prices—it may in fact not be in the development industries best interest to build all the houses they could as quickly as possible. A more detailed understanding of the economics of development, particularly in rural areas is needed. Also, consideration of the potential use and benefits of completion orders etc may be helpful.

  5.3  A house is only worth what someone is willing to pay for it. In our area the difficulty we have is that much of the demand comes from people with significant purchasing power. There is also a disparity in perception of value. For example a person used to London house prices may consider a two-bedroom cottage in Keswick priced £300,000 a bargain, whereas for a local family on average wages it is completely unobtainable.

  5.4  For many years the Lake District National Park Authority has sought to restrict occupancy of new dwellings through conditions. Monitoring of this policy has established that these conditions may in fact have little or no impact on the price of the houses. We have some anecdotal evidence that in some areas it actually increases the value of the houses as the prospective purchasers know that they will not be living next door to an empty second home. Over the last couple of year we have therefore tightened up our occupancy conditions. Further research on the impact of occupancy conditions on the price of houses and the ability of purchasers to secure finance (a common reason cited by those wishing to escape or remove occupancy conditions) is required.


  6.1  We welcome the recognition that using the planning system offers only part of the solution to the affordability problem. In areas like the Lake District National Park there may be enough houses, but not enough homes. The planning system can only influence things which require planning permission, and the reality is that most people live in, and will purchase, housing that has already in existence.

  6.2  We are heartened by discussions in the rural affordable housing inquiries which appear to be reopening discussions about separate use classes for second homes and holiday lets, and perhaps even affordable housing. We would welcome a healthy and well-informed debate around such issues.

  6.3  Fiscal measures, such as the increased council tax on second homes, can also be used to generate revenue for affordable housing. We believe that fiscal measures could also be more innovatively used to impact on second home ownership. For example, tax incentives such as the release from inheritance tax if a property is made available for local people to rent through a covenant or other legal agreement could represent a more innovative way to turn some of our houses back into homes.

  6.4  Bringing the existing stock back into use through fiscal measures, including VAT parity between redevelopment and new build, are likely to be much more effective ways of addressing the housing crisis areas like the Lake District National Park, than using the planning system to build new affordable housing on greenfield exceptions sites, or allocated sites.

  6.5  We generally welcome the interest in modern methods of construction especially where they can create more sustainable buildings in terms of energy efficiency etc. But we are concerned that this could in reality serve as a distraction from the more important issues facing our area: that of providing housing for local people at a price they can afford, while still ensuring these "affordable houses" are homes that people can, and want to live, and expand in.

  6.6  We are aware of developers looking to move into providing affordable housing. There are however concerns that "non-RSL developers" do not have to comply with the same space and design standards as RSLs. To make it stack up financially there is concern that the resulting non-RSL developments provide smaller units, with no opportunity for a couple to grow into a family. Directing single people, and couples into one bedroom flats is surely only storing up problems for later on.

  6.7  The Treasury/Housing Corporation's drive for economies of scale, and getting more units for the same or less rate of grants, could be removing future proofing from the development that are currently occurring. A recent, and much praised, development of rented and shared equity properties in the village of Pooley Bridge has been showcased by the ODPM in their Sustainable Communities DVD. Under the new efficiency drive it is unlikely that this development would have been viable. We would therefore like to see better recognition in the funding formulas for the extra costs of developing in sensitive areas. We have numerous example of affordable housing scheme in the Lake District National Park Authority that have been successfully assimilated into the surrounding villages and wider landscape. They serve to demonstrate what is possible, but the cost per unit is inevitably higher.


  7.1  For communities in the Lake District the national agenda of focusing development on "sustainable locations" is problematic. At a regional and sub-regional level this is taken to mean urban conurbations and "key service centres" in Cumbria. When sustainability is viewed largely in terms of access and reducing the need to travel, where does this leave "unsustainable" (or perhaps less sustainable) rural communities? We would welcome a greater understanding of impact of initiatives like the Northern Way may have on areas that are not included in such plans.

  7.2  We would suggest that a needs-led approach, based on local circumstances and evidence should help determine the level of house building required in rural areas. National Parks are living and working landscapes and need local people living within in them to continue to manage and look after the environment acknowledged by its very designation as being of national importance. We now have policies and mechanisms to deliver more housing for local people at prices they can afford, in perpetuity. We now need to work in partnerships to address the barriers around finance, land release, local objections and attitudes to ensure that these policies deliver housing on the ground.

  7.3  Many of our communities are suffering, schools and shops are closing as families and people who live and work locally are replaced by holiday lets, second homes, retirees and out-commuters. The definition of sustainability should allow local authorities the flexibility to consider the social and economic, and well as the environmental impacts—both positive and negative, of both allowing, but also restricting, new developments in rural areas. A separation, in policy terms, of housing that is needed to sustain rural communities from housing that the market demands, would be particularly helpful.


  8.1  The Panel Report into the Joint structure Plan acknowledged that the pressures on the Lake National Park were such that its housing market "would always be distorted".[57] So although we acknowledge and recognise the potential of shared ownership and similar schemes to help address some of our housing needs. In areas, like ours, where aspirations for ownership do not match the economic realities of a low-wage economy largely dependant on tourism and agriculture, rented solutions are still required.

  8.2  We firmly believe that numerous different solutions will be needed to address the issues of affordable housing problem. Our approach of local solutions to local problems would require this issue to be informed by local policy and local decision-making. Our research and housing needs evidence to date would suggest a need for both rented and shared ownership solution are needed. Although additional, more detailed, research is still needed.

  8.3  Now we are able to allocate sites solely for affordable housing, and restrict all new developments to only meeting local needs, there won't be any opportunities for affordable housing providing through quotas on open market sites. Instead we are working closely with Parish Councils, local landowners and partners to look to identify sites that could be allocated, or allowed as exception sites for affordable housing, and looking to our enabling role to make the schemes actually happen. This is just one example of how the Lake District National Park Authority has developed local solution to local problems that should deliver the kind of affordable housing that our evidence indicates that we need.


  9.1  In our view, a distinction that can be made between housing demand and housing need, in the Lake District National Park. In other areas a more market led solution may be required. Our view is that local circumstances and evidence should enable different models to be developed in different areas.

  9.2  The government's use of an ever-expanding definition of "affordable housing", is undermining its credibility. Simply providing smaller units as part of a quota site[58] is not affordable housing in most people's understanding of the term. Likewise two and three bedroom apartments, with local occupancy conditions, priced from £335,995-£445,000[59] are not affordable to local people either. A clear definition based on housing need (rather than demand or market forces) would be very helpful to us.

  9.3  The Lake District National Park Authority consider that to be in housing need, a household must be:

    (a) Inadequately housed AND

    (b) Unable to afford to rent and/or buy on the open market AND

    (c) Have a need to live in the locality

  9.4  "Affordable housing" for discounted sale provided by a developer in Lancaster is failing to sell, [60]but its prices from £80,000 to £148,000 put it out of the reach of those it is trying to help. However, instead of the economies of the affordable housing market bringing down the prices, the applicant sought to remove the local occupancy condition from over half of the "affordable units". It could therefore be argued that by assisting "key-workers" to access housing through public subsidy, is in fact only adding to inflated house prices and not enabling the market to re-adjust. We hope that by restricting all our new housing units to meeting only local affordable needs, in time we will create a new sub-market. However, it may take time for developers to realise there is no hope value for unfettered housing on their sites and adjust the price paid for land accordingly.


  10.1  The Granting of significant planning permissions does not necessarily guarantee the same increase in the level of house building. The development system in UK is such that the gap between planning permission and build rate is often in the hands of the development industry. We do not believe that significant house building alone would reduce the cost of housing to affordable levels. A whole package of housing and planning policy, funding and fiscal measures is required.


  11.1  We welcome the recent recognition that there are areas in the north where affordability is a big issue. We would affirm our view that solutions to local problems based on local research represent the best way of addressing affordable housing issues wherever they occur. This will not, however, address those issues relating to the inefficient use of existing stock, where the requirement for second homes and holiday homes to apply for change of use may be a more helpful and sustainable solution.


47   "Value for Money" Research by the University of Cambridge for the ODPM. Back

48   Housing Markets- Preparing for Change by Jacqui Blenkship and Judith Gibbons (in particular page 53). This report can be downloaded from Back

49   More and Better Homes Conference excerpts from Yvette Cooper's speech downloaded from Back

50   See Lake District National Park Authority's Supplementary Planning Document on Demonstarting housing Need (currently out for consultation)<au0,0> <xudistrict<au0,0> <xudocs/050927<au0,0> <xufinal<au0,0> <xuspd<au0,0> <xufor<au0,0> <xupublic<au0,0> <xuconsultation.doc Back

51   51 See SPD Supporitng Statement and Briefing Note<au0,0> <xudistrict<au0,0> <xudocs/consultation<au0,0> <xustatement<au0,0> <xubriefing<au0,0> <xunote.doc Back

52   Housing Markets-Preparing for Change by Jacqui Blenkship and Judith Gibbons. This report can be downloaded from Back

53   Housing: An Effective Way to Sustain our Rural Communities? Copes available from Cumbria Rural Housing Trust, Redhills House, Redhills Business Park, Penrith, Cumbria CA11 0DT. Tel (01768) 210264 email Back

54   Planning Policy Guidance Note 3 from the ODPM. Back

55   Getting to Yes-Persuading the Public about the need for Affordable Housing. Pages 12-19 Planning (the magazine of the American Planning Association) October 2005 see for contact information. Back

56   See SPD Supporting Statement Briefing Note for more info on how we try to do this<au0,0> <xudistrict<au0,0> <xudocs/consultation<au0,0> <xustatement<au0,0> <xubriefing<au0,0> <xunote.doc. Back

57   Paragraph 4.2.18, page 128 Examination in Public Report of the Panel into the Cumbria and Lake District Joint Structure Plan 2001-16. This can be downloaded from Back

58   Joseph Rowntree Foundation Research "Planning Gain and Affordable Housing" Back

59   Mountain Ash Development, Windermere Back

60   Lune Quays Affordable Houisng Development Lancaster Back

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