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

Memorandum by the London Borough of Barking & Dagenham (AH 22)


  The London Borough of Barking & Dagenham is located at the heart of London's Thames Gateway. Its regeneration is crucial to Government plans to develop sustainable communities in the South East and to the Mayor's ambition for prosperity to be more evenly shared between East and West London.

  Our regeneration strategy is to build on our strengths and tackle long-standing problems of deprivation, social exclusion and environmental blight. Over the next 20 years, we hope to benefit from 26,000 new affordable and market homes, 15,000 new jobs, improved transport links, new community facilities and the renewal of our public realm and environment. Regeneration will raise our community's aspirations, creating new opportunity and the expectation of excellence in service delivery. It will change the way we see the world and the way the world sees us.

  We are working with the local community, private sector partners, the GLA family, English Partnerships and the newly formed London Thames Gateway Development Corporation, to deliver our vision for a regenerated Barking and Dagenham. Our overriding priority is to ensure that the local economy and local people benefit from the renewal of the borough's housing stock, infrastructure and public realm and from the opportunity of the London Olympics.

  For ease of reference and to ensure that our response is relevant to the Committee's aims in this inquiry, we have based our submission around the list of issues set out in the press release launching the inquiry.

1. The potential benefits of and scope to promote greater homeownership

  London Borough of Barking and Dagenham recognises the benefits of homeownership to both individual households through their equity and to communities where people have made a personal investment and commitment to a neighbourhood. However there a number of issues related to home ownership which need consideration if the supply and promotion of this tenure is to increased. Our response relates primarily to the conditions in Barking and Dagenham—a significant housing growth area.

  In terms of the potential scope to promote home ownership, our view is that growth should be carefully planned and also take into account the needs of other households who can not afford home ownership to enable the development of mixed and balanced communities. East London is characterised as an area of growth and opportunity but also has the highest levels of deprivation and housing need in London. Ensuring an adequate supply of appropriate affordable housing is therefore as important in the growth areas as promoting home ownership, both to the sub region and this Borough.

  In a developer led market such as the Thames Gateway, the supply of new housing, be it for either outright sale, low cost part home ownership or at affordable rents is closely linked through the planning system, use of planning gain and impact of economic growth and demand on land values. We are working to ensure that we can provide adequate social housing and are particularly concerned that the market is not providing larger family homes for either sale or rent.

  We think that this area that is worthy of further examination as part of this inquiry.

2.   The extent to which home purchase tackles social and economic inequalities and reduces poverty

  We can not point to any evidence locally that would suggest that home purchase tackles social and economic inequalities and reduces poverty. Our recently conducted Housing Needs Survey shows that home ownership is way beyond the means of the vast majority of people currently in social housing or housing applicants. There is a market for shared ownership/low cost home ownership, but our experience is that for this to be affordable to local people the equity share and/or price must be low as average incomes in the borough are low in relation to London .

  Our more recent work on private sector renewal has also demonstrated that there are large numbers of elderly homeowners also living in older homes in poor conditions. Despite having equity value within their properties these groups are cautious about releasing this equity to improve their conditions and will continue to live in unsuitable housing.

  It should also be recognized that the drive to homeownership does not necessarily lead to greater economic wellbeing. The slump in the market in the early 1990s left thousands of households with negative equity and although we have a relatively stable market with low interest rates the potential for a repeat situation can not be ignored. The market also needs to ensure that people have access to good advice and assistance when entering into homeownership. Recent figures show that in the London County Courts, in mortgage default cases, actions entered rose by 59% ,Suspended orders were up by 73% and Orders were up by 80%.

3.   The economic and social impact of current house prices

  As well as having an impact on the supply of other much needed affordable housing referred to above, our main concern on this issue is the impact on the supply of suitable family housing for sale. It is inevitably more economically attractive for developers to build high density one and two bedroom units for sale than family housing.

  We are therefore concerned that much of this housing will be occupied for relatively short terms by childless couples who are then more likely to purchase family housing elsewhere at a later date. The social impact of this is that communities are very transient and people are not encouraged to establish long terms roots in an area. Whilst the market is flooded with smaller units, the prices of larger family homes will continue to rise.

  The secondary impact is that much of this housing will be purchased as part of the vibrant buy to let market, which whilst a necessary part of the growth of a developing economy does not contribute to the social benefits of homeownership to an area described above.

4.   The relationship between house prices and housing supply

  These issues are covered in answers, above.

    —  Other factors influencing the affordability of housing for sale including construction methods and fiscal measures.

  We do believe that there is scope through reducing construction costs by means of modern methods of construction to produce homes which can be affordable to households on modest incomes without any form of public subsidy. This can be particularly true in some areas of our borough where land values are low in relation to much of London.

  There are further potential advantages from this approach in the form of high environmental sustainability values which can be achieved and increasing capacity for the construction industry at a time when there is a high risk of over heating in the industry.

  We wish to be clear that adopting this form of construction must not be at the expense of design quality.

    —  The scale of the Government's plans to boost housing supply.

  In terms of new housing our view is that ensuring the necessary transport and social infrastructure is put in place to support new housing is essential, whilst building at higher densities through a longer term programme. Our view is that only by building at higher densities in appropriate areas such as town centres will we ensure high quality. Through such developments a critical mass of people will generate the investment in the infrastructure which must benefit existing communities. Critical to this argument will be the ability to develop larger family homes at high densities with affordable service charges.

    —  The relative importance of increasing the supply of private housing as opposed to subsidised housing.

  Barking and Dagenham has recognised within its option appraisal to achieve the decent homes target, that for a number of Council owned flatted estates which exhibit high levels of deprivation there is a need for comprehensive estate regeneration. This approach will involve the replacement of 3,000 flats with 5,800 new homes of higher quality and better environmental sustainability values. An objective of this (and also a means of delivery through cross subsidy) is to change the tenure mix away from 100% social renting to a balance between outright market sale, shared ownership / intermediate and social rented.

  The response given under question 1 also covers this point.

    —  How the planning system should respond to the demand for housing for sale.

  Covered under question 1.

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