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