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

Memorandum by Bolton at Home (AH 26)


  There is a huge assumption that achieving homeownership in itself is a panacea for many of housing's problems. The perception is that becoming an owner automatically bestows a greater willingness to invest in a property, to take better care of it, and become less likely to be involved in anti-social behaviour. That, in itself, an increase in homeownership within a run down area acts as a catalyst for regeneration. Demonstrates a commitment to an area assisting with the sustainability and long term viability of the locality. Also, by becoming a homeowner people rise in status and esteem. Following these assumptions an increase in homeownership can be construed as both a positive beneficial economic and social driver.

  Further, the potential benefits of homeownership over renting are well-rehearsed—such as investing in a significant appreciating financial asset; having a greater sense of security and control; and retaining the capacity to "liquidate" some of the equity held in the property through, for example, re-mortgaging. Indeed, when asked, most people would say that they would prefer to own their own property. So there would seem to be fairly conclusive arguments that the scope to promote homeownership virtually holds no boundaries.

  These views, however, need to be tempered with a little cold reality. The following factors constrain the scope for escalating home ownership:

    —  Renting is a choice many people make. The reasons for this are varied and include: the wish not to make a significant capital purchase early in life; the desire to release equity later in life; the convenience of not having all of the repairing obligations; where short term housing is desired; where relationship break-up takes place and further capital outlay on home ownership is deferred; people prefer to rent because they are comfortable with the service they receive from their managing housing organisation and are wary of risking their savings on the vagaries of interest rates.

    —  There has been a considerable increase in the buy to rent market recently and this shows no sign of abating. Therefore, an increase in the numbers of properties for sale on the open market will not be directly translated as a commensurate increase in the number of homeowners.

    —  The numbers of people facing repossession is on the increase as the numbers of homeowners grow. (55% increase in mortgage repossessions in 3rd Qtr 2005 compared to 3rd Qtr 2004) So, there will always be a "fall out" and this would disproportionately hit those on limited incomes.

    —  The cost to the individual of homeownership does not stop at purchase. There has been little research done about the continued cost of maintenance and improvement, and how this disproportionately impacts upon those new owners living on restricted incomes. Further how this, linked to other debts, leads towards chronic financial insecurity and subsequent threat of repossession.

    —  The significant take up of the right to buy may be seen as further proof of the almost endless scope for homeownership. The transition between tenant and owner seems to be a preferred option, and one of the easiest means of breaking up mono-tenures and creating mixed communities. However, this optimistic view of the beneficial nature and impact of the right to buy also needs a reality check. The transfer of stock was achieved only by offering major discounts on properties, many of which had outstanding significant debt charges outstanding. As house prices rose sharply the differentials on offer became, for many, more than just an incentive to become a homeowner. This led to the situation where financial speculators were openly prepared to fund a tenant's purchase on the basis of sharing the profit on resale. Rather than being used as a means as a direct route to meet a basic aspiration for homeownership in this context the right to buy was a means towards realising profit.

    —  Right to buy has also proven to be less advantageous for a significant minority of new owners whose inability to meet running costs and/or mortgage payments has resulted in serious disrepair or resale or, even abandonment. The demand for social renting has increased considerably in Bolton and elsewhere, the supply of which has been made more acute by losses of stock through the right to buy. This scenario hardly confirms the assumption that renting has lost its importance and relevance for many people today.

    —  The scope for having a higher proportion of owner-occupation is also constrained by issues relating to affordability. It is the ratio between house prices and average local incomes that is essential. Bolton, for instance, has a low wage economy. This means that hikes in house prices, even at a modest rate, can disproportionately reduce local people's ability to enter the housing market for the first time.


  Evidence from previous successful regeneration programmes suggests that one method of increasing the sustainability of a community is to increase the number of homeowners as a percentage of the whole. Usually this is largely achieved by importing more economically active people as homeowners into an area of housing deprivation rather than increasing home ownership amongst the "indigenous" population. Similarly, there is no proven correlation between becoming a homeowner and reducing poverty. Indeed in some cases the financial strain of buying a home and taking all the repairing obligations could actually increase poverty. The dwelling may then be used as collateral to fund further borrowing and thus run the risk of deepening the cycle of individual debt.

  There is a common-held opinion that homeownership is in some way intrinsically superior to renting - a crude belief that the only reason for renting is because people do not have sufficient resources to buy or come from a social class were renting is the norm. Thus renting is associated with a social stigma that is unfair but persistent. As this is a perception rather than a reality there needs to be a more reasoned and balanced public discussion about the relative merits and advantages of renting. The stereotype that someone who rents from the Council (or within certain parts of the private sector) has to be in someway socially and economically disadvantaged needs to be challenged.

  Because there is a dearth of empirical evidence, there is a need for more research into testing how and to what extent home purchase is a key factor in tackling inequality and reducing poverty. Whilst it almost certainly does play a role it is strongly suspected that it is only important as part of a whole suite of regeneration tools aimed at improving infrastructure and building up sustainability.


  House price fluctuation has always carried a wider social and economic impact. However, over the last few years this impact has expanded exponentially in relation to the significant shift in investment preferences from stocks & shares into bricks and mortar. The growing intervention into housing markets by the (institutional) investor, whose principal motivation is profit through asset management, is beginning to twist, distort and inflate such markets as a cause for concern. For instance, the first time buyer once the key driver of housing markets, is gradually being squeezed out in the face of spiralling house prices. As a direct consequence of this a new dynamic is emerging where a growing number of older householders are looking to release equity in their own homes in order to pay for their children to get on the first rung of homeownership.

  The future change to pension investments to be introduced allowing investors to secure tax breaks through properties to be included in their pension investment portfolios will also boost housing as an investment option.

  Mortgages are an expensive lending option, invariably families' major investment choice. Whereas rent paid to a social landlord goes directly to cover management and maintenance/improvement of the dwelling money raised through the mortgage process is a profit shared by the private institution.

  There is again a crude assumption that house prices will continue to rise ahead of (or in line with) inflation, thus providing the perfect "copper-bottomed" investment opportunity. However, the certainty is that prices at sometime will either stagnate or decline—already in 2005 a nationwide check on prices and sales is being experienced month-on-month. This is partly due to people waiting for the outcome of decisions on interest rates, partly on properties being over-valued during the last price surge, and partly on other factors relating to what may be basic weakness in the market as a whole. These could be manifestations of a range of factors, such as: regional differences; developer over-confidence; the over-reliance on developing at the most expensive end of the market; and the possible over-penetration of buy to let investors. Though stagnation in prices are not necessarily connected with a general downturn in the economy, as it could be argued that speculators are more likely to retreat to stable "bricks and mortar" investments as a hedge against hard times.


  House prices rise at a differential rates, dependent upon a complex mix of location, speculation and demand—the real danger emerges when both "hotspots" and "coldspots" emerge with the real possibility of, on the one hand, areas where most people are priced out of homeownership and in others where market collapse takes place. Crudely low supply means high prices, whereas, high supply helps to depress values. However, in reality, it is a much more complex relationship. This is largely due to the fact that supply is not the only factor behind house price levels. For instance, the existence of a popular school puts a premium on housing in a particular location.

  Further, it should not be assumed that the provision of additional housing sufficient to meet housing need gaps in a specific highly popular area will automatically act as a depressant on prices. Rather, it could simply act as a spur to demand and set off further inflationary pressures.

  The quality, the location, and the suitability of supply have a more sturdy relationship to house price than merely the rates of supply. The key to establishing a balanced level of housing price is to have a balance of supply; with houses available at a range of different prices along with a choice of property types, sizes, and tenures.


  New affordable housing for sale, in most circumstances, has to be imposed on private developers through planning constraints. Left unregulated developers would supply whatever generates most profit, and in most cases this would be high value housing. In order to alleviate reduced profit margins on schemes that have affordable housing as an element they go for much higher densities. This is not a pejorative statement as these are businesses with an obligation to maximise the profits of their shareholders—therefore it is unreasonable to assume that they would seek to achieve anything else. This means that Councils, acting within a regional context, have to intervene to ensure that a sufficient supply of affordable housing is created. The issue is that public subsidy (via the Housing Corporation amongst others) should be limited with the main burden for financing affordable housing falling on the developers—a point of view that does not seem to be held by Government at the present time.

  Over the last few years homeownership has been boosted by low base rates that had allowed lenders to encourage potential mortgagees through low fixed term introductory rates. However, the steady downward trend of base rates during the last five or so years has now been replaced by a more fluctuating path. In turn this breeds less confidence amongst purchasers and a market more vulnerable to boom and bust. Intuitively lesser market activity should mean that there is less inflationary pressure, so the housing market would settle back to provide more affordable housing for sale. However, this is not always the case as "boom and bust" could create a more cautious market with fewer properties for sale; fewer properties for sale reflects scarcity and scarcity is a driver of price inflation.

  The need to use modern innovative construction methods to produce housing at a price between £60,000 and £70,000 is both admirable and pertinent. The danger to be avoided is to produce housing without a reasonable shelf-life. One salutary lesson from the 60's is that cheap dense low cost housing may solve an immediate problem but without tough quality control during construction and a consideration of impact of infrastructure it can become obsolete very soon. This is evidenced by the demolition of so many 'modern' high rise and deck access property. Perhaps the solution is to look at providing housing that may be low cost but has the potential for growth, flexibility, and continued development along the lines of a lifetime home.


  The scale of new housing proposed by the Government is reasonable as a direct response to growing demographic demands. There has been much scaremongering about the impact this will have on the countryside but this seems to be somewhat exaggerated and hyperbolic. What is of issue though is the difficulty that will be experienced in actually ensuring that the new housing built fits the needs and aspirations of the customers it is aimed towards. If the assumption is that just increasing supply will solve the housing shortage then a mistake is being made. Rather, greater emphasis needs to be put upon producing new housing that is customised to meeting the full range of housing needs not just those of people at the top end of the market and also not just restricted to homeownership (affordable or otherwise).

  Further, greater emphasis needs to be placed on producing housing expansion plans that help deliver regional economic planning aims. For instance, by helping the north to bridge the national output gap by encouraging more diverse quality housing to be built in the region as a means of attracting new investment and boosting existing housing markets.

  The major concern over the Government's proposals is the total reliance on boosting homeownership, seemingly at the expense of the rented sector. There needs to be a more thoughtful approach to the problem that challenges the traditional dichotomy between rent and homeownership. This would involve developing the idea that everyone is given a stakehold in their property, and this "stake" could be traded up or down. At a stroke this would re-interpret the individual's relationship to property; removing the stigma relating to renting and providing a much more flexible model to outright homeownership.


  Should not be about increasing the supply of private housing at the cost of subsidised housing. Rather public subsidy should be largely directed towards regeneration and within areas (such as housing renewal) where the private sector builder is more reluctant to tread. The Private Sector needs to bear the main burden for creating new affordable housing from builders profit and not from the public purse. Homebuy in all its forms, whilst providing a range of innovative means towards homeownership, should not be used by the private sector to off-load their responsibilities for providing unsubsidised quality affordable housing.


  The spatial dimension of housing demand is of immense importance. Planners have a crucial role to play in working with housing in delivering Regional Plans that not only locate present and future demand, but also, help to shape and direct demand away from hotspots so as to contribute to regeneration of areas in decline. Have a stronger role to play in the types of dwelling being developed eg prevent a proliferation of apartment development—ensure a range of housing offer is available to meet the needs of the locality not a free range to produce high density developments. As previously mentioned the planning system (through Section 106 and other measures) has an absolute central role in ensuring that private sector developers produce affordable housing as part of balanced mixed community schemes. Affordable Housing provision via planning gain should be recognised as number one priority over other planning gain requirements.

  Further, the planning system needs to respond to all housing demands not just those of housing for sale.


  As previously explained the scale is important but not as important as the methods used to ensure the housing produced is relevant to and responsive of contemporary needs and aspirations. Also that there is no simple easy correlation between increased supply and lower prices. It is more about providing appropriate housing (not profit-led) even if this is scaled down.

  Clearly there are issues about ensuring new developments are as unobtrusive as possible—once more planning taking a lead policing role here. Every effort has to be made to ensure that brownfield options are exhausted—this would need planning policies to be more flexible in that they should resist the temptation to mothball potential sites indefinitely under zoning for, say, commercial/industrial use. Also, for the developer, a brownfield site is usually much more an expensive option to build on than a greenfield site. This is true both in terms of construction costs and in likely returns from sales. So, once more greater encouragement—though not necessarily in terms of public subsidy except for help in pre-construction site assembly/decontamination - needs to be given by Local Authorities to direct interest away from greenfield sites as being the first choice for private developers.

  A public debate needs to take place over the preservation of certain buildings deemed to have historical interest balanced against the needs of the country to grow its residential base to meet the needs of the present and of future generations. It could be argued that the bias has shifted too far in one particular direction. For instance, there are serious challenges to the demolition of rows and rows of empty obsolete terraced housing because of a perceived priority for conservation over demolition. Unless a more realistic view is taken major regeneration schemes, such as those prompted in the Housing Renewal Pathfinders, would be undermined. A compromise needs to be struck where a handful of older dwellings of specific historical/architectural importance are preserved without it threatening major re-construction.

  The development of new housing, whether for sale or otherwise, without a commensurate expansion of infrastructure is a recipe for future problems relating to sustainability. Much more work needs to be done on perfecting a three dimensional model(s) that shows the impact on infrastructures of new development and how this can vary by location. This could then go on to explain how best to adapt infrastructures to absorb the increased residential base. The presumption is that not all new developments will require significant infrastructure change there being a critical mass to reach within a specific area. It would also provide the basis for discussion in areas where there is simply no capacity for sufficient infrastructural development to meet the proposed housing scheme.


  The importance of tackling regional disparity is mentioned elsewhere and is central to any attempt at resolving the nation's housing problems through the increase in stock to meet growing demand.

  The Northern Way seeks to eradicate the huge output gap between our region and the rest of the country. A key element of the action plan is to develop housing more suitable to the needs and aspirations of the present regional population, whilst also anticipating the growing demand that prosperity would bring. The City Region will now provide the central point for developing strategy to make this happen. Importantly, housing issues of this nature will not be addressed in isolation but as one element in an overall co-ordinated economic plan aimed towards, in our case, enriching the Manchester City Region.

  There is a growing and more sophisticated understanding emerging within the region over how our housing problems and issues are best articulated. Rather than dealing in simple terms such as "high" and "low" demand we are now seeing supply and demand issues through the need to create balanced communities. This concept embraces the more complex dynamic nature of housing markets and challenges the crude concept that the north's housing problems are largely caused by low demand. Within our region there are hotspots of demand that sit cheek by jowl with areas of housing stress. Excepting Cheshire, the house prices within these hotspots are nowhere near as inflated as, say, the south east but their relative impact on the local social, environmental and economic structure is equally acute (eg incomes tend to be lower and there are hotspots were house price to income ratio prove to be prohibitive for local people).

  The means towards eradicating regional disparity in housing is a huge challenge and would include all of the following:

    —  Dispel some of the stereotypical thinking that crudely prescribes the south as progressive and the north as being in decline.

    —  Work towards holistic solutions—housing problems are not divorced from other social and economic factors. For instance, increased quality employment opportunities would generate the demand for more quality housing in the region.

    —  Move the emphasis away from using public subsidy in housing primarily to prop up the private sector in delivering affordable homes for sale. Rather, re-direct this to housing renewal/regeneration where the private sector builders/developers are very reluctant partners. Leaving the private sector largely to pick up the bill for meeting affordable housing through a reduction in their profit margin. This would have the general effect of moving resources to those regions where economic circumstances are more likely to depress house prices rather than inflate them.

    —  Look to producing new and improved housing that has "added value" in those regions that lag behind the national average. This "added value" could include anything from help with moving fees to it being linked to employment and training opportunities.

    —  Embrace the Barker Report findings, in particular in relation to providing homes for the most vulnerable people in society. Taking this a stage further by adopting spatial strategies aimed at integrating low and high cost housing and mixed tenure.

    —  Develop new innovative housing design, construction and fittings that provide for lifetime flexible homes.

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