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

Memorandum by the Chartered Institute of Housing (CIH) (AH 58)


  The Chartered Institute of Housing (CIH) is the only professional body for individuals working in housing. Its primary aim is to maximise the contribution that housing professionals make to the well being of communities. Membership status is dependent on completion of a professional qualification and a track record of professional achievement.

  CIH has over 19,000 individual members working for local authorities, housing associations, Government bodies, educational establishments and the private sector.

  CIH welcomes this inquiry and the opportunity it provides for deeper consideration of the debate around supply and affordability of private housing which has been at the fore of the housing community since the publication of the Barker Report.


  Government attempts to increase supply and address problems of affordability in owner occupied housing are welcome. The approaches currently being taken do, however, need further consideration, development and revision if these national problems are to be tackled effectively.

  Our main recommendations for consideration include:

    —  Continue emphasis on increasing supply of housing.

    —  Improve terms of and access to affordable equity release schemes for outright owners.

    —  Introduce a sinking fund to promote maintenance by lower income households.

    —  Give non-owners access to assets through schemes such as HomeSave.

    —  Emphasise renting as a positive choice for some households.

    —  Increase population limits for rural exception sites.

    —  Recognise that housing supply has limitations as a tool to influence prices.

    —  Ensure that the planning system is primarily strategic and enables housing need to be met.

    —  Move away from emphasis on numbers and focus on provision of the right mix of size, type, and cost of housing.

    —  Promote models to keep housing affordable such as Community Land Trusts.

    —  Increase the supply of housing suitable for households wanting to downsize.

    —  Acknowledge that affordability can be affected by factors other than purchase price.

    —  Emphasise the importance of design and quality alongside speed of delivery.

    —  Improve coordination for infrastructure funding and provision.

    —  Give greater public emphasis to affordability problems in the north and midlands.

    —  Publicly support HMRP use of demolition to restructure housing markets.

3.  (a)   The potential benefits of and scope to promote greater homeownership

  3.1  Government has placed homeownership at the centre of its drive to promote asset based welfare and supports a culture where homeownership is favoured over other tenures. Homeownership does bring financial, social, and psychological benefits to many, but it can also cause problems and hardship especially for lower income households. Government must take account of the potential problems of increased homeownership alongside consideration of potential benefits when deciding future housing and welfare policy.

  3.2  Homeowners with equity in their property can enjoy significant financial benefits as they can borrow against the value of their home and pass their wealth on to younger generations through inheritance. Home ownership also gives individuals a degree of control, stability and security above that available to private and (to a much lesser extent) secure/assured social tenants. Some communities may benefit from a strategic promotion of greater ownership where it can help to retain residents and mix incomes, household types etc. The extension of these benefits to a greater number of households/communities therefore initially appears to be a laudable policy aim.

  3.3  These benefits do not, however, come to all homeowners, and there can be significant disadvantages in homeownership. There is an inherent risk in purchasing property as an investment because its value can go down for reasons beyond the control of the owner. Also, many people are burdened by the practical and financial responsibility for ongoing maintenance, and not all owners benefit from substantial equity or the ability to release it through sale or borrowing. Mortgage repayments for people entering the housing market have taken up a greater proportion of income in recent years, and so research should be undertaken to establish what households have cut spending on and whether it is damaging quality of life in the short or long term. These issues present a considerable threat to the success of property-focused asset based welfare policies, and must be addressed before steps are taken to further increase ownership.

  3.4  The scope to promote greater ownership is limited by the financial capacity of individual households. It is inappropriate to "promote" greater ownership as the best option to people who will clearly not benefit from it, and it is important that renting is seen as a positive choice for some households either throughout or at some point in their life. The emphasis on developing schemes to help more people into ownership, and references to a "home owning democracy", run the risk of creating a perception of exclusion of those who chose not to or are unable to become owners.

  3.5  CIH has developed the HomeSave model which would enable tenants to have some access to the equity/financial benefits of ownership without the negative implications. Information can be found at

4.  (b)   The extent to which home purchase tackles social and economic inequalities and reduces poverty

  4.1  Around half of Britain's poor are home owners, [111]which clearly shows that ownership per se does not reduce poverty.

  4.2  A consequence of the high numbers of poor homeowners is a large number of properties in poor condition. There were 468,000 unfit owner-occupied properties in 2001, and 4.2 million owner occupied homes were below the Decent Homes Standard in 2003. [112]

  4.3  In theory home purchase should reduce poverty experienced by established homeowners in later life, because equity can be released from the property. In reality 70% of poor homeowners own their home outright—even when the property is debt-free, ownership does not lift the household out of poverty. It is difficult for many people to turn property-based wealth into income because of the extremely poor terms offered by many equity release products and the lack of suitable property (eg bungalows) for relocation/downsizing. This presents a strong challenge to the asset based welfare philosophy which is driving the ownership agenda. If people are to use property to provide for themselves in later life, steps must be taken to improve commercial equity release schemes and provide more suitable housing for those wishing to move to a smaller and cheaper property. CIH and CML have previously published a proposal for a national affordable equity release scheme. To address the level of disrepair, and if greater ownership is to be encouraged amongst lower income households, provision should be made for homeowners to be able to pay into a sinking fund alongside mortgage payments to enable them to maintain their property when necessary.

  4.4  There is some evidence that increasing home ownership in an area which is dominated by rented property can help to tackle social and economic inequalities. Increasing the financial resources of an area increases supply and choice of services which can be accessed by the whole community. This is not a consequence of increasing ownership but of diversifying income levels in an area: increasing ownership amongst lower income households will not have the desired effect. The experience of those living in low demand areas, often on welfare benefits, shows how owners can become trapped in an area and have little equity to release through sale. Government must recognise that ownership increases exposure of householders to the down side as well as the positive elements of the housing market.

5.  (c)   The economic and social impact of current house prices

  5.1  Many rural areas find that they are unable to retain local members of their community because of high house prices and lack of affordable/social rented housing. This causes social and economic problems as communities are broken up and low-wage employment struggles to recruit. The exception site policy population limit may need to be significantly increased to help tackle the lack of affordable housing.

  5.2  Many existing owner occupiers have benefited from recent house price rises as households with mortgages have easy access to their equity for spending on the house or other consumer items. However, geographical mobility of existing owner-occupiers is still limited by regional disparities in house prices.

6.  (d)   The relationship between house prices and housing supply

  6.1  The straightforward notion that the inability of supply to meet demand pushes prices up has been advocated by Barker and many other economists. There is less agreement about the extent to which increasing supply in line with demand causes prices to stabilise.

  6.2  Prices can be affected by what people can pay as well as by supply. When the average buyer has more disposable income (eg as a consequence of rising wages or low interest rates) or lending-income ratio is high, sellers can ask for a higher sale price.

  6.3  The debate has focussed too much on increasing the supply of houses to control prices without recognising the importance of the type of property which is built to meet particular requirements and create balanced communities. Whilst some areas are building high numbers of new homes, need for larger family houses is not met as building costs and density requirements lead to overprovision of smaller flatted accommodation. A number of urban authorities eg Southampton and several London boroughs, are reporting over-provision of one bed flats at the expense of other types of much needed accommodation.

  6.4  The recent consultation paper, Planning for Housing Provision, proposed predominantly using price information to determine levels of house building. This concept does not give an adequate picture of the full housing market and will not support intelligent approaches to planning for housing provision. Consideration of house prices immediately excludes all social rented housing, does not look at the relationship between prices and local incomes (affordability), and does not look at wider issues affecting demand such as education, employment, and transport opportunities. If demand for housing is led by demand for good transport etc, a more strategic approach might be to improve infrastructure in other areas which can satisfy demand and promote sustainability of other areas.

  6.5  In many areas it is not possible to increase supply sufficiently to come close to meeting demand. High density urban areas, such as desirable parts of inner London have no available space for building. In rural areas restrictions on and resistance to development, and desire to preserve existing quality of life all limit the ability to meet demand. Other methods to improve affordability need to be considered to tackle these problems.

  6.6  More strategic consideration of the current housing supply can help to make better use of the existing stock. For example more existing family homes may become available for families to purchase if owners who are under occupying were able to find suitable property to move to. Homeowners wishing to downsize are unlikely to want to move into flats, and many struggle to locate or afford smaller houses or bungalows in suitable locations.

7.  (e)   Other factors influencing the affordability of housing for sale including construction methods and fiscal measures

  7.1  The cost of land has a big impact on the affordability of housing, and removing it from the sale cost can have a significant impact. A private developer in Rugby recently sold new houses leasehold rather than freehold in order to make the properties more affordable. Interest in Community Land Trusts is growing as they can both provide affordable housing in perpetuity and bring wider benefits for the community. CIH is a member of the new CLT Forum which is working to encourage the growth of the CLT movement. English Partnerships should give serious consideration to this model when it is disposing of state land for housing development. Longer term benefits may come from transferring land to a CLT than selling to the highest bidder.

  7.2  Evidence that modern methods of construction are consistently cheaper than traditional methods is not yet available, although they have been shown to speed up delivery times and overcome problems of lack of skilled labour. Government should take action to increase investment in MMCs, as increasing their use will reduce their cost. This would benefit affordable housing developments, but whilst developers are still able to sell properties at the prices they ask for them, we must question whether cutting costs would lead to reduced prices or increased profits for open market property.

  7.3  In areas such as Cornwall which have high wealth, high poverty and a high income-price ratio, restructuring the economy could be a better long-term approach to tackling affordability problems than relying on public or private housing initiatives.

  7.4  Affordability of housing for sale is not just related to the purchase price. High service charges for flats or high energy costs can also make property unaffordable for low income owners.

8.  (f)   The scale of the Government's plans to boost housing supply

  8.1  The drive to boost housing supply in England is welcome: more houses are clearly needed if we are to meet economic and social demands. Further work to address objections to housing growth is needed. It is unfortunate that the ODPM work on communicating the case for housing growth has not been progressed.

  8.2  There is too strong a focus on numbers of additional properties needed and not enough on the size, type and affordability of those new homes. Many areas and households are suffering greatly from lack of larger family houses and those built to lifetime homes standards, but the emphasis on speed of delivery means that these are not being provided. Using a quota system for the development of new housing and the numbers of affordable homes to be delivered within new developments does not allow a quality-focused approach to creating or extending communities. The rush to build raises concerns about the quality of property to be developed, ability to integrate the necessary infrastructure, and consideration given to future estate management. The recommendations of the 1999 Urban Task Force relating to these matters should be revisited and given renewed emphasis.

9.  (g)   The relative importance of increasing the supply of private housing as opposed to subsidised housing

  9.1  It is unrealistic to talk about the importance of private versus social housing, as this ignores the range of provision within each tenure and does not recognise that increasing the supply of private housing does not remove the need for subsidised housing.

  9.2  Supplies of private and subsidised housing should be increased according to current and projected local economic and social circumstances, not because of an ideological prioritisation or concept of importance. Some areas with a high concentration of social housing may wish to increase the supply of private housing to rebalance the housing market and alter the local economic profile. Areas with a dearth of social housing where local residents have to leave to secure affordable accommodation may wish to prioritise social or intermediate housing over private provision.

  9.3  It is necessary to create balanced communities with a mix of houses of an appropriate size, type, and tenure which can attract a range of household profiles. It is unwise to argue that only affordable housing should be built in an area as this is unlikely to meet the needs of an area or lead to a balanced community. There is a need to provide more expensive housing for wealthier households as well as ensuring that lower income households can secure accommodation. The introduction of a PSA target for mixed communities would help to promote this strategic approach.

10.  (h)   How the planning system should respond to demand for housing for sale

  10.1  The purpose of the planning system is to create sustainable communities and so it should primarily be strategic and take a medium-long term view of an area's development. It should be improved rather than overridden to achieve increased supply and other sustainable outcomes. CIH has recently produced a paper on the strategic role of local authorities which can be purchased from

  10.2  Proposals in Planning for Housing Provision to make the system primarily responsive to demand erodes its strategic approach and hinders its ability to provide for those groups who, for practical or financial reasons, cannot express their demand by bidding for or purchasing homes. These groups include lower income households and those with a physically disabled family member. A system which responds to demand may not respond to need.

  10.3  Proposals to speed up land release to meet demand in growth areas could cause serious impediments to preventing urban sprawl and promoting regeneration.

  10.4  The planning system is currently geared against meeting some kinds of demand. Density requirements which are based on dwellings per hectare make it difficult to deliver larger family houses. The need for these houses is high in some areas, especially amongst some BME communities, but they are not being provided. Regional plans need to emphasise these problems—the London Housing Strategy has taken tentative steps in this direction. Likewise, reducing floor space can cause problems for those who need wheelchair accessible housing.

11.  (i)   The scale of housing development required to influence house prices and the impact of promoting such a programme on the natural and historical environment and infrastructure provision

  11.1  Building new homes will necessarily use some land, but the impact can be mitigated. There are some good examples of developments which seek to enhance the natural environment (Barking Riverside, London) and integrate with historical assets (Urban Splash, Salford). However, current pressures to increase supply quickly can prevent impact minimisation.

  11.2  A number of developments have sought to minimise immediate and ongoing impact through materials used, sourcing of materials, and use of efficient heat, energy, and water supplies in properties. These are still the exception rather than the norm and more incentives and requirements should be used to promote this.

  11.3  Infrastructure provision is currently a major obstacle to increased housing supply. Where responsibility for coordinating or providing finance for infrastructure lies with different bodies, aligning infrastructure provision with plans for housing has proved extremely difficult and hinders development. Coordination of finance and delivery must be improved.

12.  (j)   The regional disparities in the supply and demand for housing and how they might be tackled

  12.1  It is appropriate to take a regional and housing-market based approach to disparities in supply and demand for housing.

  12.2  Many of our members have commented that the perception that northern regions have low demand for housing whilst southern regions have high demand is extremely misleading. Earnings-price ratios in all regions reflect affordability problems nationwide. These problems are experienced even within Market Renewal Pathfinder areas where price increases are pushing first time buyers out of the market.

  12.3  A concerted effort should be made to lead economic demand north rather than letting it continue to focus on the South East, not least because it is much more cost effective to build houses in the midlands or north than London. Links between Regional Economic, Housing, and Spatial Strategies must be improved to enable this to happen. CIH West Midlands branch is a key partner in the West Midlands United Initiative which is trying to address these issues.

  12.4  Where there are mismatches between supply of and demand for housing, such as in the pathfinder areas, government must support the plans for demolition of obsolete housing and must not give into short sighted media and political pressures.

111   DWP Research Report no 251 Back

112   English House Condition Survey 2001 and 2003. Back

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