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

Memorandum by First Base Ltd (AH 62)


  First Base is concerned by the unanimously acknowledged problem of affordability of homes in the UK, in particular in London and the south east. We also share concerns over the dominance of house prices over the financial situations and lifestyles of individuals and families. First Base supports policies designed to enable people—especially Key Workers and First Time Buyers—to step on to the property ladder, for example through shared equity schemes. This submission identifies the multifarious benefits of home ownership and is a pledge of support for the motives behind current Government policy to increase the supply of affordable housing.

  There is a perceived lack of urgency, however, from the Government, in their response to the Barker Review and a lack of clarity stemming from the launch of a Sustainable Communities Plan, prior to responding to Kate Barker's findings. Furthermore, the Public Sector should be supplying surplus land more readily and vest more responsibility in the Greater London Authority and English Partnerships.

  The planning system will continue to hinder the supply of affordable housing unless reforms are swiftly made, for example, in the disproportionate power allotted to residents' objections. Developers can reduce the cost of increased home production by using Modern Methods of Construction, although Government can play its part in reducing construction costs too.

  First Base also identifies the broader infrastructural concerns of solving the housing crisis. The necessary infrastructure should be implemented in areas able to accommodate more homes; aspects such as education and transport play a role in determining where to build and how homes will be priced. Regeneration programmes accompanying new developments are vital and should be tailored to the locality in question. There is a strong link between home ownership and safe, thriving communities.


  1.  First Base is a development company established to design, build, fund and manage, high quality, affordable housing in London and the South East. It is one of English Partnerships' development and management partners under the London Wide Initiative.

  2.  Established as a private limited company backed by Lend Lease and Stanhope. First Base was specifically set up to help address the challenge of delivering more high quality affordable homes within London and the South East.

  3.  The acute nature of the under-provision of affordable and key worker homes in London and the South East is universally accepted. Increases in house prices over consecutive years have put home ownership beyond the reach of many and threaten to undermine the social and economic sustainability of the region.

  4.  First Base supports the Government's initiatives to increase the number of affordable homes in the marketplace and are participating actively to help solve the problem.

  5.  First Base has carried out substantial research and analysis over the last three years into the intermediate housing market and continues to work hard to reduce the barriers so that more homes can be delivered by the Government at less cost to the public sector, and at levels that are affordable to occupants.

  6.  The problem of creating affordable housing requires a new approach to private sector involvement in social needs. There needs to be long term commitment to development from the private sector, homeowners and the community—something that we have not seen in the UK to date. Developers would benefit greatly from lower costs of construction—residential developments need solutions that offer better value and economies of scale that keep properties affordable. Nevertheless, affordability must be made to co-exist with quality if new developments are to be viable and sustainable, and are to be maintained at that quality throughout the buildings' life.

  7.  First Base welcomes the Committee's inquiry and believes it to be both important and timely.

  The Committee has resolved to carry out an inquiry into affordability and the supply of housing, with particular reference to the following issues:

The potential benefits of and scope to promote greater homeownership

  8.  First Base believes that the benefits of home-ownership are broad-ranging and include: wealth creation, family security, pride and personal identity and involvement in the local community.

  9.  Home ownership creates an opportunity for individuals to participate in capital growth in an asset they own, which can create personal wealth over time. This could take pressure off pension and Government citizen-support systems.

  10.  Homeowners are more likely to look after an asset they own, rather than rent. This leads to better quality local environments with less dilapidated buildings.

  11.  Scope for homeownership could come from shared equity schemes, which should be made available for different categories of home buyers such as First Time Buyers, not merely key workers.

The economic and social impact of current house prices

  12.  The social impact of current house prices alludes to a "them and us" society which can marginalise people from a particular community.

  13.  People who are not able to make the substantial leap on to the property ladder cannot participate in benefits of ownership.

  14.  Individuals unable to afford a home are more likely to be disenfranchised from the area in which they would most like to live. House prices are forcing people to move away, possibly out of London, or spend large amounts of time commuting by train, tube or car.

  15.  This extra commuter traffic puts increased pressure on infrastructure, or worse still the environment, if commuters drive.

The relationship between house prices and housing supply and, the regional disparities in the supply and demand for housing and how they might be tackled

  16.  We believe that the under-supply of housing leads to an increase in prices and lack of affordable housing.

  17.  Location analysis is the key issue here. There are areas in London (Canning Town for example), where property is available and at prices that are "affordable" but no one wants to live there. This is usually due to a lack of community infrastructure such as schools, hospitals, shops and public transport, amongst other concerns; build the infrastructure and people will come.

  18.  In areas where the reverse is true there is unsurprisingly a shortage of quality affordable housing. This will probably always be the case where so much development control is vested with local residents who will discourage new development.

  19.  Our view, therefore, is that it is essential to regenerate areas where demand is low and provide the hard and soft infrastructure to enable an area to flourish.

  20.  The implementation of this is vital to solving the problem of under-supply and the resulting unaffordable house prices.

  21.  The contrasting challenges in the North and South of the UK require different solutions; national solutions are inappropriate.

  22.  In the north there is too much house building relative to demand (low levels of household formation and relatively high levels of comparative building).

  23.  In the south the challenge is affordability. Lack of affordability is driven by low supply and buoyant demand. Deregulation and expansion across Europe continues to drive demand in London and the south east.

  24.  Liberating supply in London and the south east should be a key policy aim; this can be achieved through the following measures:

    (a)  The public sector needs to take a more direct role in leadership in liberating land supply. Redundant employment land for example. In addition the needs of the public sector (in particular the Ministry of Defence) should be defined more accurately, and any surplus land released for affordable housing provision.

    (b)  The current lever is more money to Housing Associations that in turn bid up land prices and undermine the cost effectiveness of delivery. The solution is more direct involvement from the public sector, for example English Partnerships buying and developing homes (and mixed use communities) on this land.

    (c)  The Greater London Authority should be given a more direct role in planning and design, with positive powers to grant planning permission.

    (d)  Some planning authorities are imposing policies that are undermining the viability of housing delivery. This means housing supply diminishes.

    (e)  The Three Dragons Consultancy work is being misused and this is abusing the planning system.

    (f)  New players are needed to drive additional capacity.

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

  25.  First Base is of the view that construction costs in the UK for high density residential can be significantly lowered.

  26.  First Base are using tried and tested modern methods of construction techniques from the commercial sector and from residential development around the world and aim to make a step change in significantly reducing the time and cost of construction, improving safety on site and enhancing the quality of the home.

  27.  Government has introduced demand-led fiscal measures such as Homebuy, but First Base believes that more supply side initiatives such as English Partnerships London Wide Initiative should be promoted to promote market equilibrium.

  28.  Landowners, developers and institutional funders have been presented with a huge opportunity to increase the delivery of affordable housing aimed at Key Workers and other First Time Buyers, but the Initiative needs to be able to expand.

  29.  This opportunity stretches not only to increase supply, but also to the delivery against Government's key objectives.

  30.  First Base have concerns over Government investing too much in stimulating demand without an appropriate increase in supply.

  31.  We believe that HomeBuy needs to be viewed as part of a broader initiative including Barker Review policy recommendations to increase supply.

  32.  We have concerns that the Open Market HomeBuy initiative, without the other measures, would tend to drive up demand and drive up house prices, thereby reducing affordability. This is particularly acute in London where the pace of housing delivery still continues to be a problem.

  33.  Delivering additional supply should, in our view, have at least equal priority to providing demand-stimulating tools.

  34.  First Base therefore believes that in areas of higher demand, where supply is limited, the intervention by Government should be focused on realising net additional supply in addition to other measures designed to increase access to home ownership.

  35.  Government should promote the acceptance of new-build HomeBuy homes qualifying as section 106 homes. There is a problem when there is a difference in the interpretation of both the eligibility of the applicants and the pricing of the homes. We are strongly of the view that homes delivered under HomeBuy should count towards the section 106 obligations on a site. Specific guidance needs to be provided to local authorities to that effect.

  36.  New Build HomeBuy should be deliverable by developers & organisations in addition to Housing Associations. One option would be to include all organisations that are eligible to bid for New Partnership in Affordable Housing funding from the Housing Corporation.

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

  37.  We look forward to finding out what powers will actually be devolved to the Mayor as we see this as a positive step. The GLA can link housing with other community outputs.

  38.  It is necessary to address the discrepancies between planning policy in a specific area and the requirements of the Regional Housing Board. Our experience leads us to believe that there is a substantial difference emerging here.

  39.  First Base would question the ability to deliver housing in the Thames Gateway without more provision for the broader infrastructure (transport, schools, hospitals, roads, library). Evidence from other areas of Europe shows that if Government were to put greater and earlier emphasis on infrastructure provision, there are better financial rewards for the individual parcels of land, a better overall product and a better improved community.

  40.  First Base believes that an appropriate infrastructure must support the new communities in areas where new housing is a priority.

  41.  This requires joined-up Government and it is widely recognised for example, that the Highways Agency and Environment Agency are detached from the rest of Government, for example, the new Thames Crossing.

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

  42.  First Base promote mixed tenure and mixed use communities with a broad range of tenures. This encourages genuinely sustainable communities.

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

  43.  Planning problems are curtailing supply; we have numerous questions to raise on this issue:

    —  Local Planning Authority resources are not appropriately managed and there are acute skills shortages. Small planning issues should be separated from major schemes. The latter need dedicated planning resource with specialist skills; such schemes may be regional issues;

    —  There is much confusion surrounding the purpose and application of section 106;

    —  Development land tax, levy on planning permissions—where and when will this be concluded as there is evidence that this uncertainty is stalling supply.

  44.  It could be argued that local individual objections to new housing applications carry disproportionate weight.

  45.  Planning is deeply political and politicians will lean towards local objectors. Increasingly decisions are being taken by elected members on the back of local pressure from residents or other interested parties.

  46.  Recent figures suggested that the number of officer recommendations that have been accepted by committee has fallen from 60% to 40% over the last 10 years. Local councillors are reluctant to make planning decisions which may deter voters.

  47.  The democratic nature of the planning process and weakness of some local authorities mean that many difficult decisions end up with ODPM. Does this mean planning decisions are really taken at local level? This has implications for the speed of delivery of housing and begs the question as to why bother approaching a Local Authority on a contentious scheme, why not go straight to ODPM?

  48.  The link between housing and education is crucial. Good schools and infrastructure are integral in making areas attractive to potential purchasers of new homes. Government departments should be liaising more closely to promote this.

  49.  In addition the use of redundant employment land in inner cities needs to be considered. In areas where local authorities are sterilising land, in the hope that maybe in a few years, somebody might decide to build a 100,000 sq ft office building in a non-office location.

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