Memorandum by First Base Ltd (AH 62)
EXECUTIVE SUMMARY
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.
INTRODUCTION
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.
| 
