Memorandum by the Northern Housing Consortium
(NHC) (AH 64)
1. BACKGROUND
1.1 The Northern Housing Consortium (previously
the Northern Consortium of Housing Authorities 1974-2002) was
established in April 2002. It is an independent non-party political,
not for profit organisation working to improve and promote housing
services across the North. Its 179 members include Local Authorities,
Registered Social Landlords (RSLs), Arms Length Management Organisations
(ALMOs) and other organisations involved in housing.
1.2 The Northern Housing Consortium is controlled
by its members, who between them manage over 86% of social housing
in the North, over 1.3 million homes. These organisations are
drawn from the three Northern Government Office regions of the
North East, North West and Yorkshire and Humberside, as well as
the Housing Corporation (North).
1.3 The Northern Housing Consortium would
like to offer a response with regards to the following issues
highlighted by the Inquiry:
— The economic and social impact of
current house prices.
— The relationship between house prices
and housing supply.
— The scale of the Government's plans
to boost housing supply.
— The relative importance of increasing
the supply of private housing as opposed to subsidised housing.
— How the planning system should respond
to the demand for housing for sale.
— 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.
— The regional disparities in the supply
and demand for housing and how they might be tackled.
1.4 In offering our response we would like
to point out that although we will deal with each issue in turn
they often relate strongly to each other.
2. OVERALL KEY
MESSAGE
2.1 The main point that the NHC and our
members wish to get across to this inquiry is the Northern perspective.
It is considered that greater understanding of the Northern housing
market is crucial by Central Government to ensure that we have
sustainable communities in both urban and rural areas. Affordable
and desirable housing is needed in both these markets to prevent
skewed or declining populations, and to realise the ambitions
of economic growth; this includes the Northern Way and Housing
Market Renewal. Affordable housing should be relevant to the needs
of the existing and anticipated population in both the private
and social sector. The inquiry should find that much of the innovative
work to tackle the issue of affordable housing is now being achieved
in the North and will be found within our response.
3. THE ECONOMIC
AND SOCIAL
IMPACT OF
CURRENT HOUSE
PRICES
3.1 In the North it is no secret that economically,
we are still a long way behind other regions in England. The Northern
Way is an opportunity to redress the balance and will require
an attractive housing market to ensure that employment and labour
market flexibility exists in the North. Currently the housing
market in our regions will not attract the economic growth needed
to realise our ambitions.
3.2 The housing stock in our urban areas
often suffers from disparities in their desirability. A common
misconception about the North is that our housing markets are
in free-fall and policy intervention begins and ends with demolition.
This picture is no nearer the truth than it is to suggest the
South of the country is being concreted over in a rush to build
new properties. Whilst the complexity of housing markets is increasingly
being recognised, we would argue that the term "low demand"
is a misnomer. In many urban centres we have seen price rises,
alongside increases in homelessness—not usually indicators
of low demand —rather we face an issue of "wrong supply".
As part of our efforts to restructure and rebalance these housing
markets, the provision of affordable housing will need to play
a part.
3.3 Alongside the issues of "wrong
supply", the North is increasingly facing demand pressures
in hot spots across the North—from the "Golden Triangle"
of Leeds, Harrogate and York to the rural commuter belts of Northumberland
and County Durham—in these areas it is all too common to
discover that there are not enough properties to meet demand.
A key challenge for housing organisations in the North is to provide
affordable housing in these high demand areas to relieve pressure
on the housing market and crucially provide access to homes to
local and key workers, whilst not exacerbating flight away from
already declining urban cores. Indeed, this is a point already
picked up by the Audit Commission in their work on Housing Market
Renewal Pathfinders (Audit Commission Scrutiny Report: Bridging
Newcastle Gateshead February 2004). The provision of high quality
affordable housing in our urban areas, alongside sustained work
in improving the quality of our neighbourhoods should contribute
towards achieving a balance across our housing markets. Delivering
this, will no doubt assist in the North's overarching economic
objective—to bridge the £30 billion output gap between
the North and the rest of England.
4. THE REALITY
OF THE
NORTHERN HOUSING
MARKETS—IS
THERE AN
AFFORDABILITY ISSUE?
4.1 The NHC, alongside other Northern bodies,
used the recent ODPM Consultation Paper "Housing Investment
in the Regions" to argue our case for increased focus on
affordability issues in the North.
4.2 The distribution formula applied in
this paper did not, in our opinion, reflect the housing market
conditions in the North. Specifically, the affordability index
applied does not reflect the situation many Northern households
now face. We understand and acknowledge that other areas of the
country face higher pressures than the North in delivering affordable
housing, however, the reality is that under the funding formula,
no Northern region picked up additional funding in respect of
affordability pressures. Whilst it is up to each region to determine
how and why they will allocate their housing funds, in practice
the North is having to stretch funding across housing market renewal
and restructuring, decent homes and affordable issues if it stands
any hope of achieving its aim of sustainable balanced communities.
4.3 There are a number of hotspots identified
by Regional Housing Strategies (RHS) in the North where affordability
is particularly problematic. Particular hotspots were also identified
in recent research conducted by Steve Wilcox (Affordability and
the intermediate housing market—2005) of which the North
featured strongly. This research highlighted Alnwick as one of
the least affordable areas in Great Britain with the average property
costing 6.09 times the average income.
4.4 Work on the ground in affordability
hotspots identified by the RHS, and in the research by Steve Wilcox
is very much there to see. For example in Berwick upon Tweed,
the Local Authority has in its interim Planning Policy Statement
permitted development in several settlements within a recognised
area of outstanding natural beauty (AONB). However proposals must
be for 100% affordable housing. This is to contend with the very
high rate of second and holiday homes in the area, as mentioned
elsewhere in this response. Similar approaches to planning housing
provision have also been adopted in Tynedale Northumberland, where
an Interim Planning Policy now means that on sites of five or
more dwellings or 0.2ha there has to be provision of affordable
housing. This is linked to encouraging occupancy by local people,
and was informed by a number of factors, one of which was the
2001 New Earnings Survey. This identified incomes in the district
being particularly low at 76% of the national average.
4.5 Moving over to the North West there
has very recently been a parliamentary debate on affordable housing
in Cumbria where many of the issues highlighted in this response
were raised by MP Tim Farron. In particular the problem of population
decline, earnings to house prices and community sustainability
were discussed, confirming that Cumbria has real issues.
4.6 As a final point the North West RHS
echoes a stark reality for households within the Trafford area.
This was originally highlighted in Roof magazine. The RHS states:
"It needs a household income of £50,000
to buy an averagely priced semi-detached house in Trafford, but
in 2002 only 15% of Trafford households had an income of £40,000
or more. Effectively the housing market is inaccessible to 85%
of the population."
5. WHAT IS
DRIVING AFFORDABILITY
PROBLEMS?
5.1 Understanding the drivers of housing
markets is a complex task; however we have identified some key
elements that are affecting the North. These are:
— Changing housing requirements.
These are explored in more detail throughout
our submission.
5.2 Particular pressures in rural areas
In rural areas the problem extends to the possibility
that some rural communities will become unsustainable. A major
problem has been the number of residential homes bought by people
outside of the region as a second home. In our recent Parish housing
needs work with DEFRA it became apparent from evidence we were
receiving that second homes were a particular issue in many areas
of the rural North. Parishes in Cumbria had particular issues
with second homes. Second homes in the parish of Borrowdale for
example, currently make up 17.2% of the housing stock. Further
to this on a wider scale a recent article in the Guardian
newspaper (04/05/05) revealed that the most popular destination
for a second property outside of London was Berwick upon Tweed
in Northumberland, with 9.4% of properties in Berwick owned by
people who live outside of the locality.
5.3 This means that these homes are often
empty for a large part of the year and it is particularly unfortunate
that a lot of homes bought as a second home are the very homes
needed in rural areas for first-time buyers. The situation in
the Lake District National Park has become so critical that they
have taken the step of addressing affordability through a Supplementary
Planning Document requesting that the occupation of future housing
must relate to the findings of an evidence based housing needs
survey.
5.4 In tackling the issue of second homes
the option for Local Authorities to charge up to 90% of council
tax is welcome although the NHC would like to see further action.
One option may be to make the increased council tax compulsory
at full rates, or as mentioned later a more progressive additional
taxation system be put in place in second home hotspots to help
fund new housing. We understand that there are some authorities
ring-fencing this increased tax option to fund new development,
yet in reality more funding is needed to redress the balance.
5.5 It is well documented (particularly
by Business in the Community and HRH the Prince of Wales) that
a lack of affordable housing leads to grave consequences for the
rural economy. Young people and those working in lower paid employment
cannot afford to live in these areas, meaning that they move out
of the region. Left behind is an ageing population, and in the
long term the possibility of poor essential service delivery in
these areas.
5.6 On a micro-economic scale across urban
and rural areas high market prices mean that without an adequate
supply of affordable housing there could be problems for couples
either planning for or expanding their family unit. In addition
within social housing the number of two and three bedroom housing
lost to Right to Buy (RTB) further limits the opportunity for
family planning for those with the least choice. The chart overleaf
shows how RTB sales particularly from 2000-03 increased within
the North more so than in the South and Midlands. Incidentally
the figures for the North in 2003-04 were even higher with 30,905
homes sold through RTB (ODPM).
THE
RELATIONSHIP BETWEEN
HOUSE PRICES
AND HOUSING
SUPPLY
6.1 The following examples from the North
demonstrate the relationship between house prices and housing
supply in urban and rural areas.
6.2 Urban Area
Gipton Low-Cost Homeownership Initiative
Leeds East Homes (ALMO) is currently in the
process of redeveloping the area of Gipton in Leeds. This area
is a perfect example of the complexity of housing markets in relation
to regeneration and affordable housing supply. This area currently
suffers from "wrong supply" and is well know as an area
with some problems. However, within neighbouring areas there is
a shortage of affordable housing particularly for low to middle
earners, and those wishing to move into home ownership from social
housing. This scheme aims to target those wishing to purchase
a home currently residing in social housing in order to provide
for that need and free-up the homes they currently live in for
those in need applying for a tenancy, so in effect is tackling
shortages in both the private and social sector. A procedure of
demolition of undesirable homes will take place before 98 homes
are built. Leeds East Homes have had the land donated by Leeds
City Council for development, from which the savings of approximately
£12,000 per unit are passed on to the purchaser in the form
of a grant, along with exemption from stamp duty, solicitors fees
and a mortgage discount of £2,000. Leeds East Homes estimate
the total cost per unit taking into considerations these concessions
to be just £75,000 per unit, some of which is funded by partnership
with the private sector.
6.3 Rural Area
Lake District National Park
The Lake District National Park (LDNP) has responded
to the heightened affordability and supply problems in the National
Park. This is in the form of a supplementary planning document
which now will insist that all new residential housing built in
the LDNP will be to address local housing need, based on a comprehensive
parish-based housing needs survey. This will reflect the need
for market, rental or shared equity housing in line with the needs
of the locality. In short those identified as in housing need
would benefit from any new development.
6.4 To be in housing need a household must
have all of the following circumstances:
— Unable to afford to rent and/or buy
on the open market.
— Have a need to live in the locality.
6.5 This then allows for a better understanding
as to the supply of housing needed and what tenure housing is
most appropriate for any given area.
6.6 These examples demonstrate that both
urban and rural areas in the North suffer from the problem of
a limited affordable market housing.
7. THE SCALE
OF THE
GOVERNMENT'S
PLANS TO
BOOST HOUSING
SUPPLY
7.1 The NHC consider that the reliance on
the private sector to boost affordable housing supply is not without
problems. The decline in build out rates from the private sector
has been well documented by Barker and others. It is argued that
this reduction in supply has a significant impact on affordability
of the market. Whilst we support many of Barkers recommendations,
we are uncertain that the market alone can respond to increased
calls on supply. The House Builders Federation have produced evidence
to demonstrate that migration to the North is increasing dramatically
in recent years, this migration flow, coupled with projections
of new homes needed to meet anticipated economic growth in the
produces a guideline figure of between 5,500 and 39,700 extra
new homes.
7.2 Whilst we welcome proposals from Government
that Regional Spatial Strategies (RSS) should be built around
housing markets, we are disappointed that the recent Consultation
paper "Planning for Affordable Housing Provision" did
not acknowledge that there are other drivers aside from supply
that impact on housing markets. Focusing sole attention on supply
both misses the point and is unlikely to be achievable. We understand
that consultation on PPS3 is due shortly and would urge the Government
to ensure that this policy both reflects the need for affordable
housing and also is not biased towards Southern markets and structures.
7.3 Barker recommended the creation of a
National Advice Unit to support efforts across the country to
deliver the national (and regional) affordability targets. We
expressed muted support for this proposal, with the caveat that
regional affordability targets may not assist many in the North
as the averages currently mask significant hot spot pressures.
7.4 On a more positive note, we welcome
initiatives by the government, in particular the proposal for
empty dwelling management orders, although we would like to emphasise
that there is a limit to what can be achieved with the current
housing stock in order to fulfil demand and aspirations.
7.5 In the social housing sector many in
the North would like to see restrictions relaxed for borrowing
so that ALMO's and council's with retained stock can fund the
replacement of stock that has been lost. In particular we would
like to see the future of ALMO's made clear. We would also like
to see the North receive a greater proportion of public funds
available through the Regional Housing Pot and allocated as part
of the ADP to build or modernise affordable housing.
8. THE RELATIVE
IMPORTANCE OF
INCREASING THE
SUPPLY OF
PRIVATE HOUSING
AS OPPOSED
TO SUBSIDISED
HOUSING
8.1 The NHC would like to see both private
and subsidised housing sharing importance. We welcome the drive
by government, particularly in HMR Pathfinder areas to mix tenures
and create sustainable communities. This is of increasing importance
to avoid mono-tenure estates of social housing. One concern we
do have is that we do not want to see an over-emphasis on the
need for private housing as this would have a detrimental effect
on those who need subsidised housing with the least choice in
their housing options. Although according to the British Social
Attitudes Survey 2000-01 90% of people want to own their own home,
this relates more to aspiration than economic reality. We consider
that although we welcome help to own a home, housing supply should
ultimately reflect needs not just aspirations. Further work on
housing aspirations has since been completed by Shelter. In their
2005 report "Home Truths—the reality behind our housing
aspirations", it was revealed that the most important aspect
to a home was feeling safe in a neighbourhood, being able to afford
it came second, and actually owning a home came third in the list
of priorities.
9. HOW THE
PLANNING SYSTEM
SHOULD RESPOND
TO THE
DEMAND FOR
HOUSING FOR
SALE
9.1 In a general sense one of the main concerns
we have with the planning system is the ability for developers
to delay building homes after planning consent has been granted.
It may be useful to develop a time limit between planning consent
and build. Another concern is that enough suitable land is identified
by Local Planning Authorities (LPA) ready for potential development,
in line with housing provision identified in housing and spatial
strategies, this situation should be improved by recent proposals
in Planning for Affordable Housing Provision.
9.2 One key tool of the planning process
to achieve lower cost housing is through s106 Planning Obligations
(now known as contributions) of the 1990 Town and Country Planning
Act, although this is also used for rented and shared ownership
housing. This places the emphasis on the private developer to
help contribute to affordable housing, although the affordability
criteria is something that is unclear. In the Supplementary Planning
document for the Lake District National Park, affordability is
very closely linked to a housing need survey. This allows for
a closer understanding over what will be affordable in a particular
area, and ensures any development built meets this housing need.
The NHC agree that without a closer link to housing need the use
of s106 for market housing could potentially miss those it targets.
However, we understand that producing evidence for housing needs
on a larger scale would be a mammoth task, yet feel that more
work could be done to relate affordability more closely with housing
need.
9.3 The recent changes in s106 allow LPA's
to accept a financial planning contribution instead of an actual
house being developed on the developer's site in question. We
understand the reasons for this change, as it is not always the
case that the site in question is the ideal place for affordable
housing. However, effective use of these funds by LPA's is vital
to ensure that affordable homes do get built. The NHC would like
more indication from the Secretary of State as to how this will
be achieved. We would welcome that these funds are used on more
suitable private developments, based on robust evidence. One major
concern we have with this new change links in with house-building
targets, as should the new house-building quota in regional planning
guidance within a particular area reach its maximum, then all
development including affordable development will stop for that
particular year. This then has a negative affect on first-time
buyers amongst others.
9.4 Ultimately although the planning system
can be improved the will of private developers has to be in place
in critical areas to develop housing in the first instance. The
alternative is to put financial incentives in place.
10. 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
10.1 The NHC believe that any future development
should be economically, environmentally and socially sustainable.
The drive towards sustainable communities by Central Government
is a welcome one and is essential to ensure mistakes on community
planning made in the C20th are not repeated. We consider that
if not already in place, all future housing provision would benefit
from providing statutory evidence within the initial planning
application, on how the development will contribute to sustainability,
whether they are funded by public or private funds, or a mixture
of both.
10.2 The scale of housing development required
to influence house prices is not something the NHC believes can
be achieved in the private sector without considerable financial
incentives from Central Government. The private sector understandably
exists to make profit although unfortunately they can maximise
this in times of housing shortage by choosing not to develop even
though planning permission has been sought. It may be useful therefore
to attach timescales to the granting of planning permission.
11. THE REGIONAL
DISPARITIES IN
THE SUPPLY
AND DEMAND
FOR HOUSING
AND HOW
THEY MIGHT
BE TACKLED
11.1 Supply and demand for housing is linked
with infrastructure, lifestyle and provision within a particular
area, whilst acknowledging other factors such as the environment.
Regional disparities are difficult to tackle without acknowledging
and tackling the wider picture.
11.2 In particular areas of the North, there
simply is not enough supply to meet demand for the types of housing
that are needed. In rural areas in particular, the ability to
increase the level of stock is difficult due to the land restrictions
and availability, although many problems arise through poor use
of existing stock, especially with regard to second homes. In
rural areas as defined by government it is not unrealistic to
expect new housing provision to be linked to a comprehensive housing
needs assessment, and to provide for those considered most in
need.
11.3 In terms of existing high demand stock
within affordability hotspots used as second homes, we consider
that perhaps there may need to be a more progressive taxation
system placed on the owners of these homes to prevent further
loss.
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