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

Memorandum by the Northern Housing Consortium (NHC) (AH 64)


  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.


  2.1  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.


  3.1  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.


  4.1  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."


  5.1  Understanding the drivers of housing markets is a complex task; however we have identified some key elements that are affecting the North. These are:

    —  Supply issues.

    —  Second Homes.

    —  Section 106.

    —  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).


  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:

    —  Inadequately housed.

    —  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.


  7.1  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.


  8.1  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.


  9.1  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.


  10.1  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.


  11.1  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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