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


Memorandum by South Ribble Borough Council (AH 79)

EXECUTIVE SUMMARY

    —  Affordable housing can only be delivered with some form of subsidy. A clear steer is required from central government on how any subsidy should be given.

    —  Research needs to be undertaken on the British Housing Market and where subsidy should be made (eg home ownership or social rented housing).

    —  The problems that home owners already have in maintaining their own homes especially the elderly and those on the margins of owner occupation.

    —  The promotion of and reliance on Home ownership does not assist local authorities discharge their homelessness duties.

    —  The government needs to conduct research on the interplay within housing markets.

    —  Pursuing policies of homeownership does not assist in tackling social and economic inequalities and help reduce poverty. In fact the converse is probably the case.

    —  The problems of asset rich income poor older people and home maintenance.

    —  Diminishing numbers of social rented properties coming forward from Housing associations as affordability becomes an issue for tenants. The Right to Buy/Right to acquire does nothing to help local authorities discharge homelessness obligations.

    —  South Ribble is testing out new ways of assisting Key workers onto the housing ladder.

    —  Need for more and different models of assistance and the need for local authorities to play a role in making decisions on forms and levels of assistance.

    —  Issues of using planning gain to deliver affordable housing and the need for other forms of subsidy to local authorities to be available.

    —  The problems of the North not being just about low demand but the need for high demand areas to be in the picture.

    —  The possible influence of the Northern Way on the Central Lancashire city Region Core area.

    —  Pressure on Green belt and on rural areas.

    —  Care needs to be taken on relying on supply and demand to influence house prices. Homes are not just about bricks and mortar and the home as a product needs to be looked at.

1.   Potential Benefit and scope to promote greater home ownership

  1.1  By definition (whichever way it is defined) affordable housing can only be delivered with an element of subsidy. How this subsidy is applied is crucial to who can afford market housing, that is subsidised. Housing can be subsidised through bricks and mortar (Housing Corporation Grants, Local authority assistance or S106 Planning Gain). In additional subsidy can be given to individuals. This was at one time given through Mortgage Tax relief which was phased out by the previous Tory Government. Some countries still offer mortgage tax relief for first time buyers but this is withdrawn as people remain in the home ownership market.

  1.2  A steer is required from Central Government on how any subsidy should be given.

  1.3  The United Kingdom has probably one of the highest rates of home ownership in the world. Why such a reliance on owner occupation? This promotion of owner occupation at the expense of social rented accommodation has significantly influenced peoples perception as rented housing as being "of the last resort" and has led to sink estates and lack of social cohesion. Simply getting more people to buy their rented accommodation will not bring about a better society or improve social cohesion but will make it worst by further stigmatising people who because of necessity have to rent.

  1.4  Research need to be undertaken on the British Housing Market and where subsidy should be made.

  1.5  Too much public money is spent on promotion of owner occupation at the expense of providing decent affordable housing for people to rent and on assisting existing owner occupiers in maintaining their homes.

  1.6  Home ownership comes with repair responsibilities and for many people all their financial resources go on paying for the roof over their head and the state it is in becomes irrelevant. The largest area of neglect is not in the public sector but in the private sector due to people being unwilling or unable to maintain their own homes.

  1.7  The government and financial institutes should look at promoting responsible home ownership not just home ownership.

  1.8  In South Ribble we have a fairly balanced housing market. No areas of housing problems either in the social rented sector or in the owner occupied sector. It is a good place to live with good schools and low crime rates. Owners occupation is above the national average at 84%. The area was previously a New Town area and the council transferred it stock 12 years ago, the first in the North West to do so. When asking local residents what they want the first issue raised is information on what they can do to maintain their homes so that they can remain in them as long as possible (not what grant assistance they can receive) and secondly the fact that their children cannot afford to purchase a property locally (average house prices have doubled over the last seven year sand now stand at above £150k or seven to eight times the average income for the area of £17k). With a small private rented market and only 10% of the properties in the area being available through social landlords the future is bleak for young people.

  1.9  Government needs to be aware of the housing market per se and not class the North as an area of low demand when in fact it contains areas with some of the highest values in the UK and property prices vary so much. Affordability is not just about prices but also about the relationship to income as well as on entry level and ability to enter the housing market.

  1.10  The benefits of and scope for greater home ownership needs to be looked at with regard to where any form of subsidy should be made. While it is of benefit to some it must be noted that it will only be able to assist some people. It does not help local authorities in discharging their obligations on homelessness. The vast majority of our clients are women fleeing domestic violence, relationship breakdowns and young single people. With out more units of accommodation for rent the ability of council's to assist with homelessness will diminish as fewer and fewer properties become available from Housing Associations (tenants unable to purchase properties in the private sector, those buying who have the right to buy/right to acquire). The increase in home ownership adds to the pressure on social rented accommodation.

  The government needs to conduct research on the interplay within the housing markets.

2.   The extent to which home purchase tackles social and economic inequalities and reduces poverty

  2.1  In South Ribble, or indeed within Central South Lancashire it is not the view of the local authorities or partner Housing associations that pursuing a policy of promoting owner occupation tackles social and economic inequalities.

  2.2  Many of the people that come to us as homeless come from owner occupation. When (and they do) relationships fail then it is the women (with children) who apply as homeless and with little equity from the sale of the property and no job/opportunity to purchase a property, then social rented accommodation is the only alternative.

  2.3  Owner occupation for those on the margins of owner occupation also bring with it the inability to maintain their home. They are then trapped in that property/or that neighbourhoods. While possibly not a real issue in South Ribble this scenario has been found to be a problem in areas where low demand is now found.

  2.4  What we do have however in South Ribble is asset rich older people but who are income poor. Many in our area have very small occupational pensions (ex British Leyland or British Aerospace for example). This puts then out side of Income Support or Pension Credits but that small pension with the Retirement Pension means that they miss out on much assistance.

  2.5  It is suggested that ODPM look at the housing market for social rented accommodation and look at issues of low incomes on home owners and why Home Improvement Agencies are so successful in providing assistance.

3.   The Economic and Social Impact of current house prices

  3.1  Availability of RSL properties for rent has almost halved over the last three years and it is believed that most of this is due to rising house prices in the South Ribble area.

  3.2  The four local authorities in South Lancashire (South Ribble, Preston, Chorley and West Lancashire) are currently piloting a demonstration project that is looking at assisting Key Workers in the area and to get a step on the home ownership ladder. What we have found so far is that there is a need for low level assistance (around £10,000) to help meet the affordability gap. Successful applicants are obtaining certificates of what a finance company will let and grants are being made available to meet the cost of that offer and the lower end of the local housing market. Purchaser shave to demonstrate value for money by assessing the market themselves and helping to minimise the grant assistance. These successful applicants at the end of the day represent those workers paid at the higher level of income in the area and many of the applicants were found ineligible for the scheme as home ownership at the current house price level in the area is beyond their reach.

  3.3  As part of the Affordable Housing partnership all four local authority waiting lists for home ownership has been merged and applicants on the list will be kept informed of other schemes that come forward.

  3.4  The government needs to look at a variety of models to assist people become homeowners and not to rely on just a few.

  3.5  Local authorities should be freed to look at local response to affordable housing and indeed assisted with resources to help fund these schemes.

4.   The relationship between house prices and housing supply

  4.1  The relationship between house prices and housing supply seems to be in conflict, certainly in South Ribble. This is a popular area to live and a popular area for developers to develop. There is no shortage of land for development, but the low strategic requirement in RPG13 has meant that a "moratorium" situation now exists in South Ribble. Land allocated for housing in the existing Local Plan has had to be included in the moratorium, illustrating that it is not local planning policy that restricts supply, but RPG13. It is hoped that the current review of RPG13 will rectify this situation, by a sizeable increase in the strategic housing requirement.

  4.2  The moratorium has undoubtedly raised prices. In addition, because only small windfall sites are permitted, the council cannot require developers to provide affordable housing through s106 agreements. The impact of the moratorium has arguably been more acutely felt in the supply of affordable housing, which has completely dried up as a result.

  4.3  The council is looking at the need to amend its policies on affordable housing, and would ideally like to require even small developments to contribute to the provision of affordable housing, as already occurs for the provision of public open space. In this regard, the thresholds set in the forthcoming PPS3 will have a great impact on the supply of affordable housing.

  4.4  Another threat to land supply is posed by PPG3, with its emphasis on brownfield land. The borough's brownfield land is situated mainly in its industrial areas. These are predominantly post-war employment premises, for which there continues to be high demand. However, the value of such sites for housing exceeds their value for employment purposes, and many businesses are seeking to cash in on this residential land value. The unintended consequence of PPG3 in this borough is likely to be the loss of local employment sites, with negative consequences for sustainability. The single most important change to PPG3, to release land for housing, would be a more relaxed approach to the use of greenfield sites. In this borough, this would be the most sustainable option.

5.   The scale of the Governments plans to boost housing supply

  5.1  This seems to be all concentrated in the South of England with a perception that anything in the "North" is low demand and affordable.

  5.2  House prices in South Ribble are currently running at seven to eight times average incomes. South Ribble currently undertake an annual Housing Affordability Statement which seeks to match incomes to average house prices. An average "affordable" price for a property in South Ribble is currently around £70,000. By definition half of all those seeking accommodation (ie below the average) cannot afford a property at £70,000. The current average house price (as per the Land Registry) is around £150,000 per property. House prices in the borough start at around £100,000.

  5.3  Landowners are fully aware of the high values of residential land. In the past the Commission for New Towns purchased large swathes of land at agricultural prices, for new housing development. A similar mechanism could work well again today.

  5.4  Government need to look at affordability issues in the North of England and in the rural areas. There may be a useful role for urban development corporations in such areas, with the specific remit of acquiring land for housing. In this borough, English Partnerships still hold large swathes of agricultural land (allocated in the Local Plan as "safeguarded for future development"). The release of this land for a nominal sum could help supply much of the borough's affordable housing needs.

6.   How the Planning system should respond should respond to the demand for housing for sale/the relative importance of increasing the supply of private housing as opposed to subsidised housing

  6.1  These two points can be taken together. The Planning system is only responsible for the number of dwellings built and need only ensure that land is brought forward for development. Tenure is then negotiated as part of a S106 agreement or a subsidy is sought for development from the Housing Corporation. The time taken to obtain any funding from the Housing Corporation is too slow to meet many of the good offers made by private developers on their sites. What local authorities end up with is a small number of what is loosely termed affordable properties (ie they are cheaper than what developers are putting on the site and go nowhere to meeting local needs). Without subsidy affordable housing cannot be provided. Generally new build market housing in South Ribble costs over £200,000. Even if developers are forced to build smaller, cheaper properties by compromising on design, layout etc, then what is built is still valued at over £150,000. At this level Housing Associations are unable to obtain grants from the Housing Corporation for the properties as they are above Total Cost Indicators for the area. In order to secure some elements of affordability in South Ribble the council has had to reach agreements with developers to provide less properties but at a greater discount.

  6.2  Developments of high market value houses (four/five bedroomed detached) yields the greatest profit to be utilised as planning gain to secure the highest possible number of affordable houses. However, this does not meet the need for small starter homes, smaller retirement apartments, and mid-sized medium value market homes. To supply these market needs requires an unfortunate trade-off with the amount of planning gain available for affordable housing. Cross-subsidy from developers is therefore insufficient, if the planning authority seeks to ensure a good mix of house types as required by PPG3.

  6.3  Financial resources should be made available to local authorities to make the decisions locally about what it gets involved in. The system as it stands is at best cumbersome and at worst not workable.

  6.4  Having transferred its housing stock in 1994 the council re cycled the capital receipts from the transfer into affordable housing using Local Authority Social Housing Grant. This was local decisions meeting local needs. In all some £9 million was re cycled producing over 400 additional units for rent and sale over a 10 year period. While the council now does not have the necessary capital finance to do this the principle of local decisions to meet local needs remains and government is urged to review how subsidy is given.

  6.5  While supporting the work of our neighbours and colleagues in East Lancashire and the work of the Pathfinders, never the less it needs to be asked why public money is going to bolster areas where people do not want to live but nothing goes to areas where people do want to live thus making homes more unaffordable.

  6.6  Government are therefore asked to look at how resources are given out and at supporting local authorities in high demand areas to meet the affordable housing gap.

7.   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

  7.1  This approach was undertaken in the 1960's and 1970's. It was called New Towns and in those days (until 1984) South Ribble was part of the Central Lancashire New Town. This expansion and growth has continued to this day and this is recognised in the Northern way with this area being the core of the Central Lancashire city Region.

  7.2  South Ribble has huge tracks of green belt and is semi rural in nature. Any large growth of development will undoubtedly put pressure on these areas. However, large development will also fund important transport infrastructure that will ease local congestion and contribute to resolving some of Preston's serious congestion issues. These include the completion of the Lostock Hall Link Road, a park and ride in Penwortham to ease congestion into Preston, and improved public transport provision. None of these important transport schemes is likely without associated development to fund them.

  7.3  Similarly, in the absence of alternative funding, large scale development is required to subsidise the provision of affordable housing in the borough.

  7.4  There is no evidence to suggest that large scale building programmes would force down prices, indeed the opposite is the case. The former ROF site while lies in both South Ribble and Chorley local authorities areas is a Rural Village concept. House prices here actually have an additional premium on the location despite there being little infrastructure in place. The attraction being that all the properties in the area are brand new.

  7.5  Care needs to be taken in relying on demand and supply to influence house prices. The brand "home" is more than just bricks and mortar. Issues in the Pathfinder regions are demonstrating this. It is not just about areas of low demand: it is also about the product that is provided and while what is provided is left to the market and to private developers they will provide properties that do not match need but will match profitability.





 
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