Memorandum by Cumbria Sub Regional Housing
Group (SRH 14)
BACKGROUND
Cumbria Sub Regional Housing Group is a partnership
between Cumbria's eight statutory bodies with a housing remit
(six Districts, County Council, Lake District National Park) and
its eight developing Housing Associations. It has recently completed
its Countywide "Fit for Purpose" Housing Strategy which
may become a model of joint working in two-tier authorities.
Cumbria encompasses the extremes of England's
housing problems, with both high demand and low demand areas.
The West Coast has housing market renewal status due to low demand
whilst large parts of the National Park are in the worst 10 areas
of the country in terms of affordability.
We will reply to the key points of your Committee's
terms of reference:
Question: The level of public funding required
to meet social housing needs
Government encouragement for further increased
levels of home ownership is problematic. Results from Cumbria's
recent comprehensive Housing Market Assessments show that significant
numbers of households aspire to home ownership even though their
low incomes and high property prices preclude them from ever owning
more than a small share of the equity of a home. 7[7]
We need to be more honest about the harsh financial reality and
inform aspirants in some areas that they will never be afford
to purchase, even with the development of new more innovative
home ownership funding models. 8[8]
It is worth also noting that, if government
is committed to a further increase in Home Ownership, given the
very low incomes of households remaining in the rental sector,
they will need to fund grant support to shared equity models at
far higher levels than previously—in simple terms, for Housing
Corporation funded schemes, the lower the amount of equity that
can be purchased, the higher the proportion of the property on
which rent needs to be charged, and the closer that grant rates
come to the levels that are paid on affordable rented schemes.
9[9]
It could be argued that it would be a poor investment to put high
levels of government subsidy into shared equity schemes where
the owner has the right to staircase up to 100% ownership after
12 months—thus potentially very quickly losing that investment
to the public benefit.
Question: The relative funding priority being
given to social rented housing as opposed to shared ownership
and other forms of below market housing
The relative funding balance is not generally
in question in Cumbria (but see above re the subsidy cost of meeting
people's aspirations—ie the increasing costs of funding
marginal home ownership).
It may be worth highlighting here the supported
housing problem. When the Supporting People system came into place
(to fund the housing-related support costs of vulnerable individuals),
the grant to each area (the Cumbria County in our case) was based
on the baseline level of grant funding already going into the
area. Costs have been frozen for the last three years so existing
inequalities in provision have become embedded—typically
baseline provision in Shire Counties was very low and according
to one un-adopted government formula, Cumbria should have expected
nearer £18 million grant than the current £9 million.
This relative under-funding has meant that there has been little
growth in supported housing in Cumbria over the past two years
relative to other areas, consolidating the problem—which
is unlikely to improve significantly in the foreseeable future.
Thus, the inequity of the revenue funding system is restricting
the supply of affordable rented housing.
Question: The geographical distribution
of subsidies for affordable housing
The geographical distribution of subsidies for
affordable housing is not in question within the Cumbria Sub Region
(though see the implications of Supporting People Grant inequities
referred to above). However, distribution is more problematic
when we look at it regionally. There is a fundamental problem
in that the status of rural and indeed non-metropolitan areas
in relation to the "City Regions" within Northern Way
is confused and underrepresented. In reality, the Cumbrian Sub
Region is not an economic subsidiary of the North West—it
is very much a discreet economy where housing investment and planning
numbers need to be focused on the Sub Regional rather than the
regional economy. At all levels in the strategic planning process,
there is often an unclear recognition of the role of housing investment
(particularly affordable housing) in securing and sustaining economic
growth. 10[10]
An example would be, we are all providing new affordable housing
in isolated rural communities based on housing needs over the
next five years, yet at the same time we are concentrating economic
growth in the key service centres (market towns).
Question: The future role for local authorities
as builders and managers of social housing
Four of Cumbria's six Districts have transferred
their housing stock and one has an ALMO. The issue for areas like
Cumbria is more about coordinating strategy and provision on a
Sub Regional basis than who owns the stock.
Question: The effectiveness of different social
housing models including traditional local authority housing,
ALMOs, housing co-operatives and housing associations
No comment.
Question: The role and effectiveness of private
rented housing in meeting housing needs
It is important to separate the two roles of
private rented housing: low value rented for those who do not
qualify for or do not chose RSL rented housing and market rented
housing for those who can afford but chose not to live in owner
occupation. Traditionally, housing strategy has too often consisted
of overregulation of the subsidised market and unfettered market
forces for the rest. In Cumbria, we are looking holistically at
creating "Balanced Housing Markets" to ensure that we
have appropriate ranges of housing to reflect all needs and aspirations.
The first of the two private sector roles (low value rented) plays
an increasingly important part in housing those households who
have been excluded from specific communities or RSL stock. The
second of the two roles (higher value rented) is economically
important for how it facilitates labour mobility.
It is crucial that resources are found to ensure
that the poorer quality private rented stock (and especially Housing
in Multiple Occupation) is brought up to an acceptable standard.
Standards are currently over-dependent on the priority given to
grant funding by different local authorities. Although there is
now a target for bringing a percentage of private sector stock
up to a reduced Decent Homes standard by 2020, most local authorities
do not have sufficient funds to make any significant inroads into
this problem.
Question: The priorities and effectiveness of
the Housing Corporation, English Partnerships and the Regional
Housing Boards in responding to housing needs
No comment.
Question: The role and effectiveness of the planning
system, including section 106 agreements in the provision of rented
housing and securing mixed tenure housing developments
In this context, s106 Agreements are seriously
flawed in first ways. Firstly, they are interpreted differently
in different authorities—there is a clear need for government
guidance and models of good practice. 11[11]
Secondly, they are wide open to abuse—for example, by purchasers
without a valid local connection. There is an innovative scheme
operated by Impact Housing and South Lakeland District Council
where shared equity purchasers (in properties developed through
s106 Planning Gain and other non-Housing Corporation funded routes)
are vetted by the Housing Association who hold a "golden
share" of 5-15% of the equity; Subsequent new purchasers
pay a small fee to Impact for vetting them and "releasing"
the sale to them.
Whilst flawed, s106 Agreements are the best
we have got and, if local authorities are confident and pragmatic
in their use, can indeed make a significant contribution. However,
we must say forcibly that the proposed Planning Gain Tax would
be a disaster in an area of severe land shortage such as ours.
We need access to a proportion of every site which comes up in
high demand areas such as the Park—a financial contribution
from the developer would be no use if there was no alternative
site on which to spend it.
Question: The effectiveness of housing benefit
as a means of providing access to rented housing to those in need.
The key questions are: if we keep HB, what improvements
should be made and if we replace it, what with?
(i) Improvements to Housing Benefit
There are three issues with the current system:
(a) HB levels on RSL properties relate to
a government formula based on local property values and incomes.
However, income is based on an average within district authority
boundaries whilst property value is based on the notional value
of the specific property if occupied in 1999. This means that
in areas of broadly average income levels such as Cumbria, tenants
in rural areas (where house prices tend to be extremely high and
wages very low) have a disproportionately unaffordable rent. Whilst
generally Housing Benefit will pay the cost of these rents, the
tapers (see below) are problematic for people moving from benefit
into low paid employment and the high rents that this system creates
are often quite unaffordable for people on low incomes. 12[12]
(b) There is an occupancy restriction for
single people in private rented properties—they can claim
HB based only on a notional "bedsit" rent even if no
such property is available. A similar restriction does not apply
to RSL properties. If an unemployed tenant moves from RSL to private
sector, they are likely to pay more (since their benefit is reduced
and they have to subsidise from their other income)—this
discrimination discourages housing mobility and causes blockages
to RSL stock.
(c) The tapers (reductions in HB as claimants'
income increases) are so steep that they are a disincentive to
people moving into part-time or other low income employment. Typically,
91p of every £1 earned can be clawed back in reduced HB.
(ii) Replacement of Housing Benefit
Replacing HB with Housing Allowance or Rent
Allowance for RSL tenants would be very damaging. The most recent
proposal was based on the view that giving claimants a fixed cash
amount would increase personal responsibility and choice. The
reality for most RSL tenants is that they are on extremely low
incomes, have very few if any housing choices and have significant
personal pressures on their lives; the consequence is that exercising
those housing choices tends not to be a key priority. The current
system, if reformed, would work satisfactorily.
Question: The impact of the operation of Council
Tax Benefit on the affordability of rented housing
No comment.
7 In Keswick, where average incomes are less than
£19k, and the cheapest house is more than £300k, typical
low income aspirants can only afford to purchase 225 of the equity-it
is unlikely that they would feel themselves to be home owners
in this circumstance. Back
8 Lake District National Park Planning Authority has already recognised
this reality and will only support planning applications for sites
providing affordable rented housing-there will be no more market
housing and there is unlikely to be any more affordable shared
equity housing. Back
9
9 Typically the Housing Corporation would provide 24% grant input
into shared equity schemes and 50% into Newbuild rental schemes-the
shared equity grant level would need to be nearer 40% in most
areas of rural Cumbria to achieve 50:50 purchase. Back
10
An example would be, we are all providing new affordable housing
in isolated rural communities based on housing needs over the
next five years, yet at the same time we are concentrating economic
growth in the key service centres (market towns). Back
11
The recently issued DCLG generic s106 Model is regarded as too
vague to be of much use. Back
12
A rural RSL property in Thirlmere (near Keswick) now has a rent
of £95. Back
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