Memorandum by the North East Housing Board
(NEHB) (SRH 40)
INTRODUCTION AND
SUMMARY
This is a submission from the North East Housing
Board (NEHB). The NEHB welcomes the opportunity to contribute
to the Committee's Inquiry and would be pleased to contribute
to further stages of the Inquiry as required.
In consideration of the issues the NEHB would
wish to emphasise the following points:
— Understanding market exclusion involves
consideration of a number of indicators of affordability and quality
and not solely measuring average incomes and house prices.
— Whilst the chief agency for the provision
of new social housing is the Housing Corporation and its National
Affordable Homes Programme, the demand for social housing means
that there are very obviously insufficient public sector resources
to meet that demand. This means that we need to maximise other
methods of providing (social) housing for rent.
— The issue is not simply one of housing
numbers or supply but one of housing quality in the face of a
dwelling stock experiencing significant geographical pockets of
low demand.
— Sustained regeneration and commitment
to housing market restructuring is needed to deliver sustainable
communities across the North East and raise the quality of properties
and living environments. Without this the present problems will
be exacerbated.
— The rented sector should be considered
as one within a context of innovative and flexible methods to
allow people to access the housing market thus removing market
exclusion.
— The planning system and regional
planning policy set out a framework to deliver sustainable communities.
Smarter use of section 106 agreements and consistent and targeted
public and private investment should help to deliver sustainable
communities.
Further commentary is set out in the following
sections each of which are headed by the topic areas identified
by the Committee.
1. The level of public funding required to
meet social housing needs
1.1 Exponential house price rises since
2002 have not been matched by similar rises in incomes. Equally
the number of households on local authority waiting lists has
also increased over the same time period. This would suggest that
the demand for social housing in the North East is rising because
fewer people have the capital and/or borrowing capacity to buy
dwellings. However, whilst this is a logical deduction to make
it is also a crude one, which masks some of the key market experiences
apparent in the North East. Consequently we are not yet at the
stage whereby we can quantify this demand in terms of by how much
and where it is specifically.
1.2 Although the North East has the lowest
average house prices of all the English regions, average incomes
are also lower than other English regions. Considering ratios
of incomes to prices provides a better picture but again is a
crude tool of averages, which hides extreme opposites of demand
often apparent in close proximity within local authorities. Lowest
quartile income to house price ratios are also a crude tool which
can over emphasise how much more unaffordable an average priced
dwelling is within one local authority. Again this fails to consider
intra-local authority dynamics. Equally the lowest quartile ratio
diverts attention from the fact that 10% of North East households
cannot afford social rented accommodation without housing benefit
(this represents two fifths of the lowest quartile). Importantly
this final point confirms that aspirations to become an owner-occupier
may be unachievable in some instances.
1.3 Although more households have registered
on council waiting lists there has also been a rise in difficult
to let dwellings. Equally the establishment of Choice Based Letting
means that people can be on more than one council waiting list
and remain there until a property meeting their needs and aspirations
becomes available. This suggests the potential for some logical
but unavoidable double counting when aggregating local authority
waiting lists. It also illustrates a fundamental principal when
observing the North East housing market, which is that quality
and choice go hand in hand.
1.4 The North East suffers from geographically
distinct areas of low demand, which correspond with the most deprived
areas identified in the Indices of Multiple Deprivation (2004).
Historically these have been the concentrations of workforces
serving traditional industry and were built in large concentrations
in the urban areas to meet needs and aspirations, which have outstripped
the capacity of dwellings to change and meet them. This is reflected
by the recent increase in difficult-to-let dwellings in the local
authority and RSL sectors in Tyne & Wear between 2004 and
2005. This rise was significant enough to increase the figure
for the region despite falls in the other three administrative
sub-regions (Tees Valley, Co Durham and Northumberland). This
suggests that quality is a fundamental issue within the rented
sector as well as in the owner occupied sector. Further evidence
shows regional vacancy exceeding 3% and significant unfitness
within the council stock of those local authorities known to experience
pockets of low demand. Large sections of the dwelling stock are
ineffective in providing housing that meets the needs and aspirations
of the population irrespective of whether they are rented or owner
occupied.
1.5 Market exclusion is influenced heavily
by the quality of dwelling stock for many reasons. Living space
in sustainable locations does not meet people's needs and aspirations
thus depriving the market of capacity. This can act as a deterrent
to people at various stages of their housing careers and not solely
first time buyers. Owner-occupying households can often find themselves
locked into home ownership in low demand, non-decent properties
they cannot afford to maintain. Even if sale is a practical reality,
the equity released would be insufficient to purchase something
better. This hidden affordability is a more insidious form of
market exclusion which is dependent on quality and locks certain
parts of the market.
1.6 The North East Housing Aspirations Study
(2005) showed clearly that people of all backgrounds and incomes
sought good quality housing in attractive and predominantly suburban
living environments. Greatest dissatisfaction with housing and
living environments is in low demand areas.
1.7 The North East needs continued long
term commitment to the deal with market failure in order to deliver
better quality housing. This will ensure that large segments of
the dwelling stock function properly, do not place market pressure
on more popular areas inflating them further and provide a mixed
tenure solution. Social housing need is therefore part of the
wider need to fundamentally remove market exclusion and accept
that the rented sector as a whole (public, RSL and private) offers
a combined solution along side owner occupation.
2. The relative funding priority being given
to social rented housing as opposed to shared ownership and other
forms of below market housing
2.1 The North East Housing Board recognises
that both social rented housing and shared ownership are mechanisms
that help alleviate market exclusion by giving people access to
the housing market. Not all of the region's housing problems will
be alleviated with housing based solutions. The housing based
measures required are reflected in the priorities set out in the
Regional Housing Strategy (2005):
— To rejuvenate the housing stock to
meet 21st Century aspirations, replacing market failure with high
quality housing in the right locations to help create successful,
cohesive and sustainable communities.
— To ensure the type and mix of new
housing provides choice, supports economic growth and meets housing
needs and demand. This will reflect the diversity of urban and
rural communities and the needs for affordable, family and prestige
housing.
— To secure the improvement and maintenance
of existing housing so that it meets required standards, investing
in sustainable neighbourhoods.
— To promote good management and targeted
housing investment to address specific community and social needs,
including an ageing population and the needs of minority communities;
this will be integrated with the Supporting People programme and
promote greater community involvement.
2.2 The funding for which the NEHB is directly
responsible is the regional housing capital allocation provided
by Government. This is known in the region as SHIP (Single Housing
Investment Pot). Whilst this is a useful source of pump priming
cash it represents only a fraction of the total public sector
housing investment in the North East, which in turn is a small
proportion of the amount of private sector investment. The NEHB
has moved away from formulaic methods of allocation within the
region and this money is allocated to activity directly linked
to the objectives in the RHS (2005) set out above. The table below
sets out the SHIP funding for the period 2006-08 as shown below,
which was endorsed by ministers in 2006.
Table 1
SHIP ROUND 2: TOTAL PROGRAMME 2006-08 as
agreed by NEHB
3. The geographical distribution of subsidies
for affordable housing
3.1 Funding for affordable housing can come
directly and indirectly from numerous public, private and voluntary
sources. The table below shows the geographical distribution of
National Affordable Housing Programme 2006-08. It shows the majority
of funding is in the urban local authorities. It also shows that
£60 million is a small amount of money providing for only
1,193 dwellings.
3.2 The figures below exclude an additional
£21 million to the Housing Corporation from 2006-08 to complete
schemes committed in the previous programme. This figure forms
part of the £81 million under Housing Corporation shown in
table 1 above.
Table 2
NATIONAL AFFORDABLE HOUSING PROGRAMME 2006-08—NEW
SCHEMES
| Total Housing Corporation Grant
| Dwelling Units |
| Darlington | £1,182,500
| 32 |
| Hartlepool | £3,468,368
| 55 |
| Middlesbrough | £5,040,000
| 119 |
| Redcar & Cleveland | £4,164,086
| 68 |
| Stockton-on-Tees | £4,236,000
| 86 |
| Tees Valley Sub-Region | £18,090,954
| 360 |
| Chester-le-Street | £1,551,399
| 30 |
| Derwentside | £414,000
| 6 |
| Durham | £2,594,030 |
47 |
| Easington | |
|
| Sedgefield | £570,000 |
12 |
| Teesdale | £450,000 |
6 |
| Wear Valley | £1,568,833
| 33 |
| County Durham Sub-Region | £7,148,262
| 134 |
| Alnwick | £1,123,000 |
16 |
| Berwick upon Tweed | £3,015,944
| 36 |
| Blyth Valley | £1,964,000
| 35 |
| Castle Morpeth | |
|
| Tynedale | £3,315,736 |
57 |
| Wansbeck | £1,302,240 |
56 |
| Northumberland Sub-Region | £10,720,920
| 200 |
| Gateshead | £1,204,110
| 16 |
| Newcastle upon Tyne | £9,818,347
| 225 |
| North Tyneside | £2,033,000
| 41 |
| South Tyneside | £4,111,203
| 54 |
| Sunderland | £7,110,518
| 163 |
| Tyne & Wear Sub-Region | £24,277,178
| 499 |
| North East Region | £60,237,314
| 1,193 |
| Source: Housing Corporation North East Region.
|
4. The future role for local authorities as builders and
managers of social housing
4.1 Local Authorities and RSLs are presently providers
of social housing although local authorities have not directly
built stock for many years. RSLs in the region have been involved
in building programmes directly or as partners with private developers
whereby they operate rented portions of new developments, sometimes
secured through section 106 agreements. It is also not unusual
for the local authority to retain or to be given nomination rights
on transferred stock or on new social rented accommodation outside
of its ownership. In this way although there is no direct local
authority building there is provision and control of access by
local authorities to ensure those in need are housed. Some LSVTs
and some ALMOs are active in taking forward improvements, demolition
and rebuilding work. In Pathfinder and other HMR areas Local Authorities
are in the process of improvement and of demolition for replacement.
This will also be important as the stock ages because it cannot
last forever. The replacement and improvement are both mechanisms
within the social (and private) sector which improve dwelling
quality and in conjunction with wider regeneration can contribute
significantly to the delivery of sustainable communities. Addressing
the quality of the existing stock in this way is fundamental to
meeting people's needs and aspirations. These building activities
differ from pre-1980s council house building.
4.2 A more radical approach in the future would use the
housing market to alleviate market exclusion. This would involve
local authorities continuing to manage access from their waiting
lists to their own stock and that of RLS or private sector partners
involved in the scheme. By entering into agreements with people
to provide access to housing for purchase, rent or any variation
of these a system of flexible access and inclusion to the housing
market is provided. The agreements would return a share of any
sale to the organisation involved with shared equity. Alternatively
the property could be retained or sold on the open market afterwards.
The scheme could only involve housing meeting particular standards
which would meet the quality agenda. The system would also help
generate mixed tenure areas where tenure is impossible to tell
form the appearance of the property. The advantage of entering
into agreements with people would be that right-to-buy would no
longer deprive the local authority of access to stock. Clearly
this represents a more flexible management and investment role.
This would work more ideally once the present stock quality agenda
is dealt with.
4.3 A return to the pre-1980s situation with direct council
house building is unlikely without significant increases in funding
and capacity building within local authorities. However, this
should not preclude local authorities from undertaking building
activity either directly or in partnership to alleviate market
exclusion as part of a wider strategy eg in designated housing
renewal areas. However, the most important issues are alleviating
market exclusion by tackling low demand and complete regeneration,
together with, managing a process which provides easy and flexible
housing market access.
5. The effectiveness of different social housing models
including traditional local authority housing, ALMOs, housing
co-operatives and housing associations
5.1 Clearly the role of managing or controlling access
to housing stock, through any means, enables the least advantaged
to be housed. What is equally important is the quality of that
housing stock, other wise it will function inadequately. The intention
of recently introduced housing models is not to enable people
to continue their poverty under different management arrangements.
Wider regeneration is required to equip people with the ability
to work and improve their own circumstances whilst being provided
with decent quality residential accommodation. Essentially there
is a need to deliver sustainable communities in their widest sense.
Although housing is a fundamental element of this, delivering
sustainable communities is about more than simply supplying a
dwelling and ought to be considered as such. Equally who supplies
the dwelling is less important than whether people can access
it with flexibility to buy, rent or any combination of these.
5.2 Although there have been increases on council waiting
lists and choice based lettings, continued vacancy and the presence
of difficult-to-let and low demand demonstrate that demand is
measured against needs and aspirations. In practise this represents
unsustainable communities and illustrates the conflict between
qualitative judgements and purely numerical allocations of people
to spaces.
5.3 If there is a weakness or ineffectiveness it is in
wider regeneration of people and areas and this is apparent by
people choosing where not to live. The effectiveness of various
models can be judged by how far they are successful in helping
to deliver sustainable communities. Larger management organisations
like local authorities offer distinct advantages in that they
can make improvements, take beneficial decisions and offer housing
in a way that has an impact on a large share of the stock.
6. The role and effectiveness of private rented housing
in meeting housing needs
6.1 The role and effectiveness of the private sector
in meeting housing needs has to be understood in a quantitative
and qualitative context. It also has to be understood in the wider
regeneration context.
6.2 Following the combined effects of Right-to-Buy and
cessation of Council House building, the local authority sector
has reduced in size. The RSL sector has also grown in the region,
in particular following sizeable LSVTs such as Sunderland in 2001.
Subject to the result of remaining ballots it is possible that
as many as 11 of the 23 housing authorities in the North East
will be the subject of LSVTs. In the North East the private rented
sector has been growing in more recent years, possibly following
the growth in buy-to-let as a consequence of property price rises
and increases in the student population. It is the first choice
for students outside of university accommodation and houses those
who local authorities and RSLs cannot or will not. The private
rented sector is also the first choice for speculators and often
for pre-first time buyers whilst they assimilate capital. The
role of the private sector in providing a quantity of housing
for rent is significant and will continue to grow.
6.3 The quality issue in the private sector is fundamental.
The sector has an almost equal share of low demand to the social
rented sector and it dominates the unfitness statistics (although
this is the whole private sector including owner-occupied). The
English Housing Conditions Survey (EHCS) 2003 concluded that the
most vulnerable and least affluent in society living in the private
sector experience conditions of non-decency and poor living environments
compared with those in the social sector. The NEHB also considers
the Governments private sector decency target of 70% of vulnerable
households living in "Decent" accommodation as a minimum
starting point rather than an aspiration. Clearly it is not acceptable
to tolerate a situation whereby almost one third of vulnerable
households in private accommodation live in non-"decency".
6.4 Clearly local authorities, ALMOs, larger RSLs and
LSVTs are able to invest in a large stock and make a significant
beneficial difference on mass. Any mass improvement in the often
small and multiple ownership of the private rented sector would
depend on the collective efforts of owners to improve the general
condition of their private rented stock. The private sector has
a differing record of achieving this with some diligent landlords
and some not. Equally the private rented sector has limited effectiveness
in delivering major regeneration of people and areas but this
should is to be expected. It is rare to find total private ownership
of one geographical area. Private sector landlords are more appropriately
seen as partners in regeneration activities. Effectiveness must
be judged on how well the private sector embraces and participates
in regeneration and delivery of sustainable communities.
6.5 The private rented sector will only begin to fulfil
its role in meeting need effectively when those most in need of
rented housing can use the private rented sector and be afforded
the same or better quality of property and living environment
as those in the social sector. In future it will be less important
to distinguish between private and social renting and more important
to consider renting as a whole. Newly introduced licensing arrangements
should help to narrow any gap in relative standards. If one assumes
local authorities and RSLs alone are not able to deal with all
of the need then the private sector clearly must offer an additional
option within the rented sector as a whole.
7. The priorities and effectiveness of the Housing Corporation,
English Partnerships and the Regional Housing Boards in responding
to housing needs
7.1 The priorities for responding to housing needs in
the North East are set out clearly in the Regional Spatial, Economic
and Housing Strategies and the Northern Way Growth Strategy. All
recognise the important role of housing in delivering sustainable
communities and, crucially, that the North East is affected by
large concentrations of dwellings and living environments that
do not meet peoples needs or aspirations.
7.2 Both English Partnerships and the Housing Corporation
are members of the NEHB, and endorse the priorities and objectives
set out in the Regional Housing Strategy (2005)—see above—to
meet the region's housing needs. The Housing Corporation is responsible
for managing delivery of the National Affordable Housing Programme
(NAHP) which forms a component of the Single Housing Investment
Pot (SHIP) (see above). The NEHB, Housing Corporation and English
Partnerships also cooperate on the various elements of the HomeBuy
and First Time Buyers Initiatives.
7.3 The NEHB has to date produced two regional housing
strategies which identify and priorities the region's housing
needs. The make up of the Board involving English Partnerships,
the Housing Corporation, North East Assembly, One North East (the
RDA), Government Office North East and private and voluntary sectors
has facilitated cross-sector buy-in and agreement on these priorities.
Both strategies were produced on time and endorsed by ministers.
Similarly the Board has received ministerial endorsement for proposed
allocations for SHIP for two funding periods; 2004-06 and 2006-08.
Again the make-up of the Board has promoted cross-sectoral agreement
on the recommendations made to ministers for the allocation of
SHIP. The allocations for SHIP funding were based directly on
meeting the agreed regional priorities set out in the Regional
Housing Strategy to ensure that identified need and available
funding combined to ensure effective delivery.
7.4 The first round of SHIP for 2004-06 has only recently
completed and the second round of funding only recently commenced.
As not all schemes are complete and SHIP has often provided funding
for part of rather than an entire scheme its long term success
is not yet clear.
7.5 The close working relationship between the Regional
Assembly and Regional Housing Board has led to close alignment
between the Regional Spatial Strategy and Regional Housing Strategy.
The recent merger of NEHB with the Regional Planning Body cements
further this close alignment. The NEHB is encouraging greater
integration of planning and housing issues at the sub-regional
and individual local authority levels. It is also promoting more
cross-sector and cross-organisational collaborative working.
8. The role and effectiveness of the planning system,
including section 106 agreements in the provision of rented housing
and securing mixed tenure housing development
8.1 According to Planning Policy Statement 1 the role
of the planning system is to deliver sustainable development.
Under the Planning & Compulsory Purchase Act (2004) Regional
Spatial Strategies provide the strategic land use planning framework
under which Local Development Frameworks are prepared. Housing
forms one element of land use planning policy and clearly has
numerous spatial consequences which the planning system deals
with. North East regional planning policy focuses regeneration
and development in settlements, in particular the major urban
areas. It aims to deliver sustainable communities by coordinating
the proximity of land uses and ensures that the infrastructure,
service and amenity requirements associated with development are
present. Section 106 agreements provide a mechanism to deliver
these requirements where they do not exist and do not solely deal
with affordable housing. Although, the proposed Planning Gain
Supplement intends to use Section 106 only to deliver affordable
housing in the future.
8.2 Historically the implementation of section 106 agreements
has been limited in the North East due to low land values. However,
favourable market conditions in the current decade have increased
land values and developer interest in the region As a consequence
there is considerable scope for the region to make smarter use
of section 106 agreements to deliver more affordable housing and
other important planning obligations.
8.3 The Submission Draft Regional Spatial Strategy (2005)
sets out a requirement for local authorities to "consider
the level of need for affordable housing and other planning obligations
in the development of all housing sites". Therefore many
local authorities are now putting in place policies to deal with
section 106 agreements in their local development frameworks.
This needs to be matched by the appropriate administrative systems
and good practise which together help provide developers with
certainty. This work is beginning but the operational procedures
will need to bed down before effectiveness can be judged.
8.4 Clarity over the operations of the proposed Planning
Gain Supplement would assist in the delivery of important infrastructure,
service and amenity requirements associated with housing development.
BOTH 9 AND 10 ARE ANSWERED TOGETHER
9. The effectiveness of housing benefit as a means of
providing access to rented housing to those in need
10. The impact of the operation of Council Tax Benefit
on the affordability of rented housing
9 and 10.1 Those on the lowest 10% of incomes in the
North East cannot afford to social rent without the assistance
of housing benefits. Clearly those also able to claim Council
Tax Benefit are in a position where this enables them to better
afford to pay rent on accommodation. Therefore there is advantage
in that accommodation is being made more accessible to people.
9 and 10.2 However, this is a crude tool and does not
guarantee people who receive it any level of quality in accommodation.
In some cases these benefits may fund the activities of private
landlords who choose not to upgrade or provide decent housing
but make a significant return on their properties. Given the laws
of supply and demand the cheapest properties in the private sector
are usually in areas where people would not normally choose to
live, often areas of low demand. The inflated property prices,
funded by benefits can actually make CPO and housing market restructuring
activity more expensive and therefore also risks slowing the rate
of housing renewal.
9 and 10.3 Clearly these benefits form part of the wider
market for rented accommodation and a more free thinking approach
may involve a user defined system where people qualify for assistance
to live in any area and can choose to buy, part buy or rent at
the end of which time the LA or RSL can sell the property again
on the open market.
9 and 10.4 If these benefits were withdrawn completely
the most vulnerable may well not be able to pay the increase in
rent that was previously covered by benefits and would become
homeless. Any alternative approaches would need to offer the same
or better value for money to be regarded as more effective.
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