Memorandum by the Department for Communities
and Local Government (DCLG) (SRH 44)
EXECUTIVE SUMMARY
1. The Government believes everyone should
have the opportunity of a decent home, which they can afford,
within a sustainable mixed community. Provision of housing should
meet the needs of the whole community and have a good balance
of housing types and tenures. The Government's policy for housing
is based around three themes:
— building homes where they are needed
most;
— offering as many people as possible
the opportunity to own a home; and
— offering greater quality, flexibility
and choice to those who rent.
2. Homeownership is at record levels: over
the last 50 years the number of households owning their own home
has increased substantially to over 70%, with over 1 million new
homeowners since 1997, as a result of lower interest rates. But
there are many households that cannot or do not want to own their
own home.
3. There are currently 2.5 million households
in the private rented sector (around 11% of the total housing
stock) and 3.8 million households in social rented housing in
England, (19% of the total housing sector).
4. The number of households in the private
rented sector has increased significantly since 1993 (11% compared
to 9% in 1993). Prior to that point, private rented housing has
been in long term decline. Supply has grown since 1993 as deregulation
has increased the willingness of people to enter the rental business
and also lending to individuals investing in property to rent.
5. The Government believes that a thriving
private rented sector is vital to supporting labour mobility as
well as offering choice and meeting need for households who are
not able to move to market housing or do not wish to do so. It
is particularly suitable for those who are mobile and need the
flexibility that renting in the sector can bring. The private
rented sector is by far the most common tenure for students and
the newly qualified: 48% of heads of household are under 35, compared
to 20% in social rented. The Government also sees the private
rented sector as a potentially valuable housing resource for helping
those in acute housing need, and encourages local authorities
to improve access to the sector.
6. However poor standards in parts of the
private rented sector can cause problems both for tenants who
suffer and for the reputation and success of the private rented
sector as a whole. That is why the 2004 Housing Act introduced
a range of measures to raise standards and address some of the
problems caused by a minority of poor landlords—including
an improved health and safety system, mandatory licensing for
larger HMOs and tenancy deposit schemes.
7. The proportion of households in the social
rented sector has reduced since 1981, due largely to the increase
in new build for owner occupation and sales of social rented stock
through the Right to Buy, giving tenants a route into home ownership
where that is their aspiration.
8. Poor standards in the social housing
stock were of particular concern in 1997 and the Government made
it a key priority to invest billions of pounds in raising the
quality of existing homes. Sustained underinvestment meant that
in 1997, local authority social rented homes needed over £19
billion worth of repairs and maintenance to bring them to a decent
standard, with over 2 million homes failing the decency standard,
and millions of people living in homes that could not be kept
properly warm.
9. Since then, Local Authorities have had
a 30% increase in funding for council housing to tackle repairs.
Additional routes were provided to bring in the further investment
needed, and to offer residents the opportunity to be more involved
in decisions on managing and owning their homes: setting up an
ALMO, PFI contracts, or transfer to a RSL. There are now 40 operational
ALMOs managing 828,000 homes, and there have been 167 transfers
to RSLs of over 749,000 homes. Millions of homes have already
been refurbished, and by 2010 we expect that 3.6 million homes
will have been refurbished and over £40 billion spent on
improving the social housing stock. As a result, when the Decent
Homes programme is complete, all social tenants should be able
to expect warm homes with modern facilities.
10. Estimates (by Alan Holmans of Cambridge
University) of newly arising need for social rented housing that
cannot be met in the market or by existing stock suggest that
there is demand for at least 40,000 new social rented properties
per annum. In addition, there is a need to address the backlog
in need arising, to reduce the use of temporary accommodation
and alleviate overcrowding.
11. Investment in new social rented housing
will have increased by almost £1 billion between 1997 and
2008, even alongside the substantial requirements to improve the
existing stock. However land values have increased significantly
over the same period placing pressure on the Housing Corporation's
budget. Provision of new social rented housing is planned to rise
to 30,000 homes per annum by 2007-08, that is, an increase of
50% over 2004-05, with social housing being a key priority in
the 2007 Comprehensive Spending Review.
12. Since the early 1990s, Registered Social
Landlords have been the main providers of new social rented housing,
supported through social housing grant provided by the Housing
Corporation and levering in private finance. Since the 2004 Spending
Review, the Housing Corporation has made significant progress
in aligning programmes with objectives, widening the range of
providers, achieving efficiencies in grant requirement and increasing
the role played by private finance. In addition, English Partnerships
supports the provision of housing across a range of tenures, particularly
by bringing forward the development of brownfield and surplus
public sector land. It is delivering a number of housing initiatives
to provide more affordable housing.
13. Increasingly, local authorities secure
social rented homes from developers as planning obligations through
section 106 agreements. Draft PPS3 explains how local authorities
should identify where there is a need for affordable (social rented
and intermediate) housing, and set overall and site-specific affordable
housing targets, and thresholds above which affordable housing
may be required on a market development. It requires authorities
to plan for mixed communities on the basis of housing type, and
allows them to specify the size and type of affordable housing.
14. Recent research shows that the number
of planning obligation affordable homes delivered increased from
10,303 in 2001-02 to 18,175 in 2004-05 (of which 65% were social
rented). However, there is considerable variation in the number
and value of planning obligations secured, and large numbers of
homes are built each year with no developer contribution to affordable
housing. The Government has issued practice guidance to help improve
the system.
15. The role of local authorities is changing
with greater emphasis on the determination of policy and strategy,
using planning powers and housing policy in partnership with others
to deliver mixed communities. Local authorities are not precluded
from building council housing using their own resources or Housing
PFI schemes (contracts have now been signed for 750 additional
social rented units), however the majority of new social homes
are built by Housing Associations as they are able to lever in
an additional 40% of value (or more). The Government is consulting
on new ways to build more social housing, including increasing
the role of local authorities in new build.
16. Housing benefit is designed to help
people with low incomes pay for rented accommodation. 3.98 million
family units receive Housing Benefit in Great Britain, of which
80% are in social rented homes and 20% in private rented, at a
total cost of £13.2 billion. The Government is piloting schemes
to encourage lower rents and job training for those in private
rented housing (Local Housing Allowance, Working Future). 4.99
million family units receive Council Tax Benefit at a cost of
£3.6 billion. There is a risk that the withdrawal of these
two benefits as income rises creates an unemployment trap.
17. Much has been achieved but the Government
wants to do more. There are a number of streams of work in hand
exploring improvements for the future. The Government is currently
examining a range of new approaches to improve the delivery of
social rented housing. Alongside Spending Review, the department
is reviewing the relationship between the Housing Corporation
and English Partnerships, John Hills has been asked to look at
the future of social housing, and a range of pilot programmes
are exploring new approaches (many of them set out in the consultation
document, From Decent Homes to Settled Communities.)
1. HOUSING SUPPLY—THE
NATIONAL PICTURE
1. The Government believes that everyone
should have the opportunity of a decent home, at a price they
can afford, within a sustainable community. The Government aims
to help ensure:
(a) A step on the housing ladder for future
generations.
(b) Quality and choice for those who rent.
(c) Mixed, sustainable communities.
2. Housebuilding in the UK is not keeping
pace with increasing demand. Over 200,000 new households are being
formed each year yet the level of new house building has averaged
nearer 150,000 new homes.
3. Kate Barker's Review of Housing Supply
showed that in order to deliver long-term stability, the current
level of housebuilding would not suffice. Her central recommendation
was that a step-change in housing supply was required. Barker
also showed how house price inflation has made home ownership
in the private sector increasingly unaffordable for some groups
in the population, particularly for first time buyers, with knock-on
impacts on rent levels in the private sector and on demand for
social housing.
4. Government's response to the Barker Review,
published in December, addressed the central Barker recommendation
through setting out an ambition to increase new housing supply
in England to 200,000 per year by 2016 including more market housing
(for sale and rent), more shared ownership and more social housing
too. In addition to the proposals to increase the supply of housing,
the response comprised a package of measures to address the full
range of recommendations made by Kate Barker.
5. The Government's response made clear
that we have to respond to our ageing and growing population.
If we do not build the homes we need, then within 20 years less
than a third of 30 year old couples will be able to afford their
own homes. In addition to private housing, the response also underlined
the importance of providing more support for affordable housing,
including new shared ownership schemes and social housing, to
respond to housing demand across the whole spectrum and meet the
needs of the next generation.
6. The rest of this evidence is structured
as follows:
— Private rented sector: trends and
role.
— Social rented housing and intermediate
housing: need.
— Social rented and intermediate housing:
delivery by local authorities.
— Social rented and intermediate housing:
delivery by RSLs and the for profit sector.
— Delivery of social rented and intermediate
housing though the planning system.
— Housing benefit and council tax benefit
subsidies and the effect on access to rented housing.
2. PRIVATE RENTED
SECTOR—TRENDS
AND ROLE
Trends in the sector
7. The private rented sector accounted for
76% of households in England and Wales in 1918. This fell to 50%
in 1950, 20% in 1971, and 9% between 1988 and 1993. Since then
the sector's share of the housing market has risen and 11% housing
stock is privately rented (almost 2.5 million homes).
8. The contraction of the private rented
sector reflected the impact of rent control (first started in
1915), the high security of tenure enjoyed by tenants, subsidies
for social rented housing, the availability of mortgages linked
to tax relief and the steady rise of property prices. Prior to
the 1988 Housing Act, most privately rented unfurnished tenancies
were regulated in terms of rents and security of tenure.
9. The introduction of housing benefits
benefited the poorest tenants. Social tenants generally had their
rents paid in full, but for private renting benefit was subject
to upper ceilings on eligible rents. Delays by local authorities
in dealing with housing benefit payments made private landlords
less keen to house benefit claimants. Although this concern may
persist, the Government have put in place a number of measures
to improve Housing Benefit administration, including setting clear
national performance standards, regular monitoring and inspections
and measures to intervene in poor performing authorities. Standards
of administration have dramatically improved, both on average,
and for the poorest performing councils. The roll out of Local
Housing Allowance provisions of the Welfare Reform Bill should
also speed up the administration of Housing Benefit.
Causes for revival of private renting
10. The Housing Acts of 1988 and 1996 allowed
existing regulated tenancies to continue under the Rent Act 1977
(with security of tenure and regulated rents). But after 15 January
1989 new private tenancies were "assured" or "assured
shorthold" tenancies. For the latter, a landlord can seek
"no fault" possession of a property simply by giving
two months notice under section 21 of the Act (but only after
an initial six months unless a current contract provides for a
longer period). Otherwise there are grounds for possession under
Schedule 2 of the 1988 Act.
11. The proportion of private landlords
using an assured shorthold contract in 2001-02 was 58% and there
were 13% assured tenancies. However little over 60% of the private
rented sector is actively traded and there are still many secure
tenancies and tenancies that are not marketed (private arrangements,
company lets to employees, tied cottages etc). Turnover in the
sector is, according to the department's Private Landlords Survey,
in excess of 40% per annum.
12. On the supply side, the private
rented sector has grown since 1993. After deregulation, mortgage
lenders increased lending to individuals investing in property
to rent. By the end of 2002 there were some 275,500 "buy
to let" mortgages worth £24.2 billion. The consequence
has been an increase of small investors in the sector. According
to the English House Condition Survey's 2001 and 2003 Private
Landlords Surveys, the proportion owned by individual private
landlords rose from 47% in 1994 to 67% in 2003 (those owned by
partnerships, companies and other private organisations fell from
53% to 33%). The median number of properties owned by landlords
is now just over three (nine in 1994) and about 32% of landlords
let just a single property (24% in 1994—for individual private
landlords the ratio is 40%).
13. On the demand side, the private
rented sector has become the most common tenure for the young.
SEH data shows that 48% of "heads of household" (HRPs)
in the PRS are under 35, compared to 20% in social renting and
13% in owner occupation, reflecting the sector's role in providing
accommodation for the growing number of students and those newly
qualified. Some 22% of HRPs in the private rented sector have
a degree level qualification compared with 25% of owner occupying
HRPs and just 4% of HRPs in the social rented sector. The percentage
receiving Housing Benefit in the PRS has fallen from 33% in 1993
to 19% in 2005. In any one year, only 35% of private renters who
can afford to buy actually move into owner-occupation. Even so,
difficulties in accessing social housing and the rising costs
of entry to owner occupation remain important factors on the demand
side.
The Impact of "Buy to Let": scope for
new investment
14. Deregulation in the private rented sector,
accompanied by financial liberalisation, encouraged the Association
of Residential Lettings Agents (ARLA) in the marketing of "buy
to let" schemes in the late 1990s. This followed the recovery
in property prices, when there was a shortage of properties for
rent. The government created a favourable environment for this,
but did not specifically intervene to promote or support it. By
early 2004, there were nearly 500,000 "buy to let" mortgages.
Overall growth in the PRS has been less dramatic than the increase
in "buy to let", suggesting that the "buy to let"
market is largely constrained by demand for the PRS as a whole.
15. The scale of "buy to let"
within the sector (20% of 2.5 million PRS properties) means that
its impact on the general market is still limited. There are important
regional variations: in London, the "buy to let" market
was 4% in 2004, below the national average, while the top markets
recently have been the West Midlands and South West. In addition,
buy to let investors are more likely to purchase new build, and
in some areas particularly new build flats. It is unclear what
impact this may be having on the new build market overall. A comparison
of CML and SEH data shows that "buy to let" investors
are not easily differentiated from other private landlords. Typically
they are small investors buying only one or two properties and
so reinforce the "small landlord" nature of the sector.
16. The better commercial lenders have encouraged
landlords to adopt sensible business plans and invest in decent
properties in areas with good rental prospects. So newer, better
quality properties have come into the market with the emphasis
on flats rather than HMOs (a declining share of the market) and
some newly built units have gone straight into private renting.
17. There are several areas which have raised
concerns about parts of the private rented sector:
(a) the ability of the smaller landlords
to maintain and repair their properties in the longer term;
(b) the activities of some landlords in low
demand areas;
(c) the number of empty units in newly built
blocks in central city areas, often apparently sold through investment
clubs; and
(d) the impact of concentrations of student
accommodation in particular areas of university towns with consequences
in terms of services, anti-social behaviour and mixed and sustainable
communities.
These issues are being addressed through a number
of measures in the Housing Act, 2004 and through voluntary and
co-operative approaches.
Regulation and Voluntary Good Practice Initiatives
18. In April 2000 the Housing Green Paper
"Quality and Choice: A decent home for all". (and the
December 2000 response "The way forward for housing")
looked for a larger, better quality, better-managed private rented
sector. It saw the sector as performing below its true potential.
It also saw that the quality of rented stock and its management
was not always what it should be. The aim had to be to retain
the many good and well-intentioned landlords, and help them to
raise their standards further; to persuade reputable investors
to expand the supply of decent rented homes; and to make the worst
landlords perform better, or get out of the business altogether.
The specific measures needed included:
— To introduce a new Housing Health
and Safety Rating System for assessing the condition of homes
in all tenures.
— To introduce a compulsory licensing
system for Houses in Multiple Occupation.
— To develop proposals for selective
licensing of other privately rented properties in areas of low
demand.
— To encourage local authority accreditation
schemes and other best practice initiatives.
19. The Housing Act 2004 seeks to raise
physical and management standards in the sector, particularly
in the interests of those who are most vulnerable and live in
Houses in Multiple Occupation (HMOs). Part 1 of the Act, and the
new Housing Health and Safety Rating system (HHSRS), aims to ensure
that housing is healthier and safer and replaces the prescriptive
fitness regime of the 1985 Act. A key target of HHSRS are HMOs.
Parts 2-4, 6 and 7 of the 2004 Act provide for HMO licensing,
Selective Licensing, Management Orders (MOs), Empty Dwelling Management
Orders (EDMOS) and tenancy deposit protection.
20. Since 6 April 2006 mandatory HMO licensing
has applied to larger HMOs of three or more storeys and with five
or more unrelated persons living in them. If they can make a case,
having considered alternatives such as accreditation, local authorities
can seek ministerial approval for schemes that extend HMO licensing
to smaller HMOs, or selectively licence the private rented sector
in areas of low demand or anti-social behaviour. In general the
key purpose of licensing is to ensure landlords are "fit
and proper persons" managing their property well. MOs and
EDMOs enable a local authority to manage a property that is not
being well managed.
21. A key message in implementing the Housing
Act is that central and local government needs a thriving private
rented sector, playing a full part in meeting housing need and
in building sustainable communities through raising standards.
This message promulgated by the Information and Development Agency
(IDeA) is that local authorities need to see licensing as a way
of developing a partnership with—and actually reducing the
burden on—good landlords who comply with accreditation codes
and who are members of landlord bodies.
22. The Government strongly supports accreditation,
along with landlords' forums and training packages. These offer
scope for a co-operative and voluntary approach (between local
authorities, universities and landlord bodies) to raising standards
in the sector. The Accreditation Network UK has played a major
role in raising the profile of accreditation and, apart from local
schemes focussing on property the London-wide landlord accreditation
scheme shows how regional accreditation arrangements can be of
value—and support licensing.
23. A European requirement is that, by 2009
for all new lets, valid energy certificates will need to be produced
by landlords. This offers a new opportunity for reducing fuel
poverty in the sector and raising standards in terms of energy
efficient homes. The government is keen to end fuel poverty in
the sector through the Energy Efficiency Commitment (targets imposed
on energy suppliers), warm front (grants to tackle fuel poverty
among vulnerable households), and the Chancellor's measures to
give tax reliefs to landlords based on energy saving measures
(such as the Landords Energy Saving Allowance or LESA).
Meeting Housing "Need"
24. Local authorities use the private rented
sector for those in acute housing need and there are indications
that the decline in the proportion of Housing Benefit claimants
in the private rented sector is levelling out. The Government
have been monitoring the effect of the implementation of the Local
Housing Allowance in the Pathfinder areas trialling it prior to
a national roll-out in the private rented sector under the provisions
of the Welfare Reform Bill. So far there has not been a significant
increase in tenants defaulting in the payment of their rent as
a result of ending direct payments.
25. Local authorities also use the private
rented sector for those needing temporary accommodation because
they are homeless and in priority need. While this can provide
good quality self contained accommodation for those in need, the
Government is concerned at the high cost of temporary accommodation
and the impact that the rent levels have on work incentives. That
is why the Government is funding Temporary to Settled Initiatives,
investing £30 million for the Extra Homes Pilot to help London
local authorities provide settled homes for families currently
in temporary accommodation (see Chapter 5).
26. In "Sustainable Communities: Homes
for All" (2005), ODPM said that local authorities should
bring accredited landlords into a nationwide system of Choice
Based Lettings by 2010. Furthermore local authorities should seek
to improve access to—and maximise use of—the private
rented sector for households who might otherwise experience homelessness,
through landlord fora and schemes that provided rent deposits
and guarantees.
27. DCLG has developed advice and case studies
to help local authorities in developing the supply of property
in the private rented sector (PRS) for tenants in varying levels
of housing need. This sees the private rented sector as a potentially
valuable housing resource for local authorities and picks up on
the key theme in implementing licensing, of seeking to actively
engage with private landlords. Indeed there is much scope for
large local authorities who are prepared to commit themselves
to PRS solutions co-operating with some of the larger corporate
landlords to this end.
3. SOCIAL RENTED
HOUSING AND
INTERMEDIATE HOUSING:
NEED
The current picture of the sector
28. Social rented housing is defined as
rented housing owned and managed by local authorities and registered
social landlords ("RSLs"—housing associations
in England registered with the Housing Corporation), for which
guideline target rents are determined through the national rent
regime (Guide to Social Rent Reforms, March 2001). It may
also include rented housing owned by other persons provided under
equivalent rental arrangements to the above (eg by contract with
the Housing Corporation). Access to social rented housing is restricted
to households on local authority and RSL housing registers.
29. There are currently 3.8 million households
in social rented housing in England, 19% of the total housing
sector. The share of households in social rented housing rose
from only 1% in 1918 to 32% in 1981 (5.5 million dwellings). It
then fell to the current level of 19% (3.8 million), largely due
to the increase in new build for owner-occupiers, and the Right
to Buy.
30. About 28% of social rented sector stock
is detached or semi-detached housing and over 40% is flats (the
remainder is terraced). This is a similar profile to the private
rented sector, but differs from owner occupied stock, where over
60% of stock is detached or semi-detached and under 10% are flats.
31. The social rented sector houses higher
proportions of disadvantaged groups who cannot find suitable housing
on the market. The proportion of heads of household of working
age in full employment living in social rented housing has fallen
from 67% in 1981 to 35% in 2005. An increasing number of occupants
are long term sick and disabled, lone parent households, or retired.
Social tenants are twice as likely as private renters to be in
the bottom three income deciles, and three times as likely as
owner occupiers. The proportion of white and BME households in
social rented housing is roughly the same (about 30%), though
there are variations between different BME groups (eg 55% of Bangladeshi
households, but under 10% of Pakistani households).
32. Sustained under-investment meant that,
in 1997, local authority homes needed more than £19 billion
worth of repairs and maintenance to bring them up to a minimum
decent standard. The Government therefore set a target by 2010,
to bring all social housing into decent condition, with most of
the improvement taking place in deprived areas, and increase the
proportion of private housing in decent condition occupied by
vulnerable groups. The irradication of the backlog of repairs
has been the focus of investment and since 2001 the number of
non-decent homes in the social sector has been reduced by over
50%. The Government is determined to build on this success to
improve the living conditions of social tenants across the country.
The Government is now looking at ways that this can be achieved
by not just improving homes but improving places too.
33. Since 1997, the Government has increased
the funding available to Councils to invest in improvement of
their stock. This year spend by Council per home is about £1,100
compared with spend equivalent of £800 in 1997. This is a
30% increase in real terms. On top of that the Government will
have also made £3.7 billion available for Arms Length Management
Organisations delivering improvements to council housing stock
and £2.7 billion for PFI schemes by March 2008. In total
over £20 billion of public money has been invested in improving
council housing since 1997. An additional £7.4 billion has
been levered in through independent borrowing by Housing Associations
as a result of stock transfers and PFI.
Social rented housing need—levels
34. Work by Alan Holmans (of Cambridge University)
and adapted for the Barker Report estimates that newly arising
need for social housing that cannot be met in the market or with
existing social stock is at least 40,000 new social rented properties
per annum. It includes need due to newly forming households and
reductions in stock as a result of Right to Buy. Not all of this
need is necessarily long term; much of it could be transitional,
eg following separation of a childless couple.
35. This level of new social housing need
should be seen in the context of increased demand in the wider
housing market. It is projected that there will be 209,000 more
households per year in England to 2026, due to a rise in one-person
households as well as population increases.
36. There is also a significant backlog
of unmet need. This includes 100,000 in temporary accommodation
and about 500,000 tenants in unsuitable (often overcrowded) homes.
This backlog need can be begun to be addressed not just by new
supply but also a combination of preventative measures and other
forms of meeting social lets (eg temporary to permanent schemes).
37. While the majority of social rented
tenants are not able to afford homeownership at the lower quartile
house price at present, there are around 215,000 households who
can but choose not to. The number who could afford intermediate
affordable housing (eg HomeBuy) is considerably higher. Existing
social rented tenants and those on waiting lists have priority
in Government intermediate housing schemes (HomeBuy), as their
social rented home would then be freed up to help another household.
Social rented housing need—homelessness
and overcrowding
38. The Government is committed to preventing
and tackling homelessness by addressing its underlying causes
and symptoms. Under the Homelessness Act 2002, local authorities
have a statutory duty to formulate a strategy for preventing homelessness
and ensuring that accommodation and support is available those
who are homeless or at risk in their district
39. The latest statistics (published September
2006) show that in 2005-06 there were 93,980 new cases of homelessness,
22% lower than in 2004-05. This confirms a downward trend which
began in 2003. Homelessness acceptances during the second quarter
of 2006 were 29% lower than in the same period in 2005, demonstrating
the effectiveness of prevention services. DCLG has also set a
target to halve the number of households in temporary accommodation
by 2010 (from just over 100,000 in 2004).
40. Households owed a housing duty under
the homelessness legislation are often provided with temporary
accommodation when a settled home is not available immediately.
However, latest statistics show that there were 93,910 households
in temporary accommodation in June 2006, a 7% reduction since
the same date in 2005. 92% of these families with children have
been provided with self-contained homes with sole use of a kitchen
and bathroom.
41. Nationally, 46% of all overcrowded households
are in the social rented sector. The trend in overcrowding for
England declined in the late 1990s but has since stabilised at
around 500,000 households (2%) overall. The level in London increased
from 160,000 to 180,000 due to an increase in overcrowded households
in the private rented sector. In London, 11% of social rented
households are overcrowded, though the figure is higher for some
ethnic minority groups (Bangladeshi 29%, Black African 28%).
4. SOCIAL RENTED
AND INTERMEDIATE
HOUSING—DELIVERY
BY LOCAL
AUTHORITIES
Local authority role
42. The role of local councils in managing
housing is changing from simply direct provision to a role where
determining policy and strategy is more important. They are ideally
placed to take an overview across all tenures using their planning
powers as well as housing policy to deliver mixed communities.
They are in the right place to work with others including RSLs,
regional housing and planning bodies, the private sector and of
course the local community.
43. The Government is exploring ways to
increase the impact of public sector investments and public sector
assets and also to find innovative ways to lever in additional
funds. In June DCLG published a discussion paper "Decent
Homes to Sustainable Communities". This invited views on
how best to achieve this and we have received over 100 responses
as well as feedback from stakeholder groups. Responses are currently
being analysed.
44. Local authorities are not precluded
from building council housing. They may use their own resources
for this purpose, and they may also build through PFI schemes.
But it is the case that the vast majority of the national budget
for new social housing goes to RSLs because they are able to build
40% more houses for the same support from Central Government,
due to their ability to lever in extra private sector borrowing.
45. However, the pressing need for new housing
supply means we need to look at all kinds of ways to build more
housing, including strengthening the role played by local authorities.
This issue features prominently in the Secretary of State's June
2006 discussion paper "From Decent Homes to Sustainable
Communities". The paper seeks views on different ways
in which we can deliver more social housing, including the building
of new social homes for rent and looks at ways in which local
authorities could build more homes. The responses to the paper
will contribute to our examination of innovative ways in which
funding can be secured from different sectors (including ALMOs—see
below).
46. New build opportunities for councils
with or without ALMOs could provide benefits in terms of geographical
rationalisation and better management. In particular, small scale
and in-fill developments in areas of majority council housing,
including through section 106 agreements, could be done without
introducing a new landlord. This could support more efficient
and effective management and maintenance of properties and the
areas around them.
47. The Government needs to take a view
on the public finance implications of increased building by local
authorities. This will include any use that councils may make
of social housing grant to build. It will also take account of
the longer term public sector borrowing impact where, for example,
assets and revenues might be used to support further borrowing
to do more building. In considering which proposals to support,
these wider impacts would be weighed alongside the strengths of
each individual plan.
Managing existing local authority stock
48. There are around 4 million social rented
homes, which together form a vast asset worth around £400
billion. Yet sustained under-investment meant that, in 1997, local
authority homes needed more than £19 billion worth of repairs
and maintenance to bring them up to a decent standard. The Government
therefore set a target to bring all social rented homes to meet
minimum standards of decency, and at the same time to encourage
local authorities to improve the management of their stock.
49. Local authorities have seen a 30% increase
in their direct investment per home. In order to bring in the
additional investment needed, additional funding routes were also
provided and designed to improve performance in the delivery of
services to tenants. The routes are:
(a) set up a high-performance Arms Length
Management Organisation;
(b) enter into a Private Finance Initiative
(PFI) contract; or
(c) transfer stock to Registered Social Landlords
(RSLs).
50. These programmes have the additional
benefit of offering residents the opportunity to become much more
involved in making decisions about the management and ownership
of their homes.
51. In many areas local authorities have
decided to retain their housing stock and deliver services including
the capital investment required to deliver decent homes themselves.
98 local authorities have opted for retention, covering 245,000
non-decent homes as of April 2005.
52. Over £20 billion of public money
has been invested in improving council housing since 1997. An
additional £7.4 billion has also been levered in through
independent borrowing by Housing Associations as a result of stock
transfers and PFI. By the end of 2010 in total over £40 billion
of public money will have been invested.
Housing PFI
53. The Housing PFI Programme continues
to deliver decent homes, provide additional social rented units
and help create sustainable communities by enabling the regeneration
of areas. Contracts typically last between 15 and 30 years, and
include initial capital works to modernise homes or build new,
lifecycle renewals and ongoing housing management and maintenance
for the life of the contract. PFI can also facilitate the building
of homes for sale.
54. Local authorities can include new build
and/or re-provision in Decent Homes PFI projects to ensure that
the best value for money solution is selected for an area, including
making best use of available land and resources. In these schemes
tenants remain tenants of the local authority and the properties
remain in council ownership.
55. Local authorities can also develop additional
social rented housing PFI schemes, where they enter into a long
term contract, traditionally with a Registered Social Landlord
(RSL), to provide extra social housing. In these schemes the tenants
will be tenants of the RSL.
56. To date £2.7 billion has been allocated
for Housing PFI Schemes. Currently 13 schemes have signed which
will reduce the number of non-decent homes by 9,000 and provide
750 additional social rented units (these are included in Table
3 below). Fifteen schemes are in procurement and eight developing
outline business cases. Overall, the Government expects the programme
to reduce the number of non-decent homes by around 27,000 and
deliver over 3,100 additional social rented homes.
Arms Length Management Organisations (ALMOs)
57. An ALMO is an organisation set up by
a local authority to manage and improve all or part of its housing
stock. It is for the authority to encourage a businesslike and
innovative approach to management of the housing stock, and it
chooses which management functions are delegated to the ALMO.
The total funds available for the ALMO programme are up to almost
£3.7 billion to 2007-08, including £2.5 billion made
available in the 2004 Spending Review.
58. There are now 40 fully operational ALMOs
which have received consent under section 27 of the Housing Act
1985 and qualified for funding following "good" or "excellent"
ratings from the Housing Inspectorate. A further 15 are operational,
but still awaiting inspections. Another one is on the programme,
but not yet operational. The inspection process ensures a good
standard of management. Together, ALMOs are now managing around
828,000 homes, almost one in three of all local authority homes.
59. The Government is examining innovative
ideas for high performing LAs and ALMOs to build more social housing.
In some areas innovative partnerships are being explored between
local councils, ALMOs and developers to build more homes. Some
areas have been exploring using local authority land and mixed
communities proposals to fund social rented housing that would
be owned by the ALMO.
60. Like other unregistered bodies, ALMOs
may now bid for social housing grant directly or in partnership
with others. Grant-funded homes owned or run by ALMOs will be
subject to contractual conditions, and ALMOs will need to have
demonstrated their ability to own and manage.
Transfer to RSLs
61. Ownership of tenanted housing stock
can be transferred to a RSL. Under its regulatory framework, the
Housing Corporation will make a series of visits to a new RSL
after transfer. The RSL may directly manage the housing stock
or may contract the work to an agency or private company.
62. An authority is legally required to
consult all tenants whose homes would be transferred, and transfer
cannot go ahead if the majority are opposed. Before giving consent,
the Secretary of State must be sure that the proposal is in line
with the strategic aims of the authority, has tenant support,
provides tenants with future protection, good management and affordable
rents, and generally accords with Government policy on housing
transfer—in particular to the target to provide decent homes,
tenant empowerment and regeneration.
63. Since 1997, there have been 167 transfers
to RSLs by 115 local authorities, involving more than 749,000
dwellings. Of these, around 358,000 were non-decent. 27 schemes
have secured places on the 2005 transfer programme, covering an
estimated 31,000 non-decent homes. 21 have been "held open"
whilst we consider their "gap funding" requirements,
to enable local authorities to transfer their stock even when
the cost of making the repairs required exceeds the rental income
from the homes.
64. Delivery agencies need to continue to
ensure they are getting value for money and meeting the high performance
standards expected. Crucial to this is the continued involvement
and empowerment of local tenants.
5. SOCIAL RENTED
AND INTERMEDIATE
HOUSING: DELIVERY
BY RSLS
AND THE
FOR PROFIT
SECTOR
65. Since the early 1990s, Registered Social
Landlords (RSLs) have been the main providers of new social rented
and intermediate affordable housing. RSLs can deliver more units
than local authorities for a given amount of public expenditure
because they may access private finance. Since 1988 around £36
billion of private finance has been levered in by RSLs.
Regional distribution
66. The Government established Regional
Housing Boards in 2003 to ensure a more strategic and coherent
cross-local authority approach to tackling housing problems. They
have been responsible, in consultation with key stakeholders,
for overseeing production of a Regional Housing Strategy (RHS)
and advising Ministers on the allocation of resources for housing
investment to address identified strategic priorities and to take
account of local issues. This helps ensure that housing makes
the biggest possible contribution to creating and maintaining
sustainable communities. In 2006 responsibility for the Boards'
work passed to the Regional Assemblies.
67. Resources are divided between regions
on the basis of a formula which includes different measures of
housing need (eg homeless households in temporary accommodation,
overcrowding/sharing, housing affordability) and takes account
of the variations in costs across regions. The Housing Corporation
programme reflects the priorities set out in regional housing
strategies. The regional distribution of allocations for funding
recommended by the Regional Housing Boards in the 2006-08 Housing
Corporation Affordable Housing Programme is at Table 1.
Table 1
HOUSING CORPORATION 2006-08 ALLOCATIONS FOR
SOCIAL RENTED AND LOW COST HOME OWNERSHIP FUNDING/UNITS, BY REGION
| Region | Social Rent £m
| Social Rent No units | Low Cost Home Ownership £m
| Low Cost Home Ownership No units |
| East Midland | 116 | 2,637
| 42 | 2,135 |
| East of England | 243 | 6,153
| 72 | 3,840 |
| London | 1,051 | 10,439
| 409 | 11,251 |
| North East | 56 | 922
| 5 | 257 |
| North West | 141 | 2,238
| 63 | 1,913 |
| South East | 502 | 9,341
| 169 | 7,301 |
| South West | 248 | 5,600
| 51 | 2,599 |
| West Midlands | 116 | 2,335
| 36 | 1,750 |
| Yorks & Humber | 105 |
1,980 | 28 | 1,032
|
| Totals | 2,578
| 41,645 | 875
| 32,078 |
68. From 2008-09 the Regional Assemblies will advise
the Government on the split of investment within their regions,
both spend and outputs, by sub-region and by type of product.
(In London, the Government announced proposed powers for the Mayor
to set the strategy for investment in the supply of new affordable
housing units). They will do this on the basis of regional knowledge
informed by a proper analysis of housing markets in their regions
(including assessments of need), rather than making formulaic
allocations. They will not normally advise on specific housing
schemes. However, the Corporation will consult the Assembly and
the Mayor on its funding programme, and adherence to the RHS is
a major factor in the assessment of bids for NAHP funding.
The system for delivering RSL social rented housing
69. RSLs (and now other providers) may apply for Social
Housing Grant through the Housing Corporation's National Affordable
Housing Programme (NAHP). The NAHP is a national investment programme
which delivers regionally, to agreed national and regional priorities
and targets. Bids are assessed on criteria including: value for
public money (and housing quality); fit with local needs (set
out in regional/local strategies); deliverability; and sustainability.
70. After bid assessment, the Corporation presents draft
regional programmes of scheme allocations, based on the bids received,
for recommendation by Regional Assemblies and approval by Ministers.
These set out the outputs from the proposed allocations, reconciled
to advice on outputs and spend, national priorities and the RHS.
Programmes include reserve schemes and pre-allocations for larger
strategic schemes in future rounds.
71. Until 2004, only RSLs were eligible for social housing
grant. Unregistered bodies ("non-RSLs"), including private
developers and ALMOs, are now also eligible. The aim of this was
to improve value for money through competition and innovation
and to widen the market, while ensuring standards and public money
are protected through contracts. Non-RSLs may own and manage homes
as well as build them, under similar conditions to RSLs. The 2006-08
NAHP and an initial mini-round in 2005 were open to both RSLs
and non-RSLs, and about £70 million of grant was allocated
to seven private developers for about 3,000 social rented and
intermediate homes.
Temporary to Settled Initiatives
72. In April DCLG announced £30 million of investment
for the Extra Homes Pilot, which will help London local authorities
provide settled homes for families currently in temporary accommodation.
The scheme, which will build on initiatives developed in Ealing
and Newham, will provide up to around 1,000 new permanent social
homes after a lease period of around 10-15 years (depending on
the scale and nature of the bids received).
73. The principle of the scheme is that rental income
currently funded through Housing Benefit is used to repay borrowing
that has been raised to procure a home, and that after a lease
period of around 10-15 years these payments have cleared the debt
and provided a new permanent social unit. This contrasts with
Housing Benefit payments being made to private landlords to pay
for renting a property as temporary accommodation on which no
return is made. In the short term, successful proposals will deliver
settled homes which could be offered as fixed term qualifying
assured shorthold tenancies.
74. The bidding round will be launched in October.
Levels of social rented and intermediate housing spend and
completions
75. Levels of spending through the Housing Corporation
on social and intermediate housing has risen significantly since
1997, from £954 million in 1997-98 to almost £2 billion
in 2007-08.
Table 2
HOUSING CORPORATION EXPENDITURE
£m
| Housing Corporation | 1997-98
| 1998-99 | 1999-2000
| 2000-01 | 2001-02
| 2002-03 | 2003-04
| 2004-05 | 2005-06
(P)
| 2006-07
(F) | 2007-08
(F)
|
| Social Rent | 458 | 450
| 525 | 576 | 647
| 762 | 1,217 | 1,050
| 992 | 1,394 | 1,348
|
| Low Cost Home Ownership | 160
| 115 | 79 | 97
| 90 | 187 | 498
| 469 | 581 | 510
| 475 |
(Note: P = Provisional figures, F = Forecast.)
76. However, the substantial increase in funding the
increase has not been matched in outputs. The last 10 years has
seen a rapid increase in the cost of land and the construction
costs, particularly in the South of England, where demand is highest.
77. Table 3 shows levels of social rented units and low
cost home ownership units (most through Housing Corporation Social
Housing Grant, Local Authority Social Housing Grant up to 2005-06,
and other sources (Local authorities, PFI and units through s
106 agreements without grant).
Table 3
SOCIAL RENTED AND LOW COST HOME OWNERSHIP COMPLETIONS
| Social Rent | 1997-98
| 1998-99 | 1999-2000
| 2000-01 | 2001-02
| 2002-03 |
| Housing Corporation | 25,680 |
23,967 | 20,539 | 18,316
| 19,409 | 17,706 |
| LASHG | 9,777 | 9,415
| 8,095 | 7,825 | 6,233
| 5,301 |
| Other sources | 320 | 190
| 140 | 930 | 1,190
| 930 |
| Total social rent | 35,777
| 33,572 | 28,774
| 27,071 | 26,832
| 23,937 |
| Low Cost Home Ownership |
| | | |
| |
| Housing Corporation | 10,777 |
8,176 | 4,445 | 4,038
| 3,481 | 3,647 |
| LASHG | 712 | 576
| 581 | 597 | 738
| 698 |
| Other sources | 0 | 0
| 0 | 1,400 | 1,400
| 4,000 |
| Total LCHO | 11,489
| 8,752 | 5,026 |
6,035 | 5,619 | 8,345
|
| 2003-04 | 2004-05
| 2005-06
(P) | 2006-07
(F)
| 2007-08
(F) |
| Social Rent | 16,563 | 16,245
| 18,637 | 21,000 | 28,000
|
| LASHG | 4,332 | 3,187
| 2,123 | 0 | 0
|
| Social Rent—other sources | 1,800
| 1,600 | 2,400 | 2,900
| 3,000 |
| Total social rent | 22,695
| 21,032 | 23,160
| 23,900 | 31,000
|
Low Cost Home Ownership |
| | |
| |
| Housing Corporation | 6,174 |
10,901 | 16,047 | 15,737
| 19,263 |
| LASHG | 584 | 508
| 382 | 0 | 0 |
| Other sources | 7,800 | 2,000
| 3,100 | 3,310 | 5,100
|
| Total LCHO | 14,558
| 13,409 | 19,529
| 19,047 | 24,363
|
(Note: P = Provisional figures, F = Forecast.)
78. The Spending Review 2004 delivered over £400
million of additional provision above baseline specifically to
increase the supply of social rented units. This, with additional
PFI funding and efficiency gains will provide an extra 10,000
new homes annually by 2007-08, mainly through the Housing Corporation.
79. Investment through the Corporation over the period
2006-08 at £3.9 billion is an increase of some 15% on the
previous two years. Targets for this programme have been set to
complete 49,000 social rented homes and 35,000 low cost home ownership
homes over 2006-08, an increase of around 33% on the 2004-06 programme.
80. Since SR04, significant progress has been made in
aligning programmes with objectives, widening the range of providers,
achieving efficiencies in grant requirement and increased the
role played by private finance. Levels of grant per unit are starting
to reduce.
Table 4
HOUSING CORPORATION AVERAGE GRANT PER UNIT (£)
| 1997-98 | 1998-99
| 1999-2000 | 2000-01
| 2001-02 | 2002-03
| 2003-04 |
| Rent | 22,642 | 25,072
| 29,209 | 37,519 | 48,638
| 57,619 | 63,456 |
| Shared Ownership | 16,645 |
18,223 | 19,974 | 26,434
| 27,408 | 30,833 | 32,578
|
| DIYSO/Homebuy Grant | 22,629 |
23,382 | 22,470 | 23,745
| 27,159 | 31,337 | 37,420
|
| Allocation stage
2004-06
| Allocation stage
2006-08 |
| Rent | 66,886 | 61,907
|
Shared Ownership |
| 31,057 |
| DIYSO/Homebuy Grant | |
26,828 |
The role of English Partnerships
81. English Partnerships (EP) is the national regeneration
agency, helping the Government support high quality sustainable
growth across England. EP focuses on the assembly, infrastructure
provision, remediation and masterplanning of land to bring about
the development of sustainable mixed communities. This includes
the provision of housing across a range of tenures, including
social rented.
82. EP brings forward the development of surplus public
sector land. It is working closely with DCLG and HMT to identify
barriers to the re-use of this land for housing, and ensures development
supports the Sustainable Communities agenda. EP also helps to
bring forward brownfield land and the development of its other
land holdings. Development of this land provides social rented
housing as part of the development of mixed tenure communities.
83. EP has developed housing initiatives which deliver
affordable as well as market housing, though the focus is primarily
intermediate (shared equity) housing, particularly using surplus
public sector land.
84. The London-Wide Initiative (LWI) uses redundant buildings
and sites to provide discounted for sale intermediate affordable
housing (totalling about 1,500) across London. LWI is a deferred
equity model in which EP retains the unsold equity of the homes.
Sites will also provide a further 2,500 homes, a mixture of open
market for sale and other affordable tenures, including some social
rented homes.
85. The First Time Buyer's Initiative (FTBI) is a shared
equity product providing first time buyers a "stepping stone"
into home ownership, and is part of DCLG's New Build HomeBuy initiative,
targeted at key workers and other eligible groups currently priced
out of the market. FTBi's target is delivering 15,000 homes across
England by 2010.
86. EP helps local authorities in the Growth Areas to
increase the scale, speed and quality of major housing and regeneration
proposals, which include social rented homes. The Advisory Team
for Large Applications (ATLAS) offers advice to Local Planning
Authorities dealing with major development proposals in the wider
South East.
87. EP managed the Design for Manufacture competition,
which challenged the house building industry to create sustainable,
well-designed, good quality homes for a construction cost of £60,000.
EP sets high standards of design and procurement practice as benchmarks
for the private sector. It has also adopted a target of 25% Modern
Methods of Construction across its programme to help deliver well-designed
homes which can be built quickly, efficiently and economically
and increase housing delivery.
The Housing and Regeneration Review
88. The Government is currently conducting a review of
the institutional structures for delivery of housing and regeneration.
The Housing and Regeneration Review provides an important opportunity
to build on the existing strengths of English Partnerships and
the Housing Corporation and ensure a coherent approach to delivering
new housing and mixed sustainable communities.
89. In addition to addressing the Housing Corporation
and English Partnerships, officials are examining the DCLG delivery
functions to determine the scope for rationalising activities,
with the aim of ensuring clear, focused and accountable delivery
chains. Officials are analysing a range of potential modernisation
and structural options for reform.
6. DELIVERY OF
SOCIAL RENTED
AND INTERMEDIATE
HOUSING THROUGH
THE PLANNING
SYSTEM
90. The planning system is a key agent in the successful
delivery of housing as a whole, and social rented housing in particular.
The new approach to delivering affordable housing through the
planning system is set out in draft Planning Policy Statement
3 (Housing).
91. Increasingly, local authorities secure contributions
from developers towards new affordable housing as planning obligations,
in "section 106 agreements". These are used as a supplement
or alternative to social housing grant.
How planning obligations deliver affordable housing
92. A planning obligation is a private agreement, usually
negotiated in the context of a planning application, between a
local authority and persons with an interest in the land. Planning
obligations are negotiated under section 106 of the Town and Country
Planning Act 1990, as substituted by section 12 of the Planning
and Compensation Act 1991.
93. Government policy, in ODPM Circular 05/05 "Planning
Obligations", requires that planning obligations should only
be sought by local authorities in order to "make acceptable
development which would otherwise be unacceptable in planning
terms" and where certain tests are met. In particular, a
planning obligation must be: relevant to planning; necessary to
make the proposed development acceptable in planning terms; directly
related to the proposed development; fairly and reasonably related
in scale and kind to the proposed development; and reasonable
in all other respects.
94. In relation to affordable housing, planning obligations
can be used to prescribe the nature of a development by requiring
the inclusion of a given proportion of affordable housing. The
requirement for the provision of an element of affordable housing
in a residential development or mixed-use development with a residential
component should be in line with Local Development Framework policies.
As per the guidance in Planning Policy Guidance Note 3 "Housing",
Local Development Frameworks should identify the need for affordable
housing and should set site-size thresholds above which the provision
of a specified proportion of affordable housing would be expected.
Draft Planning Policy Statement 3: Housing (PPS3)
95. Draft PPS3 explains how local planning authorities
should in their local development frameworks:
— Identify where there is a need and recognise the
importance of affordable housing in creating mixed sustainable
communities.
— Set overall (plan-wide) and site-specific affordable
housing targets, which may include separate social rented and
intermediate targets.
— Set thresholds above which affordable housing
will be required as part of housing development.
— Identify the size and type of affordable housing
(but not "market" housing) required to meet the identified
need.
— Set out the circumstances where off-site affordable
housing or financial contributions in lieu would be acceptable.
The policy presumption is that affordable housing is provided
on site and in-kind.
— Explain the approach to Section 106 agreements
or covenants that ensure the developer contribution is suitable
as affordable housing, eg requirements on eligibility, price,
quality and recycling of subsidy.
96. Government does not accept that different types of
housing and tenures make bad neighbours. Draft Planning Policy
Statement 3: Housing (PPS3) requires regions and local
planning authorities to create communities that are sustainable,
mixed and inclusive. It requires authorities to plan for mixed
communities on the basis of household type. In particular, authorities
should plan for market housing on the basis of the range of households
requiring housing. Affordable housing will continue to be planned
for on the basis of housing size and type, allowing authorities
to specify the proportion of rented affordable housing, based
on housing market assessments.
97. Whether a contribution to affordable housing is required
to make a development acceptable depends on the size of the development
and the threshold for a contribution set out in the Local Development
Framework. In determining the minimum threshold, draft PPS3 proposes
to replace existing PPG3 policy which requires sites of 25 units,
with an indicative threshold of 15 dwellings. This will let authorities
seek affordable housing from a greater range of residential planning
applications. Authorities can also go further, setting a different
threshold or series of thresholds, providing they can be justified.
98. Draft PPS3 requires all authorities to include an
affordable housing policy, setting out where appropriate, policies
and/or targets for the size, type and tenure of the affordable
housing element.
Level of affordable housing delivery through planning obligations
99. Planning obligations make an increasingly important
contribution to the delivery of affordable housing. Sheffield
University and Halcrow Group's Valuing Planning Obligations[116]
report found that the percentage of major[117]
residential planning permissions with a planning obligation attached
had risen in England from 26% in 1997-98 to 40% in 2003-04. The
study also found that the proportion of major planning permissions
accompanied by planning obligations in 2003-04 is highest in the
South East (40%) and lowest in the North (7.5%).
100. The number of units of affordable housing delivered
in part through planning obligations has increased from 10,303
completions in 2001-02 to 18,175 completions in 2004-05 (DCLG
HIP data). [118]These
units might also have received some grant funding (see below).
Of the 2004-05 completions, 65% were social rented, 28% shared
ownership, 5% discounted sale and 1% unknown tenure (DCLG HIP
data).
101. The number of planning obligation affordable housing
units granted planning permission increased from about 18,480
in 2001-02 to 37,000 in 2004-05 (DCLG HIP data). There is a time
lag between granting planning permissions and the completion of
a development which to some extent explains the gap between the
amount of affordable housing granted and completions in the same
year. There may also be multiple applications relating to one
site, of which none or only one is built out.
102. Research by the JRF[119]
concluded that once development starts on a site, the terms of
the agreement are delivered in the majority of cases.
103. The Government issued on 1 August 2006 "Planning
Obligations: Practice Guidance", which aims to improve
use of the current planning obligations system, and offers practical
advice on how to develop, negotiate and implement planning obligations.
It also provides real life examples of how to make the process
quicker, whilst providing more certainty. It includes a model
planning obligation agreement prepared by the Law Society.
Housing Corporation policy on Section 106 sites
104. Many schemes approved by the Corporation will be
on sites where affordable housing is funded through a mixture
of social housing grant and developer contributions secured through
a Section 106 agreement. The Corporation's policy for paying grant
on Section 106 sites within the 2006-08 NAHP was:
105. The preference is for affordable housing in Section
106 sites to be delivered without grant input from the Corporation.
106. For grant to be considered, the Corporation requires
early involvement in negotiations over the content of the Section
106 Agreement as it relates to affordable housing, and, in particular,
the expectations about the availability of Corporation grant.
The Corporation's objective in negotiations will be to ensure
that the site delivers more affordable housing or a different
mix (reflecting the Government's approach to mixed communities)
than would have been possible without grant.
107. It is important that the Corporation receives the
best value for grant from Section 106 sites. It will use financial
appraisal tools to help do this more precisely and ensure that
grant on Section 106 schemes obtains additional benefits and does
not artificially inflate land prices.
108. The Corporation will only fund Section 106 sites
which integrate different tenures in a single site design, following
mixed communities principles.
109. Some local authorities have an agreed planning policy
of achieving affordable housing on Section 106 sites without use
of grant. The Corporation will work with such policies, only funding
Section 106 sites in such areas with specific agreement of the
Local Authority and to achieve specific improved outcomes, for
example in terms of tenure mix.
Improved delivery and the Planning Gain Supplement
110. Kate Barker's report recommended that Government
should impose a Planning Gain Supplement (PGS)on the granting
of planning permission, to extract some of the windfall gains
accruing to landowners from the sale of their land for residential
development. Affordable housing delivery is a Government priority
and, if a PGS was introduced, affordable housing would remain
within the scope of planning obligations to ensure the continued
delivery of mixed communities.
111. If PGS is introduced, Government would scale back
the scope of planning obligations. The contribution made by developers
to the provision of affordable housing through planning obligations
currently varies widely (from discounted land to build costs).
In looking at the scaling back the scope of planning obligations,
Government's priority will be to ensure that new housing developments
include the types of housing, including affordable, necessary
to meet a local need identified in the Local Housing Market Assessment
and Local Development Framework.
112. There will be further announcements on PGS before
the end of 2006, once the responses to the Government's consultation
have been considered. If implemented, a PGS will not be introduced
before 2008.
7. HOUSING BENEFIT
AND COUNCIL
TAX BENEFIT
SUBSIDIES AND
THE EFFECT
ON ACCESS
TO RENTED
HOUSING
Housing Benefit
113. Housing Benefit (HB) is an income related benefit
payable to people in all types of rented accommodation. It is
designed to help people with low-incomes to pay for rented accommodation
whether they are in or out of work. People are eligible only if
they are liable to pay rent. Up to 100% of eligible rent can be
paid, depending on, for example, income/household consumption.
People getting the Guaranteed Pension Credit (poorest pensioners),
Income Support or Jobseekers Allowance are "passported"
to full HB as they are treated as having no income or capital.
There are currently 3.98 million family units in receipt of HB
in Great Britain. 38% of these are classified as elderly and 62%
are working age families.
114. There are 0.82 million (21%) HB recipients who are
tenants in private rental sector accommodation. The remaining
3.16 million (80%) are tenants in the social sector. More than
50% of those living in the social rented sector are on HB.. Overall
HB spending stood at £13.2 billion in 2004-05. Of this £3.4
billion was spent on private sector tenants and £9.8 billion
was spent on social sector tenants.
115. The Local Housing Allowance (LHA) is being tested
by 18 local authorities. Unlike current HB, the LHA is not related
to individual rent liability, but on area and property size. In
setting and publishing the rates in this way, the LHA introduces
clarity and transparency which helps tenants know in advance of
renting a property the maximum amount of financial help towards
housing costs provided by the state. Additionally, by setting
the LHA rates at the median of market rents in an area, the LHA
will provide a fairer way of ensuring that tenants can afford
to access property in 50% of the local private rental sector market.
A national rollout is planned for 2008.
116. Temporary accommodation can attract high management
charges and such high rents can be perceived to act as a barrier
to employment. DWP and DCLG are supporting a pilot—the Working
Future project led by the Greater London Authority and East Thames
Housing Group to test how lowering rents and increasing training
opportunities for those in temporary accommodation can help overcome
their worklessness. This involves the tenant paying an affordable
rent by HB (in other words a normal "council" rent),
with the extra costs funded separately, via a direct central government
grant. The project started in September 2005, and is expected
to last two years. Evaluation will take place both on a continuous
basis, and in the latter part of 2007, after the project is complete.
Council Tax Benefit
117. Council Tax Benefit (CTB) is a non-contributory,
income-related benefit that provides help to people with low incomes
to pay their council tax whether they are in or out of work. Like
HB, up to 100% of council tax liability can be paid. People getting
Pension Credit guarantee credit, Income Support or Jobseeker's
Allowance are "passported" to full CTB. There are 4.99
million family units in receipt of Council Tax Benefit in Great
Britain. 48% are classified as elderly and 52% are classified
as working age (under 60). Overall CTB spend was estimated at
£3.6 billion in 2004-05.
116
DCLG-Valuing Planning Obligations in England (May 2006). Back
117
The Valuing Planning Obligations study defined major permissions
as developments of more than 10 housing units. Back
118
HIP data 2001-02 and 2004-05, DCLG Housebuilding Statistics. Back
119
Delivering affordable housing through section 106: outputs
and outcomes (Joseph Rowntree Foundation, 2006).
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