Memorandum submitted by The Places for People Group (H&R 10)

 

As well as being the UK's largest property management and development group, Places for People is a major house builder/developer and provides a range of social support services including affordable childcare, elderly care and financial services.

The Group has 130,000 customers across the UK and aims to be one of the top six house builders by 2010, being responsible for developing around 3,500 homes every year from small scale local projects to whole area master planning with a focus on being environmentally friendly.

 

Introduction

 

1. This paper outlines Places for People's comments on the Housing and Regeneration Bill.

 

2. Overall, Places for People welcome the creation of the Homes and Communities Agency (HCA) and the Office for Tenants and Social Landlords (Oftenant). We believe these organisations have a vital role to play in the creation of new homes and the regeneration of existing homes and communities.

 

Aims & Objectives

 

3. We believe that the Government's overall aims and subsequent objectives for the Housing and Regeneration Bill are to provide a framework which:

 

· ensures tenants are involved in the specification of outcomes/outputs;

· incentivises excellent customer service and efficient financial performance;

· produces the future volume of houses at levels of quality which the consumer demands;

· caters for an efficient mix of public and private sector investment;

· provides a level playing field for organisations that receive Government funding.

 

4. Such a framework must also take account of the need for long term investment and interventions in communities, together with the organisational stability that is required for that to be successful. It also needs to be flexible enough to cater for emerging socio-demographic trends, such as a more diverse and older population, technological and environmental changes.

 

5. Our analysis has identified three principal issues:

 

· Accountabilities: The Government must set the standards for regulators to monitor or implement (see our comments on Clauses 173-178 set out below);

· Investment: The Government needs to encourage more private sector investment (e.g. equity funding) into the sector so that it can leverage more affordable housing. Consequently, the economic and regulatory framework needs to be designed in a manner that both enables this to happen and also incentivises the innovative use of funding (both private and public) to deliver affordable housing (see comments on Clauses 36 & 111);

· Regulation: The Government should define what forms of social housing are regulated (see our comments on Clauses 35 & 67-76) and how it is regulated (see comments on Clauses 104, 162-164, 181-182, 204-212, 222-229) in a manner that encourages innovation and is not overly bureaucratic.

 

6. We have set out below some detailed comments on specific parts of the Housing and Regeneration Bill. These comments are designed to ensure that the Bill can deliver the aims and objectives outlined above.

 

 

Part 1 - The Homes and Communities Agency

 

Clauses 2-4: We support the objects and principal powers of the HCA including the transfer of previous powers under the New Towns Act 1981 and Commission for the New Towns.

 

Clause 35: We believe the Government needs to give consideration to changing the definition of low cost rental accommodation to be "accommodation which is below the market rent by virtue of a Government capital grant". This will provide housing companies with incentives to create innovative shared or fractional ownership products with no grant.

 

Clause 36: We believe the Government must redefine the way that the current Recycled Capital Grant Fund (RCGF) works to enable organisations that have received Government capital grant funding to recycle that funding to provide either new homes or products that provide access to home ownership. In particular, such organisations should be able to decide how and where they invest previous grant funding receipts on the basis that they provide regular accounts for the allocation of such funds. This will enable organisations to allocate recycled capital grant funds in response to where the affordable housing market needs them most and not on the basis of where the RCGF has been generated.

 

Part 2 - Regulation of Social Housing

 

Clause 67: We believe social housing should be defined as housing that is in direct receipt of Government capital grant funding.

 

Clauses 68 - 70: Low cost rental and low cost home ownership should not be defined by reference to "rent below the market rate" as that could include innovative products which offer early discounts that do not require Government capital grant funding. The definition currently in the Bill could have the adverse effect of preventing this sort of product coming to the market.

 

Clause 71: We believe regulation should only cover homes and products/services which have obtained direct receipt of Government capital grant funding.

 

Clauses 72-76: We believe that social housing stock should be defined as housing that is in direct receipt of Government capital grant funding and therefore once that interest has either been bought out or released, then the property in question should no longer be regarded as being part of the social housing stock. This would provide an incentive for organisations to develop trading models that not only encourage affordable homeownership but also enable Government capital grant to be effectively recycled to projects (both nature and location) that best respond to the affordable housing market needs.

 

Clause 86: We support the ten objectives for the regulator as set out in this clause.

 

Clause 104: Whilst we understand the need for the regulator to obtain information at regular intervals in order that it can carry out its duties effectively, we believe the Bill should require the regulator to devise a standard set of information requirements that organisations will provide annually and that it will only request additional information if the regulator's monitoring or inspection regime indicates that it needs to.

 

Clause 111: We support the need for both for-profit and not-for-profit organisations to produce and manage social housing (as defined above). We recommend that only charitable bodies be defined as not-for-profit organisations, thereby enabling hybrid organisations to both obtain Government capital grant and also be in receipt of equity funding. This is consistent with the conclusions of the Cave Review which recommended the separation of ownership and management functions of organisations for the purposes of regulation. This would mean that hybrid organisations could raise equity finance in one part of the organisation for commercial activities and apply the benefits of this finance to other parts of the organisation that provide social housing. For example, Places for People would be able to bring equity funding into its commercial land trading division, to enable sites for affordable housing to be procured in the open market.

 

Clauses 162-164: We believe any part or full disposal of the house in direct receipt of Government capital grant funding should not require the individual consent of the regulator. Instead, an organisation registered to provide housing with the use of Government capital grant funding should be able to undertake block disposals of properties provided it can demonstrate that it has satisfactorily accounted for the Government funds and acted responsibly in the recycling of those funds. These funds could then be recycled to affordable housing projects (both nature and location) that best respond to the affordable housing market needs.

 

Clauses 173-178: Currently these clauses enable the regulator to set the standards of social housing provision and financial viability of registered organisations, subject to approval from the Secretary of State. We believe that these clauses should be redrafted to enable the Secretary of State to set the overall regulatory framework and standards of social housing provision in a manner that enables the regulator to ensure they are delivered potentially by testing against some codes of practice.

 

The changes outlined in clause 111 enable an overall framework that regulates organisations (or parts of it) that provide social housing as defined by receipt of Government capital funding, whilst allowing other organisations (or parts of it) that provide housing in a competitive environment to be unregulated. Those organisations (or parts of it) that provide social housing with Government capital funding would be subject to regulation which defined some agreed outcomes/outputs (e.g. numbers of affordable housing and sustainable community infrastructure) that would be delivered according to specified price and quality levels. The regulator would receive information on an annual basis and would formally review the performance of those organisations (or parts of it) every five years or so. The key effect of this would be to allow existing hybrid groups of companies where the group body is now required to be an RSL would be allowed to de-register as an RSL to allow it to compete on a level playing field with commercial organisation who set up RSL's within group structures where the parent body is not an RSL.

 

Clause 174: Whilst we agree that it is for the regulator to monitor financial viability and management as set out in Clause 174, we do not agree that financial standards need to be specified in advance as this would preclude the use of innovative yet commercially sound financial management practices, including the benefits from different forms of private funding (e.g. equity). For the avoidance of doubt, we support the principle of the regulator's role to ensure that housing standards are met as set out in Clause 178, but believe that the Government must undertake a consultation on those housing standards prior to the establishment of the regulator so that the powers for the regulator to intervene or bring enforcement action to those organisations that do not meet housing standards can be implemented effectively.

 

Clause 181: We believe that general inspections should only be conducted once every five years for well managed organisations, with the regulator able to inspect more frequently organisations that are not achieving agreed performance criteria. Frequent inspections impose costs and organisational burdens on regulated organisations that are operating efficiently and effectively.

 

Clause 182: In common with our comments on Clause 104; we believe that the Bill should require the regulator to devise a standard set of information requirements that organisations will provide annually and that it will only request additional information if the regulator's monitoring or inspection regime indicates that it needs to.

 

Clause 194: Given that social housing providers will be registered and regulated, we see no reason for the regulator to operate an accreditation scheme.

 

Clauses 204-212: We believe the imposition of fines should be used by the regulator as an initial mechanism to incentivise organisations to improve their performance. Following that, we believe that those organisations deemed to be consistently under-performing by the regulator should then have their housing stock subject to tender bids from well performing organisations. Residents of the affected housing stock should also be given the opportunity to participate in either the reselection of the existing or the selection of a new provider.

 

Clauses 222-229: In relation to organisations that the regulator deems to be consistently under-performing (as set out in our comments to Clauses 2004-212 above), we support the principle set out in these clauses which enable the regulator to transfer the management of social housing and land in receipt of Government subsidy away from non-performing registered organisations.

 

 

Appendix

 

The Places for People Group: structure & activities

 

The Group's key objectives are to provide excellent housing in great places, a wider choice, deliver high quality neighbourhoods and mixed communities, and to work towards ending poverty rather than accommodating it. These are delivered through the internal divisions and closely linked specialist companies listed below, all of which are strengthened by the expertise and financial strength that comes with being part of one large organisation:

 

· Places for People Homes owns and manages the 46,000 homes within the Group. It is active in over 200 local authority areas and works in partnership with a wide range of statutory and voluntary organisations to deliver a locally responsive service. Stock includes rented housing and apartments for families, couples and single people through a mixture of tenures.

 

· Places for People Individual Support is committed to providing the support required for individuals to live independently in the community. Our portfolio of 5,000 homes includes housing and services for older people, people with learning disabilities, homeless people and preventative and practical access to services for women at risk from domestic violence.

 

· Places for People Neighbourhoods ensures that the Group does not simply manage, build and rent houses but supports the regeneration and wellbeing of whole communities. Providing childcare facilities, employment opportunities, training schemes and new business start ups, Places for People Neighbourhoods demonstrates the Group's commitment to communities.

 

· Places for People Development is a major player in construction and is driving forward the sustainability agenda by raising standards and translating this into demands on suppliers. Planning takes place in partnership with communities to support the development of a vision for an area by encouraging participation and local consultation.

 

· Places for People Financial Services will provide flexible financial products such as mortgages, interest free loans and equity shares to tenants and local communities. Providing flexibility and choice for its customers is a key objective for the Group. It does this by looking at the housing market and designing products and financial services that allow people access to housing that meet their needs, and allows them to gain an equity stake in their home.

 

Within the Group, there are a number of closely linked companies providing specialist services and products to local communities. These include;

 

· Castle Rock Edinvar: formed following the merger of Castle Rock and Edinvar Housing Association. It manages 5,000 homes in the Edinburgh and Lothian regions.

 

· Places for Children is aligned closely with the Government's National Childcare Strategy and the Sustainable Communities Plan and aims to meet the needs of parents and communities. Places for Children has invested over £8 million creating neighbourhood nurseries in some of the most challenging and deprived areas of the country.

 

· Making Places, a joint venture with Cofton - the land regeneration and development specialist - to acquire land and deliver thousands of homes across the UK. The venture was formed to procure land for large scale and complex developments that will help to address the country's chronic housing shortage and meet the growing demand for new high quality, energy efficient homes. The partnership will invest £300M in land acquisition over the next two years and currently has plans to develop over 14,000 new homes.

 

· Kush works in black and ethnic minority communities and manages over 700 properties across North London. It helps homeless and socially excluded people access housing, work and education opportunities.

 

 

January 2007