Memorandum by the Joseph Rowntree Foundation
ABOUT THE
JRF
The Joseph Rowntree Foundation (JRF) is one
of the largest social policy research and development charities
in the UK. It supports a research and development programme that
seeks to understand the causes of social difficulties and explore
ways of overcoming them. This is combined with extensive practical
experience of housing and care provision through the Joseph Rowntree
Housing Trust (JRHT). We are a strictly apolitical organisation.
Our research is made freely available to all through our website
(www.jrf.org.uk).
This memorandum has tried where possible to
address the areas of interest expressed by the committee and has
therefore used bullet points from the inquiry notice as titles.
However, due to there not being suitable recent JRF research available,
this paper has not addressed issues of:
— the geographical distribution of
subsidies for affordable housing;
— the effectiveness of different social
housing models including traditional local authority housing,
ALMOs, housing co-operatives and housing associations;
— the priorities and effectiveness
of the Housing Corporation, English Partnerships and the Regional
Housing Boards in responding to housing needs;
— the effectiveness of housing benefit
as a means of providing access to rented housing to those in need.
SUMMARY
— Following its overall decline during
the last century, the private rented sector now caters for a number
of specialised needs.
— Recent growth in the private rented
sector has been concentrated in areas which witnessed the largest
decline in the 70s and 80s.
— Despite improving quality in recent
years, private rented accommodation is still the most likely tenure
to be without central heating.
— The private rented sector is still
dominated by small landlords and in need of institutional investment
if supply is to be increased without removing properties from
owner occupation or the social sector.
— Growth in social rented and affordable
properties will increasingly be dependent on the outcomes of S106
agreements.
— S106 agreements not only present
an opportunity to increase supply, but are as importantly an opportunity
to create sustainable mixed communities.
— However, a number of barriers and
concerns need to be reduced/addressed if the greatest potential
is to be made of this. Notably it would seem that successful S106
agreements are dependent on a buoyant housing market and state
subsidy.
— Work still needs to be done to convince
developers and local residents that mixed communities are desirable
and that social tenants do not equate to "problem tenants".
While incentives need to be provided to ensure that S106 agreements
produce sufficient family homes to ensure that communities are
mixed in demographic terms, alongside tenure and income.
— Finally, although S106 agreements
have great potential to increase supply, on their own they will
not be sufficient. There is still a significant role for RSL-led
development and greater consideration should be given to the Government's
role in providing gap funding and the role that can be played
by local authorities and others in releasing land.
THE ROLE
AND EFFECTIVENESS
OF PRIVATE
RENTED HOUSING
IN MEETING
HOUSING NEEDS
1. The JRF has recently published extensive
research, based on recently released census data, which examines
the state of the private rented sector.[5]
It is worth drawing the Committee's attention to a few areas of
interest highlighted by the report.
2. For much of the 20th Century, the size
of the private rented sector has decreased in size and moved from
being a traditional, general form of housing to one that now typically
caters for specialised needs. The research found this to focus
on five main roles:
— a "traditional role", housing
people who have rented privately for many years;
— flexible, easy access housing for
young and mobile people;
— accommodation linked to employment;
— a "residual role", in housing
people who are unable to access owner occupation or social renting;
— and as an "escape route"
from social rented housing.
3. This is perhaps unsurprising, but it
does highlight a unique role for the sector. Those who use the
sector in its "traditional role" are seemingly declining
in their make up of the market. For example, single pensioner
households have decreased by a third (1981-2001) in their use
of it. It aids large proportions of young people by providing
them with accommodation during higher and further education. It
allows them to take jobs outside their "home town".
There is still a significant minority of privately rented properties
that are employment-linked (5%); these are typically in non-deprived
areas (both urban and rural) and occupied by a higher proportion
of people in managerial/supervisory roles. This perhaps suggests
that the private sector, along with the state, is having to provide
some element of key worker housing, though employers could perhaps
do more.
4. A specific role of the sector not covered
above is that it provides a significant proportion of the accommodation
used to house homeless people; 32.7% of the total households granted
temporary accommodation (5.5% of all private rented stock). Further,
it is the most ethnically diverse sector with all BME groups over
represented in the sector.
5. Those areas which have experienced above
trend growth in rented accommodation over recent years (1991-2001)
seem to have been those areas which experienced the largest decline
in the sector over the previous two decades (1971-1991).
6. The research found there to be no link
between the levels of private rented houses and the levels of
multiple deprivation, breaking the stereotypical 1960s view of
the sector. However, the private rented sector still in areas
displays sub-average quality levels of accommodation. Private
sector properties are twice as likely to have no central heating
when compared to all other tenures, with 17.4% nationally not
having any, which rises to as high as 23% in areas like Yorkshire
& Humberside, and as low as 13.1% in the North-East region.
The households in this sector most likely to be without central
heating are single pensioners (25.7%).
7. There is also an issue of whether there
is sufficient local authority capacity to aid private sector renewal.
This work found that while 80% of housing stock is in private
ownership, over half (54%) of all local housing authorities employed
fewer than five full-time members of staff on private sector housing
renewal activity, and 26% of authorities had less than three people
undertaking such work.[6]
8. In ownership terms, the sector is (still)
characterised by small-scale landlordism. The 2003 Survey of Private
Landlords[7]
revealed that two out of three landlords were "one-person"
enterprises, and that only one in three let properties as a main
business. Individual landlords tended to have more modern stock
in better condition, and to be more represented amongst the 90%+
of privately rented stock that is not in low housing demand areas.
The survey also showed the significance of new entrants to the
sector; 16% of landlords had been in the sector for less than
2 years, 88% of whom were private individuals. While these landlords
have improved the quality of the sector and expanded its supply,
they have not significantly contributed to an increase in overall
supply, suggesting the need for larger, institutional, players
to enter the market. This formed one of the main conclusions of
the 2002 JRF/Shelter Private Rented Sector Commission report.[8]
9. The Foundation, through its City-centre
Apartments for Single People at Affordable Rents (CASPAR) in Leeds
and Birmingham, has shown that strong positive returns for such
investors are possible.
10. This small landlordism is likely to
have increased further since the above statistics were recorded
given the continued rise in the buy-to-let element of the sector.
It could well be this group that is driving the current further
growth in the private rented sector (though of course increases
in buy-to-let mortgages can not be equated directly with increases
in small scale landlordism).
PERCEPTIONS OF
SOCIAL SECTOR
TENANTS
11. Though the JRF has not recently undertaken
any research specifically on the requested area of the perceptions
of social-rented sector tenants, we have recently commissioned
some research from York University into the perspectives of those
living in affordable high density housing, which we would be happy
to share with the Committee when the results are available in
late 2007.
THE ROLE
AND EFFECTIVENESS
OF THE
PLANNING SYSTEM,
INCLUDING SECTION
106 AGREEMENTS IN
THE PROVISION
OF RENTED
HOUSING AND
SECURING MIXED
TENURE HOUSING
DEVELOPMENTS
12. The rise in households in the UK and
the failure of overall housing supply to keep pace has been well
documented.[9]
Alongside this trend in recent years, the number of homes built
through S106 agreements are rapidly increasingly in their proportion
of the socially rented and affordable stock that is built. As
it is unlikely that there will be a large increase in state spending
in this area and, because some Housing Associations find it difficult
to acquire affordable land for new build, this is likely to become
an extremely important form of providing socially rented and affordable
housing in the future (if it is not already).
13. JRF research[10]
has highlighted that between 2000-1 and 2002-3 the proportion
of affordable homes built through S106 agreements increased from
30% to 47% of all affordable completions. While during the same
period non-S106 completions fell from 21,451 to 13,949. The same
research included a survey of housing associations undertaking
development work. This noted that in only 38% of cases S106 developments
were taking place where direct RSL development may have occurred
and notably that such sites were increasingly difficult and expensive
to obtain and develop. Overall, housing associations increasingly
saw themselves as only able to gain access to land in the areas
of greatest housing pressure. Many housing associations stressed
that land supply was their main constraint and that, for them,
the prime rationale of S106 is that it provides land.
14. This memorandum will later highlight
some of the barriers to greater outputs from S106 agreements,
but firstly it is important to draw attention to a significant
other benefit of them. S106 agreements provide a means of increasing
social and affordable housing, but as importantly, they present
a significant opportunity to create mixed communities. Given this,
the supply of rented housing (both social and private) is inextricably
linked to the wider supply of housing, and it is important that
it is considered as such.
Mixed Communities
15. The JRF's work into mixed communities[11]
has shown that there is no one definition of what one should consist
of and that nor should there be. Mixed communities can be a mix
of incomes, tenures, demographics and ethnic groups, and how this
mix comes about can be caused by a range of factors, including,
tenure mix, local authority allotment, market pressures, migration
and property specifications; some active and some passive. Most
importantly, the mix of community most likely to create a sustainable
community is going to be one that responds well to local demands
and pressures.
16. Ultimately a mixed community is one
that avoids a neighbourhood becoming too socio-economically and
demographically homogenous—relative to the wider community.
This can occur as much at the higher end of the economic spectrum
as it can in more deprived areas, though it is of course the latter
which is the focus of most research. A number of research pieces
shows that concentrating deprivation magnifies the individually
negative aspects of being in poverty: low educational achievement,
poor mental and physical health, worklessness, the likelihood
of being a victim of crime or committing a crime, low self-esteem
and well-being while often reducing access to more mainstream
services, such as financial and essential retail services.
17. Defining them positively, a JRF good
practice guide based on current example of mixed communities[12]
has identified a number of key attributes for their long-term
success:
— a clear assessment of local housing
needs and market conditions;
— a briefing and master plan process
which produces a full range of housing types and sizes, located
in an attractive environment;
— a vision promoted and sustained by
all stakeholders;
— a locally based and unified system
of housing and environmental management embracing all stakeholders
and including substantial community involvement.
18. Housing markets in all areas in the
UK are changing rapidly. Although economic self segregation has
always been with us and will continue to be a real choice for
the very wealthy, to those further down the socio-economic ladder,
the Right to Buy, the Right to Acquire, Buy to Let, flexible tenure
and equity release products, mean that neighbourhoods are increasingly
likely to be tenure fluid. An individual home is no longer fossilised
in the tenure for which it may originally have been intended.
There is no evidence to suggest this is a temporary trend, indeed
indications suggest it is likely to become more the norm as, due
to planning guidance and regulation and increased interest in
residential investment, new communities are built as mixed tenure
and as more and more often, off-plan sales are made to Buy to
Let investors. It is given this fluidity that the supply of rented
accommodation cannot be considered in isolation from all other
tenures.
Achieving increased supply and mixed communities
through S106
19. While, as noted above, S106 are unlikely
on their own to be able to regenerate areas facing deepening decline,
they have an important role to play to ensure that in other areas
the supply of housing that is built is mixed for the longer-term
benefit of residents. It is therefore vital that the most is made
of this potential.
20. In 2002-03 just over 2,260 affordable
homes were completed through the S106 policy without any public
subsidy, 9 per cent of the total. The remainder rely on SHG and
subsidy from other sources including the now abolished Local Authority
SHG (LASHG), Single Regeneration Budget and Safer Communities
Grant. Land costs are a significant element in the total cost
of S106 provision and contributions from private developers are
important in reducing these costs and bringing total development
costs within levels that are within the limits imposed by the
Housing Corporation funding regulations.
21. Importantly for mixed communities, a
survey of housing associations[13]
found that nearly 70% of respondents believed that the growth
of S106 meant they were developing in more expensive areas (in
terms of land costs) and 68% stated they were able to develop
in areas not normally associated with affordable housing. These
agreements are also producing value for money homes as only minor
differences were found in the amount of Social Housing Grant required
on S106 sites compared with other sites because contributions
from private developers bring S106 site costs down to funding
limits in line with non-S106 sites. S106 sites funded through
the use of public subsidy will thus produce a similar number of
homes as the same level of funding on non-S106 sites, despite
being located in areas of generally higher land costs. The importance
of this is further highlighted by research currently being undertaken
for the JRF.[14]
This has noted that new social housing units are still being concentrated
in more deprived areas, while new private housing is more evenly
spread (though this may be caused by new social build occurring
on demolished sites, which actually be increasing the tenure mix—this
is being further examined at present as part of this research).
The same research has also further highlighted that one of chief
reasons for failed regeneration initiatives are that they are
unbalanced and have failed to change the social standing of the
neighbourhoods.
22. This further highlights the need for
the supply of rented housing to be considered in relation to wider
supply and mixed communities. There may be instances in which
it is advisable to reduce the provision of social rented housing
within an estate. This can include demolition, as noted above,
seen most commonly in HM Pathfinder areas, but also extends to
housing sales. A forthcoming JRF publication[15]
highlights the benefits estates can realise if certain properties
are sold for owner-occupation in order to make the community more
mixed. As is the case of JRHT-run New Earswick and as was suggested
for rural areas by the JRF Rural Housing Policy Forum,[16]
covenants can be placed on the property to allow the RSL first
refusal on buying the property back when it is next put up for
sale to allow some continued control over the tenure mix and to
ensure the new owners do not then turn this into private-rented
housing (defeating the point of the original sale). Beyond the
creation of a greater tenure mix, the community can further benefit
from the reinvestment of the sale funds into increases in or improvements
in housing stock or new community facilities.
23. Turning back to areas where greater
supply is needed, further research[17]
commissioned by the JRF, based on the study of 39 developments,
has highlighted that once a development starts on a site, S106
pretty much delivers what was agreed. However a number of problems
and concerns remain and are highlighted by the range of aforementioned
research above:
— securing homes through S106 depends
heavily on the buoyancy of the housing market—a strong market
makes it easier to agree the original S106 and to deliver the
desired affordable output (a downturn will present greater challenges);
— there is growing concern about the
quality of the housing produced—but this applies across
housing development as a whole and is not specific to affordable
housing;
— mixed communities are not just about
varied incomes and tenures, but also household types—JRF
research has concluded that while inner-city[18]
mixed communities are good places to raise children, a lack of
family homes is not allowing families to remain within them (research
noted that developers were reluctant to address the needs of larger
families where land values are high, and that changing incentives
will be required to change this behaviour);[19]
— while the majority of S106 homes
are delivered on the same site as those homes available on the
open market, there is still work to do in persuading developers
and local residents that social housing tenants do not directly
equate to "problem tenants";
— although Social Housing Grant limits
are not seen as slowing development at the moment they could become
more binding if the number of S106 permissions were to more rapidly
convert into developments.
24. Further concerns were highlighted (there
are also wider concerns to do with developments not specific to
S106 sites):
— problems remain over the length of
negotiations with the start of the process to occupancy taking
up to four years for some S106 provision.
— a large number of S106 permissions
do not become developments which could suggest an unwillingness
by private developers to increase supply in certain areas, highlighting
the case that not all affordable and social housing will be supplied
though S106 agreements and that there is still a need for RSL
led developments (this is addressed further below in the gap funding
section).
THE FUTURE
ROLE FOR
LOCAL AUTHORITIES
AND RSLS
AS BUILDERS
AND MANAGERS
OF SOCIAL
HOUSING
25. The final point above is more extensively
raised in the JRF's recent response to the Government's consultation
on Planning Policy Statement 3. This in particular highlighted
that releasing land will not in itself lead to an increase in
housing supply as private developers have a profit motive in ensuring
that areas do not suddenly witness a significant up surge in new
build units. There is still a considerable need for RSL driven
development.
26. Greater consideration should be given
to the use of cross-subsidising, levering existing assets and
partnerships with private sector investors which would assume
that state funding for sustainable communities will be in the
form of Gap Funding. There will be occasions where no funding
is necessary if organisations are inventive and creative in their
use of methods such as those above. Similarly there will be occasions
where short term pump priming only is necessary.
27. English Partnerships has developed expertise
in this area already and there are tried and tested models such
as the Gro grant Initiative (introduced by Scottish Homes in the
1990's) on which to build.
28. Consideration should also be given as
to whether the state is content with grant aid in the form of
gap funding or with being a long term capital investor. The ability
for the state agency to choose the form of funding most necessary,
appropriate and—in investment terms—desirable could
yield significant savings and/or receipts for reinvestment in
social housing.
29. Finally, there is also greater scope
for local authorities to form partnerships with RSLs on certain
developments for joint funding and to help aid community involvement
and ensure the community is mixed and sustainable, as is currently
being undertaken by the Joseph Rowntree Housing Trust in partnership
with City of York Council at Derwenthorpe.[20]
THE LEVEL
OF PUBLIC
FUNDING REQUIRED
TO MEET
SOCIAL HOUSING
NEEDS
30. Though the JRF has not conducted research
specifically on this area, other work undertaken for the Town
& Country Planning Association has highlighted the levels
of demand for housing overall, of which social housing need will
of course be part.[21]
THE RELATIVE
FUNDING PRIORITY
BEING GIVEN
TO SOCIAL
RENTED HOUSING
AS OPPOSED
TO SHARED
OWNERSHIP AND
OTHER FORMS
OF BELOW
MARKET HOUSING
31. Though again the JRF has not conducted
research specifically into the balance of priority, work undertaken
for the Foundation[22]
has demonstrated the scale of the intermediate market which highlights
the potential demand for shared ownership housing. The intermediate
market is made up of those households who earn enough not to require
or be granted social housing but are relatively poor enough not
to be able to purchase an open market property at the lowest decile
(10 per cent) point of local house prices. In 40 local authority
areas 40% or more of all younger (20-39 years) working households
fall into this increasing market, which is concentrated in London
and the South (including many rural areas).[23]
Only through some form of shared ownership or subsidised housing
could these households enter homeownership at their current income
levels, which gives some suggestion as to the potential latent
demand for such schemes.
THE IMPACT
OF THE
OPERATION OF
COUNCIL TAX
BENEFIT ON
THE AFFORDABILITY
OF RENTED
HOUSING
32. While the JRF has not conducted any
specific research into how Council Tax Benefit relates to the
specific affordability of rented housing, a wider piece of work
on this area highlighted a number of difficulties with it.
33. The qualitative work[24]
noted that many low-income households struggle to pay Council
Tax and that there were poor take levels amongst pensioners. Amongst
working age recipients its was concluded that the benefit was
in some ways being used to try to remedy the regressive nature
of the tax, which in turn (due to it being means-tested) often
reduced people's work incentives. Further, many interviewees considered
the benefit rules to be highly complex and subject to a number
of administrative problems.
5 The modern private rented sector, David Rhodes,
2006 (JRF/CIH). Back
6
Implementing new powers for private sector housing renewal,
Rick Groves and Sian Sankey, 2005 (JRF). Back
7
English House Condition Survey 2003-Private Landlords
Survey, 2003 (ODPM). Back
8
A new settlement for the private rented sector, 2002 JRF/Shelter
Private Rented Sector Commission). Back
9
For good succinct summary of the latest figures on this please
the see the recent, Housing and neighbourhoods monitor,
2006 (JRF/NPI). Back
10
For an overview the main issues in this area please see, Land
and finance for affordable housing, Sarah Monk, Tony Crook,
Diane Lister, Steven Rowley, Christine Short and Christine Whitehead,
2005 (JRF). Back
11
Neatly summarised by: Foundations: Mixed Communities,
2006 (JRF). Back
12
Creating and sustaining mixed income communities: A good practice
guide, Nick Bailey, Anna Haworth, Tony Manzi, Primali Paranagamage,
Marion Roberts, 2006 (JRF/CIH). Back
13
Found in: Land and finance for affordable housing, Sarah
Monk, Tony Crook, Diane Lister, Steven Rowley, Christine Short
and Christine Whitehead, 2005 (JRF). Back
14
Transforming places: Housing investment and neighbourhoods
market change, Glen Bramley, forthcoming 2007(JRF). Back
15
Rebalancing Communities: A guide to selling vacant properties
on existing mono-tenure social rented estates, Graham Martin
and Judi Watkinson, forthcoming (JRF). Back
16
Homes for rural communities: Report of the Joseph Rowntree Foundation
Rural Housing Policy Forum, Richard Best and Mark Shucksmith,
2006 (JRF). Back
17
Delivering affordable housing through Section 106: Outputs
and outcomes, Sarah Monk, Tony Crook, Diane Lister, Roland
Lovatt, Aoife Ni Luanaigh, Steven Rowley and Christine Whitehead,
2006 (JRF). Back
18
More than tenure mix: Developer and purchaser attitudes to
new housing estates, Rob Rowlands, Alan Murie and Andrew Tice,
2006 (JRF/CIH). Back
19
A good place for children? Attracting and retaining families
in inner urban mixed income communities, Emily Silverman,
Ruth Lupton and Alex Fenton, 2006 (JRF/CH). Back
20
For more information please visit:
http://www.jrf.org.uk/housingandcare/derwenthorpe/background.asp
Back
21
More Households to be Housed: Where is the Increase Coming
From? Alan Holmans and Christine Whitehead, 2006 (TCPA). Back
22
Affordability and the intermediate housing market: Local measures
for all local authority areas in Great Britain, Steve Wilcox,
2005 (JRF). Back
23
Homes for rural communities: Report of the Joseph Rowntree
Foundation Rural Housing Policy Forum, Richard Best and Mark
Shucksmith, 2006 (JRF). Back
24
Struggling to pay council tax: A new perspective on the debate
about local taxation, Michael Orton, 2006 (JRF). Back
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