Conclusions and recommendations
1. The overall success of the Housing Market
Renewal Programme in addressing the problems of low housing demand
in the North of England and the Midlands will depend on local
economic performance, employment opportunities, community safety,
access to public amenities and transport being addressed alongside
improving housing stock.
In transferring oversight of the Programme to the proposed new
Homes and Communities Agency, the Department should require that
pathfinders' physical regeneration plans align with broader plans
to address the vitality and sustainability of neighbourhoods.
2. The Programme has refurbished over 40,000
homes, acquired and demolished 10,000, yet built only 1,000 new
homes, creating a risk that demolition sites, rather than newly
built houses, will be the Programme's legacy.
Revitalising pathfinder neighbourhoods is a long-term project,
with the acquisition of properties under Compulsory Purchase Order,
for example, typically taking five to six years. The Department
should provide greater certainty and clarity over the future objectives,
funding and governance of the Programme in order to foster confidence
amongst local communities and developers.
3. After five years and an investment commitment
of some £2.2 billion, the gap in demand in housing between
pathfinder neighbourhoods and surrounding regions has started
to close but the Department is unable to assess whether this is
due to pathfinder-led interventions or wider market factors.
The Department should enhance its performance measurement framework
to draw on the wider range of socio-economic indicators already
being developed by a number of individual pathfinders. These include
indicators relating to, for example: residents' satisfaction,
levels of crime and social disorder, residents' investment in
properties, educational facilities and attainment, rates of employment
and worklessness, and income rates.
4. The success of the efforts by pathfinders
to restructure housing markets in their areas depends on a co-ordinated
regional approach to planning housing growth.
Plans to increase the targets for numbers of new homes in the
North and the Midlands could fuel the migration of people out
of pathfinder areas, hindering the impact of pathfinder interventions.
The Department should clarify how the Housing Market Renewal Programme
is expected to align with regional housing strategies.
5. Neighbourhood regeneration
is more likely to be sustained if local communities are actively
engaged in the decision-making. Pathfinders' intervention
proposals should take account of the views of existing residents
of an area's problems. Proposed interventions should be clearly
explained to local communities, and community support reappraised
regularly as plans develop and change.
6. The needs of those who wish to remain in
an area should not be overlooked in developing more mixed and
sustainable communities. The Department
should require pathfinders to monitor existing residents' housing
options and demonstrate that those who wish to remain are offered
appropriate options.
7. The average shortfall between the compensation
received by existing residents under a Compulsory Purchase Order
and the cost of a suitable alternative property is £35,000,
with the risk that existing residents are priced out of the housing
market altogether. The Department should
work with pathfinders, developers and private sector financial
institutions to identify ways in which the affordability gap might
be bridged, for example, through encouraging shared ownership
and equity loan schemes.
8. The application of existing rules for Value
Added Tax may encourage developers in pathfinder areas to demolish
and rebuild rather than refurbish. Much
of the cost of new construction is zero-rated whilst most refurbishment
work is standard-rated at 17.5%. The Department should explore
with the Treasury whether there is a case to utilise any scope
within the European Union Value Added Tax Directive to apply a
lower rate of Value Added Tax for the provision, construction,
renovation and alteration of housing where part of a funded social
policy.
9. Pathfinders should ensure their plans do
not threaten the distinctive historical character of neighbourhoods.
It is important that heritage is seen as a positive asset in regenerating
many of these areas. Pathfinders, with English Heritage's help,
are now required to make assessments of the housing heritage in
their areas. The Department should not approve demolition proposals
that are not part of a wider study of landscape and townscape.
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