Memorandum by London and Quadrant Housing
Group (CRED 06)
L&Q of course fully support the recent G15
submission to you but David Montague our CEO, has asked me to
write to you with some further thoughts on actions the Government,
working with the RSL sector could take to increase the supply
of affordable housing whilst also helping to stimulate the housing
market.
The Government of course want quick affordable
housing supply and the demand will increase as people find it
more difficult to remain in home ownership. Some mortgage rescue
schemes will help but our view is that over the next few years
Local Authorities are going to be under sever pressure to rehouse
displaced families.
The obvious solution once we have found new
ways of organising our own development programmes (which must
be our first priority) is to embark on a volume street property
purchase programme.
What are the benefits?
— Instant supply of housing—it
takes around four months to acquire and prepare for occupation
a street property compared to around two years for an average
new build scheme. Complex regeneration schemes can take even longer.
— RSL's have worked hard over the years
to develop out mono tenure rented schemes which were expensive
to maintain and to an extent became stigmatised as social housing.
Whilst market rent and intermediate rent as part of an affordable
housing scheme will no doubt help, residents that move into a
street property have instant existing support networks and become
part of an existing balanced community. We think that ideally
there should be no return to mono tenure for new build schemes
as it will threaten balanced communities and undo much of the
good work that RSL's have undertaken over the past 10 years or
so to relieve poverty hotspots.
— A street property programme in terms
of total costs is usually more cost effective grant wise than
market delivered new build. This may ease the pressure on grant
rates.
— The homes are very popular with residents
and overall because of the dispersed nature of the homes can give
rise to lower housing management costs.
— Family housing is where the demand
for affordable housing is at it's most acute—especially
in London. At present giving the housing market there is an abundance
of supply of reasonable quality family homes some of which could
be upgraded to meet decent homes standards.
— With the anticipated slow down of
new build and the take up of Government cash a volume street property
programme would accelerate spend and given that street properties
require on average spend of around £25k to bring them into
affordable housing use this will provide a much needed and quick
boost to the construction industry particularly small building
firms who are going to be severely affected by the market slow
down.
— Because Street property programmes
are single house purchases it could be easier for more RSL's to
access private funding. Large new build schemes are private finance
hungry and often can only be undertaken by large RSL's. Street
property programmes are more incremental in the use of private
finance and can be tailored to the financial capacity of organisations.
— Targeted street property purchase
of larger family homes can help ease RSL's own transfer demands
and free up accommodation for smaller families on council waiting
lists. It can positively help to reduce overcrowding directly
and indirectly.
— The product can be easily adapted
for LCHO when credit markets ease. The old DIYSO product was much
more popular with residents than new build LCHO with the right
targeting and grant rates.
There are of course always some downsides!
— Often street properties can attract
a higher long term maintenance cost although RSL's over the years
have managed this through improved asset management.
— Less Eco efficient than new build
so therefore only likely to be a short term fix in terms of the
current housing market.
— No housing gain for the Government
but at present and for the near and foreseeable future the demand
for housing generally is likely to reduce in practical terms as
the market tightens.
I hope that this gives you some further ideas
for the future and of course L&Q is already embarking on its
own self funded street property programme which we use to ease
transfer demands from our own tenants. A volume programme supported
by the Government would however have a much greater impact and
most importantly help to give immediate relief to an ailing housing
market also providing much needed affordable housing where the
demand is we feel bound to increase as a result of the economic
conditions that are presently with us.
October 2008
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