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Memorandum from The Local Government Association (CRED 48)
The
Local Government Association (LGA) represents over 400 councils in
Summary 1. The LGA welcomes the committee's inquiry and believes that councils have a vital role to play in ensuring that housing is provided to local residents, which should be delivered in partnership with developers and other housing providers. Improvements to the flexibility of funding streams and the review of local authority housing finance will allow councils to deliver more housing and to improve the efficiency of housing delivery.
2. The one billion pound housing package announced by Communities and Local Government (CLG) in September 2008 was a step in the right direction to keep hard working families in their own homes and take pressure off scarce council housing. However, the money made available will only help a small number of people who will need it over the next few years, at a time when there are four million people waiting to get a council house. The LGA believe that government should look seriously at allowing councils to lend competitive mortgages and borrow more money against their assets.
3. It is also unclear what steps have been taken to progress this package. Provision of further information should be progressed as a matter of urgency. It is vital that detailed guidance on the implementation of these measures is announced. There is particular concern over the slow progress in clarifying mortgage rescue schemes, as well as concerns about practical implementation, opportunities to utilise existing local authority schemes and powers to assist.
4. The mortgage rescue scheme, which allows councils and housing associations to buy out a stake in a resident's house, will be an effective way of preventing people becoming homeless or having to move into temporary accommodation. This responds to proposals which the LGA has argued for. However, town halls are going to face a difficult task of managing expectations locally; the money being made available really won't go that far. As those with local knowledge councils must be at the centre of deciding where and how any additional money is spent.
5. Whilst it is good news that a £400 million boost funding is being brought forward for affordable housing schemes to deal with the shortage of housing, this shouldn't mean that housebuilding in the future will suffer as a consequence. The LGA believes new money must be made available or problems will simply be stored up in other parts of the housing market.
6. The LGA, in principle, supports any programme - such as HomeBuy Direct - which brings housing within reach of hardworking people. However, it must be carefully targeted both in terms of the individuals who benefit and the housing schemes where it is available. This will ensure that those most in need benefit and that it supports the viability of schemes which bring the greatest community benefits.
7. In addition: · There is a danger of losing skills and capacity in the industry (for example through threats to apprenticeship schemes). Local authorities and other public bodies should contribute to retaining these skills. · Current delivery methods for new affordable housing are at risk (for example Section 106 developments) and new delivery mechanisms are essential. · The LGA believes there needs to be greater flexibility within Housing Corporation grants to ensure local circumstances can be responded to at that time. Even where regional affordable housing targets might not be met on individual developments, this would assist in providing a level of confidence going forward. · We welcome proposals to allow stock retaining local authorities to seek partnership status with the Housing Corporation to access National Affordable Housing Programme (NAHP) funding. However, there needs to be information provided on qualification requirements. · Monitoring suggests shared ownership housing is becoming increasingly less affordable, due high property values and restricted mortgage lending criteria.
8. Developers must be willing to continue to do develop sites and there must be a viable market for the end product. Interventions are needed to: · Mitigate the risk for the developer, without simply transferring this risk to the public and/or independent sector. · Give buoyancy to the market and where possible guarantee an end user.
Achievement of the government's house building targets, both for market and for social housing 9. The current difficult economic climate is having a negative effect on councils' abilities to deliver government housing building targets. However, this not a universal affect nor a clear cut picture. The development pipeline means that it is still too earlier to judge the real impact of the economic slowdown on the total numbers of housing units built, both in the market and social housing sector. Indications are that what is currently in development will complete and that this year will be marginally below target. Delivery for future years remains in question.
Appendix A highlights what authorities have said about their ability to deliver these targets in the current economic situation.
Direct impact of credit crunch 10. Where councils have reported a slowing of house sales in new developments there are a number of reasons: · New purchasers are not coming forward due to market issues, a lack of confidence, a lack of available credit, and because they are waiting to see if prices correct. · Shared ownership sales are almost non existent; reasons cited include the above pressures plus a reluctance to pay rent on top of a mortgage. · People with existing mortgage offers are finding the offer is often not renewed if it lapses or at least reduced to a figure that undermines the possibility of a sale. This is a regular occurrence as development slows down.
11. This reduced market activity has meant that where developers were already on site the build rate has slowed down, and where developers are not yet on site they are reluctant to sign agreements.
12. A secondary impact is that developers want to sell the unsold stock to partner Registered Social Landlords (RSLs). Whilst there is a current demand for social rent there are concerns about selling stock in this way: · Our primary concern is that this may replicate mono tenure estates rather than creating mixed tenure developments. Selling more units to RSLs makes mixed tenure less likely. · Demand may be temporary and whilst we would expect this to remain strong for high quality new build it may undermine future demand in older, less desirable social stock.
Solutions to these problems 13. The LGA believes there needs to be greater flexibility within Housing Corporation grants to ensure local circumstances can be responded to at that time. Even where regional affordable housing targets might not be met on individual developments, this would assist in providing a level of confidence going forward.
14. Flexibilities in relation to intermediate products are welcomed particularly on the rent and purchase type options that have and are being developed by the Housing Corporation. However, the products being developed need, particularly in relation to conversion from shared ownership, to respond to RSL financial imperatives to make schemes stack up financially. Cascade arrangements (for example moving from key worker only type intermediate schemes to accommodation being generally available) need to be abolished to allow for faster turnover on existing stock and on completion of new units.
15. We would also be interested to see more detail of the underwriting arrangements that English Partnerships/Housing Corporation and in turn the HCA may offer and would generally support such an initiative if the arrangements in securing this support were not onerous.
16. In our response to the Housing Green Paper 2007 and in our then Chairman, Sir Simon Milton's letter to Rt Hon Caroline Flint MP (then Housing Minister) in July 2008 we expressed our view that the push to meet house building targets should not be paramount. The targets are becoming increasingly unrealistic in the current economic climate and will potentially lead to negative outcomes such as: · Perverse incentives to develop smaller units at the expense of building both market and affordable family housing. · A continued concentration of quantity of dwellings developed, rather than a focus on quality of homes and public spaces. · Public subsidies encourage the development of mono tenure social housing which is not conducive to achieving sustainable communities.
17. The LGA agrees that a realistic consideration of targets is needed, to ensure that this is balanced with a mix of tenure and property types. If this is not done the current problems will only be exacerbated in the future as the wrong types of property are developed in the wrong locations.
Regional Spatial Strategy (RSS) Targets 18. There is a growing recognition that RSS targets will not be met - either in total or for affordable housing - for 2008 and possibly subsequent years. However, underlying demand for more homes is strong and must be planned for. As the credit crunch resolves itself and finance is more available, house prices may accelerate due to demand exceeding supply. Plans must be in place to prevent or respond to this situation. This includes measures to control and improve land supply.
19. The current financial climate is putting a strain on delivery and the LGA would ask that the issue of the five year land supply is reconsidered[1]. If councils are unable to demonstrate that completions are occurring, and therefore do not have a five year supply, they would potentially have to give permissions in inappropriate locations or may lose appeals. This will in turn hinder councils work to develop sustainable communities.
Fees 20. Almost all local planning authorities use planning fees as a real source of income. The reduction in applications will have an impact on a council's ability to manage the service and move forward planning applications.
The financial viability and ongoing business of housing associations 22. The LGA would urge the Committee to consider the financial viability of council housing alongside that of housing associations. The LGA are in the process of developing our own local government ask for housing finance, which will allow authorities to manage their business and develop new housing for their tenants and residents.
23. The LGA and its partners believe that local authority housing finance needs a fundamental reform. This reform should be based on the following principles: · A council's housing rents should be spent on that council's housing and their neighbourhoods, and not allocated elsewhere. · Tenants should not pay a 'tax' to government via a redistribution mechanism. Where there is a need for subsidy, this should be met from general taxation in the same way as any other public spending need. · Decisions on resource allocation should be made at a local level and not by central government. · The Local Government White Paper places councils at the centre of local decisions, with the new local area agreements (LAAs) giving the power to coordinate the work of partner agencies to ensure consistent services for the public. Yet local authority housing finance is centralised and creates a parent-child relationship with local government inconsistent with the new policy agenda. · The LGA believes that local management and local decision making on spending and services will deliver services that best suit local needs. Councils deliver effective local services in conjunction with residents when empowered to do so. · Councils have a vital role to play both as sustainable community planners and as housing providers and managers. The LGA want to see finance solutions which secure the long term viability of local authority housing as well as the well-being of tenants and residents. · Councils are important deliverers of affordable housing and community services. Freeing them from the constraints of a defunct finance system will allow councils to deliver more housing and to assist the government in delivering on is Housing Green Paper pledge of producing 3 million new homes by 2020.
What does local government need to deliver? 24.
To deliver this agenda the LGA believes the following changes are essential. These form part of the LGA's "My rent went to
· The ring fence 25. We believe that in principle it is appropriate for a housing revenue account (HRA) ring fence, to ensure that resources are allocated to housing. However, we believe that councils should have the freedom to decide in agreement with their tenants how this money is spent. The local ring fence acts to protect tenants locally from leakage of HRA resources to other council priorities. A similar principle should operate at national level ensuring that council housing resources are ring fenced for council housing expenditure.
· Capital Receipts 26. The LGA and its partners have long called for local authorities to be able to retain 100% of capital receipt from Right to Buy. Authorities would then be able to reinvest this money in additional housing provision. The current 25% retention is based on a historic notion of debt for the original build. However, this historic debt will have in fact been paid off by local authorities in previous years through the subsidy system. The retention of 100% of capital receipts will bring Right to Buy properties in line with the rules surrounding Social Homebuy and other non Right to Buy receipts.
· Rent Setting 27. The LGA believes that councils should have enough resources to enable them to manage their properties effectively. Under the current rent restructuring system local authorities are not able to decide what rent is appropriate for their area. Current centrally decided rent levels contradict the government's commitment to localism in the Central-Local Concordat.
28. The working group believes councils with their tenants should to be able to determine the rent level that suits their management, maintenance and investment needs. We believe that rents should be reasonable and would expect councils to be able to justify their rent increases to tenants. Where tenants have a concern about the rents set by the council then the new tenant regulator could be asked to assess the acceptability of the rents set.
Housing Associations 29. As the private sector reduces the amount of housing it is producing it is more important then ever that housing associations work constructively with their local authority partners to deliver the affordable housing needed. The financial viability of these organisations is therefore essential.
30. In order to achieve this, the LGA recommends that: · Housing Associations need to review their business plans and financial investment strategies up until 2020. They should then provide local authorities and the Homes and Communities Agency with an estimate of financial viability and year-on-year estimates of how many units their business and financial investment process could deliver. · Housing Associations should also provide an estimate of what resources they might provide up until 2020 that will allow customers to access affordable housing opportunities. · Authorities have noted that as it is becoming harder for associations to borrow there is a reduction in the amount of development coming forward from this sector.
Evidence from authorities on this issue is attached as Appendix B.
Housing Corporation Grant 31. The Housing Corporation ultimately needs to be more flexible. Its approach to value for money is not helpful and there is a reluctance to front fund development. The Corporation must take a more holistic approach with the districts working together.
LGA proposals to ensure the financial viability of housing associations. 32. For Housing Associations to remain financially viable the following must be considered: · Recycled Grant Funding should be used for land purchase and not for units as is currently the case. · The Housing Corporation needs to increase the grant rates for units in both urban and rural schemes whilst taking into consideration differing land values. · Interest rates should be reduced for loans for Housing Associations. · PPS3 and Sustainable Community requirements have increased the provision of shared ownership flats which are standing empty. Grants should be made available for these units to make schemes viable. · Increasingly shared ownership applicants are unable to access mortgages. This in turn increases the pressure on the limited amounts of affordable rented housing. The continuing preference for Housing Associations to develop shared ownership will not be financially viable. · Housing Corporation grants to developers are being allocated for lower standard units than is the case for Housing Associations. · It is essential that support for developers' capacity and skill retention is given, for example by bringing forward improvements. · All Regional Housing Board funded schemes should include a clause in the contract to use local labour. · Off the shelf homes should be available for purchase from private developers by Housing Associations if of acceptable quality. · More flexibility may be required for local authorities in the sales of low cost home ownership. · There should be an increased ability to use commuted sums, capital receipts and partner organisations to purchase completed homes and land. · Housing Associations should be supported to buy land and the Housing Corporation should be encouraged to provide funding. For example, through more flexibility in the payment of grants such as an increase of the start on site payment to 60%, or a reversion to an acquisition tranche, enabling housing associations to purchase and landbank sites. · Housing Associations should be able to switch the tenures in on-going and planned schemes from shared ownership/discounted sale to gain more rented housing. The Housing Corporation is currently considering this on a case by case basis. · There is the potential for Housing Corporation/HCA to provide additional grant/equity stake to support the development of rented homes, which are later sold and the investment repaid. · Sub-regionally it will be necessary to review the delivery requirements for affordable housing programmes over the next two years in the context of pressures on section 106 negotiations and to alleviate pressures on waiting lists and the potential for overcrowding. · There should be assistance for the remediation costs of brownfield sites.
Measures to help existing and prospective homeowners affected by the credit crunch. 33. Councils are actively working to help people affected by the credit crunch and are developing a range of initiatives to help. These include: · In many authorities housing options work is increasingly focused on early intervention and prevention of homelessness. Much of this work links up with training and employment advice. · The development of Tenants' Accreditation Scheme alongside the various Landlord Accreditation Schemes. · Rent guarantee schemes which assists the financially disadvantaged to access the private rented sector. A deposit or rent guarantee is provided to landlords, with the properties being managed by councils. · Housing Associations to be able to change the tenures in ongoing and planned schemes from shared ownership/discounted sale to gain more rented housing (the Housing Corporation is currently considering this on a case by case basis). · There is potential for the Housing Corporation/HCA to provide an additional grant or equity stake to support the development of rented homes. These are later sold and the investment repaid. · Encourage and support landlords to rent out empty homes, substituting rental income for capital growth.
Attached as Appendix C are a number of further measures that LGA members are taking to protect residents affected by the current economic conditions.
Appendix A Evidence submitted to the LGA by member councils
Over
recent years RSLs developing new build schemes in
Each borough will clearly have its own characteristics which may facilitate development using the extra £400m made available and existing SHG resources. For Hammersmith and Fulham for year three of the development programme we are currently monitoring (2010/11) we have identified a significant downturn in the numbers of units that may be delivered in the borough.
Although discussions continue with both RSL and private developers there has been generally a slow down in approach and nervousness in terms of how the housing market will go over the next one to two years. Officers have not perceived the offer of additional social housing grant as having a positive effect with both sectors being risk averse in an uncertain market. RSLs are also concerned as to their existing commitments in terms of the decreasing value of their landbanks (a potentially significant issue in a high value borough) and the uncertainty over the shared ownership and market elements of their completing developments.
North Tyneside Council In some areas reducing house prices means that the house price to income ratio is decreasing making housing more affordable for a wider range of people. In two schemes which were about to go ahead, changes have been made to ensure the schemes are not affected by the crunch. In one scheme, the developers have agreed to change the house types (moving away from the standard has allowed more flexibility in costs) and in the second scheme, the amount of affordable housing has been increased with the Council applying for further Housing Corporation grant to cover the difference.
However,
some councils are seeing early and real difficulties with delivery of numbers
and tenure mix. In
While a small number of landowners may make sites available because of cash flow problems most landowners are retaining their land holdings pending an increase in land values. Developers are not coming forward at the same rate for planning consents that require affordable housing quotas.
Some developers see the present diminishing housing market as a good time to seek planning consents on sites where affordable housing quotas are required under Planning Policy. This is because viability appraisals may reveal that affordable housing quotas are not viable because of the reduced and diminishing values and therefore developers may hope that significantly reduced affordable housing will be required. We are addressing this by agreeing an initial quota with an uplift included to account for any subsequent increase in values.
Where negotiations are able to take place for S106 affordable housing contributions it is difficult to agree a tenure split for the affordable housing (rented/shared ownership) because of the uncertainty about the likelihood of being able to sell the shared ownership homes.
Appendix B Evidence submitted to the LGA by member councils
Because of the level of Housing Corporation grant into RSL schemes, viability has relied upon a percentage of schemes being sold on shared ownership. Due to the lack of shared ownership mortgage products shared ownership properties are difficult to sell, as it is increasingly difficult for people to obtain the mortgages they need.
Consequently RSL schemes that require some shared ownership units for viability reasons will not proceed.
We are very actively pursuing options for the future delivery of affordable housing through a local asset backed vehicle. An independent options appraisal is being commissioned, but in the light of the credit crunch and the current state of the property market it may not be appropriate at this time for the Council to put land assets forward if market sales are to be relied upon. However, other mechanisms may be viable with collaboration with the Homes & Communities Agency.
It is our view that the demand for rented housing will increase, not just in the short term because the inability of people to obtain mortgages at present, but also in the longer term. When mortgages become more available lenders will require bigger deposits than in the past. This will affect those on lower incomes who will find it more difficult to save for a deposit.
As a stock-retaining authority we are concerned that, notwithstanding housing benefits, the credit crunch will result in higher levels of rent arrears as some people's incomes are adversely affected. This may also be the case for private sector rented housing. This in turn may lead to increased levels of homelessness.
As far as existing homeowners are concerned higher levels of mortgage arrears are anticipated. The combination of increased rent and mortgage arrears will place a significant pressure upon local authorities.
Actions to address these issues:
· We are encouraging and supporting our RSL partners in following up opportunities to buy for renting (at intermediate rent levels if necessary) 'off the peg' from developers who cannot sell completed or near to completed schemes subject to funding from the Housing Corporation/Homes & Communities Agency. · We are hoping that the new regular market engagement process through the Housing Corporation/Homes & Communities Agency will provide a significantly more speedy response to opportunities that arise and that sufficient levels of SHG will be made available. · We are hoping that the 'national clearing house' approach to the acquisition of privately constructed dwellings from big volume builders by RSLs with Housing Corporation/Homes & Communities Agency funding will not work against local authorities such as ours where there are no sizeable developments. · RSL partners are following up opportunities to purchase for affordable housing schemes sites that property owners need to sell subject to funding from the Housing Corporation/Homes & Communities Agency. · We are currently developing the Development Plan Document for affordable housing under the Local Development Framework. We believe central government should be encouraging flexibility within these documents to enable local authorities to respond to changes in identified needs and the property market. At present we are experiencing resistance from GOSW to such flexibility. · We will need to adopt a flexible approach within S106 Agreements regarding tenure split to allow a switch of tenures if shared ownership units cannot be sold. · The Housing Corporation/Homes & Communities Agency will need to make grant available to turn planned shared ownership units into rented to deal with the serious viability issues being experienced by some RSLs. · Share ownership mortgages have been a niche service with only a relatively small number of lenders offering shared ownership products. Government needs to strongly encourage more lenders to offer shared ownership mortgages. · We are working strongly with the private sector to arrange nomination agreements for intermediate rented housing. · We are taking steps to make more use of empty homes through a new Empty Property Strategy. It is expected that additional intermediate rented will be generated. · We are re-examining the provision of housing advice at the court desk for people subject to possession cases for mortgage arrears to step up homelessness prevention. We are aware that CLG is working to establish a viable mortgage rescue scheme. We consider this approach to be essential to prevent homelessness, but we fear that the scheme may not be sufficient to meet demand.
Three Rivers Some RSL's have stated difficulties in the credit crunch, whereas before the credit crunch RSL's had money to fund ambitious projects and now we have to cut prices on land values and in return they are having to provide us with more social housing than first stated, due the lack of people obtaining a mortgage, and therefore they are unable to sell housing in the current market and shared ownership is showing the same problem. This is seen as a benefit for Local authorities to receive more social rented accommodation.
We have been selling land at the purchase price of £1 to allow affordable housing to be provided. On an elderly development site, we will give the land at a purchase price of £1 to develop the site, which will give us 45 elderly properties on this site for socially renting.
On a current scheme we agreed to a decrease the selling price on the land for a new development, to allow the RSL to proceed with planning submission, as soon as possible
The Credit crunch has allowed RSLs to provide more social rented housing and the possible use of intermediate renting schemes to allow people in the long run to acquire home ownership through shared ownership.
The financial viability of the RSLs is beginning to show. Most RSLs are performing an economic appraisal on projects coming through, some are having problems with funding as they are not able to pay for legal costs are part of the s106 agreement and therefore they have to go to Board Members to agree funds to proceed with projects.
Developers are trying to apply for grants and assistance and asking the local authorities to support their application, but we are unable to, even though the accommodation would be for homeless families but they are not of the required Code of sustainable homes standards.
Staffs are being trained on debt management, as there has been an increase in people applying for bankruptcy and approaching as homeless and seeking assistance. This has helped staff understand how people can fall into debt and them they can make the necessary enquiries while conducting their investigations. This is also hoping to help them assess applicants regarding mortgage rescue measures come into effect from the Government in January 2009. It will be the Local Authority who will assess people's priority need and financial situation to see if the where "reckless". If applicants showed signs of recklessness then it is unlikely that they will be assisted by CAB and the mortgage rescue scheme.
There has also been an increase of people applying to the Housing Register as compared to last year due to the fact that people are facing difficulties and therefore applying for social housing.
Housing Register applications received in the 6 months from 1st April 2007 - 30th September 2007 compared to the number received from 1st April 2008 - 30th September 2008
2007 2008
April 65 85 May 55 85 June 69 55 July 58 78 August 71 78 September 53 57 ___ ___
Total 371 438
We are advised by RSL partners that access to bank funding is effectively closed and is only likely to be achievable by the most financially robust RSLs. Banks are unlikely to be open for normal RSL business for 2-5 years. The alternative mechanisms available for development funding are costly and probably only open to large RSLs that have a very strong credit rating. I understand that new banking rules are to be introduced which will require RSLs to be 'BASIL' rated, which will mean that in the current market, only those with an A rating will be extended credit. For those with a B or poorer credit rating, the implications are obvious.
One of our smaller RSL partners has commented that their capacity to subsidise and deliver new developments is hindered by the call on resources to meet the Decent Homes Standard, and that their capacity to deliver new homes and general financial strength would be increased if the Government were to fund major repair programmes. This would also provide local job opportunities and increase resident satisfaction.
We have not yet had an RSL partner pull out of a development but they are extremely reluctant to take on any new intermediate units.
At least 3 of our RSL partners are pulling out of shared ownership as the lack of mortgage finance is particularly hitting potential purchasers because: · They are seen as high risk by lenders and unable to get competitive rates · Most are unable to secure the deposits now required
The consequence of this is that the cross
subsidy from sales is not available for social rented elements - on one of our
schemes this has resulted in a 200% increase in subsidy requirement. It would
seem from this that any bringing forward of expenditure from future years is
likely to be needed to meet increased subsidy requirements rather than provide
any additional homes. In the
Our RSL partners are also reconsidering providing private sales on a site to cross subsidise as their boards are not prepared to take the risk. Any diverting of funding into supporting schemes with a higher proportion of rented accommodation would therefore be beneficial both in keeping schemes moving and delivering a higher number of rented units that originally envisages and in keeping business available for building firms thus securing jobs in the community. One of our sites which include selective development of Council homes is running into trouble at the 11th hour because of this.
The possibility of LA's bidding for Corporation funding is not a practical proposition for LA's in negative subsidy as 50% of gross rents will go back to Government. For Councils in this position this would only work financially if homes so funded were exempt from the subsidy regime.
We have been in lengthy discussions with CLG and HM Treasury regarding the liability for pooling on receipts from sales of LA owned shared ownership. This has also affected a development by GBC under the Starter Home Initiative where 10 out of 26 flats are standing empty, some for nearly two years, because the Council is in the invidious position of having to pool the receipt from resale at a rate of 75% or risk repayment of the original subsidy. On future surrenders of leases we will have to choose between repurchasing and leaving empty or foregoing our right of first refusal and repay subsidy received when the scheme was developed, if non key workers purchase. The other effect is on our general Shared Ownership stock where only direct sales to the incoming purchaser are possible and removes the option of reducing shares purchased that taking up the option for the council to repurchase offers. Frankly it is disgrace that the Council is put in this position because Government has failed to get its act together over the last two years.
As we have yet to see any details or guidance on how the mortgage rescue scheme will actual operate (paraments for nominations to purchasing RSL's, who they are, processes etc) and the schemes aren't up and running yet it is impossible to comment on their effectiveness. It is to be hoped however that this will provided another useful tool in the prevention of homelessness. The delay between announcement and putting the schemes in place has been something of an embarrassment as we have been receiving enquires from people seeking assistance under the schemes but are as yet unable to provide it.
The Government package does not, as far we are aware, provide financial support for RSLs and Councils to repurchase equity from their existing Shared Ownership lessees when they get into difficulty or to convert them to social rent. Clarification on this would be welcome.
Appendix C Evidence submitted to the LGA by member councils
Currently in development or already developed: · Golden Triangle Mortgage Rescue Scheme. · Introduction of mortgage tax relief on a staircasing basis to help either first-time buyers or those encountering financial difficulties in terms of servicing their mortgage. - Review the mortgage tax relief model that is being developed by the French. · Tax Relief that parents could claim in terms of releasing equity to support their children either purchasing property or servicing their mortgage, depending upon financial circumstances and any difficulties in terms of servicing the mortgage · Working with the Council of Mortgage Lenders to review equity sharing models to ensure that they are financially viable both from the local authorities and housing association perspective, together with their prospective owner. · Schemes need to be developed in terms of financial viability within each region, based upon average salaries, lower quartile thresholds and the value within the local housing market. · Where such schemes cannot work locally, the local authority would work with partners to deliver a wider range of social and intermediate rented accommodation with a potential of moving to home ownership once financial circumstances had changed.
Working in conjunction with sub-regional partners (Norwich and South Norfolk) we are looking to promote the transfer of the uncommitted National Affordable Housing Programme budget for the sub-region, into the Regional Infrastructure Fund, as we consider that by investing in infrastructure, housing sites that are currently constrained will by infrastructure limitations will be able to be brought forward and contribute a proportion of affordable housing without the need for public subsidy, that would have been required through the NAHP.
We are developing a Mortgage Rescue Packages. At present provision it is only available for those households with one charge against the property, any with more than one charge would not meet the criteria for assistance
We are working with our RSL partners and the Housing Corporation to "buy-up" unsold open market new housing to meet a social housing need. Initially this strategy proved successful, however, in recent weeks we have found it more difficult. Several of our RSL partners are now reporting difficulty obtaining credit. It means that several simply do not have funds to secure tenders being offered by developers and those that do cannot offer a price attractive enough for the developer to accept. As result the negative effective of the credit crunch on building work is being compounded still further. A lack of funds, or lending in the system, is also affecting delivery/viability of new small site developments which are within the control of the RSLs - both rural and urban developments. Many of the RSLs now need Housing Corporation grant levels above that previously requested prior to the "credit crunch". Our experience at a recent meeting with the East Midlands Housing Corporation is that they still have an expectation that grant levels requested today are to be at similar levels to those secured 12 months ago. If this strategy continues we may be struggling to secure grant of sufficient levels to deliver affordable housing. Initiatives being pursued:
· Council Facilitated Mortgages The City Council is in discussion with major lenders regarding the potential to facilitate Mortgages. The aim is to give access to mortgages to households who have the means to become home owners and could secure a mortgage in more normal times but have difficulty in the current climate.
· Equity Loans for Purchase The City Council currently provides Equity loans for Re-location. These are intended to provide all or part of the finance required by low income owner occupiers to bridge the gap between the compensation money available for the current dwelling and the purchase price of a replacement home. The loan is secured as a percentage of the value at purchase and the same percentage of value is repayable on the disposal of the property. No interest is payable during the life of the loan.
The Council is also investigating the options of whether this same model could be used to support first time buyers in acquiring a new-build property or a second hand property off-the-shelf. The level of public subsidy required would be similar to that provided to shared ownership but the product would have a significant number of advantages:- o It is simple and easy to understand for purchasers and lenders o It is likely to be perceived as fairer as there is no rent to pay o If the equity loan acts in lieu of a deposit, the product is likely to provide access for many households who would currently have difficulty accessing credit.
· Rent to Mortgage Various products are being developed which are aimed at people who can afford to rent at market rent or intermediate levels with the aim that they purchase at a later date.
The advantage of these products is that they can be used to attract households who have both the means and a strong intention to buy but are unable or unwilling to purchase at present due to the lack of a deposit and/or caution about the state of the housing market.
· Proposal The City is working up a proposal in partnership with RSLs that would ask the Homes and Communities Agency to allow RSLs flexible use of grant already committed on shared ownership projects. This would allow them to offer customers a menu of options including shared ownership, equity loan and rent to mortgage. We would also be seeking to discuss the possibility of the HCA making funds available from the Affordable Housing Programme to finance equity loans for purchase.
The City has established asset backed regeneration vehicles to lead regeneration and new development in Norris Green and in Anfield. The long term nature of the partnerships and the risk-sharing involved will mean that the partnerships can better plan its response to market conditions taking a long term view. Our experience to date is that this produces a less volatile response to market conditions.
As set out above, the credit crunch also has a potential impact on owners and landlords investment in their own homes. The City and our partners have a number of products to support home owners including · Equity loan for improvement · Handypersons scheme · Group repair · Energy efficiency measures
The City has recently negotiated with the PCT resourcing of a Healthy Homes Initiative with particular focus on the private rented sector. In addition we are in conjunction with the Supporting People commissioning body reviewing our requirements for assistance to vulnerable home owners in maintaining their homes.
Offer an (oversubscribed) Decent Homes Grant which helps vulnerable people (people on benefits) improve their homes and offers assistance to people in Borough to buy empty homes.
The grant has financial limits and enquiries always outstrip available budget, but through the new South West Regional bidding regime for Private Sector Housing Renewal Funding, we hope next year to introduce a system of loans as per government good practice. However, as part of a Gloucestershire consortium bid (alongside initial proposals for a Gloucestershire Private Housing Strategy Framework) we are aware that the credit crunch will mean that grants are still necessary for those in the most need. Therefore I would suggest that PSR money should remain, continue and will always find a good home for those affected by the 'credit crunch' if it was increased. I think you would receive a similar response from my peers in other authorities.
We also help contribute to the Gloucestershire Warm and Well project, operated on our behalf by Severn Wye Energy Agency. This has several funding streams. They take a lead in the Gloucestershire LAA and can be seen as a good practice model in the area of affordable warmth, fuel poverty as well as best use of funding.
November 2008 [1] Planning Policy Statement 3: Housing published in November 2006 set out a requirement for local planning authorities to ensure that there is a continuous five year supply of deliverable sites available for housing. [2] In response to the amendments tabled by Baroness Hamwee in the Lords Committee stage of the Planning bill, Baroness Andrews stated: Amendments Nos. 412 and 413 insert new clauses that allow local planning authorities to advertise planning applications on the internet rather than in local newspapers. I understand the problem of accessibility and the case about cost. There is merit here, and I understand why the LGA is concerned. It may be that readership levels of local newspapers are not as high as they once were. However, they still serve a useful purpose, and I do not think we should exclude people because they are not online. My local newspaper has a tremendous following. This is an important point, and we will consider the publicity requirements for planning applications generally as part of the review and simplification of the Town and Country Planning (General Development Procedure) Order 1995. We are taking on board the issues raised by the noble Baroness. If we need to make a change, there is no need to do so in primary legislation. We could do it in secondary legislation. I hope the LGA will be satisfied with that. |