Memorandum from the National Housing Federation
(LH 01)
EXECUTIVE SUMMARY
— The National Housing Federation London
region welcomed the Mayor's adoption of a target to deliver 50,000
affordable homes in the three years to 2011. However, the current
economic situation has meant that this target is now not likely
to be delivered until 2012. This is due, in part, to the significant
reduction in the delivery of affordable housing via S106 planning
gain.
— While the Federation accepts that
in the current circumstances housing delivery will be affected,
we are concerned that proposals to delegate delivery to the boroughs
will result in less efficient and less effective delivery of affordable
housing.
— We are concerned that in the absence
of an overall requirement that all boroughs should deliver affordable
rented housing, we will see this tenure delivered primarily in
those boroughs which already have the highest levels of deprivation
and where there are already high concentrations of affordable
housing. If we are to have mixed and balanced communities then
affordable housing should also be delivered in more prosperous
areas which currently have lower levels of affordable housing.
— The Federation is concerned that
in spite of the overwhelming need for an increase in the supply
of affordable rented housing, the target for delivery of this
tenure has, in percentage terms, been reduced.
— We are concerned that the delivery
of new larger homes is below target. Such homes are urgently needed
if we are to address the pernicious effects of overcrowding which
affects the capital disproportionately.
— The private rented sector can be
a viable alternative for many in housing need. However, greater
certainty over funding in the medium to longer term is needed
if housing associations are to continue to deliver high quality,
well managed housing in this sector.
— It is essential that the level of
Supporting People funding is maintained if housing associations
are to continue to provide cost effective support to the most
vulnerable in our society.
— Housing associations have proved
to be a resilient sector in the face of the current economic climate.
INTRODUCTION
The National Housing Federation represents 1,200
independent not-for-profit housing associations in England and
is the voice of affordable housing.
The London region of the Federation represents
some 350 housing associations. Between them, they house around
one in 10 Londoners.
The London region of the Federation is represented
at the Mayor's Housing Forum and actively lobbies national, regional
and local government to create the conditions and adopt the strategies
which housing associations need if they are to continue to deliver
the high quality, well managed and affordable housing which London
needs.
In the current uncertain economic conditions,
which have seen a collapse in private house building in the capital,
housing associations' resilience and ability to continue to invest
in land and housing, has shown the strength of the sector and
its continued importance to the delivery of affordable homes and
successful communities.
1. PROGRESS
TOWARDS MEETING
GOVERNMENT TARGETS
ON AFFORDABLE
HOUSING IN
LONDON
1.1 Affordable housing targets in London
are set by the Mayor, subject to approval by the Secretary of
State. The Federation welcomed the Mayor's commitment to providing
50,000 affordable homes across London over the next three years.
We note though, that the current economic environment and level
of house building activity in London has meant that this target
is now expected to be delivered over the four years to 2012.
1.2 The target of 50,000 homes was set
on the basis of the expected levels of subsidy available. The
National Housing Planning Advice Unit estimates that the overall
number of new homes which are required in London each year is
between 33,000 and 42,000.
1.3 We understand that the Mayor has, (at
end of February 2010) agreed with the London boroughs, that they
will deliver 41,000 affordable homes over the three years to 2011,
with the remaining 9,000 homes to meet the 50,000 target, delivered
by 2012. Although there is an overall, London-wide target that
60% of this housing will be for affordable rent, there are no
individual borough targets for the delivery of affordable rented
homes. We fear that this lack of prescription will mean that the
overall target for affordable rented homes will not be met. It
is also likely to result in some boroughs delivering very low
numbers of affordable rented housing, choosing instead to focus
on low cost home ownership.
1.4 The Federation welcomes the Mayor's
commitment to provide more family-sized homes, with 42% of new
social rented and 16% of intermediate homes having three bedrooms
or more. The Federation would like to see the Mayor take a stronger
stance in ensuring that the private sector fulfils the same family
home targets. The Federation has long campaigned for more family
homes in the capital, outlined in our publication "Think
Big".[1] (For
more information, see section 3.3-3.5)
1.5 The Federation welcomes the commitment
to provide more homes meeting the access, space and adaptability
needs of disabled and older people, particularly in view of demographic
trends. Especially as 14% of social housing tenants in London
have a long-term limiting illness.
2. PROGRESS
ON DELIVERY
OF AFFORDABLE
HOUSING ACROSS
THE WHOLE
OF LONDON
2.1 The Federation has concerns that the
Mayor has changed the delivery mechanism from one which is a percentage
of affordable housing on each site, to this negotiation of individual
borough targets. We fear that without very strong direction and
management from the Mayor, this will result in some boroughs delivering
much more than others. It could also lead to further concentrations
of social rented housing, particularly in areas with a high level
of land for development. East London has the greatest potential,
representing about 51% of London's total capacity, but maximising
development in this area would lead to even higher concentrations
of social rented housing. The lack of a target on each new development
removes the borough's mechanism lever to deliver mixed communities
even in private developments. Many boroughs used the 50% target
to engage private developers in delivering affordable housing
on every site, in fact, the use of commuted sums had significantly
decreased in London. Without this tool, we are likely to see concentrations
of social housing developed in areas where land is cheap, thereby
further increasing social polarisation.
2.2 The Mayor's proposals to delegate the
responsibility for the delivery of affordable homes to boroughs
also gives us concern. Three boroughs, Westminster, Hackney and
Croydon are currently taking part in a "delegated delivery
pilot". This new mechanism is intended to incentivise and
enable local authorities to deliver new housing through a tailored
and flexible approach (from the Homes and Communities Agency via
the London Housing Board), within the national and regional delivery
framework. Again, the Federation is concerned that this may sideline
housing associations, who have already proved themselves to be
effective and efficient deliverers of affordable housing. We are
also concerned that this new mechanism may not deliver the same
value for money as housing associations have achieved over the
years.
3. IDENTIFICATION
OF CAUSES
OF HOUSING
NEED IN
LONDON AND
ADDRESSING THE
NEEDS OF
FAMILIES IN
LONDON
Homelessness
3.1 In 2008-09, 12,780 households were
accepted as homeless. London has the highest proportion of homeless
families in the country but the number of acceptances is declining,
year-on-year, due to successful interventions by local authorities
and housing associations. The G.15 for instance, the group of
15 largest housing associations in London, is working in partnership
with London's local authorities to increase the level of nominations
from local authorities to void properties, which are given to
those households identified as statutory homeless.
Overcrowding
3.2 Overcrowding is a major cause of housing
need in London. CLG housing statistics show us that nearly 7%
of households in London are overcrowded, more than 2.5 times the
national rate and the highest proportion in the country. In Tower
Hamlets, the most overcrowded borough in England, 13% of families
are overcrowded. Recent research published by Karin Housing Association,
which houses a high proportion of Somali households, showed that
for this particular community overcrowding was of epidemic proportions,
with 69% of the research sample households saying they were overcrowded.
We know that overcrowding has a massive impact on educational
achievement for children and leads to poor health, stress and
family breakdown. The Mayor has a target to halve overcrowding
by 2016. Whilst this is a laudable aim, there seems to be no real
strategy to achieve this and projected delivery of larger homes
is also unlikely to meet the pent up demand.
Larger homes
3.3 We are simply not building enough homes,
enough affordable homes, or enough high quality homes for families.
While high density one and two bedroom flats may appear to satisfy
a need for smaller homes for what demographic projections tell
us is an increasing number of smaller households, this masks the
urgent need for affordable, family sized homes for London's diverse
communities.
3.4 The Mayor and the Homes and Communities
Agency have set a target that 42% of all publicly funded homes
in the 2008-11 investment round should be three bedroom and above.
At the last reporting date, (to end October 2009), allocations
were at 38%.
3.5 However, historically building has fallen
well short of this, with CLG statistics showing that in the last
available reporting year of 2008-09, 11% of flats and houses built
by private developers in London were three bed and above, while
16% of housing association new build homes were three bed and
above.
Private rented sector
3.6 As the Rugg Rhodes[2]
review highlighted, temporary housing in the private rented sector
(PRS) can be a viable alternative tenure for many people. This
can include people moving on from supported housing projects as
well as people needing relief from overcrowding or homelessness.
The use of the private rented sector to house homeless and vulnerable
households will reduce the current significant pressure on London's
waiting lists. In the capital, waiting lists have risen 46 % in
the past five years with 353,130 households on London's social
housing waiting lists in 2008, a 6% rise on the previous year.
3.7 Housing associations working in this
area have agreed common standards for high quality housing management
and maintenance and services to their tenants in the PRS. The
Federation's London Leased Accommodation Strategic group, which
comprises representatives from our sector as well as from local
authorities and statutory agencies, has worked closely with the
Department of Work and Pensions on the reform of temporary housing
funding arrangements.
3.8 Our sector does, though, need more
certainty around funding via housing benefit in the medium term,
and a more strategic approach from boroughs if we are to maximise
the benefit which accommodation in the PRS can offer. Without
funding certainty, housing associations are unable to take the
business risk of procuring, renovating and maintaining properties
from the PRS. We are keen too, to support the development of Social
Lettings Agencies (SLA). SLAs could be a means of rationalising
the procurement of leased accommodation within a borough and taking
a more strategic approach to procurement. In the absence of a
mechanism like SLA, local authorities, housing associations and
others can all be competing to attract landlords and their properties.
This can have the effect of inflating the incentives on offer,
increasing the cost to the public purse.
Supported Housing and Supporting People funding
3.9 The Federation welcomes the Mayor's
commitment to provide 1,250 new supported homes between 2008 and
2011 to meet the needs of vulnerable and older people. However,
there are many groups of vulnerable Londoners who will not be
catered for within this target and the Federation believes the
Mayor must use his statutory housing powers where appropriate,
to achieve a pan-London approach in a number of key areas, in
particular, the provision of hostels and supported housing. It
is the vulnerable and difficult to reach smaller groups such as
ex-offenders or those fleeing domestic violence who will slip
through the net if there is no coordinated approach to represent
the challenging and specialist housing needs of these Londoners.
3.10 The Federation lobbied hard to retain
the ringfence for Supporting People (SP) funding. Given the importance
of this funding stream in supporting vulnerable people, we argued
that removal of the ringfence may be a precursor to seeing this
funding stream diverted from such support. We are pleased that
SP has been retained as a named grant within local authority funding,
but will closely monitor its use to ensure it is not diverted
elsewhere.
4. THE EFFECT
OF THE
CREDIT CRUNCH
ON THE
SUPPLY OF
HOUSING IN
THE PRIVATE
SECTOR AND
THROUGH SECTION
106 AGREEMENTS
4.1 In 2008-09, Housing associations completed
6,970 homes for affordable rent, representing just over 36% of
the 19,330 homes completed in all tenures, including homes for
low cost home ownership. In the previous financial year, housing
associations built over 50% of the total number of homes built
in the capital and a 16% increase on the previous year, while
overall new home completions fell by 22%. In addition to this,
in 2008 overall housing starts on site fell by 41% in London,
while in contrast housing association starts increased by 1%.
These statistics illustrate the resilience of the housing association
sector in the face of the economic downturn and the contribution
made towards alleviating housing need in London.
4.2 A recent report by the Tenant Services
Authority on the impact of the credit crunch on housing associations
suggested that the sector has weathered the recent period of economic
turbulence relatively unscathed. "Its core rental income
stream accounts for 80% of turnover and is around 65% government
funded through Housing Benefit, ensuring that it has a greater
degree of certainty over its revenue than most commercial businesses.
This stability, in addition to government support for capital
investment, means the sector has been able to continue growing
during the downturn and enables it to undertake valuable projects
which would be untenable in the commercial sector."[3]
However, rents for 2010-11 have been effectively frozen, the cost
of borrowing has escalated and there are inflationary pressures
on the maintenance and management cost base.
Affordable housing developed via S106 agreements
4.3 Homes and Communities Agency data for
2009-10 shows that in the first quarter (April till July 2009),
28% of the Agency's expenditure in London was allocated to affordable
housing schemes arising from S106 planning gain. In the second
quarter, this had dropped to 12%. Overall, S106 delivery of affordable
housing was down 25% from 2008-09 to 2009-10.
8 March 2010
1 Think Big: Delivering family homes for Londoners,
National Housing Federation, London Region (2006). Back
2
Review of Private Rented Sector Housing, Centre for Housing
Policy, University of York, Rugg, J and Rhodes, D (2008). Back
3
The impact of the credit crunch on housing associations, TSA,
February 2010. Back
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