Communities and Local Government CommitteeWritten evidence submitted by Hastings Borough Council

Introduction

1. It is sometimes unfairly characterised as being a substandard provider. However, the sector can only work in a healthy way within certain boundaries. In Hastings, Margate and other seaside towns, economic weakness has meant the creation of a low income/low value sector linked to the needs of those on benefits or low incomes. These areas have entered a protracted period of cyclical decline with high crime, bad housing standards and lack of stability. The deprivation in these towns became amongst the highest in the Country. The physical and economic peripherality of these communities meant their exclusion from rising prosperity in much of their regions. The market was “self fed” as these conditions drove out working people and much local business but drew in more people with difficult and often chaotic backgrounds. In some places this has bought sharp decline to whole communities.

2. Rents which often reflect maximum benefit levels and low wages co-exist uncomfortably with old property which is costly to convert and refurbish and with high maintenance costs. This results in some landlords providing substandard accommodation which can be provided with lower levels of investment. The market fails the community and individual residents and acts as a block to constructive investment and immigration.

3. Conversely there is a great opportunity to address this if Government at all levels can support the market’s development through a range of actions aimed at both enforcement and adding value.

4. This paper presents a range of options for the Committee to consider about how these issues might be tackled. The submission is accompanied by three appendices:

A paper prepared by Bob Young, the previous Chief Executive of the Local Space Housing Association giving the wider case for housing in the context of coastal regeneration.

A selection of statistical evidence showing the issues in Hastings. This is particularly the case in St. Leonards which has the highest concentration of these issues in the Borough.

Summary of recommendations.

Quality of private rented housing and steps taken to ensure all housing in the sector is of an acceptable standard

5. It is the view of the Council that the most significant issue is the lack of responsible long term investment in good quality private sector property for rent. It is difficult to see how the low value/low investment cycle common to many seaside towns can be broken without action at a national level. Only finance by institutional investors is likely to address this and the market would currently tend to direct their attentions to areas of higher value. Only Government can provide access to the incentives that might encourage this investment. Possible options are:

Placing new expectations on Pension Funds and other institutions to invest funds in rented housing. It must be recognised that this would be much less attractive to a Fund focused (say) on inner London than areas with low value housing. Therefore mechanisms to encourage this either by incentive or obligation would be required. Government could use its influence to encourage task forces (at LEP level for instance) to bring institutions together with Councils and local business to address this issue and fund schemes. Such housing issues are often not seen as first order economic issues.

Providing stability to potential tenants. At present public sector housing is moving towards five year tenures under the social housing tenancy reforms. This is in great contrast to the flexibility and lack of security in much of the private sector. This creates an uneven playing field and does not encourage tenant commitment to home or community.

Most significantly economic growth and higher levels of income provide an essential component. Investment in creating good quality housing stock is unlikely to take place without an expectation that owners will achieve an adequate level of return, over and above that provided through Housing Benefit. Therefore focused economic growth and inclusion is essential.

There is a particular need to rebalance these communities and this depends upon a sustained (and potentially expensive) set of actions to improve the economic and social position of residents and intervention in the housing market.

The current operation of the benefit cap appears potentially self defeating. Designed to reduce public subsidy and place limits upon accommodation costs in higher value areas it may act as a disincentive to raising the quality of housing in lower value areas.

6. Experience in Hastings gained through work with Local Space Housing Association is that the regimes to support intervention are inadequate in two ways:

In absolute terms the Homes & Communities Agency [HCA] funding is too low to permit the acquisition and refurbishment of properties that are clearly substandard.

Funding or other incentives need to be made available to the private sector as well as RSLs if private sector investment is to be encouraged in weak markets from larger investors.

These approaches would require radical change. HCA funding regimes absolutely favour the construction of new homes and even within this framework the levels of funding in weaker markets is sometimes inadequate. Tackling the barriers to responsible private sector investors is essential if the sector is to contribute in weaker parts of the market. The Council would wish to see such a move accompanied by strong regimes to ensure the quality of build and management. This area to be the subject of more detailed work and production of proposals for consultation.

7. There is little evidence at present that current levels of private sector investment in housing in Hastings are bringing about a significant improvement in the experience of many tenants in deprived neighbourhoods. There is evidence (so far limited) that government policy is in fact pushing more benefit dependent households into seaside towns and other places with low value private rented sectors. Areas like these already contain higher numbers of economically disadvantaged people with multiple health, educational and skills disadvantages.

8. The complexities within the housing market have to a degree been recognised within the system used to assessed the suitability of property (regardless of tenure), being the Housing, Health and Rating System (HHRS). This is a risk based approach to assessing standards against 29 prescribed hazards. The system, if applied correctly, is a robust, comprehensive system. However, it is criticised for being overly complex. Landlords in particular often call for a more objective or prescribed set of standards so that they can assure themselves that their properties are up to standard. Consideration should be given to a “Decent Letting Standard” to be applied to all rented accommodation setting out minimum acceptable conditions for letting a home in any sector.

9. The starting point should be simplifying the language and condensing the numbers of hazards. A more simplified risk assessment approach could be adopted that would identify the key hazards and assess risk to health and/or safety, based on the likelihood and outcome.

Over and above the minimum standard, a traffic light system or grading system might be introduced which would require measures to be taken to mitigate lower level risks within specific time periods. This would allow tenants to more easily assess value for money and exercise choice.

Housing Benefit payments should reflect property condition as well as local housing demand to help encourage investment. Good landlords would benefit from a premium placed upon higher standards (Hotels & Guests Houses are already graded in such a way).

10. Under such proposals, landlords would need to have some form of certification confirming their properties as suitable for letting before they could rent their property out. Regulators would have the ability to apply conditional certification and the power to revoke where improvements are not carried out within an agreed timescale.

11. We believe that there is case for a single licensing scheme covering all rented accommodation in a particular LA area or sub area, where a local authority has publicly consulted with those effected and is satisfied that it is necessary based upon local conditions.

Levels of rent within the private sector

12. The Council believes that rent levels present a contradictory and difficult challenge. The rented sector has many subcategories depending on the demographics and property profile of an area. . A landlord might be marketing to wholly self-reliant households wanting this tenure. Equally they might be marketing to those households partially or wholly dependant on state assistance for whom the tenure is the only available option. The HMO sector has similar sub-categories, where often the most vulnerable of our communities will be housed alongside students, young professional etc.

13. It is the view of the Council that current rent levels in Hastings, a feature of many other coastal towns also, are often set in relation to the local housing benefits limits (usually just above it). This results in the following dilemma:

The absolute level of rent is insufficient to encourage significant refurbishment and investment.

The rent is still beyond what a significant proportion of low income families can afford without recourse to welfare benefits—itself a barrier to employment.

14. In turn these conditions may make these areas more attractive for the relocation of people from higher value areas where the benefit cap operates at a higher level. The market response being the creation or subdivision of more poorer quality accomodation to meet market demand. The all too obvious result being a spiralling downward of those areas into greater deprivation.

15. Rent controls do offer an opportunity to help address this. If such controls were introduced this might give a level of stability to the operation of the market. Thus creating the conditions for long term investment if accompanied by other measures.

16. Linking rent levels to floor areas rather than the number of bedrooms would be beneficial and discourage unacceptable increases in housing densities, a feature of both high and low value areas.

Regulation of landlords, and steps that can be taken to deal with rogue landlords

17. A national register of landlords, where landlords would be required to register themselves as landlords and declare all their rented property would be a positive step in dealing with sub-standard rented property. This needs only to be a simple list, giving name and address, contact details and a list of rented property. The list should be available to the regulators of the rented sector, eg Local Authorities Private Sector Housing Teams, Trading Standards, Fire and Rescue Services, Health and Safety Executive, etc. A list of this nature would allow the ready identification and targeting of rented properties by regulators. This is a particular concern in areas where the private rented sector is the focus of deprivation, poor heath, antisocial behaviour etc, and unscrupulous or “unregistered” landlords are known or suspected to be operating.

18. Linked to this should be the requirement for landlords to undertake some basic training in order that they can demonstrate their ability to manage housing. This doesn’t have to be complex, but could be something similar to the training requirement relating to food handlers, the Basic Food Hygiene Certificate. This function might be made through a professional body if commercial landlords were obliged to join one.

19. A national list might be financed either by applying “registration fees” or by allowing the list, where permission is given, to be accessed by third parties interested in paying a fee to access the information, eg letting agents, maintenance companies, mortgage companies, insurance, etc.

20. The enforcement tools available to Regulators, especially those under the Housing Act 2004, to deal with sub-standard property are extremely valuable but are overly bureaucratic to administer

There are frequent cases of landlords terminating tenancies as a direct result of tenants making a complaint to the Local Authority regarding property standards. This is a considerable strain on LA resources both in terms of enforcement and the prevention of homelessness. Loss of private rented housing is a principal cause for people approaching the Council for help in finding accommodation.

We would welcome similar legislation to prevent a landlord serving notice on a tenant if the property has been served with an enforcement notice. This would protect tenants, ensure landlords carry out works and will assist in preventing them letting the property to new tenants in the same poor state.

If the standards and national register of landlords were to be adopted then it would be feasible to introduce a “fixed penalty” regime, whereby landlords failing to issue tenancies, or running sub-standard accommodation, could be subject to on the spot fines.

Regulation of letting agents, including agents’ fees and charges

21. Distinctions needs to be made between those that may let on behalf of owners and those that are responsible as managing agents, particularly where this includes the management and maintenance of blocks of flats including common parts.

22. Management of the latter remains in our view a highly unregulated area, subject to many abuses. Often leaseholders of flats in blocks privately rent out their accommodation. Tenants and leaseholder landlords both may suffer when block management is poor. Poor management often has a severe impact on the surrounding neighbourhood. We are of the view that it should be mandatory for Agents to be registered with a professional body, the individuals operating in an Agency as well as the business itself.

23. Model Management Contracts should be considered, clearly setting out the expectations of the Agent and Landlord. These would cover necessary budgeting arrangements agreed with the landlord to enable minor maintenance works to be carried out.

24. Significant sums of money are being paid to agents in respect of unnecessary “holding fees” or inflated administrative fees for issuing standard AST’s. These need to be controlled but the legislative tools are not currently available.

The regulation of houses in multiple occupation (HMOs), including the operation of discretionary licensing schemes imposed by a local authority for a category of HMO in its area

25. HMOs, as defined under the Housing Act 2004, need to be treated differently, due to the much higher inherent risks. It is right to maintain an extra set of Regulations that deal with the management of these types of property. However, it is not necessary to have two sets of Management Regulations dealing with two different types of HMO (The Management of Houses in Multiple Occupation (England) Regulations 2006 for shared and room rent HMOs and The Licensing and Management of Houses in Multiple Occupation (Additional Provisions) (England) Regulations 2007, which relate to certain buildings converted into flats). These should be amalgamated into one set of Management Regulations.

26. We believe it would be beneficial if it were mandatory for operators of HMOs to have specific training in the standards and the management requirements relating to these forms of properties.

27. Discretionary and selective licensing should be supported for areas that have the evidence to justify their introduction. Licensing has a number of positive effects:

Makes it illegal to operate certain types of property without a license, in effect making a landlord bring their property forward to be licensed. This frees up LAs to seek out those that have not licensed their properties.

A landlord has to be “fit and proper” to hold a license. This is an area that needs tightening. A landlord should need to have some training to be fit and proper and the LA must have a more robust method of assessing whether a landlord has been convicted of certain offences including housing offences (not current convictions that need to be declared and registered).

A license can carry conditions relating to numbers of people and households, amenities, standards, management, etc. Breaching conditions is an offence. This has the benefit of moving beyond just standards of accommodation, but deals with the necessity of properly managing the properties.

A landlord cannot evict a tenant without a license in place. Illegal eviction legislation would apply.

Rent Repayment Orders can be applied for where a property is licensable and hasn’t been.

Tenancy agreements and length and security of tenure

28. Tenancies offered in private and social rented markets need reconciling and bringing together in a single understandable tenancy regime. The concept of a “starter tenancy” which allows for a probationary period, before the granting of a longer term tenancy would give confidence to landlords in this context. This would go some way to recognising the need for tenants to have greater security of tenure whilst protecting the interests of landlords who want the security of knowing their investment is being protected by the tenants and that there is a regular income.

29. Minimum five year tenancies in line with those being introduced in the social rented sector would create a more level playing field between the sectors and encourage home seekers to consider the private sector as a longer term option to meeting their housing needs. This would enable tenants to take up accommodation and establish themselves in an area. Such measures would begin to provide an element of community cohesion currently absent in many areas.

30. The new tenancy regime needs to account for the requirements of institutional investors. A change is needed in the “buy to let” mortgage markets. Longer term tenancies are currently being restricted by mortgage companies making short term Assured Shorthold Tenancies a condition of lending. We believe this is an issue for Government to take up with the sector.

How local authorities are discharging their homelessness duty by being able to place homeless households in private sector housing

31. Recent changes in legislation that enable Local Authorities to discharge a full homeless duty into the private rented sector are generally welcomed. This change comes with a range of requirements for a Local Authority to ensure the accommodation, the landlord and the management standards are suitable and reasonable for the household.

32. It is recognised that the Government’s intent for this legislation is to reduce the reliance by local authorities on the use of expensive and unsuitable accommodation. However, the risks to the affordable private rented sector in Hastings and other seaside towns lie mainly around attracting households from more expensive areas or other Local Authorities looking to place homeless families in Hastings. This encourages the further concentration of deprivation in already significantly deprived neighbourhoods and risks driving up rents to the extent that many local working households cannot access accommodation for their needs without recourse to benefit support, which is a system of support unlikely to be available to such households in the future. The risks associated with an influx of vulnerable households from outside of the area in terms of increased demand for local services and the negative impact on the overall local economy cannot be underestimated and are the source of considerable local concern.

33. In addition to discharging a full homelessness duty, Local Authorities make offers of accommodation in the private rented sector accommodation so as to prevent homelessness and assist households found intentionally homeless or not in priority need under the legislation. In such circumstances we are of the view that Local Authorities should be expected to apply the same assessment of suitability of accommodation as required when discharging a full homelessness duty. This would discourage Local Authorities making unsuitable offers of poor quality accommodation in areas outside their own when they do not owe a homelessness duty.

34. It should also be a requirement for Local Authorities to inform a receiving Authority of any household relocated to another area with details of how ongoing support needs will be addressed. The receiving Local Authorities should be able to stipulate which areas should not be used to relocate homeless households eg areas with significant levels of deprivation and large concentrations of private rented stock where extensive work is ongoing to regenerate the area through tenure diversification and enforcement. This would enable Authorities to understand who is moving to the local area and to monitor the effects on the local housing market and changing population within an area. It would assist Authorities with future planning and enable them to target resources more effectively to meet wider strategic priorities around regeneration, education and healthcare for example.

35. The inter-relation between this particular tenure and the overall regeneration of an area has largely been ignored. In many towns and cities the private rented housing sector now accounts for a greater share of the overall housing market than that provided by the social sector, yet it remains largely unregulated and poorly understood in terms of the role it plays in the local economy.

January 2013

APPENDIX 1

ECONOMIC RECOVERY AND RESILIENCE IN HASTINGS, SELEP SEASIDE COMMUNITIES AND UK SEASIDE TOWNS OVERALL

(The case for a sustainable private rented residential sector)

Historic Challenges Facing our Seaside Towns

1. Seaside towns surely have it all—the romance of the coast, big skies and bracing sea breezes, healthy beach activities, exciting water sports and fun for all the family. The perfect components of the ideal holiday, yet for the last 50 years the attraction of foreign shores and cheap flights have relentlessly diverted the patronage of the British public and eroded the economic viability of coastal settlements whose primary raison d’être was domestic tourism.

2. Maybe as many as 50 seaside towns have been coming to terms with this challenge for more than two decades and though their situation has attracted significant attention, research and a range of regeneration initiatives, economic renaissance has for the most part passed them by. Now, as we face the longest recession in modern history, seaside towns must harness all available resources and resolve to overcome the drawbacks of peripheral location and historical disadvantage to reposition themselves once again as premier domestic destinations, albeit with more diversity and resilience to cope with the challenging decade ahead. This will be far from easy.

3. Though the problems of our seaside towns are now well understood, reliable strategies to achieve resilience and economic success remain elusive. Their relatively small size and poor accessibility puts them at a competitive disadvantage with larger and better connected settlements towards the core of the city regions whose political clout and urban synergy enables them the more readily to benefit from both private investment and public subvention. Moreover the economic and social pressures within the conurbations have increasingly underscored the out migration of the urban poor, sick and disadvantaged to seaside towns reversing the historical balance of benefit between city and seaside. Achieving the economic turnaround of seaside towns against this background and in the teeth of the UK’s longest recession will therefore require extraordinary, even unprecedented, cross sector cohesion and leadership and more than a little responsiveness and support from both city regions and central government. For example In Hastings a raft of action has been put in place which is listed below, but has been matched by efforts in Kent and Essex

The creation of new employment space in the town centre and edge of town much of it successfully let.

The Jerwood, Stade Space, Stade Hall and café have opened and become established, with a “Stade Saturdays” programme of arts events (partly Arts Council funded) taking place through the 2012 tourist season.

Central St Leonards renewal has proceeded, prompting a minor wave of investment in specialist retail—the South Coast’s Portobello Road; and sustaining Kings Road.

Award-winning initiative to promote apprenticeships, raising the number of new places by double the national rate.

£11.4 million Heritage Lottery funding securing the restoration of the Pier.

A new Hastings campus of the University of Brighton.

Confirmation of funding for Hastings-Bexhill link road, unlocking land for 1,300 new homes and employment space for over 5,000 jobs.

Government Growing Place Fund awarded and development work under way for new office buildings in Town Centre, creating 400 jobs.

Government Regional Growth Fund awarded and development work under way for new industrial buildings (300 new jobs).

A new FE College building on two sites offering an outstanding platform of skilling and educating local people and supporting local business.

A new intervention in the private sector housing market in St Leonards building on previous interventions there.

4. However, it is clear that further sustained investment in buildings, jobs and (most of all) peoples lives is essential for permanent change recognised as such by residents themselves. The stoicism and even optimism of seaside residents, business people and their political representatives suggests the potential of seaside towns as future areas of economic growth and prosperity is enormous. Nor has the recession been all bad from a tourism perspective. Indeed, the cold wind of austerity seems to have blown an additional 20% or so of visitors into UK domestic destinations in the last couple of years—a numerical increase albeit with a somewhat depleted spending power—but the market share of this increase won by seaside towns has been disappointing. Why is this? Why is it that seaside towns are doing less well than other destinations in the “staycation” stakes? What is holding them back? More importantly has the mindset of seaside towns moved on from mainstream dependence on tourism to explore a broader range of opportunities for exploitation of the natural and built environment?

Dealing with the Current Challenges

5. The failure of strategies depending on a particular themed offer or “grand project”, like the Blackpool casino, has underlined the need for a portfolio approach which moves ahead across a broad front, progressing interconnected strands to achieve a critical mass of investment opportunities through economic diversification. The Hastings Task Force/Sea Space initiative provides an exemplar of such a balanced approach having delivered: a new university and FE College; a creative media and innovation center; new accommodation for small and large businesses; high tec manufacturing opportunities and the Jerwood/Stade centre. Even so, access problems and the dead weight of poor housing and the steady influx of deprived and vulnerable incomers it attracts, continues to impede the full realization of seaside towns’ ambitions.

6. The experience of striving seaside towns like Hastings, Margate and Scarborough suggests there are clearly a number of recurring themes that must be addressed if seaside towns are to punch their weight alongside other destinations and harness their fortunes to the green shoots of recovery. These include:

Outreach and research to ensure a mix of holidaymakers with a broad range of interests is catered for.

Providing for people with disabilities by actively encouraging local disabled organizations to act as advisers and hosts.

Providing a mixture of traditional seaside attractions plus other attractions like the Musicport Festival in Bridlington and Galleries such as the Turner in Margate and the Jerwood in Hastings that bring people in and encourage them to return.

Promoting neighbourhoods within their boundaries, like the Hastings Old Town and the Brighton Lanes.

Collaborating with other destinations along the coast or in the hinterland to extend visitor stays with multicentre promotions and multiple ticketing.

Developing their night-time economies and entertainment generally.

Providing more and good quality holiday accommodation.

Keeping their beaches clean and producing and maintaining a high-quality public realm encouraging more beach and street vitality; including more commercial opportunities for entrepreneurial activity on promenades and beaches.

Making the most of the coast and countryside around them.

Finding an indigenous and authentic identity, like Whitstable with its oysters, Hastings with the largest beach-launched fishing fleet in the UK or Southend with the World’s longest pier.

7. This identity is crucial to attracting new investment by new and existing business in activity in a much wider set of economic spheres. It is understood that for resilience the modern seaside town must have a diverse economy that offers opportunity to people with both very high and low levels of skills:

Offering a range of commercial spaces of all sizes in new and refurbished buildings for small and expanding companies, particularly those creating high value jobs.

Complementing strategic investment/employment initiatives in adjoining settlements to enhance the sub-regional/cluster offer.

Providing support for local business.

Producing a well-educated and well-trained local workforce.

Working in partnership with the private sector and the third sector to facilitate networking and clustering of businesses working in allied sectors.

Promoting and supporting the development of third sector companies.

Providing a range of good and affordable housing for people working for the new businesses.

8. Amongst these, housing plays a significant part currently in either encouraging or suppressing potential beneficial inward investment. Dealing with the housing situation of seaside towns is essential if economic decline is to be reversed. In addition to securing an adequate supply of quality affordable new housing for sale and rent it is essential to secure the proper stewardship, regulation and utilisation of their private rented residential sector.

Why is Housing so Important?

9. Those seaside towns whose housing stock grew exponentially in the late Victorian and Edwardian periods, developing a strong dependency on tourism, current exhibit the most severe problems of social and economic decline. During the last 50 years holidaymakers have deserted them for the beaches of the Costas, the Caribbean and the Cyclades amongst other overseas’ destinations. As a result their resort infrastructure is underutilized and neglected with piers, public buildings and housing stock declining into disrepair and even dereliction.

10. In many cases a substantial proportion of their purpose built hotels and boarding houses have been converted into houses in multiple occupation (HMOs) within the core area of the town, often adjacent to the town centre, transforming such neighbourhoods into low-income ghettoes, halos of neglect which have become millstones of deprivation and despair, frustrating the best efforts of the hospitality industry and town centre management to secure and sustain visitor affection and investment.

11. In spite of such difficulties the key players continue to strive to re-position and re-present their seaside towns to a public increasingly looking for good value in an age of austerity. They know that the 21st century seaside town must be diverse. It should be both a good place to live and work and a place worth visiting throughout the year. It should have a range of attractions that bring in visitors for short or long breaks, good and affordable tourist accommodation and above all a safe, well-kept and attractive public realm.

12. It must also be able to attract new businesses to provide diversity in employment and move away from a dependence on tourism and leisure, rebalancing the local economy to achieve greater resilience in an increasingly uncertain future. Sustained recovery will clearly be dependent however upon a ready supply of decent and affordable housing for rent to attract and accommodate people with the skills and commitment to support business expansion.

13. It will also require the transformation of those neighbourhoods defined by concentrations of vulnerable and impoverished people consigned there over decades through ill-considered and uncoordinated public policy. A wide range of seaside towns have received: quotas of asylum seekers delivered by NASS and its contractors; regular releases of prisoners signposted by the probation services; the mentally ill and substance abusers marshaled and delivered by the NHS; homeless and destitute households and looked after children placed by the major conurbations’ local authorities.

The Hastings Experience and Current Situation

14. The Hastings experience is typical. In the 1980’s in the name of “care in the community” the closure of the large mental health institutions delivered large numbers of vulnerable people into the poorest and least desirable rented housing, much of it in concentrated in the private rented sector clusters of former guest houses around the centres of Hastings and St Leonards. This was followed in the 1990’s by the systematic settlement of asylum seekers in hotels such as the Adelphi in Warrior Square which received over 100 such needy and disorientated people.

15. In addition and throughout the past two decades a steady influx of homeless, impoverished and poorly households have made their way into Hastings and St Leonards looking for cheap housing, increasing the quantum of social and economic deprivation and exacerbating the burden upon the Council and other local public authorities and voluntary sector services. This has enhanced job prospects for public sector providers but to an extent that has made the local economy particularly dependent upon that sector.

16. More recently, the recession, welfare benefit changes and increasing housing pressures in London particularly, have stimulated a further and a growing migration of needy people looking to escape the tightening jaws of austerity afflicting the capital. Finally the opportunity for housing authorities to discharge their duty to the statutory homeless in the private rented sector has stimulated a further haemorrhaging of the London poor, many signposted to, if not actively resettled on, the coast.

17. These population movements have further exacerbated a long term trend of economic decline and now Hastings faces a formidable, multifaceted challenge. The dramatic and rapid shrinkage in public sector employment as a result of government austerity measures has directly impacted former staff, private sector suppliers and more widely across the community as overall spending power has declined.

18. Proposed Welfare Benefit changes are expected to significantly shrink the local economy since Hastings exhibits twice the regional average unemployment and claimant counts with almost 3,000 Incapacity Benefit claimants—half the total for the County as a whole!. Such a large proportion of the population living on state subsistence has burdened the local economy for decades and the upcoming benefit changes are likely to damage this fragile economy even more. The estimated 50% reduction in people in receipt of Incapacity Benefit is likely to take £2 million pa out of the local economy and housing benefit occupancy rule changes are likely to reduce the spending power of social housing tenants by a further £1 million pa.

19. These economic impacts, bad as they are, need to be set on the stage of a large, largely insecure and poorly managed private rented sector and against the backcloth of extensive and complex social malaise and desperately poor public health. Overall half of Hastings housing was built before the First World War and a quarter of it is rented from private landlords who own almost 3,000 HMOs, two thirds of which are substandard and this proportion rises to four fifths in the four central wards. Here we find the highest incidence of drug offences and domestic violence, the lowest life expectancy, the highest proportion of vulnerable single people—young and old—and the greatest burden on health and social care services.

20. The Hastings’ experience is not exceptional amongst seaside towns. Indeed it serves to underline the similarity between the seaside town situation and that experienced by the nine areas of so- called market failure in the Midlands and the North that warranted the previous government’s deployment of over £1.5 billion of investment (the Housing Market Renewal Pathfinders). The common thread is the extent to which the poorly managed and poorly utilised private rented sector has held back such neighbourhoods from the beneficial social and economic development that has been enjoyed elsewhere. It follows in our view that whilst the reordering of the private rented sector may not guarantee the renaissance of our seaside towns, failure to fix the private rented sector will likely frustrate, impede, devalue or deflect all other strands of regeneration strategy from achieving success.

The Challenge of the Private Rented Sector

21. Since 2001 the private rented sector has grown by 1.5 million homes and though much of this growth has been in new build buy-to-let, over the same period the sector has accommodated 1.5 million more low income households. According to the latest English Housing Survey a fifth of all households in the PRS suffer fuel poverty and almost a third of all children in the PRS experience persistent poverty. Almost half of all disabled people in the PRS live in an unadapted home and almost 200,000 households in the PRS are overcrowded with the greater likelihood of childhood TB, respiratory problems, infections and risk to mental health.

22. Recent trends include a 32% uplift in gross lending on buy-to-let in 20112012 and an average increase in rents in 4.3% over the same period. The annual Housing Benefit contribution to the PRS is almost £8 billion. This huge underpinning of the PRS is unconditional—no minimum standard of management is required by way of licensing, no minimum standard of health and safety need be verified by way of inspection. Yet 1.4 million PRS homes are below the decency standard and of those 900,000 exhibit Category 1 Hazards.

23. Against this background there has been a 70% increase in landlord repossessions in the last three years and a 20% increase in homelessness from the loss of an Assured Shorthold tenancy in the first quarter of 2012. In areas of concentrated poor private renting, especially those characterised by large houses in multiple occupation, such as Margate’s Cliftonville and Hastings’ St Leonards, the situation has stimulated exceptional and energetic responses from both the council and the wider community.

24. Kent County Council and Thanet District Council have provided significant resources alongside the HCA and Thanet has taken special licensing powers in an attempt to tame and turn around a chaotic largely private rented neighbourhood adjacent to Margate’s award winning Old Town. Hastings Borough Council and the Gensing and Central St Leonards Community Forum have promoted a community led programme of neighbourhood renewal relying upon a systematic and sustained programme of enforcement led acquisition and improvement of run down HMOs by Housing Associations. In each of these cases, though impressive demonstration projects have been achieved, it is far from clear that the scale of resources required to maintain momentum and secure sufficient critical mass to turn around the neighbourhoods will be forthcoming from either the public or private sector. Yet repositioning these neighbourhoods is believed to be critical to underpinning the success of other social and economic recovery strategies.

25. These are not isolated examples of heroic initiatives promoted in a climate of reducing resources but actually the test beds upon which the potential building blocks of sub regional regeneration will be demonstrated, evaluated and subsequently replicated if found to be robust and affordable. They are potentially key components of the Local Enterprise Partnership’s recovery strategy for the region and are likely to be the stages on which the success or failure of the government’s welfare reforms will be acted out.

26. Remediating the most run down residential neighbourhoods will improve health, employment and life chances generally, reducing the welfare, health and education burdens, increasing local spending power and unlocking local property values. Removing the millstone of low value HMO ghettoes from around town/business centres will liberate them, allowing better prospects for redevelopment and remodelling the town centre offer to rebalance declining retail with other more sustainable uses. All in all, transforming the problem private rented sector neighbourhoods lies at the heart of SELEP’s recovery plan for the South East’s seaside towns.

Seaside Town Collaboration within the SELEPSome Common Themes

27. The three SELEP work streams established in September last year set the agenda for the next stage in tackling individual challenges through collaboration and collective action. The “Influencing” theme seeks to exploit all possible opportunities to lever in resources from UK government, Europe and key agencies and institutions such as the European Investment Bank to underpin local projects and plans and help attract new private sector investment. Clearly whilst the municipalities and public sector agencies can exploit such pathways, the business sector needs to lead a parallel approach by populating a broad prospectus of coherent investment opportunities which can then be shaped into an asset class capable of securing large scale institutional investment. The development of SELEP bonds, specific targeting of public sector pension funds and marketing SELEP opportunities at investment fairs like MIPIM, as proposed by KCC, will require parallel exploration alongside the pursuit of assisted area status.

28. The economic potential theme with its basket of potential economic growth opportunities will need to gauge the appetite of existing business for growth and research the market for attracting new or portable businesses into the SELEP region. As with the influencing theme, a dynamic and persuasive SELEP promotional campaign will need to be intelligently targeted at the larger prospective players and broadcast to existing business via chambers and trade networks. A viral approach to stimulating SME interest and confidence will also enable “hot calling” of reticent lenders.

29. The skills and employability theme requires sensitive handling. Whilst an existing skilled workforce is attractive to potential inward investment, building such a resource takes time and may only catch the tail end of the roll out of emerging technologies thus should be targeted at fundamental and established sectors which may in addition grow in response to secondary and tertiary demand arising from inward investment . Bringing in people with new skills to support new business will require a strong housing and education offer which should be approached on a SELEP wide basis. Professional and highly skilled, high income/high spending incomers will bring their own stimulus to both the economy and the social fabric of the area and attracting them should be a key objective.

The Coast and the Conurbations—Finding a Mutually Beneficial Relationship

30. The point has been well made on a number of occasions that SELEP occupies the eastern rain shadow of the Capital yet has failed to enjoy in recent years equivalent benefits to its western cousin beyond the Heathrow fringe. Continuing to draw the centre of gravity of the capital eastwards will require close collaboration with Boris and the directly elected Mayors of the eastern boroughs and this will bring into sharp focus the issues of out migration and “swamping” that have informed a somewhat dysfunctional relationship in recent years. Building effective linkages will necessitate mature political dialogue and a bold and decisive political détente in order that a mutually beneficial outcome can be secured and sustained. SELEP’s seaside towns are key to such a rapprochement and should look to regain their role not only as a major recreational resource for the capital but also increasingly as a quality residential resource as their accessibility is enhanced. Forging strong and strategic economic and social investment linkages with the Capital should of itself have a moderating influence on the “dumping” practices which have characterised the behaviour of certain boroughs and agencies in recent time.

APPENDIX 2

HASTINGS & ST LEONARDS CONTEXT

Hastings is a coastal town in East Sussex with an estimated population of 87,188 people. Historically an oasis for city dwellers, it was formerly a site of holidays and retreats, and it benefited from a Victorian and Edwardian boom. This is clear from the large and impressive Victorian buildings that pervade the town. Not only is there the appeal of a beach, but Hastings is also the site of the one of the most celebrated battles in British history and tourists can visit Hastings Castle—originally built in 1066. Historical importance extends further to the America Ground, where an area of Hastings declared themselves as the “twenty-fourth” US state in 1822. With traditional seaside attraction and historical grab, it is no surprise that a range of small businesses, unique cafes and creative industries have developed in Hastings. It is a town with a great deal of potential.

However, Hastings also remains one of the most deprived districts in England.

The worst housing conditions and some of the highest levels of deprivation remain concentrated within private sector housing in the town centres of Hastings and St Leonards. House prices in Hastings remain below the regional average and the virtual collapse of the housing and house building market in 2008 has resulted in falling prices after a period of sustained growth.

Affordability remains a key issue, with average incomes also lagging behind the regional average. In 2008, the average household income in Hastings was 10% lower than East Sussex and 22% lower than the South East. In the same year a first time buyer needed over five and a half times their income to purchase an average three bedroom house.

Homelessness remains a central concern, particularly so amongst young people with 1617 year olds making up 14% of homelessness acceptances against a national average of under 9%. 18–24 year olds make up over 24% of all homelessness applications.

Hastings has an ageing population with the number of people aged 65+ due to increase by nearly 7,000 between 2001 and 2026.

Nearly 25% of homes in the Borough are privately rented—twice the national average. A good number of these are Houses of Multiple Occupation (HMOs) and non-decent homes located in the town centres. 8.1% of dwellings in Hastings are HMOs, representing 2,770 buildings. The national average of HMOs is approximately 2%.

The stock profile of Hastings contains a substantially higher proportion of pre-1919 stock at 47%, compared to a national average of 25%.

Within Hastings, Central St Leonards is by far the most deprived ward. It has a deprivation score of 55.18 compared to a Hastings average of 32.21 and a county average of 18.78. Of the four neighbourhoods that comprise the area, three were in the worst 5% nationally and the other was in the worst 10% nationally. It is the location of severe housing problems, and other substantial forms of deprivation as indicated in the Index of Multiple Deprivation, 2007 & 2010, also the HBC Private Sector Housing Condition Survey of 2007.

The greater part of central St Leonards was declared a Renewal Area in 2003. A series of interventions including environmental improvements, financial assistance for property improvement and enforcement have been targeted at the area since that time. Properties which were known to contain dangerous features such as inadequate means of escape were targeted alongside a reactive and funding limited improvement grant programme.

Despite the Council led interventions to date, it is recognised that the St. Leonards area still suffers from significant multiple deprivation. It faces a range of socio-economic problems. The issues relate to the physical condition, layout and management of the properties and the multiple and complex problems of the residents. This is evidenced by the fact that:

24% of dwellings are HMOs, representing 940 buildings, being used to house multiple households, compared to 2% nationally.

Nearly 50% of dwellings in Central St Leonards are privately rented (and the majority are HMOs).

Housing conditions amongst the private rented sector (PRS) are very poor, with HMOs posing an “imminent threat to health” and 26% of houses being unfit for human habitation.

There is a high degree of social churn, with 56% of residents indicating living just one to five years at their current address and only 20% of residents living in their home for over ten years.

The level of non decency is estimated to be 40%, falling just 2% since the renewal area declaration in 2003.

9.4% of dwellings are overcrowded.

The Renewal Area has the highest level of benefit dependency in the county with 11.4% claiming Job Seekers Allowance (JSA) and 33.8% claiming key out-of-work benefits. 40% of households live in poverty.

There are low levels of income amongst the working population; nearly 50% of households have an income of less than £10,000 per annum.

Central St Leonards is the ward with the lowest life expectancy in the county, and it faces a series of serious health issues.

It should be recognised that improvements have been carried out through the work of the Council including measures that have led to over 255 properties being brought up to the Decent Homes Standard since 2006.

However, with funding available to the Council likely to be restricted for the foreseeable future, through the loss of government funds, there is a considerable concern that the area will suffer further without major intervention. The latest IMD figures, and other available information, indicate that the area is declining further and therefore the driver for further intervention is clear.

HBC have begun the process of attempting to sustain the housing and regeneration improvements in several key ways.

The implementation of an additional licensing scheme, which covers the Central St Leonards Renewal Area. This will assist in sustaining and brining about further improvements to standards and management of housing in the Renewal Area.

The development of funding model with the HCA and Registered Provider partners that will enable the purchase and improvement of some 50–60 of the worst private privately rented homes over the next two years. The underlying philosophy is to create balanced and more stable communities through increasing tenure diversification within an area of predominately private sector stock.

Proactive and dedicated enforcement activity.

Links to a wider programme of economic and community intervention, including employment and training programmes, public realm improvements, Town Team approaches, Rebranding and Marketing strategies etc.

Data drawn from three Index of Multiple Deprivation (IMD) 2010 and published during March 2011 presents a picture of significant deprivation concentrated but not exclusively, in the St Leonards area of the town. The area has a rank of 1.02% which means that it is within the worst 1.02% of LSOA’s in the country. The relative ranking of deprivation has got significantly worse since the previous publications in 2004 and 2007. Whereas it was the 994th worst LSOA in the country in 2004 and the 1265th in 2007, it has now risen to the 331st worst. Its worst ranking is the IMD Employment Deprivation Domain—170. Clearly this is an area of severe unemployment and few prospects. It has an IMD Environment Deprivation Domain ranking of 607, taking account of the poor quality of housing and living conditions in the area.

The IMD information adds weight to that provided by the East Sussex NHS Joint Strategic Needs Assessment (JNSA) which has recently published its latest scorecards for 201011. The scorecards provide a range of health and other social and demographic information. Central St Leonards scored particularly badly compared with other wards in Hastings in the following areas:

The lowest percentage of people registered with GPs aged 0–19 years (1,163 of 6,639 people).

The highest GP reported mental health prevalence (102 of 6,751 people).

The 4th highest number of people aged 18 years and over with mental health needs, supported to live independently through social services.

The lowest proportion of pupils on the school roll as a proportion of all children aged 0–19 years (546 of 1,163 people).

The proportion of pupils receiving free school meals (2nd highest).

The rate of persistent absence in primary schools (3rd highest).

A detailed analysis of one road within seven key streets in the central area of St Leonards identified that there were a total of 56 properties containing 202 units of accommodation. 80% of the properties (137) were privately rented with 15% void (31), with one having been vacant since 1998. Only 13% are in owner occupation (23) with only one of these representing a full house. 57% of the residents (98) were in receipt of Housing or Council Tax benefit.

If this is typical of this area of St Leonards then there could be about 370 properties consisting of about 1,114 individual units in the seven streets alone. The aggregate market value of properties in the area is about £110 million. If the tenure in the rest of the area is also 80% in the Private Rented Sector, then the income to private landlords based on one & two bed flatted accommodation and a Local Housing Allowance rate of £127.50 as applied until 31st March 2011 was around £6 million pa. At current market rent rates of £120.40 per week this equates to an income stream of about £5.5 million pa and at the new LHA rate from April 2011 of £107.10 per week to around £5 million pa.

This demonstrates that there is a significant rental stream flowing into the area, supported by housing benefit, but this is not being reflected in improved housing or management standards.

Road

Units

HB and/or CTB Claimants

% Claimants per Road

Kenilworth Road

278

127

46%

Pevensey Road

339

146

43%

Silchester Road

81

42

52%

Stockleigh Road

105

65

62%

Rothsay Road

9

4

44%

Carisbrooke Road

202

111

55%

To complement the IMD and JSNA data, a more detailed overview of St Leonards and the Seven Streets Area has been produced. A number of observations can be drawn from the high-level information that has been provided:

Property prices—A consistent pattern of low property values in the St Leonards area. December 2010 prices indicate a one bed flat priced at £63,031 and a two bed flat priced at £99,903 in Central St Leonards. This is below surrounding wards—West St Leonards, Braybrooke, Castle and Maze Hill. Property prices on average are now below May 2005 levels.

Social issuesAnti-social behaviour, poor health, unemployment and social churn are all key concerns in St Leonards. 40% of households live in poverty, 11.4% claim JSA and 33.8% claim key out-of-work benefits, the highest in the county. St Leonards has the lowest life expectancy in East Sussex.

Levels of Unemployment—Analysis of Indices of Deprivation and JSNA data confirm that currently in the St Leonards area 11.4% claim JSA and 33.8% claim key out of work benefits. The impact of cuts in public expenditure and increased redundancy affecting public sector workers is yet to work through the system. Hastings is an area with a high dependency on public sector jobs and in that context the attraction of SAGA to Hastings is a welcome addition to local private sector employment. However, in the absence of further substantial local growth and consequent job opportunities the already high levels of unemployment are likely to increase.

Housing Market Performance—Set in a context of rising unemployment and increasing levels of benefit dependency, it is unlikely that the housing market will return to the level it reached pre-credit crunch in the short to medium term. Whilst in the short term a depressed housing market will assist the early purchase of properties, the longer term vision of creating a more balanced community and housing market will be compromised until the outcomes of a successful holistic regeneration intervention including improved local and external perceptions of the area are achieved.

Funding Opportunities—The acquisition of a significant number of properties in the St Leonards area is dependant on a robust financial model that is sensitive to a range of factors, most important of which is the rate at which finance can be secured to fund purchase. Current and predicted rates of interest at circa 6.3%—6.7% would make intervention unattractive to potential funders.

A combination of a lower interest rate and/or grant funding would mitigate this. Opportunities for government sponsored grant support are now limited to funding through the Homes and Communities Agency through its Affordable Homes Programme or a bid for Regional Growth Fund monies through the Local Enterprise Partnership. Both funding sources are likely to be over subscribed.

APPENDIX 3

SUMMARY OF PROPOSED RECOMMENDATIONS

1. Encourage and incentivise institutional investment in rented housing. To encourage this by a variety of means including;

Encouraging Local Economic Partnerships (LEPs) to bring together potential investors and other players in Task Forces to devise plans to encourage the sector at this level. For government and LEPs to view this as a key economic issue, particularly in the coastal towns where the market produces negative results.

The importance of targeted economic and social measures to improve areas where both investment and immigration with a low value sector is explicitly recognised.

An examination of the impact of the benefit cap works on some coastal communities and other areas of lower value/lower investment private rented sector.

To examine if and how private sector organisations might have access to HCA/Public Funds for providing rented accommodation and/or tax incentives for investment.

To consider the higher level of costs often faced in acquiring and restoring older property in seaside towns and other places and if HCA and government regimes can address these issues.

2. Simplification of Housing, Health and Rating System including a straightforward “traffic light” system of assessments.

3. Linking the level of housing benefit payable to the condition of the property.

4. Certification of landlords and single licensing schemes covering all private rented property.

5. Consideration of rent controls linked to the floorspace (not number of rooms) and condition of a property.

6. A mandatory national register of landlords together with mandatory training for landlords and letting agents.

7. Legislation to prevent landlords serving eviction notices if the property is subject to an enforcement notice.

8. Introduction of model management contracts.

9. Introduction of “starter” tenancies.

10. Private sector tenancies to be brought in line with those in the public sector.

11. The government to engage with mortgage lenders to reduce insistence on short term tenancies.

12. A legal requirement of disclosure where one Council discharges its responsibilities by placing people in accommodation in another Authority’s area.

13. Local authorities being able to stipulate areas within their boundaries where other local authorities may not make placements due to existing conditions in those areas.

Prepared 16th July 2013