Environment, Food and Rural Affairs CommitteeFurther supplementary written evidence submitted by the Country Land & Business Association

Thank you for asking me to give evidence at your inquiry into rural communities. During my evidence I promised to write to you regarding housing. The CLA’s members are uniquely placed to provide housing in rural areas.

Many of our members own land on the edge of settlements or in greenbelt locations and are in a position to assist with the national housing supply shortfall. The overwhelming majority retain rented housing stock with over 38% (Joseph Rowntree) of let housing in rural areas owned by CLA members—often at sub-market rents. With this in mind increasing rental portfolios through new build is of particular interest to CLA members.

The CLA is currently reviewing its housing policy and through it seeks to harness members’ capability to deliver housing on the ground. The draft policy has been formed following extensive consultation amongst the CLA’s 34,000 members; below are some of our consultations findings

Barriers to the Delivery of New Housing and Maintenance of Existing Stock

1. Poor Implementation of the NPPF

The existing CLA Housing Policy from 2004 was a success with many of its recommendations being used in the 2011 National Planning Policy Framework (NPPF). CLA members, however, report that the NPPF is not always being implemented to its fullest extent. The CLA’s policy team is compiling a list of LPA’s who are not implementing all of the NPPF and as a result are:

failing to recognise that without new open market housing in rural locations, the sustainability of settlements will be affected;

stifling the breadth of the rural economy and generating large house-price differentials with urban areas and making rural housing a sought after commodity unaffordable for many; and

failing to recognise that many urban brown field sites are faced with extensive clean-up programmes and are now unviable and therefore should not be allocated for housing provision but put forward instead for “greening programmes.”

2. Difficulties in bringing redundant farm buildings forward as new housing stock

Some LPA’s will only consider economic development uses or affordable housing use for redundant farm buildings. Owing to the building, construction and expense, however, of converting some farm buildings the only viable means of developing these buildings is as open market sale housing.

3. Taxation Disincentives

Many CLA members charge sub-market rents for their let housing but there is no tax incentive for them to do this because of the lack of capital gains tax holdover relief. This means that lifetime transfers of such properties accrue capital gains tax. Likewise, with minor exceptions, there is a general lack of inheritance tax business property relief for let residential property. Unless taxation disincentives are tackled by the Treasury, landlords will be discouraged from providing new rented housing in rural areas.

4. Tenancy Reform

The archaic nature of the 1976/77 Rent Act can also cause problems. Members have identified inconsistency and a lack of transparency regarding different decisions from different rent officers. Succession rights in such stock also flies in the face of recent changes made to the new freedoms (Localism Act) awarded to local authorities and housing associations, who are now able to charge rents at 80% open market rents and offer flexible tenancies.

Since the credit crunch of 2007, some CLA members will have had to raise rent levels on assured shorthold properties. Higher rents in AST tenancies enable increased investment in housing stock that owing to its traditional construction type is expensive to maintain. Subject to taxation reform, and the impact that such changes could have on yield, some landlords wish to grow their rental portfolios and assist with national housing supply shortfalls.

Harry Cotterell
President, Country Land & Business Association

18 December 2012