Housing and Planning Bill Committee

Written evidence submitted by the London Borough of Barnet Council (HPB 121)

Housing and Planning Bill

Summary

1. The Council is broadly supportive of the aims of the Housing and Planning Bill to increase access to home ownership and provide a million new homes by 2020.

2. We are keen to play our part in helping the Government realise this ambition, and think that we could use our own resources to deliver more homes if there was more flexibility on the rules around the use of Right-to-Buy receipts to provide replacement homes.

3. We accept the principle that social housing tenants with higher incomes should pay higher rents, but believe that this should not be implemented in a way that provides a disincentive to people improving their economic circumstances through working hard.

4. High house prices in Barnet mean that starter homes are likely to be beyond the reach of many households in the borough, and we would like to see continued support for shared ownership as this is a more affordable option.

About Barnet Council

5. Barnet Council is the most populous borough in Greater London with 393,000 residents and is expected to increase by 76,000 over the next 25 years – an increase of 19%. The borough of Barnet contains 135,916 households, according to the 2011 Census, with an average household size of 2.6 persons and 2.7 bedrooms.

6. The tenure split in the borough is changing. Between 2001 and 2011, the number of private rented homes rose from 17% to 26% of homes in the borough. During the same period owner-occupation reduced from 66% to 58%.

7. Barnet is an expensive place in which to live. Average house prices in September 2015 were £477,231 (Land Registry). Average monthly private rents in September 2015 were £341 per week (Valuation Office Agency). This is about 30 % more than the current average council rent of £103 per week.

8. We have recently produced a new housing strategy for the borough. The strategy sets out how we will provide the homes for a growing population, including affordable homes and homes for vulnerable people, how we will improve housing quality, prevent and tackle homelessness and provide effective services to residents. The strategy can be foundhere.

Background

9. London is a successful, thriving city, attracting investment and people from across the globe and with the best schools in the country. This brings many benefits to Barnet residents. But it also brings challenges. The increasing numbers choosing to live in London- and to stay here as their families grow- together with longer life expectancy, creates pressure on housing and other services.

10. The demand for housing, and particularly affordable housing, is a huge challenge throughout London, as well as in Barnet which has this year become the Capital’s most populous borough with 393,000 residents. To increase long-term housing supply we are working with developers to deliver 20,000 new homes by 2025, the most in outer London, with roughly 40% at affordable rates. We are also building hundreds of new council homes by 2020, as well as regenerating our biggest housing estates.

11. We are increasing our early intervention strategies to prevent homelessness and reduce the need for expensive emergency accommodation but there is still a high demand for affordable housing for rent across London. Private renting is very expensive in London and Barnet is the 4th most expensive outer London borough. The amount of subsidy that can be claimed has not kept up with the increases in market rents meaning that for some households many private rented properties are now unaffordable. Increased housing costs combined with restrictions on housing benefit has resulted in more households moving out of Central London to Outer London boroughs, including Barnet.

12. We support the overall objectives in the Housing and Planning Bill to increase the supply and availability of housing, including housing for sale as many people aspire to buy their own home which has become increasingly difficult to obtain in places such as Barnet. However, given the pressures of affordable housing supply and demand, particularly in London, it is important that the level of affordable housing for rent is sustained.

Right to Buy

13. While we support the aspirations of housing association tenants to own their own home there is a risk that the policy will reduce the overall stock of affordable homes for rent in London. This could be mitigated by ensuring that the receipts from the London sales are used to provide at least "one-for-one" replacement in London to ensure that the level of affordable housing is maintained to provide housing for those who need it.

14. Crucially, to ensure that we can meet our statutory housing duties, and particularly in London with the increasing demand for housing from a growing population, we would argue for greater flexibility in the use of Right to Buy receipts under the current 1-4-1 replacement arrangements, including relaxing the timeframe and match funding requirements and constraints on reinvestment. This would allow London boroughs to provide more housing for those who need it.

15. We would also like to see a change in the current rules that mean that local authorities cannot use right to buy receipts to fund the delivery of new homes by an organisation that they are the majority stakeholder of, such as an Arm’s Length Management Organisation (ALMO). This would provide support another option for the delivery of replacement homes and one that we are interested in pursuing.

16. The Right to Buy extension also risks driving up the Council’s spend on temporary accommodation, which is already a significant pressure, as it will take time to replenish the supply of social sector properties which may be sold. Allowing Councils to use their HRAs to contribute to the rising costs of statutory homelessness, in line with how housing associations can use rents they collect to cover wider costs, would go some way towards alleviating this pressure.

Sale of High Value Council Housing

17. We have developed a business plan for our housing revenue account to effectively manage and maintain our housing resources and meet health and safety obligations. Within this, we have also developed a pipeline to build new homes for rent on council land and the procurement of other homes for rent. Flexibility in local implementation of the high value sales policy could help to mitigate some of the potential unintended consequences that could reduce the overall supply of affordable housing in London and also make housing revenue accounts unsustainable in the long-term.

18. We would welcome discussions with ministers on how the receipts from the sale of high value council homes can be retained locally and be used to build new affordable homes for rent within the borough, rather than being used to deliver housing in cheaper areas of the country where there is a lower demand for housing. Alternatively, this could be done collectively with boroughs in London to ensure that housing supply is increased in the Capital and affordable housing is maintained.

Pay to Stay

19. We recognise that there is the potential for social tenants to pay rents that are higher than traditional social rents. In fact, on our new-build council homes we will be charging a rent that is based on 65% of average market rents, or the equivalent local housing allowance rate whichever is lower. The rent will be used to reinvest in housing in the borough.

20. On the Pay to Stay policy specifically, we would recommend that the implementation of the policy is tapered to ensure that it does not act as disincentive to seek better paid employment for households that are just below the £40,000 income level.

21. We would also like local authorities to be treated in the same manner as Registered Providers and be allowed to retain additional income raised through higher rents to support the provision of local housing services and investment in new homes.

Starter Homes

22. We welcome the introduction of a new option that will help more people access home ownership.

23. We are, however, concerned that as Starter Homes will be exempt from section 106 agreements there will be a reduction in the amount of other types of affordable housing provided as part of new developments, such as affordable rent and shared ownership.

24. Average household incomes in Barnet are in the region of £40,000 per annum, whilst the average house price is £535,135 [1] . This means that even with a 20% discount and a cap of £450,000, starter homes will not be affordable for many of our residents.

25. Prices for new 1 bedroom flats in Barnet start at £275,000, which means that with a 20% discount the price, would be £220,000 which would require a salary of more than £60,000 with a 10% deposit based on being able to borrow at 3 times salary.

26. An experienced teacher in Barnet might expect to earn in the region of £36,000 per annum, which would mean that they would not be able to afford a Starter Home.

27. Shared ownership provides a more affordable option and the average income of people acquiring a home through this route was £37,000 last year [2] .

28. In view of this, our view is that support for shared ownership should continue as this would help more people would be helped to access home ownership in high value areas like London.

Planning

29. We support the Government’s intentions to grow the Self-building and Custom Building sector. However, based on the evidence of need locally, it is only going to make a relatively small contribution to the overall housing numbers that are required to meet the need of the population. These provisions place an additional burden on local authorities to identify (via Local Plans) and grant sufficient permissions on serviced plots to meet the needs identified by those self/custom builders registered with Councils via the provisions in the Self Build and Custom Housebuilding Act 2015. The Bill refers to fees being introduced to cover the costs and we would welcome full cost recovery.

30. The new duty to hold a register of brownfield land is will significantly increase the burden on local planning authorities because the National Planning Policy Framework (NPPF) only requires Strategic Housing Land Availability Assessments (SHLAAs) to "consider all sites and broad locations capable of delivering five or more dwellings … on sites of 0.25ha (or 500m2 of floor space) and above". The site has to be at least 0.25ha AND be capable of delivering five or more dwellings. 0.25ha is the minimum threshold – not 5 dwellings. This will add a significant number of sites to the SHLAA process.

Conclusions

31. We support the overall aims in the Housing and Planning Bill to increase the housing supply and to promote home ownership.

32. However , to ensure that councils can continue to meet local housing need , it is essential that flexibilities are built into the Bill so that councils are able to play their part in increasing the supply of housing. This includes

a) More flexibility on the match funding and timeframe re quirements associated with the use of Right to Buy receipts under the current 1 - 4 - 1 replacement rules.

b) Allowing councils to use Right to Buy receipts to fund the delivery of new homes through a council wholly owned organisation , such as an ALMO .

c) Allowing councils to retain the receipts from the Sale of High Value Council Housing to develop more homes.

d) A llowing councils to retain the additional income from Pay to Stay to develop more homes.

December 2015


[1] Mean House price in Barnet for 2014, Land Registry Data: http://data.london.gov.uk/dataset/average-house-prices-borough

[2] Source Greater London Authority

Prepared 8th December 2015