Housing and Planning Bill

Written evidence submitted by Greater Manchester Combined Authority (HPB 135)

1 Introduction

1.1 The Housing and Planning Bill has been described by Ministers as "the start of a national crusade to transform generation rent into generation buy", and contains a wide package of measures across housing and planning issues. Many of the provisions of the Bill are lacking in detail, instead awarding the Secretary of State the power to introduce or amend provisions through regulations at a later date. For example, we remain uncertain about:

· How ‘high value local authority housing’ will be defined

· What deregulation will be applied to registered housing providers

· How the Secretary of State’s new powers to prepare a Local Plan where a local authority has failed to do so will actually be triggered and used

· What the requirements will be for the preparation of brownfield land registers

· How the automatic ‘planning permission in principle’ will operate.

1.2 This makes the Committee’s task a difficult one, since much of the impact of the Bill is imponderable until the missing detail is available. We are concerned therefore that, while the use of regulations may provide current and future Ministers the ability to be flexible and respond to change, this is outweighed by the difficulty of applying effective scrutiny and challenge to the emerging legislative framework; and by the uncertainty implicit in a framework which remains subject to continued unpredictable ‘reform’ by subsequent Ministers.

1.3 Although the Bill has been largely presented as a ‘Housing’ bill it actually represents a radical change to the local planning system in England. These changes will reinforce the already extensive powers of the Secretary of State and will, along with the extension of permitted development rights, further weaken the local planning system’s ability to deliver high-quality homes in sustainable communities. The proposals introduce a ‘zonal’ planning system removing the discretionary powers of local authorities and will make it difficult to plan for ‘places’.

1.4 We would ask the Committee notes the further GM devolution announcement in the recent Spending Review, including a commitment that Government will work with GMCA to "consider how regulatory reform can maximise the housing and public service reform outcomes" arising from our work with GM housing providers to enable better utilisation of the social housing assets to increase the diversity of social housing provision, and to increase investment in home ownership. With this welcome commitment to devolved working, there is a consequent requirement for flexibility in how the Bill is implemented once enacted, to recognise the very different circumstances found in housing markets across England.

2 Greater Manchester Combined Authority (GMCA)

2.1 Established in April 2011, the Greater Manchester Combined Authority was the first Combined Authority in the country and brings together the ten local authorities in Greater Manchester in order to integrate and streamline our joint work on economic development and transport, increasing the transparency and accountability of our joint decision making. The GMCA builds upon the achievements of our ten local authorities who have been working together since 1986 as AGMA, the Association of Greater Manchester Authorities, and works alongside the GM L EP to forge a comprehensive and truly collaborative partnership unique in England.

3. Key provisions - Housing

3.1 Starter homes are defined as a new dwelling available for first-time buyers under the age of 40 only, to be sold at a discount of at least 20% of market value within a price cap outside Greater London of £250,000. Local planning authorities will have a duty to promote the supply of starter homes, and report on how they have carried out that function. The changes provide that authorities will only be able to grant planning permission for certain residential developments if specified requirements relating to starter homes are met.

3.2 The Committee will be aware that Ministers have stated their intention to create a legal obligation on Councils to provide 200,000 new starter homes. Starter homes are to be defined as a new building or part of a new building available for purchase by qualifying first-time buyers only. The Government has indicated that it will change the definition of affordable housing to include not just properties for rent but also starter homes. It is unclear as yet, what the impact of the starter homes duty will be, and what the GM ‘share’ of the 200,000 will be.

3.3 Previous statements had indicated that the 20% subsidy to first time buyers would be provided by councils disapplying s106 requirements. In a GM context where many districts already waive planning obligations, and/or where the value of these will not equate to 20% of market value, this threatened the viability of Starter Homes. The Spending Review announcement of £2.3 billion funding for Starter Homes may help overcome that issue, but would mean the availability of funding for schemes in GM will determine our ability to supply the designated number of Starter Homes, while also undermining our ability to provide truly affordable homes by weakening the s.106 regime. It also produces a once-only impact on affordability, as the subsidy applied is retained by the first-time buyer on resale after 5 years, neither recycling the subsidy nor retaining the property for subsequent households, notably poor value for money. From a buyer’s point of view, it’s not clear that the 20% subsidy will make homes substantially more affordable, given the key barrier for many GM households is the deposit rather than the headline purchase price. We also question the impact of Starter Homes on local housing markets , and how the 20% ‘discount’ will be monitored to ensure pricing relates to true market value.

3.4 Some GM districts already secure home ownership through their affordable housing policies. One seeks affordable homes as 25% of homes on sites above 25 units, at 25% below open market value, securing much needed affordable home ownership for households otherwise have been unable to afford the full market value. These affordable properties are secured in perpetuity. With no limit on the age of households eligible for these properties, they benefit a wider range of households. The Government’s proposals undermine such local approaches whilst producing sub optimal outcomes, removing flexibility for local authorities to meet local needs and demand for a once-only subsidy to a limited group of households.

3.5 There is no indication of the penalties councils face if they fail to provide the required Starter Homes, or indeed how such targets may be set. We share Government’s desire to encourage home ownership, as part of the plans for economic growth through the Northern Powerhouse. But we should ensure that resources available are used effectively - the Starter Homes lever should be available where it is suitable and left in the toolbox where it is not.

3.6 The ‘voluntary Right to Buy’ for housing associations applies a further substantial subsidy to a relatively small group of prospective purchasers. This seems an expensive approach to securing a limited amount of growth in home ownership, offering poor value for money in releasing assets of considerable value at a much reduced price. Substantial numbers of the properties sold through Right to Buy (RTB) are destined to end up in the portfolios of private landlords. We note the challenge this will add to Government’s efforts to justify a reversal of the recent decision by ONS on the status of housing associations.

3.7 The impact in GM, particularly taken together with the ‘Pay to Stay’ provision, will be an accelerated loss of social/affordable housing. If this has a similar impact to the introduction of RTB on council houses in the 1980s, we could see 5,000 plus sales per year - the Chartered Institute of Housing (CIH) forecast 10% of eligible households will buy in the first 5 years. In some cases, including some parts of GM, this switch in tenure may be justified by local markets, demand and residents’ ability to afford home ownership. However, there are no means to direct this switch in tenure strategically. Thus the possibility that replacement units will not be in the form of social/affordable housing as currently defined, but arrive as Starter Homes instead (or not at all), and that that choice is effectively out of the hands of local authorities, is a concern.

3.8 The sale of vacant high value local authority housing is expected to be used to pay for compensating housing associations for voluntary RTB sales. We have serious concerns about the principle and practice of this measure, including:

· The forced removal of Councils’ assets to compensate associations, thus losing two affordable homes in exchange for the uncertain replacement of one of them;

· That the discount is not applied as an equity share, which would at least offer some recycling of the subsidy as RTBs are resold;

· The determination of the amount required to be surrendered by each local housing authority is undefined and subject to change from year to year;

· The lack of clarity on how the funds generated will be distributed, including how the demand for compensation for housing associations will be matched with the supply of funds;

· How compensation will be implemented in areas where stock transfer means there are no HRA assets to sell, but where tenants will expect equal access to RTB;

· The absence of any indication of flexibility on the restrictions which apply to the HRA to allow authorities to manage it differently to help generate the funds required through more sustainable routes than selling assets; and

· The undermining of the principle that Councils would be able to plan and manage the HRA on a strategic, long term basis. It may be that the indication that the SoS may agree with an authority to reduce the amount the authority is required to pay, if the amount of that reduction is used "for the provision of housing or for things that facilitate the provision of housing" offers a route toward a medium term settlement between the SoS and an authority or group of authorities. If so, that would be welcome - but still a step back from the principles underpinning the reforms which came in to force in 2012.

3.9 Earlier statements by Ministers had indicated that proceeds from these sales would also be used to resource, inter alia, a ‘Brownfield Fund’. Such a Fund is a major gap in our policy and investment armoury, and one which could make a substantial contribution to housing delivery in places like GM, though we would not suggest this as a suitable source of funding.

3.10 The mandatory ‘Pay to Stay’ scheme for social tenants on high income also awaits much detail to follow in regulation, including the definition of high income. We see this proposal being of extremely limited value in generating additional investment in providing new homes for working households or households in general, which is a key part of Greater Manchester’s growth agenda. In fact, we fear that in practice the proposals will cost more to administer than will be collected in additional rental income.

3.11 In terms of our reform agenda, where we share Government’s desire to reduce dependency on public services, we are concerned that the proposals actually act as a disincentive to work or to increase household income as the penalising impact of the pay to stay approach would be significant. Our fear is this encourages people to opt for part time work, with potential implications for welfare benefits, particularly so given the subsequently proposed income threshold of just £30,000. Alternatively, it may have a negative impact on the social mix of communities, residualising social housing estates as higher earners move out.

3.12 But the practical concerns about this policy are substantial. The households targeted by this policy are implicitly assumed to have stable incomes above the relevant thresholds. This assumption is extremely bold – particularly for multiple-income households, for the self-employed or for those suffering unexpected ill health or disability which might impact on their ability to work. The implication is either that rents will be able to respond in real time to changing household circumstances, or that households will be expected to be able to ride the peaks and troughs in their income while maintaining regular rent payments. Even with the help of access to HMRC information, neither of these options appears to be sustainable. The policy may lead some households to exercise the RTB to avoid the additional rent – but the same issues as just outlined also suggest that many of the households are ill-prepared for the risks of home ownership. These concerns naturally decrease as the income threshold is raised – the suggested £30,000 is simply too low, even on a tapered basis.

3.13 The Bill’s provisions to deal with rogue landlords and letting agents are generally welcome additions to the tools and powers available in this area, albeit with concerns about local authority capacity to make best use of them, given the continuing squeeze on funds for local government outlined in the Spending Review. One option which the Committee may wish to consider is the ability to share the proceeds generated by uncovering rogue landlords’ and agents’ undeclared income and consequent tax liability to HMRC. This would allow Councils to maintain sufficient dedicated investigation and enforcement teams to make a significant impact in this important area of work, while still generating additional income for HMRC, an example of the collaborative, cross-agency working which public service reform demands.

3.14 The Bill’s proposals for new housing are in the main focused on improving access to home ownership, particularly for younger people. We are concerned that it does not contain a range of measures to support a balanced mix of tenures to meet the demands and aspirations of our communities, including older households, for a choice of homes they can afford.

4. Key Provisions - Planning

4.1 We share the Government’s view that Local Plans are the primary mechanism for identifying the development needed in an area, which is why we have jointly agreed to produce a statutory plan, the Greater Manchester Spatial Framework (GMSF). We recognise that in areas where there is no willingness to produce a Local Plan more draconian measures may be required, however we are very concerned that the provision for Government to take over Local Plan where the plan is not completed by 2017 will impact severely upon our ability to progress the GMSF. We are sure that this is not necessarily the intention, but given the resource requirements it is not possible that we can resource both the GMSF and district plans adequately at the same time. It is also not desirable that we should do this as the whole point of the GMSF is to plan for Greater Manchester on the basis that it is a functioning economic area and we need to understand how each place can contribute to success and what the inter-relationships and synergies are across the conurbation.

4.2 We have serious concerns that districts who have committed to the preparation of the GMSF will be penalised for participating in the ground-breaking GMSF. If the 2017 deadline is maintained, districts will be likely to withdraw assistance and channel their limited resources into the preparation/review of local plans. This will not only prevent further progress on the GMSF, but will result in an uncoordinated approach within GM. We are also unsure what process Government intends to use to produce a local plan ‘with the input of local communities’. If it is intended that this is a more streamlined than the current approach, then this process should also be available to Local Authorities.

4.3 The Bill introduces the requirement for LPAs to prepare, maintain and publish local registers of brownfield land Regulations will provide details of the criteria which land should meet.

4.4 The Bill will enable local planning authorities or neighbourhood groups to grant permission in principle for housing sites at the point when a site is allocated in an adopted local or neighbourhood plan document or a local brownfield register. This would set out the type and scope of development, location and amount of development. A further ‘Technical Details Consent’ application would be required to provide full planning consent.

4.5 The detail of how brownfield land registers and permission in principle is yet to be set out in regulations and this detail is critical. There are concerns that the requirement could be onerous for districts if they have to fund environmental impact assessments etc. The criteria for ‘permission in principle’ could rule out many GM sites if it includes environmental constraints. There is little evidence in GM that lack of planning permission is holding sites back. We have over 45,000 extant consents on sites – housing completions for 1014/15 are in the region of 5,000. We are also concerned that another form of planning permission (Technical Details Consent) will add an unnecessary layer of complication (following the introduction of ‘Prior approval’ for example).

4.6 The Housing and Planning Bill will require local planning authorities to ensure that there are sufficient serviced permissioned plots consistent with the local demand on their custom build registers. Greater Manchester authorities have no evidence that self/custom build will significantly contribute to housing supply within the conurbation. It is unclear how this would be funded particularly as budget cuts continue.

5. Resources

5.1 On a more general note, the proposed reforms to strategic planning and development management continue the trend of adding further requirements at the local level whilst reducing the ability to cover the cost through fee income. At the same time funding for planning services continue to face severe reductions. Recent work by Arup for the RTPI identified a significant reduction in LA planning staff across the NW – by 37% for strategic planning and 27% for development management.

5.2 Earlier changes have introduced processes perhaps intended to reduce work of development management staff (e.g. increased permitted development rights and Prior Approval). However our experience is the amount of work in practice is little reduced, but the fee is considerably smaller. We are concerned that the preparation of brownfield land and self build registers will compound this problem.

December 2015

Prepared 14th December 2015