Housing and Planning Bill

Written evidence submitted by the English Cities in the Core Cities Group (HPB 147)

1. Introduction

1.1 On 3rd November, the Housing and Planning Bill Committee issued a call for written evidence from "those with relevant expertise and experience or an interest in the Housing and Planning Bill ("the Bill")".

1.2 This submission is on behalf of the Core Cities group and has been compiled by the Core Cities Housing and Planning Policy Hub with inputs from the affected English city local authorities in the network (Bristol, Birmingham, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield). The response offers expert evidence and viewpoints on selected parts of the Bill.

1.3 Core Cities is a unique and united local authority voice to promote the role of our cities in driving economic growth and the case for city devolution. We represent the Councils of England’s eight largest city economies outside London along with Glasgow and Cardiff. These cities drive local and underpin national economies. Working in partnership, we aim to enable each City to enhance their economic performance and make them better places to live, work, visit and do business. The Core Cities Group has a track record of 15 years as a cross party group, led by the City Leaders.

1.4 Each Core City aims to offer the range, choice and quality of housing needed to attract and retain a skilled workforce to support and stimulate a growing city-region economy. However, there are significant differences between and within the housing markets in the Core Cities, which also set them apart from other parts of the country. Long-term failure to build enough homes across the country, and areas in desperate need of regeneration to make them places where people want to live combined with above average population increases, means access to good quality housing is a growing issue across the Core Cities. Therefore localised solutions are needed, rather than a simplistic one-size fits all approach.

1.5 Section 2 of this paper provides a summary of our submission and recommendations. Section 3 provides a detailed response and some evidenced examples form individual cities.

2.
Summary and Recommendations

2.1. Core Cities share Government’s key housing objectives, which are to build more homes and to promote home ownership.

2.2. The promotion of home ownership, however, should not be at the expense of other housing tenures, particularly lower cost social and affordable rent for those people that need this housing tenure. As such, we believe there is a real danger that the Bill, alongside other government policies, will result in fewer Council and RP properties being built with the detrimental impact this could have on low income families

2.3. The Bill is silent on improving the quality of housing. Addressing poor quality housing and neighbourhoods is a major challenge for all Core Cities.

2.4. An important general observation is that the Bill in its current form contains very little information; deferring as it does much if not all of the crucial details to further regulation. This is considered to be unsatisfactory for such an important piece of legislation and makes the submission of evidence, impact assessment or proposed amendments to the Bill, difficult.

2.5. Given this, the Committee is requested that further calls for evidence and consultation opportunities are provided as more detail of the Bill emerges.

Starter Homes

2.6. Proposals will effectively result in Starter Homes replacing the social or affordable rented homes that would have been delivered via Affordable Housing Requirements and this may have unintended consequences.

2.7. Government should allow local planning authorities, in the context of Localism or via Devolution Agreements, to locally determine the appropriate contribution Starter Homes will make to supply, including the size and location of sites to which Starter Homes will be applied and allow flexibility for the use of commuted sums.

Rogue Landlords and Letting Agents

2.8. Core Cities welcome government’s recognition of this issue.

2.9. We are in favour of the introduction of banning orders and banning order offences. However, we would be grateful for further definitions of what a ‘rogue’ landlord or agent is. The Bill requires much greater clarity on the management of properties following the issuing of a banning order.

2.10. The Bill misses the opportunity to allow Council’s the flexibility to vary the amount of Housing Benefit paid according to neighbourhood and housing quality. Such local flexibility could reduce costs to the public purse and incentivise landlord investment in poor quality properties.

Office conversion to residential

2.11. The proposal will inflict further negative impacts on Council budgets including, a significant loss of business rates, reduced planning fees and S106 contributions. Such locally earned income forms an increasingly important part of local government budgets. Furthermore, the policy conflicts with government’s commitment to localism.

2.12. Local Planning Authorities should have the power to make decisions over office conversions.

Forced sale of high value council housing

2.13. The proposal will lead to fewer Council homes being built. It will exacerbate spatial inequalities, remove the tenure mix in many areas and make council housing even more ghettoised.

2.14. We share government’s objective to increase home ownership but this should be achieved through increasing supply and not at the expense of other tenures.

2.15. The Bill requires clarity on what constitutes a high value council property, the formula to be used and whether Councils will be allowed to retain part of the receipt to pay off debt associated with the properties sold.

2.16. Greater clarity is required on how the overall scheme will work and particularly how the local one for one replacement of Council and Registered Provider homes can be achieved.

Pay-to-Stay

2.17. Implementation and monitoring will have significant resource implications for stock holding Councils who must verify and update the household incomes of all tenants. The proposal to allow housing associations but not Councils to keep any new money raised is unjust. Local authorities should be allowed to retain any additional rental income raised to cover their administration costs rather than returning it to the Treasury.

2.18. Given the significant difference in market and social rents in some areas, the proposal has the potential to create disincentives to work. It will result in substantial rent increases for some tenants and trigger an increase in rent arrears. No account appears to have been taken of household needs when setting the threshold.

2.19. A better system would be to gradually increase rents as household income rises above an agreed threshold.

Changes to Allocations policy

2.20. Local authorities often have nomination rights to first lets and vacant housing association properties, and use these to secure housing for people in need on their housing registers or homeless households to whom they owe a statutory duty.

2.21. Local authorities must retain nomination rights to ensure they can fulfil their statutory housing obligations.

Planning permission in principle & Register of brownfield land

2.22. Core Cities welcome the focus on brownfield land but are concerned that providing planning permission in principle is an insufficient incentive in itself to make a substantial difference to housing supply. Core Cities are pro-development; securing planning permission is not a major blockage to brownfield development in our cities. The blockage is more often around market viability and the pre development costs associated with site clearance and decontamination.

2.23. A brownfield regeneration fund with a specific focus upon tackling difficult urban sites is required to substantially increase house building in sustainable urban locations.

2.24. There are many circumstances where automatic ‘permission in principle’ should not be given, and, where a ‘permission in principle’ application should not be submitted. Planning Permission in Principle increases the risk that fundamental issues like flood risk or contamination as well as issues about community infrastructure and design/place-making will be missed.

2.25. The Bill should consider how to take account of these issues in future drafting and specify exemptions from permission in priciple.

2.26. These new requirements impose additional and significant resource implications on Council budgets. The granting of permission in principle will also reduce the amount of income generated through planning fees. Early indications suggest authorities will incur penalties should they not comply with this requirement on time.

2.27. These proposals should be amended to make them cost neutral to local authorities.

3.
Appendix – detailed response

3.1 The Core Cities are broadly supportive of Government’s key housing objectives, which are to build more homes and to promote home ownership. However, the promotion of home ownership should not necessarily be at the expense of other housing tenures, particularly lower cost social and affordable rent. The provision of this tenure is important in housing lower paid working families; supporting economic growth; reducing the welfare bill (particularly housing benefit); and helping to secure long term sustainable communities.

3.2 The government’s objective of boosting housing supply is supported by the Core Cities. Indeed, all the cities have ambitious plans to provide new homes and are in a position to make a major contribution to the government’s objective of providing a million new homes by 2020. Moreover, the Core Cities can provide many of these homes in sustainable locations and on brownfield land.

3.3 The Bill is silent on improving the quality of housing. Many of the Core Cities have an increasingly ageing housing stock; some of it in poor and deteriorating condition. At present, there are no national policy tools available to address poor quality housing and neighbourhoods. It is suggested that the Bill be amended to revoke the Written Statement from the Secretary of State for Communities and Local Government dated 16th January 2015 thus providing the tools to allow local authorities to fully assess housing and neighbourhood conditions and to determine the best way to improve the quality of housing stock offer and to address issues of poor living conditions.

Provision of Starter Homes

3.4 The Core Cities recognise that a government objective is the provision of 200,000 Starter Homes by 2020 which will be homes offered at 20% below the "local market price" (with a price cap of £250,000 outside London) to first-time buyers aged under 40. The Bill places a duty on local planning authorities (LPAs) to provide for these homes and in some cases, LPAs may only grant permission for schemes where a provision for Starter Homes has been made. It is understood that it will apply to all "reasonably sized" new development sites. It appears that this could completely replace any affordable Housing Requirement and the 20% discount will be achieved by waiving any s106 or CIL requirement. S.106 agreements which previously would have provided social or affordable rented homes will now be expected to provide Starter Homes instead.

3.5 The Core Cities are concerned that this part of the Bill may have unintended consequences. Not all Core Cities are characterised by high house prices.

· In Leeds, the price of starter homes, at 20% below market values, is likely to be higher than existing entry level house prices in most parts of the city and accordingly could be unattractive to a high proportion of potential purchasers. The location of starter homes on sites in high value areas, and to a lesser extent in mid-priced, areas could mean that prices are potentially unaffordable.

· In Liverpool, in 2014 the average house price was £134,916 with the median price being £118,000 [1] . Both of these values are below what they were in 2007 prior to the financial crisis. Indeed, much of Liverpool’s housing stock is low value, with some 80% of houses in Council Tax Bands A and B. The provision of Starter Homes at 80% of these values, therefore, could make some housing development sites unviable to developers. This could bring the Bill into conflict with the National Planning Policy Framework which stresses the need for housing sites to be viable in order to be included as part of the housing land supply.

Moreover, where house prices are lower than average, the Starter Homes policy could undermine attempts by local authorities to provide wider housing choice through the development of higher value stock.

3.6 The impact of this initiative on Registered Providers and SME builders is also unknown as in some instances their ability to continue to deliver additional new housing is enabled by investment in properties made available through s106.

3.7 Given also that Starter Homes provision will replace some or all s.106 agreement to provide affordable homes in a development then the overall impact of the proposal will be to lead to a reduction in the supply of lower cost affordable housing across the country.

3.8 Core Cities believe that Government should allow local planning authorities, in the context of Localism or via Devolution Agreements, to locally determine the appropriate contribution Starter Homes will make to supply, including size and location of sites to which start homes will be applied and allow flexibility for use of commuted sums.

Rogue Landlords and Letting Agents

3.9 Recent years have witnessed a significant growth in the private rented sector. In some cases, this growth has been accompanied by an increase in the number of poor landlords and, as a consequence, the number of people living in poor conditions. The Core Cities welcomes the Bill’s proposal to allow rogue landlords to be the subject of banning orders where they, or their letting agents, have been convicted of a banning order offence, although there needs to be much greater clarity on the management of properties following the issuing of a banning order.

3.10 The Bill’s focus on rogue landlords complements work undertaken in the Core Cities. For example, through its accreditation and selective licensing schemes, Liverpool has already implemented measures to root out rogue landlords, to work with good landlords and so improve the quality of the private rented sector.

3.11 The Bill’s proposal to ensure that local authorities maintain the database of rogue landlords and letting agents on behalf of the Secretary of State will be resource intensive at a time when further economies in local government are being proposed.

3.12 Where possible, Liverpool will undertake this in conjunction with the aforementioned landlord accreditation and licensing initiatives in order to keep costs down but for other Core Cities, this opportunity doesn’t exist. The Core Cities would welcome recognition of this by Government.

3.13 Newcastle has been invited along with another 65 authorities to bid against a £5m funding stream to assist with the cost of setting up a rogue landlords list. This is only a short-term funding stream to be spent by 31st March 2016.

3.14 Rent Repayment Orders are a welcome mechanism, however the ability to ascertain that a property is fit for purpose before Housing Benefit is paid would offer protection to the customer and to the public purse and would encourage many landlords to improve their properties.

3.15 The Housing Benefit system itself does not recognise the diversity of housing market areas. Leeds, for example, is one Broad Rental Market Area and this leads to a situation where properties in high rent areas and properties in low rent areas receive the same amount of Housing Benefit. Giving local Councils the ability to set Local Rental Market Areas within an overall Broad Rental Market Area and, on a case by case basis would not only reduce the overall Housing Benefit/Universal Credit bill (resulting in savings which could be shared with Councils with the intention that they are ring-fenced to support an affordable homes strategy and/or further tackling rogue landlords and substandard accommodation) but would enable publicly funded housing cost support to more accurately recognise poor quality accommodation.

Office conversion to residential

3.16 This temporary rule, introduced in May 2015, allows disused offices to be converted into homes without applying for planning permission is to be made permanent.

3.17 The proposal will have further negative impacts on Council budgets: a significant loss of business rates, reduced planning fees and S106 contributions received by the authority. It will also lead to the loss of valuable office space and a lack of control over the quality of the housing product being delivered.

3.18 For example, the former HMRC building in Liverpool’s Queens Dock generated around £1 million in business rates, with 50% returned to Treasury and 50% retained by the City Council. Following its conversion to residential use (utilising this policy), the building now generates around £300,000 in Council Tax. The loss to the Council in terms of income is £200,000 from this one building. This example highlights that when the proposals for Councils to retain 100% of their business rates comes into effect, that the office to residential policy will result in a potential 70% loss of income to local authorities from each conversion.

Forced sale of vacant high value Council housing

3.19 This part of the Bill is designed to help government meet its manifesto pledge of funding the extension of right-to-buy to housing associations through the sale of high value council homes when they become vacant.

3.20 We await clarity from Ministers on what constitutes a high value council property or the formula to be used and whether Councils will be allowed to retain part of the receipt to pay off debt associated with the properties sold.

3.21 In order for the sale of council stock to cover the costs of replacement stock for Registered Providers, properties will have to have a minimum value in order to generate a sufficient level of receipts and it is difficult to see how this could be achieved at scale in the Core Cities. Based on past replacement rates for houses sold through RTB, the homes that local authorities and Registered Providers are forced to sell under the new system are unlikely to be replaced on a one for one basis. Furthermore, the lag between a property being sold and a new one being built means that there is likely to be a particular shortage of affordable housing in the short term, following the new legislation coming into force.

3.22 The homelessness charity Shelter recently calculated that Newcastle for example, would be heavily impacted with 1,651 council homes falling into the government’s previously released high value threshold – equating to 82 forced sales per annum. The Council’s own estimates, using more up to date values, suggest this figure will be much higher.

3.23 There is a real danger of losing the remaining mix of social and private housing that exists in some areas. High value homes are by definition likely to be located in high value housing areas. Selling them into the private sector will remove any mix in these areas.

3.24 Additionally, Council housing will become even more ghettoised – all that will remain will be low value stock in low value housing areas.

3.25 Furthermore higher land values and a lack of council-owned sites are likely to make it less cost effect to build replacement homes in the areas where the highest value stock is being sold. This will concentrate stock in the lowest value areas and exacerbate existing spatial inequalities.

3.26 All cities indicate that forcing local authorities to sell their most valuable housing will undermine their HRA business plans, which are based on assumptions made about future rental income. This will lead to fewer Council homes being built. It is difficult to make an exact impact assessment without further details of how this proposal will be implemented and especially without financial figures.

3.27 Although the Housing Minister stated: "It is right that as high value homes become empty that they should be sold to fund new affordable house building in the same area" (our italics), there is nothing in the Bill which suggests that the proceeds of the sale of high value homes will stay in the area. On the contrary, it would seem almost impossible for this to happen given the uneven distribution of high value Council homes across the country.

Pay-to-Stay

3.28 The aim is to make all tenants with a household income of £30k (£40k in London) pay ‘something close’ to the market rent from April 2017.

3.29 Given the significant difference in market and social rents in some areas, the proposal has the potential to create disincentives to work and to improve family incomes for households whose income is close to the threshold. No account appears to have been taken of household needs when setting the threshold. A simple system, where rents are gradually increased as household income rises above the agreed threshold could help to avoid affected tenants facing substantial rent increases.

3.30 Implementation will have significant resource implications for stock holding Councils who must verify and update the household incomes of all tenants. Local authorities will have to pay any additional rental income raised to the Treasury, whereas housing associations will be able to keep any new money raised. Hence, the resources the authority put into implementing pay to stay will not be fully realised as additional funds to the HRA.

3.31 Clarity is required on whether there will be some allowance in the payment to DCLG for these administration costs and the increased arrears the policy will generate. Overall, we are concerned that the costs of administration will far outweigh any returns to HM Treasury and that this policy will disproportionately affect Local Authorities (compared to housing associations) as they will not receive any of the rent increase but are expected cover the cost of implementing and monitoring it.

3.32 £30,000 does not coincide with our interpretation of a "high" income. For example, the average earning for full time employees in Nottingham is just over £22,000 p.a., meaning a household comprising one full time and one part time employee would be considered "high income".

3.33 The £30,000 threshold is too close to that for Housing benefit eligibility. In fact in some areas of the country a £30,000 income would still make a family eligible for Housing Benefit on a social rent and in many of the Core Cities it is likely that Pay to Stay could see people becoming eligible for benefits, therefore eliminating the overall value for money case put forward by HM Treasury.

3.34 The tenants who are moved on to a higher rent will of course expect more for their rent, something that will be difficult to deliver as this extra income is paid to HM Treasury and not to Housing Revenue Accounts.

3.35 We believe that this policy will pose a direct threat to cohesion and diversity in social housing as well as a trigger for rent arrears, evictions and choices between basic living costs. The policy also seriously undermines the government’s promise to protect and encourage hard working, low income families.

Changes to Allocations policy

3.36 Clause 73 of the Bill provides for the Secretary of State to make regulations to amend regulatory provisions in the Housing and Regeneration Act 2008. This would give housing associations greater control over who they house.

3.37 Local authorities often have nomination rights to first lets and vacant housing association properties, and use these to secure housing for people in need on their housing registers or homeless households to whom they owe a statutory duty. If authorities are no longer able to utilise nomination rights this could have implications for their ability to fulfil their statutory housing obligations.

3.38 Local authorities have also often provided land and support for Registered Providers to enable them to build housing to meet local needs. The policy would undermine this and diminish the ability of local authorities to supply land to RPs for affordable housing.

Planning permission in principle & Register of land

3.39 Permission in Principle (PiP) would be a new form of right which establishes the principle for development on a specific site. The Government intends to apply this where a site is either designated by the Council on their brownfield land register as suitable for housing, or to sites allocated for housing in the local development plan or neighbourhood plan. It is expected that PiPs will be prepared for sites suitable for accommodating 10 or less dwellings.

3.40 With the details to be set out in regulations, each local planning authority will have to maintain a ‘register of land’- statutory brownfield registers that list land suitable for housing. Councils will be required to consult on the list and update annually. In addition, the regulations should state that local planning authorities must take into account any representations made to them as a result of the consultation in preparing such a list.

3.41 As much of the detail is to be finalised later it is difficult to comment at this stage including on how PiP might differ significantly from outline planning consent, or Technical Details from reserved matters. The concern is that some essential and fundamental issues like contamination and flood risk as well as issues about community infrastructure and design/place-making will be missed.

3.42 Whilst local authorities welcome the support for self and custom build housing, clarity is sought on how local authorities will be able to facilitate this given pressures on land supply in some localities and their ability to satisfy the requirements of individual self-builders.

3.43 These new requirements have significant resource implications and will place further pressure on Council budgets. Early indications suggest authorities will incur penalties should they not comply with this requirement on time. The granting of permission in principle will impact negatively on the amount the authority receives in planning fees.

CPOs: Notice of vesting and notice for taking possession following vesting (Clause 120 & 128)

3.44 The Bill suggests lengthening the CPO process which we believe is unnecessary and certainly unhelpful for acquiring authorities.

3.45 Currently for S.122 we have to give not less than 28 days to vest a property under the GVD (Bristol currently gives approximately 6 weeks), the Bill proposes changing this to 3 months; and s128 – the Bill proposes a change from 14 days to 3 months, where we believe that something like 28 days would be more appropriate.

December 2015


[1] Source: HM Land Registry Paid data.

Prepared 14th December 2015