Housing and Planning Bill

Written evidence submitted by the Intergenerational Foundation (HPB 149)

The Intergenerational Foundation ( www.if.org.uk ) is an independent think tank researching fairness between generations. IF believes policy should be fair to all – the old, the young and those to come.

Introduction:

The Intergenerational Foundation (IF) welcomes the opportunity to officially comment on the Housing and Planning Bill 2015/16. As a charity which researches challenges facing young people in modern Britain, IF is particularly concerned about the barriers which they face to finding decent, affordable housing. We are glad that the Bill places such a strong emphasis upon boosting the housing supply, particularly through reforms to the planning system and adopting the official target of delivering a million new homes by the end of the current parliament. However, we fear that this target is likely to be missed unless the government is willing to adopt a more radical set of interventions than those which have been attempted previously.

Subdividing Homes

A forthcoming piece of research by IF – Unlocking England’s "Hidden Homes" (to be published in January 2016) – argues that the government could dramatically boost the housing supply at little cost by making it easier for people living in large houses to subdivide them into smaller ones.

The benefits of subdivision

Data from the 2011 Census suggests there are 4.4 million owner-occupied homes in England that have two or more spare bedrooms, potentially enough space to be divided into at least two flats that would comply with the new National Space Standards. Even if just 2.5% of these 4.4 million households subdivided their properties into two flats, it would produce more new housing than the entire private sector currently builds each year.

The report argues that making it easier for people to subdivide their homes would have the following benefits:

1) Providing a new supply of housing to help reach the 1 million homes target;

2) The new homes thus created would already be in the "right" places: predominantly areas with the highest future demand for new housing, and surrounded by existing communities, jobs and infrastructure;

3) It would avoid the controversies which surround building on Green Belts and providing adequate infrastructure to service new developments on virgin sites;

4) Homeowners would benefit from unlocking a proportion of their housing wealth, reduced household bills and lower Council Tax without having to leave their current areas;

5) It would help adapt Britain’s housing stock to match the trend towards a rapidly growing population where more people live in small households.

Downsizing-in-situ

Subdividing large homes would also help address the housing needs of Britain’s ageing population; evidence suggests that 1 in 5 older homeowners would like to downsize, and there are 1.8 million currently living with health problems which could make larger homes unsuitable for them, but the vast majority either don’t want to leave their existing communities or can’t find suitable homes to downsize into. Therefore, making it easier for people to convert large homes could help older homeowners "downsize-in-situ", through adaptations such as converting the downstairs area of a large property into a smaller dwelling while creating a new flat upstairs for the owner to rent or sell. This would help adapt Britain’s housing stock to the needs of the 4.26 million over-65s who live in houses with at least 3 spare bedrooms by enabling them to remain independent for longer and making them financially better-off, while also reducing the housing inequalities between young and old.

What needs to happen?

Fewer than 4,500 houses are currently being subdivided each year, which suggests it is too difficult; the report argues that this is because planning and tax policies encourage people to use England’s housing stock inefficiently.

The key change which would need to be introduced through an amendment to the Housing and Planning Bill would be to include a new householder permitted development right which allows owner-occupiers to subdivide their properties into smaller self-contained dwellings with only prior approval, rather than needing to obtain full planning permission as happens currently. The prior approval process is effectively a "light touch" form of planning permission which outlines a limited set of criteria that applicants need to comply with for permitted development to be allowed, removing the need for them to satisfy every policy in a Local Plan. At present, Local Plans often contain policies which make it difficult for people to subdivide their properties, such as requirements for all new units in an area to provide "family-sized" housing or to be in keeping with the prevailing local housing density.

It would be suitable for the government to hold a public consultation to formulate a set of prior approval criteria for this permitted development right, but the two key issues are likely to be that all new units created through subdivisions would need to comply with the National Space Standards (to avoid the proliferation of cramped, poor-quality housing), and they would either need to provide off-street parking or be zero-car to prevent it from exacerbating parking conflicts.

The report also suggests a range of tax reforms which could "nudge" people towards using England’s housing stock more efficiently, but obviously such measures would lie beyond the scope of the Housing and Planning Bill. However, it is suggested that the government could provide a financial incentive to encourage subdivisions by providing soft loans to pay for the necessary conversion works, which could be funded by re-directing some of the £7.6 billion which is being spent on the New Homes Bonus Scheme, for example.

Conclusion

Encouraging people living in large homes to subdivide them would not be sufficient to solve the housing crisis by itself, but given all the obstacles which exist to building enough new homes through more conventional means, it is an option which deserves further consideration for the reasons outlined above.

IF intends to publish this paper in full in early January 2016. We would be keen to provide more information about our work to the Committee if the members request it.

December 2015

Prepared 14th December 2015