Housing and Planning Bill

Written evidence submitted by Shelter (HPB 62)

Dear Housing and Planning Bill Committee members,

Thank you for taking time to hear evidence from Shelter’s Chief Executive Campbell Robb on 10th November on the Housing and Planning Bill. In the course of Campbell’s evidence, members requested that Shelter provide further detail to the committee on our Starter Homes research in particular, in addition to that provided in our 2nd reading briefing. Members were interested to know how we reached our conclusions, and more about the breakdown of results.

I have provided detail on this below, and hope it proves useful ahead of the scrutiny session on Starter Homes on Thursday.

Shelter’s ‘Starter Homes’ research

As you will know, Starter Homes are a new form of affordable housing the government wishes to introduce through the Housing Bill. They will be homes for sale at 80% of the market price. The government is committed to delivering 200,000 of these homes in this Parliament, though they are not expecting these to start being built until 2016-2017. Starter Homes will be delivered via requiring local authorities to prioritise them in ‘affordable housing’ obligations with developers, as well as on new brownfield exception sites.

Shelter’s research therefore sought to analyse how affordable Starter Homes will be in 2020 in every single local authority area in England (excluding the City of London and Isles of Scilly as small sample sizes meant data wasn’t reliable). The report’s methodology is outlined on pages 6-9, but in essence:

· To establish as thorough and comprehensive picture as possible, we took three different illustrative types of household: single earners, double income earners with no kids (‘DINKS’; 2 full time earners) and a family with children (1 full time and 1 part time earner).

· For each of these household types, we had four income sub-sets: the new National Living Wage (£9/hour by 2020), those on median wages (local), higher than average wages (local) and the very highest incomes (90th decline; regional).  Local income data was taken from Annual Survey of Hours and Earnings 2014 (ASHE), an official government data set.

· Each of these groups’ actual ability to afford a Starter Home in their local authority area was then established by: (a) assessing what they would be able to borrow, based on their income, multiplied by the current average lending multiple in each region, as provided by CML, and the deposit based on the current average advance given in each region, then (b) comparing this to what would be needed to afford a Starter Home in their area, based on applying OBR house price projections for median house prices in that area, and then applying a 20% discount. The government has claimed that it was unreasonable for us to choose median house prices in this calculation. However, the median figure we use here is in line with the ONS’ estimation of average first time buyer prices.

· The report then presented results for every single local authority area in the country. The results for every local authority is laid out in the full report here. The data summarising the results for each region is contained on page 12.

· Overall, we found Starter Homes will be unaffordable in 58% of local authority areas in England for families on average wages, and affordable in 42%. They will be out of reach for families on the new National Living Wage in 98% of areas, and affordable in 2% of areas. Full affordability maps are provided in the Appendix of the report.

The report makes clear what local areas we count in what regions. Though Starter Homes are most consistently out of reach in local authorities in London and the South East, there are also many other areas across the country where they cannot be afforded by people on low and middle incomes. To illustrate this and provide some examples, I have pulled out all the local authorities relevant to members of the Bill committee below. I have also shown the research results by region.

Shelter welcomes the Bill’s focus on housebuilding, and we are not against Starter Homes on their own terms: they help some people, and we need more of all types of home. But we believe this data shows why Starter Homes should be kept additional to other more affordable types of ‘affordable housing’, rather than in place of them. Our major anxiety is that the Bill currently provides for the opposite: Starter Homes will partly be delivered by requiring local authorities to divert existing resource (affordable housing obligations) away from the building of other, more affordable types of affordable housing – such as low rent homes. We are anxious about the consequences of this for working people on low incomes in particular, for who low-rent homes are a lifeline.

For these reasons, we seek to work constructively with the government to improve the Bill as it passes through Parliament.

Example A: results by region

For the result of every local authority area, see the full report results. Maps of affordability for the whole country are available in the report’s Appendix.

Example B: affordability of Starter Homes in local authorities relevant to Housing and Planning Bill Committee members

NB. This is a selection of LAs. For the result for all LAs and all household types and incomes see the full report results.

Are Starter Homes affordable to people in this local authority? (red: unaffordable, green: affordable).

Constituencies of Bill committee members

Relevant or nearest local authority (GovEval data)

Region (GovEval data)

Working family on National Living Wage

Working family on average local wage

Working family on higher than average local wage

Bootle

Sefton

North West

Burton

East Staffordshire

West Midlands

City of Durham

Durham

North East

Croydon South

Croydon

London

Dulwich and West Norwood

Lambeth

London

Easington

Durham

North East

Erith and Thamesmead

Bexley

London

Great Yarmouth

Great Yarmouth

East

Greenwich and Woolwich

Greenwich

London

Harrow West

Harrow

London

Lewes

Lewes

South East

Mansfield

Mansfield

East Midlands

North Wiltshire

Wiltshire

South West

Nuneaton

Nuneaton and Bedworth

West Midlands

Peterborough

Peterborough

East

Skipton and Ripon

Craven

Yorkshire

South Norfolk

South Norfolk

East

South Ribble

South Ribble

North West

Thirsk and Malton

Harrogate

Yorkshire

Wimbledon

Merton

London

November 2015

Prepared 19th November 2015