Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Minutes of Evidence


Examination of Witnesses(Questions 260-279)

MR JIM COULTER, MR JOHN PERRY AND MR ROBIN TETLOW

TUESDAY 22 OCTOBER 2002

Chairman

  260. Can I be clear about the scale. What you are saying is that at the present moment the amount of housing being provided by planning gain is one drop of rain on a wet day and then you are saying to us if you got really tough it would improve. Is that going to be two drops of rain or half the day's rainfall?
  (Mr Tetlow) You could realistically seek to double it over the next five years but there are two important qualifications. Firstly, in terms of public subsidy there will still be a major demand on public subsidy so I would not want to assume (particularly bearing in mind that many of the sites will be brownfield) that you will be achieving more than the present third figure without subsidy. The other thing is that there need to be proper linkages between these sites that are coming forward via the planning system and the funding mechanisms via the Housing Corporation. I think the third point is that housing associations are increasingly dependent on this source of supply and the reason for that is that it has been increasingly difficult for them to find sites on which to develop 100 per cent affordable housing.

Christine Russell

  261. But do you believe that local authorities also need additional legal powers in order to achieve this doubling of the numbers because there have been some recent decisions where a local authority has said, "We want social rented housing on this site", and although a form of subsidised housing has gone, it has not been rented, it has been shared ownership, I think. Would it be helpful if local authorities had more statutory back-up?
  (Mr Tetlow) I do not think they necessarily need more statutory powers. They certainly need better guidance. Circular 6/98 should have been reviewed previously. After all, we had a PPG3 in 2000 and one of the central planks of that was providing more affordable housing. Yet for some odd reason the Government did not issue new guidance to support the new PPG3 and the circular was intended to supplement the superseded PPG. The definitions and the site size threshold are two issues that definitely need to be addressed in the new guidance. It needs to be more practically focused as well. There has been quite a lot of good practice research carried out and that needs to be better distilled into clearer government guidance. I do think, however, that a lot of it is down to the local authorities giving the issue priority and showing determination in their negotiations.

Dr Pugh

  262. You have made suggestions that the right to buy should be limited in some areas. Why is it necessary to do that?
  (Mr Perry) The difficulty with the right to buy now as opposed to earlier on is the loss of stock that is involved. It is running at around about 50,000 units per year and, as we have heard, we cannot provide that number in terms of replacing the lost properties. Even though the response will be that the right to buy is exercised by people staying in properties anyway so those houses are not really available, that is not strictly speaking true because people tend to stay there for about ten years, so after ten years the property becomes available. We are looking long term, and of course a proportion will leave after the three-year period when they are entitled to leave without repaying the discount, and so those losses to the stock are fairly immediate. Particularly in London where right to buy is running at around 11,000 a year, we are probably building less than half that in terms of new units, and it is really contributing to a very serious situation in terms of loss of affordable rented housing stock.

  263. When Tower Hamlets talked about the right to buy being abused, have you any evidence of that? How many right to buy sales are affected by abuse of the system?
  (Mr Perry) We cannot quantify that yet. The ODPM is doing research on that at the moment. I think the evidence will be out quite soon. We know the kinds of abuse that are taking place in terms of people being bribed to buy their property when they do not want it, and they sub-let the property for three years until the company that bribed them takes it over, that kind of thing, and also people buying properties in advance of known demolition in order to benefit from compensation. Those are two of the most commonly known abuses but we simply do not know the extent of abuse.

  264. Do councils need new powers here and, if so, what powers?
  (Mr Perry) The difficulty with the present legislation is that, understandably, in 1980 it was based very much on forcing local authorities to sell come what may and the onus was very much in favour of the prospective purchasers, and the local authority could do very little to prevent a sale. We need more balanced legislation where local authorities can restrict sales in certain circumstances, where they can restrict sales when demolition is due, and where they can restrict sales within terms set by the Secretary of State in very high demand areas.

Mr Clelland

  265. There is a proposal that the right to buy should be extended to all housing association tenants. Would that be a helpful or unhelpful move?
  (Mr Coulter) We need to deconstruct the figures. I personally have not seen the consultation document which was promised to back up that proposal. It would add a relatively small number of housing association tenants to that pool. Of the current 1.8 million housing association tenants, about 650,000 have the preserved right to buy through stock transfer; about another 200,000 plus have the right to acquire which was introduced in the 1996 legislation; so of the balance of roughly one million, about a third already have the right to buy because they are tenants of non-charitable housing associations. So we are talking about a core of 600,000 or so who would be captured by the right to buy from the charitable housing associations, which raises a range of issues about charity law, for one, and secondly at a practical level since approximately two thirds of tenants across the social sector as a whole either have full or partial housing benefit, it raises the question of whether it has any relevance to the sort of issues that are debated in the housing market.

  266. In terms of social housing would it be helpful or unhelpful?
  (Mr Coulter) I do not see that it would help particularly.

Chairman

  267. The right to acquire; is that being exercised extensively or not?
  (Mr Coulter) Not extensively. The specific reason I think is two-fold. Firstly, the point I made about the income levels of those who are housing association tenants, particularly in the period since it was introduced, where those income levels are reducing relatively speaking. Secondly, of course, there is a different structure from the right to buy. It is not a discounted approach, it is an approach which reflect the previous tenant incentive cash schemes. I think the maximum available discount is about £20,000 in the highest cost areas and, of course, there is a growing gap between that available discount and the current market value.

  268. A lot of people in the South East with that sort of discount could buy a couple of houses in Greater Manchester or in Newcastle, could they not?
  (Mr Coulter) Potentially so.

Mr Cummings

  269. Many submissions to the Committee support the idea of mixed tenant developments but apparently there are very few successful schemes. How can you ensure that social rented housing is not just confined to one corner of a development site?
  (Mr Coulter) Perhaps I could split that into two parts. If I could make some general observations and Robin could add some specific planning comments. Certainly the mono-tenure approach would be regarded by everyone as a failure. It has been a product of a range of circumstances, including public policy, which I think is now being redressed in choice based lettings and the rest. Increasingly we are seeing developments and existing schemes looking to mixed tenure. For example, the Greenwich Millennium Village is a mixed tenure proposal. If you look at what the Joseph Rowntree Housing Trust is doing on its largest own estate in New Earswick in York, it is selling every fourth re-let in order to rebalance the economic and social structure of those communities. So there are some practical steps starting and there are some planning approaches which might also help.

  270. Do you see it as a problem of some significance?
  (Mr Coulter) Absolutely. The socio-economic composition of the social sector has changed dramatically.

  271. What can be done to ensure this does not occur?
  (Mr Coulter) At two levels. Firstly, the planning of new housing (not of the development programme but the planning of new housing) is specifically to be mixed. That is now public policy with the Housing Corporation's programme which will give preference to schemes which provide for tenure mix. Secondly, dealing with existing stock on a re-let basis to ensure that there is more economic balance in communities.

  272. Have you been consulted as to your opinions by the Department?
  (Mr Coulter) By the Department and the Corporation, yes.

  273. You have. Many schemes led by registered social landlords include a mix of social rented housing and shared ownership but do not include housing for sale. How do you think this problem can be addressed?
  (Mr Coulter) Housing associations are not legally empowered to provide housing directly for sale so schemes which have that component would have to involve a genuinely private sector organisation.

  274. Are you saying that requires legislation?
  (Mr Coulter) It requires a change in the law to enable housing associations to be direct providers.

Chairman

  275. I thought we heard in earlier evidence that it is happening in Liverpool and that one of the housing associations there was doing it?
  (Mr Coulter) It is probably through an unregistered subsidiary and I am not aware of the circumstances.

  276. So they can do it?
  (Mr Coulter) They can do it through unregistered bodies, which may raise other questions for regulatory authorities.

Mr Cummings

  277. Are you supportive of such changes to legislation?
  (Mr Coulter) Yes, we would like to see that.

  278. Are service charges imposed by freeholders on mixed tenure estates causing problems for tenants in the social housing sector?
  (Mr Perry) I think they probably are but it is difficult to know what to do about this issue where there is a genuine service provided.

  279. Have you any views on what can be done?
  (Mr Perry) The issue is coming up specifically in relation to achieving the Decent Homes targets. Leaseholders in right to buy properties in blocks of flats often stand in the way or have to take part in renovation schemes if the whole block is to be brought up to a decent standard, and that is an issue which is being looked at by the ODPM at the present time. I suspect some incentives to leaseholders to take part in those schemes will come from that, perhaps in the way of capping of costs.


 
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