Memorandum by East of England Local Government
Conference (EELGC) (HOU 38)
How spending of the new resources should be balanced
between social housing and options for owner occupation for those
who cannot afford to buy (including shared ownership) and the
mechanisms to be used for their distribution;
Joined up policy
1. Although investment in affordable housing
is vital to both economic growth and regeneration, it should not
be seen or addressed in isolation. EELGC is preparing Regional
Planning Guidance for the East of England (RPG14) to deliver an
integrated spatial strategy in which employment, housing, transport,
and environmental priorities will be delivered and co-ordinated.
The aim will be to create sustainable, socially mixed and balanced
communities. Provision of the correct amounts, type, distribution
and quality of affordable housing will have a critical role within
the overall contribution of housing in meeting this challenge.
An undue focus on housing alone will not give everyone the opportunity
of a decent home and a good quality of life.
2. EELGC, jointly with the East of England
Development Agency (EEDA) and the Housing Corporation, is commissioning
research to assess the scale of the region's long-term affordable
housing need, and will include policies aimed at its delivery
3. Provision of affordable housing provision
has lagged significantly behind need in the East of England for
a considerable period. The reasons for this fall into three broad
(a) Demand for social rented housing consistently
exceeds supply, for reasons detailed later in this note, broadly
due to the inadequate resources available for its provision, particularly
through reductions in finance for new-build Local Authority housing;
(b) House builders, developers and housing
providers are unable to deliver sufficient affordable housing
to meet different needs;
(c) Growth in the RSL housing stock has consistently
been out-weighed by loss of stock through the Right to Buy scheme.
4. Affordable housing needs in the East
of England fall into three categories:
(a) "Traditional" priority need,
ie for households unable to afford market priced housing; in unsuitable
housing, sharing dwellings, or homeless. Such households usually
suffer low incomes and adverse household characteristics. Many
are in receipt of State benefits and their housing and related
costs, such as energy use and transportation, represent a high
share of their income. Although the East of England is an otherwise
prosperous region, significant pockets of deprivation persist
in many parts of the region, usually tightly concentrated inner
city or rural wards. Examples include the region's Priority Areas
of Economic Regeneration such as Luton, Great Yarmouth and Lowestoft,
Harwich/Clacton, and many parts of the Thames Gateway. The needs
of such groups can usually only be met by "traditional"
publicly subsidised social rented housing.
(b) The aging population raises new needs,
which will become more acute in the future. Whether they originate
from owner-occupied or social rented sectors, the needs of the
region's aging population will become more acute as the numbers
of frail elderly and vulnerable groups grow. Owner-occupation
is unlikely to be the primary solution to meet such needs.
(c) The needs of key workers are a major
and growing feature of housing needs in the East of England. While
many households are able to secure housing either by owner occupation
or renting, there is a growing gap confronting workers who cannot
afford housing in areas of high prices, particularly for owner-occupation.
While this mostly covers households eligible for Key Worker housing
initiatives, there is a growing segment of the population in employment
that falls between categories of need, yet has insufficient income
to buy or rent privately and are not eligible for social housing
or help with their housing costs.
5. These problems occur to varying degrees
throughout the region, but are most acute in two types of area:
(a) rural and coastal areas where the highest
quality environments attract demand for second or retirement homes,
thereby raising house prices. Conversely, such areas are generally
those where employment opportunities and earning capacity for
indigenous populations are lowest. This has an adverse impact
on social inclusion, as local residents cannot afford the raised
prices and are forced to move elsewhere or to live in sub-standard
housing. The focus of Government planning policy on urban development
limits the opportunities for rural affordable housing;
(b) economically buoyant areas experiencing
in-migration and high housing demand pressure, eg southern parts
of the region with close links to London and growth areas eg Cambridge.
6. In these economically buoyant areas,
pressure on the dwelling stock and housing land supply results
in high house prices. This has several impacts:
(a) People who cannot afford to buy or rent
near to where they work need affordable housing, even in cases
where they receive reasonable wage levels;
(b) This applies pressure to the transport
network, as workers have to live further from their workplace
and commute over longer distances;
(c) It inhibits economic growth through the
adverse impact on the labour market, causing difficulties with
recruitment and retention, whether of skilled workers or key public
7. Recent house price inflation of around
20 per cent has not been matched by wage increases, which widens
the affordability gap.
8. Even major house building in the pressurised
areas is unlikely to reduce house prices down to a level that
becomes "affordable" to low and medium-waged workers.
The scale of development required to achieve this would be technically
difficult to deliver and politically unacceptable in most areas.
9. The East of England has the 3rd highest
prices in England. Average house prices in the region rose by
49 per cent from £94,700 in 1999 to £140,800 in the
2nd quarter of 2002, exacerbating the affordable housing problem.
CACI Ltd data for 2002 shows mean household income to be £28,200,
although the median is only £21,300. There are considerable
intra-region variations. The latest average price in Hertfordshire
is £192,000 compared to £98,700 in Luton (but still
significantly lower than in Greater London where the average is
currently £232,800). The southern part of the region (the
M11 corridor) has an average house price to average income ratio
10. It is no longer strictly correct to
define this problem as affecting only "key workers".
The problem now affects:
(a) Well-recognised groups, such as police,
nurses and teachers (many of whom would qualify for the Starter
(b) Other public sector workers who deliver
essential public services, eg health service, fire service, local
authority staff, etc.
(c) Many workers in the private sector, particularly
clerical and retail staff, service industry workers, etc.;
(d) All but the highest paid young people,
whether graduates or unqualified.
11. These phenomena have been demonstrated
in the Cambridge sub-region, where, long-term house price inflation
has been accompanied by shortages of workers across a wide spectrum
of industry sectors. Many people find even the cheapest homes
beyond their reach, unless they commute long distances, despite
relatively low interest rates and a stable economy.
12. Resources should be targeted on the
issue of delivering affordable housing in the intermediate housing
market, ie low cost home ownership mechanisms to enable workers
in the intermediate market to afford housing nearer to where they
work. This would widen the choice available for those aspiring
to home ownership, acting as a stepping-stone to access the main
housing market rather than more social rented housing. Extending
the Starter Homes Initiative will address part of the problem,
but the definitions of those eligible for assistance needs to
be widened to include key private sector employees critical to
the sectoral growth of the buoyant areas.
13. Great care is needed to ensure that
this process does not simply increase competition for house purchase,
thereby further increasing local house prices. Hence no solution
will be effective unless there is a significant and long-term
increase in resources for the delivery of publicly subsidised
affordable housing. Acquisition of land sub-market prices will
be essential to achieve this.
14. Employer provision of housing could
also make a contribution in some areas, but is unlikely to be
effective in the East of England, where the employment market
is increasingly characterised by SMEs with limited ability to
finance such activity, or where some parts of the workforce are
too mobile to benefit from it.
15. Planning obligations can and will continue
to provide key opportunities to secure financial contributions
for affordable housing from developers via planning agreements
(S.106 agreements) with developers. It is essential that planning
powers and best practice guidance are used effectively to deliver
affordable housing within new private sector developments.
16. However, there are limitations to the
application of this method:
(a) While the level of need suggests that
all opportunities to deliver affordable housing should be explored,
the ability of developers to make such contributions varies across
the region. In areas with weaker economies (such as the PAERs)
the scope for such provision is limited by the lower viability
of housing development and consequent lower returns. Even in economically
buoyant areas, care is needed to ensure that housing schemes remain
viable, otherwise all provisionopen market as well as affordable
housingwill be frustrated;
(b) The guidelines set by DETR Circular 6/98
set thresholds to limit the pursuit of planning agreements. The
thresholds are set too high to enable many areas to apply them.
This is commonly the case in areas of strong planning (especially
Green Belt) constraint, and areas heavily reliant upon development
on previously-used land for housing supply. In such areas, the
bulk of supply for all housing sectors comes from small sites,
below the threshold sizes. Large sites capable of making affordable
housing contributions are the exception, and so the degree to
which planning agreements can provide affordable housing is limited;
(c) Lower thresholds are set for use in London
boroughs, but this ignores the fact that many areas outside London
share similar characteristics, either of physical form, or of
market conditions. Many examples can be found in those parts of
Hertfordshire and Essex in close proximity to London. This creates
sharp divergences across arbitrary administrative boundaries.
17. "Rural Exceptions" policy,
as set down in PPG3 and Circular 6/98 enables rural sites to be
released for housing as exceptions to normal planning policy,
to provide affordable housing. Local Plans can include policies
to enable such housing within the local plan strategy for sustainable
development in rural areas within or adjoining existing villages.
They must meet proven local need and be secured on a long term
base eg through S106 agreements so it remains affordable in perpetuity,
and not comprise a mix of high quality and low cost housing. Such
sites can make a contribution, but they are prone to "NIMBY"
objections from existing residents, and can be slow and difficult
to secure. They also rely heavily on the goodwill of land owners
to make land available. In the most pressurised areas of the East
of England, hope value for unrestricted market housing development
frequently frustrates attempts to secure housing by this means.
18. The DPM's July 2002 statement on Sustainable
Communities highlighted the role of for potential growth areas
in delivering increased housing supply. Three of these areasThames
Gateway, London-Stansted-Cambridge, and the Milton Keynes/South
Midlands arealie mostly or partly within the East of England.
19. EELGC is working with partners to assess
the scope of future development and include suitable proposals
in RPG14 for these areas. However, EELGC is concerned that there
is a tendency in Government policy to assume that if total housing
supply is increased, affordable housing will be produced in some
form of proportional relationship. While this clearly has some
general validity, we consider it simplistic, as it overlooks the
processes needed to produce affordable housing, and the limitations
of relying only on total housing supply.
20. We consider that three considerations
should be recognised:
(a) increasing total housing supply will
have some pro rata impact on increasing affordable housing supply
via use of planning obligations, but this by itself will not bring
forward enough affordable housing, as this paper will show;
(b) affordable housing supply (from all sources)
needs to be targeted as a key policy output, to ensure that affordable
housing is provided in the correct locations and quantities. Different
approaches will be needed in different areas, eg in areas of strong
market demand, greater reliance is possible on planning obligations
and tariff solutions. In areas of weak market demand, or where
the suitable sites are not coming forward, this method will not
provide sufficient affordable housing, and other methods may be
(c) increasing total housing supply may not
increase affordability by reducing either the cost of housing
or the rate of increase in cost. The former Dept of Environment's
research ("The Relationship Between Housing Supply and Land
Cost" early 1990's) showed that only a very dramaticand
by present approaches arguably unsustainableincrease in
housing land supply in the South-east could significantly reduce
the cost of land and housing.
21. EELGC acknowledges that the sum announced
in CSR2002 is substantial. This will provide additional resources
over the next three years for affordable housing and new mechanisms
for the strategic delivery of housing. The settlement provides
for a substantial increase in investment in affordable housing
to rent and own in London and the South East (including parts
of the East of England). The ODPM has announced increased provision
of affordable key worker housing, including the £200 million
"Challenge Fund", to provide new homes for rent and
low cost sale in the South East of England.
22. EELGC considers that the DPM's announcement
on housing reform plans later this autumn/winter will enable an
assess of the impact for the region of bringing together existing
funding streams into a single non-ring-fenced budget via a strong
regional housing bodyto better integrate decisions on housing,
economic development, planning and transport. EELGC is keen to
take part in forming and operation the regional housing body to
deliver joined-up working with other partners in the region. It
is important that this new body should work with other partners
on strategy and implementation. An over-focus on housing alone
will not deliver housing in association with employment opportunities
and either physical infrastructure (rail, road, etc) or social
infrastructure. The infrastructure deficit has time and again
been shown to be the biggest single barrier to development and
economic growth in the region, and provision of housing alone
will not address this problem.
23. In the potential growth areas the new
role of English Partnerships as a key delivery agency could be
vital to deliver effective co-ordination of plans for key worker
and affordable housing. EP will need to work closely with the
Housing Corporation and other key agencies such as EELGC, EEDA,
and infrastructure providers such as SRA and Highways Agency.
Density, design and quality
24. EELGC is keen to deliver higher quality
development in all sectors, including affordable housing, to ensure
that new stock is be sustainable, attractive and efficient. RPG14
will need to include policies to deliver the Urban Renaissance
by making urban areas safer and more attractive places to live.
Both market and affordable housing in urban areas will be pursued
by trying to make higher density living not only more acceptable
but positively desirable.
25. Better use of land needs to be made
by building at higher densities; using good design and quality
building (including smaller dwellings, use of airspace, efficient
26. Sustainability is also vital. RPG14
will need to seek provision of high quality, resource and energy-efficient
27. Renewal of existing housing will be
as important as new building. RPG14 will need to address issues
of regeneration throughout the region, both in PAERs and generally
within the housing stock.
28. Care should be taken in pursuing new
construction techniques opportunities to deliver affordable housing
more quickly for Housing Corporation-funded or other developments
to ensure that greater efficiency, better design and higher quality
of development is achieved. It is essential that the implementation
of the policy delivers quality affordable housing that avoids
storing up problems of poor build quality and design as experienced
in previous house-building programmes. Controls through finance,
covenants and other agreements with the land owner and housing
provider could be used to give greater certainty to the funder,
the developer and the occupier.
29. Planning policy and supplementary planning
guidance aimed at sustainability issues to raise the quality of
design, energy use/efficiency, management of water resources,
biodiversity, waste management and healthy environments will provide
key tools to encourage developers and occupiers to expect and
achieve long-lasting quality.