Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by Liverpool City Council (AFH 25)


  1.  The Inquiry begins from the premise that meeting the Government's target that all social housing meets set standards of decency by 2010 will only be possible if decent houses are made affordable and affordable houses are made decent. Of the two elements of this premise it is decency which is the problem in Liverpool not affordability.

  2.  The housing problems in Liverpool are not the well publicised problems of London or the South East, prosperous rural areas or the more affluent parts of the North West such as the southern parts of Greater Manchester and Cheshire, where there are shortages of affordable accommodation for people on low or average incomes.

  3.  In Liverpool radical housing market restructuring is required to secure a wider and better range of housing stock, which meets modern housing requirements and expectations. On a city wide level we have an over supply of affordable accommodation. However, too much of our housing stock is low value, in low demand, in poor condition or obsolescent and accordingly we certainly have a problem of making affordable housing decent. At a city wide level there is clear evidence of obsolescence and market withdrawal in both public and private sectors, with falling property prices and little demand, and these trends are likely to accelerate. Substantial housing market restructuring is therefore required in specific geographical areas of the city principally the City's Inner Core over the next 10 years and beyond.

  4.  However, Liverpool has significantly differing local housing markets with areas of housing market strength as well as low demand areas. In high demand areas principally the City Centre we have identified a need to promote a wider range of housing types and affordability to sustain or develop balanced communities.


  5.  Liverpool has argued consistently that a significantly improved policy and resource framework is required to address the scale of problems of cross tenure housing market failure evident in the city. Liverpool has contributed significantly to the lobby for a dedicated Housing Market Renewal Fund to turn around areas blighted by low demand in the North and West Midlands in conjunction with the Key Cities Housing Group, the National Housing Federation and the Northern Housing Forums.

  6.  Accordingly we welcome the announcement in April that Merseyside would be one of nine national pathfinders to work with Government to "provide lasting solutions for communities blighted by derelict homes through investment and innovation". The Merseyside pathfinder encompasses inner Liverpool, south Sefton and parts of Wirral.

  7.  We recognise that housing market failure is not contained within local authority boundaries and must be dealt with on a cross local authority basis. We are currently working with Sefton and Wirral Councils to develop the Housing Market Renewal Fund initiative on the basis of an established formal agreement to co-operate. The HMRF initiative will also build upon work well established to prepare a strategic framework for the comprehensive regeneration of Liverpool's Inner Core.


  8.  Liverpool's Housing Strategy which is promoting a radical restructuring of housing markets in the city, is a fundamental integral part of the city's regeneration strategy. It is based upon a thorough understanding of the dynamics of housing markets, which has emerged from possibly the largest programme of housing market research in the country conducted in conjunction with the Centre for Urban and Regional Studies at the University of Birmingham. This has involved a series of research reports including the following:

    —  Measuring the Sustainability of Neighbourhoods in Liverpool;

    —  Private Rented Housing in Liverpool: an Overview of Current Market Conditions;

    —  Stabilising the Population of Liverpool: Employment Markets and Housing Choice;

    —  Changing Demand: Making the links between Housing and Planning across Merseyside;

    —  A Comprehensive Regeneration Framework for the Eastern Fringe Estates; and

    —  Renewing Housing Markets in Liverpool's Inner Core.

  9.  Copies of our research reports are available on request. The intention is to summarise the findings of the whole research programme in a local housing markets study which will then in future be produced on an annual basis.


  10.  The city's housing stock is currently significantly unbalanced, with over 80 per cent of homes in Council Tax bands A and B, resulting in substantial over supply at the bottom end of the rented and owner occupied market and real shortages of better quality homes in Council Tax bands C, D, E and above. The result is a polarised housing market with some of the lowest property prices in the UK at the bottom end of the market and rapidly rising prices in higher Council Tax banded property. This restricted choice at the higher end of the market is encouraging outward migration of households from the city. The danger that the city faces is therefore that an improving local economy and economic prosperity will lead to further population decline.

  11.  Empty residential property in Liverpool is currently 9 per cent of stock against the North West regional average of 4.3 per cent and a recognised healthy average of 3 per cent. Empty property is disproportionately located in Council Tax band "A" property, in specific geographical areas (particularly the Inner Core and Eastern Fringe) and in particular property types (pre-1919 terraces and council homes). Vacancy rates in the Inner Core are double the city wide average and in excess of 20 per cent in some neighbourhoods. 16 per cent of private dwellings across the Inner Core are vacant and these are predominantly concentrated in the pre-1919 terraced sector.

  12.  Poor condition is evident in both public and private sector housing stock, with an outstanding disrepair and unfitness bill, which exceeds over £1 billion at present day prices. Almost 9 per cent of the city's housing stock is assessed as below the statutory fitness level. Two thirds of Liverpool's Council stock, almost 24,000 dwellings fall below the Decent Homes standard at present.

  13.  The City Council's Private Sector Stock Condition Survey 2000 indicates that 8.6 per cent of the private sector stock is unfit and a further 10.3 per cent is in poor repair. The cost of remedying private sector unfitness and poor repair across the city is put at between £436 and £653 million. While on a city wide level 18.9 per cent of the private stock is unfit or in poor repair, in the Inner Core 27.9 per cent is unfit or in poor repair and the repair costs represent 63 per cent of the total city wide repair costs.


  14.  The City Council is pursuing a twin track policy of decommissioning redundant stock and developing stock transfer options with tenants and RSL partners to draw down the necessary capital for investment in the more sustainable stock. In conjunction with the City's Strategic Housing Partnership we are developing a toolkit of new measures to rationalise and improve housing markets. We have already developed a number of successful initiatives including new regeneration vehicles such as our first local housing company South Liverpool Housing and Include Neighbourhood Regeneration Ltd, a national Housing Corporation pilot housing regeneration company in the Dingle. We have secured overwhelming tenant support to transfer 13,000 Council homes in the Eastern Fringe of the city to three new housing associations in autumn 2002.

  15.  However, the resources available to the City Council are insufficient to provide appropriate levels of investment in a reasonable timescale to respond to the problems of market failure and poor housing conditions in Liverpool. Our Housing Capital Programme for 2001-02 was £34,783 million. Our Housing Investment Programme allocation for 2002-03 is £18,506 million. At the present level of resources we will not be able to reach the target of bringing all Council housing up to the decency standard by 2002.

  16.  Although we will try to use as fully as possible the new flexibilities offered for private sector renewal through the Regulatory Reform (Housing Assistance) Act 2002, our problem in regenerating private sector housing with the present level of resources is even more daunting. We have particular problems in retaining in owner occupation, owner occupiers in low demand areas that will be displaced by clearance who have low incomes and little or even negative equity. This problem is significant because Liverpool's owner occupied rate at 52 per cent is well below the UK average of 68 per cent (1991 census). At present we are developing Home Swaps initiatives to help displaced owner occupiers who do not wish to become social housing tenants.


  17.  In planning policy terms the key issue for Liverpool is not to seek to create mixed communities by enabling affordable housing to compete in buoyant land and housing markets. The key issue is to devise and apply planning policies to encourage the further provision of middle and upper market housing particularly in areas currently dominated by social and lower market housing. Unsurprisingly Liverpool has no experience of applying planning gain to fund affordable housing.

  18.  The issue of setting affordable housing targets in Regional Planning Guidance is of little direct relevance to Liverpool given that current guidance (as expressed in Draft Regional Planning Guidance for the North West) sets an indicative target for the region as a whole, and the fact that there is a substantial oversupply of social and lower market housing in the city. As a general principle, however, such indicative targets serve little purpose; it being more appropriate for targets to be set locally depending on local authorities' interpretation of their own circumstances.

  19.  Liverpool contains a substantial brownfield development resource in the form of vacant and derelict sites, vacant and underused buildings, and vacant and underused existing housing. If it can be realised, this supply is more than sufficient to meet the city's own housing needs and potentially, accommodate needs arising within surrounding parts of the conurbation.


  20.  Whilst there is an oversupply of affordable housing across Liverpool, in specific locations principally the city centre where city living is buoyant the provision of affordable homes as part of balanced residential provision is an issue. In the city centre a number of developers are pitching their prices from £65,000 to £110,000 wherever they can and RSL shared ownership schemes have proved popular. Diversifying housing choice in the city centre by encouraging affordable housing for sale, shared ownership and rent which corresponds with local need will ensure that a balanced city centre population is maintained and a range of housing provision is available. There is a significant shortage of family accommodation and additional family homes would help to secure a more balanced population mix and sustain local education provision.


  21.  With regard to the costs of the shortfall of the provision of decent affordable housing you may be interested in the assessment of the costs to Liverpool of population loss of almost 154,000 people in 35 years (equivalent to almost 67,000 households) linked to the non-availability of higher and middle range accommodation in the city. Our research study Stabilising the Population of Liverpool: Employment Markets and Housing Choice provides clear evidence that the likelihood of a household living outside Liverpool is directly linked to its income.

  22.  The above study demonstrates that during the year 1998-99 using average disposable income the "lost" 67,000 households would on average have produced £1.51 billion of expenditure per annum. Additionally, if each of these households had purchased an average value property in the city (£57,000), then an additional investment of £3.8 billion at 1994 prices would have been made in housing over the period.

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