Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by Harvest Housing Group (AFH 27)


  The Sub-Committee's work on Empty Homes was extremely valuable. It focused attention on the complexities of housing market failure and highlighted the misery being suffered by people left behind in neighbourhoods undergoing abandonment. We welcome the Government's response to the report and the proposal for housing market renewal partnership pathfinders. We hope substantial funding can be made available to support this work.

  However, it is important to note that market failure is not the only housing issue in the North. There are areas of high demand where the cost of entry to owner-occupation is beyond the means of people in low-paid employment. In places such as Trafford and Stockport, for instance, young people are having to move away from their home areas if they are to compete in the housing market. Ironically, these areas are within a few miles of neighbourhoods in East Manchester and Salford which are in chronic decline. There are also rural areas where local people are finding it increasingly difficult to compete in the local housing market—the Lake District is a particular example. Also, there are areas where demand exists but where stock condition remains a major problem.

  Resources are needed in the North to address these problems in addition to those associated with housing market failure.


  Stock condition is a problem for many RSLs in the North. Harvest Housing Group has for several years been investing in programmes to upgrade and modernise its older stock. We have used ADP grant from the Housing Corporation for this whenever possible but this source has become very restricted. Increasingly, we have used our own resources (planned surpluses) and borrowing but the extent to which we can use these resources in future will be constrained by the limits placed on rental growth by Government policy. The objectives behind this policy—affordability and making sense of rents across the RSL and local authority sectors—are supported but the impact will make it difficult for many RSLs in the North to achieve the Decent Homes Standard.

  We feel it is essential that an increased quantity of ADP resources is made available for reinvestment projects. Failure to maintain the existing stock only means that it needs to be replaced more quickly. Public sector property has suffered from this syndrome for decades.

  We suspect that the key performance indicator by which the Housing Corporation is measured is new units completed. This is unhelpful and does not encourage prudent property asset management. We believe a greater proportion of the Corporation's resources should be applied to maintaining and improving the existing RSL stock. A new performance measure should be devised based on the number of units brought up to the Decent Homes Standard through ADP investment.


  A Harvest subsidiary—Derwent and Solway Housing Association—operates in Cumbria. There is unmet demand for rented and shared ownership accommodation from local people in places such as Keswick and Cockermouth but the current funding regime makes it difficult for us to provide any additional housing.

  We suggest there should be a review of the Housing Corporation grant system as it applies in rural pressure areas. In Cumbria, part of the problem is that low cost areas on the West Cumbria coast distort the funding system which does not make sufficient allowance for high land values in the National Park.


  There is still a substantial quantity of older terraced accommodation in the private rented sector. In areas of market decline, more stock is going into this sector and it provides some of the poorest accommodation. It also provides some of the poorest managed accommodation. Some owner-occupied housing is also in very poor condition and this particularly applies to a number of deprived communities including some with high proportions of BME residents.

  To make real progress with these problems the Decent Homes Standard should be applied to both rented and owner-occupied private sector housing. Also, there is a definite need for increased regulation of private sector landlords.


  Stock transfer is seen as a major route to achieving the Decent Homes Standard. This is based on the assumption that following transfer the new RSL will be able to borrow money and use it to fund repairs and improvements. The reality is that Rent Restructuring will make this difficult for many transfers in the North.

  This particularly applies to partial transfers of urban stock. These tend to involve property in poor condition and where there are high costs associated with estate remodelling to put right design defects such as "Radburn" layouts. This means that the transfers can go through at low or negative value but with high borrowing needs to fund reinvestment. Traditionally, borrowing has been financed by rent increases significantly above inflation (which tenants have accepted through positive transfer ballot results because they want their homes and estates improved). With Rent Restructuring such rent increases are not possible.

  The danger here is that transfer business plans will be trimmed so that they can "work" on paper but in reality there will be insufficient funding for the scale of improvement these estates need.

  For a short period of time the Estate Renewal Challenge Fund (ERCF) provided the means to achieve viable business plans for these estates. A similar measure is needed now to deliver the Decent Homes Standard in these areas.


  Planning gain can make a significant contribution to funding affordable housing in areas of the North West where there is a strong housing market and developers are active. We are currently working with developers in such areas.

  We support the proposals set out in the Planning Green Paper.

  The situation is different in areas such as the Lake District where development is restricted. Positive action is needed to provide affordable housing sites for local people and additional ADP resources are needed to cover high land costs and the costs of meeting special planning requirements.

  We also feel it is anomalous that planning gain can be charged against affordable housing developments when affordable housing is intended by Government policy to be a major beneficiary of this system.


  The system of calculations for Social Housing Grant is very complicated but also mechanistic. Such systems run the risk of creating distortions which prevent them delivering outcomes which are, in common sense terms, desirable. One of these is that the system works against "works only" schemes whereby an RSL builds on a piece of land already in its ownership. This could become a major issue in the future as RSLs redevelop sites in Housing Market Renewal Areas to replace stock no longer needed with a mix of property which matches forecast demand.

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