Select Committee on Transport, Local Government and the Regions Memoranda


Memorandum by Southampton City Council (AFH 40)

   In common with much of the south east there is a shortage of affordable housing in Southampton. Families on our Housing Register will typically have to wait up to seven years for a 3-bedroom house—often living in acute housing need. Bridging this gap requires the direction of more resources and innovative new solutions.

THE DEFINITIONS OF "AFFORDABLE"

  Currently each local authority reaches its own definition of affordable housing (supported by evidence about local housing need). For planning purposes current planning legislation defines affordable housing as that being low-cost home ownership, shared ownership and subsidised rented accommodation. It is fair to say that these three criteria offer some form of reduced cost housing for those on a lower than average income. However proportionally the numbers requiring subsidised rented accommodation and the numbers requiring shared ownership are not as great as those requiring subsidised rented accommodation. For example in Southampton our last Housing Needs and Housing Market Survey (1999) showed the need for 2,339 units of subsidised rented accommodation over the period 1999-2002 compared to 250 units of low-cost/shared ownership units over the same period. Too frequently where affordable housing is required as part of a planning obligation developers seek to provide low cost home ownership based often on the perception of "preferred client".

THE SCALE AND LOCATION OF THE DEMAND FOR AFFORDABLE HOUSING

  The Housing Market is also not just divided between the north and south, it is locally divided between the "Haves"—existing homeowners with sufficient equity and/(or those with the) income to self determine their future housing requirements, and the "Have Nots", those with insufficient savings/income to break into the homeownership sector at a level that meets their household needs or aspirations. This latter group are no longer just the "lower paid", they include virtually all newly forming households, virtually all manual workers and households with incomes up to £30,000.

  The Regional Housing Statement for the South East identifies the provision of more affordable housing as being its most important priority. Evidence to this effect is offered within this document. This paper explains the strategic regional implications of the high need for affordable housing in the south east. In summary, the relationship of London to the south-east, limited land supply, high need and not enough supply, in-migration and demographic changes. The affordable housing crisis in the south cannot be viewed in isolation. The high price of accommodation in London puts further pressure for affordable properties in the rest of the south east and out-migration from the north (wasting abandoned properties) exacerbates this situation.

  Even households with Professional workers are becoming excluded from homeownership. Many do not reach the threshold of £30,000 per year, including the majority of Public worker professionals, who may traditionally have been the backbone of the homeowner corps.

  Regional pressures become local pressures. Locally in Southampton—the city suffers from high house prices (house prices have increased by 104 per cent since 1995), and lower than average incomes. This puts continued pressure on the capacity of the social housing sector to meet need and demand.

THE QUALITY OF AFFORDABLE HOUSING

  The design, quality, management and maintenance of new affordable housing should be at least equal to the best that the private sector can provide. The rationale for this is that those with higher than average incomes can exercise choice over their housing solutions, whereas those on average incomes or less are increasingly unable to do so.

THE ADEQUACY OF THE EXISTING SUPPLY AND THE AMOUNT OF RESOURCES AVAILABLE
  (a)  The supply of land resources is a major constraint. There is great competition for all housing development land and the best sites are often snapped up by the developer sector at ever increasing prices. Developers build the product that reaps the best return and in urban areas like Southampton, this is frequently a luxury two bedroom flat. These sell at prices well beyond the means of the majority of local people, adding little to the city's useable housing resources.

  The developments will inevitable generate some household migration within the existing stock which may result in the release of a few affordable homes, but local perception is that the majority of dwellings are sold to households migrating into the city, or to households "trading down" from larger properties, or to the "Buy to Let" market, the rents for which are likely to be beyond the definitions of "affordability".

  This is an area which would benefit from some national or regional research which may inform the development of planning guidance to help local authorities encourage developers to build housing more appropriate to future demands for local markets.

  (b)  In urban areas such as Southampton, the majority of sites are "brownfield" and bring with them a cocktail of development constraints which add to the cost of development and may affect the viability of development. This acts against the local authority in its negotiations with developers, as both parties know that the site may not be developed if the development profits cannot be maximised. Is there a case for greater Government support to the redevelopment of brownfield sites to encourage the development of more appropriate housing to a locality? The SEEDA Brownfield Land Assembly Trust proposal would be one such method.

  (c)  Demolition of domestic buildings is at an all time low and the RTPI and others have estimated that the current stock of UK homes must last 5,000 years or more.

  There is a compelling case for a new major redevelopment programme in urban areas. Many Victorian suburbs are well beyond their economic life and will continue to crumble without significant ongoing investment.

  Many suburban Council estates have large stocks of low density non-traditional housing, which has a finite life and which cannot be sold through Right to Buy as it is unmortgageable. Greater freedoms for Councils to borrow could result in significant redevelopment and the reconstruction of higher density, more sustainable communities.

  The impact of climate change has also yet to be realised in the south. The higher ambient summer temperatures, greater seasonal temperature variations, higher levels of winter precipitation, drier and hotter summers and dramatically rising sea levels, all forecast for the next 50 years could, within the next 20 years start to render huge numbers of properties obsolete. Given the preponderance of older homes in the stock, much of it built in shrinkable clay soils this is at best worrying. New homes of course are being built to a design life of at least 70 years and if they are not designed to cope with climate changes then they too will become obsolete, probably with significant financial consequences for their owners and the insurance industry.

  (d)  Financial resources are insufficient in areas of high demand. Housing provision is considered by some to be the poor relation of other higher profile public sector spending departments. Pragmatically therefore new thinking needs to be applied to identify better/more efficient ways of spending the same money:

    —  Unlocking existing resources/spending power tied up in local authority housing stock and rental streams;

    —  Releasing the equity in homeowners property to enable it to be used to improve the property and keep it in good repair, so releasing ongoing demand on renovation grant resources and shifting the full responsibility to homeowners/landlords;

    —  New forms of low-cost homeownership to realise the aspirations of the majority, but at an affordable cost;

    —  Increasing the supply of new affordable homes by the enforced release of government/health authority/other public sector held land in the south east;

    —  Identifying positive and supportive policies, which would encourage the migration of households from the south to other parts of the UK where housing costs are lower and stemming migration to the south east;

    —  Identifying short term housing solutions as a stop gap to quell demand (eg well designed, high density, prefabricated dwellings with design life of 30 years maximum). There may be some groups who need to access affordable housing for a relatively short period of time (eg single person/couples starter units), where building of a lower standard offering cheaper building costs/rent/value may be acceptable;

    —  Planning policy requiring high levels of affordable provision across the south east;

  (e)  Affordable housing supply cannot be the sole responsibility of individual local authorities. The success of the UK economy and of the Region is dependent on the free flow of skills and labour and this is significantly frustrated by unequal housing costs between and within regions. In Southampton, the local housing stock is meeting a sub-regional role as, along with Portsmouth and Gosport, it has significantly lower house prices than in surrounding districts. Lower income households are therefore resorting to the cities for their housing solutions whilst perhaps working elsewhere.

  The cities are already densely developed and land costs are high mitigating against significant future affordable provision. Provision needs to be balanced between city areas and suburban/rural areas.

  Action is needed to tackle NIMBYism. The result of this in rural areas is often migration to the city in search of affordable stock so exacerbating city housing demand.

THE EXTENT TO WHICH PLANNING GAIN CAN FUND THE LEVEL OF AFFORDABLE HOUSING REQUIRED

  As said previously, developers seek the highest return. Without compromising on quality (eg lower property standards or higher densities for affordable housing than for mainstream housing), then achieving much more than 25-30 per cent is not realistic at a local level, as developers, which are generally regionally or nationally based, will simply not develop in the locality as better profits can be achieved elsewhere. The solution therefore is a Government policy which properly reflects affordable housing need, rather than the needs of the developer community.

  Once a policy with appropriate threshold and percentage targets is in place there is then the issue of the financial contribution required to support the affordable provision. The Tariff proposal in the Planning Green Paper may be sufficient, but unless there is clear guidance to the contrary, what would stop local authorities deciding to weight the tariff contributions to economic development, leisure, education or other local priorities rather than affordable housing?

  There may be argument for some tariff to the allocated for affordable housing possibly on a regional basis.

HOW RESOURCES SHOULD BE BALANCED BETWEEN SOCIAL HOUSING AND OPTIONS FOR OWNER OCCUPATION FOR THOSE WHO CANNOT AFFORD TO BUY (INCLUDING SHARED OWNERSHIP) AND WHETHER ANY ADDITIONAL MECHANISMS ARE REQUIRED TO BRING FORWARD SHARED OWNERSHIP-TYPE SCHEMES

  Southampton's housing needs and housing market survey showed unexpectedly high demand for private rented housing and the Government needs to recognise that home-ownership is not the only solution other than social rent. However, pragmatically, both the market economy and household long term aspirations are both drivers for more homeownership and the issue is how to bridge the gap between aspirations and affordability. With sustained house price inflation, traditional shared ownership is becoming less attractive as it is more likely to "lock-in" its customers in perpetuity as the costs of laddering out escalate. The rental element is also disliked by customers as they see nothing in return.

  There is certainly a gap in the provision of low cost homeownership schemes with the majority of the schemes in Southampton being pitched at above average local incomes. There is indicative evidence to show that there is a body of people on average local incomes (£14-18,000) who can't access LCHO schemes currently. The Housing Corporation is carrying out a review of LCHO schemes and there seems to be an opportunity to consider alternative schemes/mechanisms to bring forward LCHO schemes which are more affordable to local people. In terms of good practice—we have developed a shared equity model at Oakley Road which has worked well for keyworkers trying to access homeownership and is an alternative to traditional shared ownership with no SHG requirement.

  There needs to be more recognition of shared ownership/equity as a legitimate and mature market in its own right. It is currently seen as a staging post to full ownership and consequently a facilitative "tenure hybrid". Realistically many of those in the sector will never ladder into full ownership given the growing mismatch between house prices and average incomes and consequently to meet household needs and aspirations, improved facilities for trading between properties within the sector are required. This is currently undeveloped and the opportunities that do exist are not well known or well marketed.

  The resourcing of shared ownership needs to be based on a sensible assessment of affordability at a local level. This should be undertaken by local authorities through their housing needs surveys. The funding of low cost homeownership by the Housing Corporation or other Government Departments or agencies (eg via key worker housing policy) should be driven by local needs appraisal rather than political dogma.

WHETHER TARGETS IN REGIONAL PLANNING GUIDANCE ARE APPROPRIATE

  The numbers in current guidance are more a result of posturing by the participating councils than identifiable local needs. Targets are not area specific. The problem with setting such targets is that once established they are "set in stone" and worked to by planning departments and developers whether or not they are reliable indicators of need.

WHETHER CURRENT POLICIES AND PRACTICES ARE LEADING TO THE CREATION OF MIXED COMMUNITIES

  Arguably, in dense urban areas such as Southampton, all sites are relatively small and brownfield and the majority are infilling within established communities. As such community mixing is assured. On larger greenfield developments, it is unlikely that affordable housing will be intermingled throughout the development and the Nimbyist attitudes of both developers and home purchasers will mitigate against the perceived stigma of affordable housing.

WHETHER MORE GREENFIELD DEVELOPMENT IS NEEDED TO MEET HOUSING NEED

  The cities and urban areas cannot do it all by themselves without major redevelopment. Rural communities should also be facilitated with local people being able to stay in their home-community should they wish and not displaced by relatively well off new-comers whose purchasing power and mobility "gentrify" rural communities.

THE COST TO INDIVIDUALS, BUSINESS AND THE ECONOMY RESULTING FROM ANY SHORTFALL IN THE PROVISION OF DECENT, AFFORDABLE HOUSING

  This is not currently measured but perceived to be important.

  Southampton's workforce is predominantly service based and relatively low waged. The ongoing relationship between employer's workforce needs and employees housing needs are therefore inextricably linked in a housing market where house prices are inflating at three to four times wage inflation.

  Private sector rents have a relationship with house prices (if only because landlords will leave the sector if the capital return exceeds the rental return) and other things being equal continued housing costs, fuelled substantially by those on higher incomes will result in a housing crisis amongst the lower paid. This may in time precipitate local labour shortages in some sectors as households migrate to cheaper housing areas or to higher paid jobs, resulting in either local decline in certain business sectors, or an increase in local wage rates at the expense of business profitability.

  High prices, nominal income remains an issue amongst Key Workers. In Southampton we have developed a Key Worker Strategy which defines key workers as:

    —  those people employed in occupations that provide services which are essential to the well-being of the nation or the local economy and community and whose income does not allow them to compete effectively in the local housing market.

  Current examples of local key workers included in this definition are nurses, police officers, fire and rescue personnel and teachers. As house prices increase retaining and recruiting these groups remains more and more difficult.


 
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