Select Committee on Transport, Local Government and the Regions Memoranda


Memorandum by London Borough of Hammersmith and Fulham (AFH 54)

  The London Borough of Hammersmith and Fulham welcomes the opportunity to submit evidence to the Urban Affairs Sub-Committee in its inquiry into Affordable Housing. Affordable housing, by what ever definition, continues to be a matter of utmost concern, whether it be lack of supply or condition of existing stock, and this Council supports the Government's strategy to increase both the availability and condition of this tenure both nationally but in particular in relation to London. We have noted the issues that the sub-committee is particularly interested in and have addressed most of these.

AFFORDABLE HOUSING SUPPLY AND DEMAND IN THE LONDON BOROUGH OF HAMMERSMITH AND FULHAM

  This Council is proud of its record since 1986 of having worked tirelessly to develop over 2,000 units of affordable housing in the fourth highest property and land value area in London and therefore in the UK. Despite the success of the Council's enabling role in the delivery of affordable housing, the borough remains one of overwhelming demand, high numbers in bed and breakfast, migration of middle income earners out of the borough and ever increasing property prices.

  In 1998 Fordham's undertook a Housing Needs Survey of the borough, which was updated in 2001. The survey estimated that there were 11,000 households in housing need in the borough, representing 15 per cent of all households in the borough. The estimate of the projected shortfall of affordable housing in Hammersmith and Fulham was 1,375 homes each year over the coming years.

  House prices and rents are high across the borough, reflecting the scale of demand for residential accommodation in this part of London. House prices, although already well above the London average, rose by 100 per cent between 1996 and 2000, rising 29 per cent in 2001 alone. New build prices are typically 15-20 per cent or so higher than average second-hand prices.

  There are continuing high numbers of people presenting as homeless in the Borough and increasingly these are single people. There is a widening gap between re-housing capacity and demand and this has resulted in increased use of Bed and Breakfast accommodation, resulting in large financial costs to the Council and also social costs for families living in unsuitable accommodation. A major source of this increase is the growth in single person demand. This new feature is attributable to the growing cost of access to the private rented sector in Hammersmith and Fulham. Family sized accommodation long ago ceased to be affordable in the private rented sector in the borough and this has contributed over many years to the excessive demand for two and three bedroom properties under statutory duties. At the end of May 2001, temporary accommodation occupancies stood at 1,302 overall.

IMPLICATIONS OF AFFORDABLE HOUSING SHORTFALL

  Research into the housing needs of key workers shows that only 11 per cent of local social workers, 19 per cent of teachers and 5 per cent of police officers actually live in the borough. Strong challenges exist in recruiting and retaining these workers and all these services have high level of vacant posts. These recruitment and retention problems inevitably make it more difficult to deliver high quality local public services. Other local employers also identify recruitment and retention problems for similar levels of staff. 24 per cent of employers identify housing as the main issue in recruiting skilled manual staff and 17 per cent identify it as the main problem in retaining non-manual staff. The mismatch between local residents and local jobs will inevitably lead to long journeys between work and home and less sustainable lifestyles.

AFFORDABLE HOUSING DEFINITION

  This Council regards housing as affordable if its cost to the occupier, however it is provided, is equivalent to the cost of Registered Social Landlord accommodation of similar size and quality in the Borough. This includes housing to meet the needs of low to middle income households and key workers.

  However, we have concerns on the effects of the Government's rent restructuring proposals on high value areas such as Hammersmith and Fulham. In respect of traditional low cost home ownership models, we consider that these are becoming increasingly ineffective in high land value boroughs in delivering affordable housing. We would propose that the Housing Corporation cease requiring RSLs to sell a minimum of 25 per cent equity on grant funded shared ownership schemes, as even at 25 per cent equity most shared ownership accommodation is unaffordable to Hammersmith and Fulham residents on incomes below £25,000 pa. RSLs should be allowed discretion to sell initial equity shares as low as 10 per cent on shared ownership schemes.

  In addition, the property value thresholds and grant available on Homebuy are too low to enable households to buy in high land value areas. Whilst Homebuy is successful as a model in lower land value areas, it has the effect of exporting economically active households in high land value areas to lower land value areas, therefore accentuating the polarisation of wealthy and poor communities in high land value boroughs.

  The Council would also recommend that there is a requirement for affordable housing to remain permanently available, or at the very least to the initial and subsequent occupiers. The Council would propose that the option of requiring RSLs to retain a golden share to ensure that low cost housing is not totally lost through right to buy is explored. A golden share of say 25 per cent would still enable occupiers to staircase up through shared ownership—existing schemes in this borough set a ceiling of 75 per cent that occupiers can purchase.

  In terms of intermediate housing, Councils require flexibility in the delivery of such schemes. This is an emerging and fractured market which will be heavily influenced by the occupational and affordability issues pertaining to each local authority's priorities. The NHF "Mind the Gap" report addresses some of these issues.

  In Hammersmith and Fulham, "social rented housing" is the key priority given the growing number of people in bed and breakfast and temporary accommodation. There is still much work that needs to be done to identify and address the issue of intermediate housing and, in the absence of such information, it is important to ensure that such housing is provided in addition to, rather than instead of, social rented housing. We would not want developers trying to get around affordable housing policies/requirements by only providing intermediate housing (NB. Hillingdon appeal decision).

LONDON SITUATION

  In London, boroughs currently have strategic dwelling requirements set out in RPG3. This figure is based on the 1992 LPAC Housing Capacity Study. In 1998, LPAC carried out another capacity study and the findings and dwelling requirement figures from this will help inform the Mayor of London's London Plan. The Mayor for London will soon be consulting on his draft London Plan. The GLA London Plan is expected to contain targets for boroughs for maximising the provision of affordable housing. However, this Council would want to be able to set higher targets where these are justified on the basis of need. The 50 per cent and 35 per cent targets are already being seen by some developers as a cap. In this borough the maximum reasonable proportion of affordable housing is sought from all residential developments and an average of 65 per cent affordable housing has been achieved from all planning approvals over most of the past decade.

  Therefore we consider that the 50 per cent and 35 per cent targets must be applied flexibly with each borough making appropriate provision in the light of local needs and circumstances whilst making their due contribution to meeting pan-London needs. It will be important for monitoring agencies to scrutinise borough targets that are set too low such that they are not making a reasonable contribution to meeting London's affordable housing needs.

  The provision of targets for individual sites included in UDPs is likely to be appropriate for a very limited number of sites, for example those where a full site history and circumstances are known. Because this level of detail is not known for many sites, setting over-prescriptive targets could provide a constraint on development. Therefore, rather than setting targets for individual sites, we support provision of a general policy that sets an affordable housing target and would permit consideration of the many variables that may affect the economics of housing provision on individual sites, provided such flexibility does not result in under provision. This target should not be viewed as a ceiling figure but instead a monitoring figure to inform future policy reviews.

  The exception to the above would be sites where the local planning authority's policies would not allow residential development unless it was in the form of affordable housing. LBHF have successfully operated such a policy for many years on "windfall sites" of every conceivable size, where vacant land formerly in employment use or some form of "community service" use (eg school, hospital) is normally required to remain in employment or community use due to the scarcity of suitable land, and new residential development is not permitted. An exception is built into our policies to allow residential development in such circumstances (where environmentally suitable) only if the development is 100 per cent permanently available affordable housing secured by S106 legal agreement. This "exceptions policy" approach is effectively a 100 per cent target for land where (market) residential development (typically the highest land value generator) would not otherwise be allowed.

  In practice, mixed tenures have been allowed on some such sites to achieve viable developments with usually only small market or shared ownership housing and much larger proportions of affordable social rented housing being secured. The combination of essential high levels of public subsidy (Housing Corporation grant plus any local authority input) and very small proportions of market housing has repeatedly delivered viable predominantly affordable housing developments. This formula recently delivered a successful outcome at Queen Charlottes Hospital (redundant health service site) where the NHS's capital receipt from disposal exceeded their needs (for funding other health provision), a commercial house builder is making a profit from the development in partnership with a Housing Association receiving a high level of grant subsidy, and the approved development mix in a high value residential conservation area is 55 per cent social rented, 20 per cent mixed tenure intermediate / key worker and only 25 per cent open market.

  The Council also gives guarded support to the GLA's expected targets for a two thirds/one third split between social rented accommodation and key worker housing with boroughs taking into account local circumstances. However, as stated above, we consider it vital that key worker housing should be sought only as additional to the social housing target wherever possible or sought as a provision where traditional family rented social housing is unsuitable. It will be important for the GLA to scrutinise borough targets rigorously to ensure that these are not set too low and that they are making the optimum reasonable contribution to meeting London's affordable housing needs.

LOW COST MARKET HOUSING

  Some forms of shared subsidised rented housing can provide a valuable source of affordable housing, in particular houses in multiple occupation (HMOs), hostels and other forms of non-self contained accommodation, and it is therefore important that boroughs retain such accommodation and have policies to control new proposals. However, it is difficult to assess the extent to which low cost (self contained) market housing can meet intermediate housing need without significant research and information on such needs. It is very important to ensure that developers do not only provide such housing instead of affordable social rented housing to meet those on lower incomes.

  The Council consider that for any low cost market housing to be considered affordable in this borough, it would have to be subject to levels of subsidy that make its cost equivalent to the cost of registered social landlord accommodation. In this borough we have only once negotiated a very small portion of discounted housing for sale. This is in the St George Imperial Wharf scheme, but this housing is not, by any stretch of the imagination, affordable and makes no contribution to meeting affordable housing or intermediate housing needs. The discounted prices are way above what people can afford unless they are on high earnings, and it's only use is to enhance the balance of tenures and the overall acceptability of the whole development mix, given the large scale of that development (over 1,600 dwellings) and government planning guidance aimed at achieving balanced communities.

  The Council consider that loss of all types of housing should be resisted. In particular, affordable housing needs to be retained to meet the continuing need for this type of housing.

THREE DRAGONS

  The approach currently being developed by the GLA could help to provide a more level playing field across London for negotiation with developers, and would result in a more rational basis for discussion. However, we do not want the model to be seen as the only factor that boroughs will take into account. Local circumstances and site characteristics will continue to have an important role to play, whilst locally developed policies, such as this borough's "exceptions policy" will take precedence where appropriate.

  We are extremely concerned that in their conclusions and policy recommendations the Three Dragons suggest that the five "super league" boroughs (which include LBHF) could provide affordable housing without public subsidy through the use of residual value. We consider that it is wrong to include Hammersmith and Fulham in this list, because in this borough high proportions of affordable housing cannot be provided without public subsidy. The Three Dragons recommendations would lead to less affordable housing in this borough, and therefore in this borough the Mayor for London's objective of providing more affordable housing would not be met. We have achieved 65 per cent affordable housing with public subsidy, and this must continue if we are not to see this level fall and the proportion of market housing increase. Affordable housing by cross-subsidy will not work in this borough, and Housing Corporation money is necessary for continued affordable housing provision. We are extremely concerned on this point as we are aware that the Housing Corporation is seriously examining the report as a method of determining future social housing grant allocations in future years. Market cross subsidisation without public subsidy would produce only a low proportion of affordable housing, far less than the 65 per cent which has been constantly achieved using public subsidy to underpin planning negotiations.

PLANNING GAIN

  The Council is supportive of new commercial developments being required to contribute to meeting affordable housing need, as recommended in the Government's consultation paper on Planning Obligations. This should normally be in the form of mixed use provision in situ. Where schemes do not involve residential as part of their mix, and where it is not appropriate to do so, we support proposals that the developer should make a financial contribution to affordable housing. It will however be necessary to consider factors such as the scale and nature of the development, the characteristics of the surrounding area and other implications arising from the development. In addition we believe that this "tariff system " must not be seen as a substitute for Housing Corporation funding, it must be in addition to public subsidy if any increase in affordable housing delivery is to be achieved. Grant subsidy must continue in this borough if we are to maintain our level of affordable housing provision.

  The Council's view is that if a site is suitable for affordable housing provision it should normally be expected to be provided on that site. Only in very exceptional circumstances, if it can be shown that on-site provision is not appropriate (eg conversion of listed building proving too expensive or unable to produce satisfactory layout of rented family housing) should a financial contribution towards off-site provision be acceptable in lieu of in situ provision.

  Whilst developers have been demanding a uniform formula for payment in lieu requirements, we consider that it is unlikely to be practicable on a London wide basis.

REGIONAL WORKING AND FINANCE

  Sub-regional partnerships based on agreed sub-regional strategies could present affordable housing provision within the context of the broader dynamics and duties put on local authorities of social, economic and environmental well being. However, whilst this borough would seek to continue and strengthen its existing mechanisms for working with West London boroughs in addressing regional priorities, we would strongly seek the borough's ability to address its own housing need. This is because individual borough factors can produce localised housing need and Hammersmith and Fulham's circumstances are not the same as those of outer west London.

  The Council is concerned about the pace of the movement towards regional allocations of affordable housing finance. Recent examples of regional funding such as the Starter Homes Initiative and the recent additional allocation to the Housing Corporation for the 2002-03 Approved Development Programme have been based solely on delivery and value for money criteria. Whilst the Council welcomes the additional resources, it is concerned in terms of the SHI that this has the net effect of exporting economically active households from the borough increasing the polarisation between residents remaining in the borough. The additional Housing Corporation allocations have been mainly allocated to the outer London boroughs on the expectation that boroughs not receiving allocations will obtain nominations to the outer borough schemes. This form of allocation takes no regard of housing need, assumes future occupants are prepared to move considerable distances from their existing family and support networks and assumes that frameworks and structures of regional working are well established.

  If regional allocations become the norm, it will cut across the Government's stated aim of maintaining and sustaining balanced communities. If high land value boroughs such as Hammersmith and Fulham are unable to access public funding streams for the development of both affordable housing association rented accommodation or key worker housing in borough, this will have the inevitable consequence of increasing the difficulty of low to middle income owners accessing housing in the borough.


 
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