Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by Royal Institution of Chartered Surveyors (AFH 63)


   The Royal Institution of Chartered Surveyors (RICS), represents the views and interests of 120,000 chartered surveyors worldwide covering all aspects of land, property and construction. Under the terms of its Royal Charter, RICS is required at all times to act in the public interest.

  RICS welcomes this opportunity to submit evidence to the House of Commons Select Committee on Transport, Local Government and the Regions on affordable housing. If the Government is to ensure that all social housing meets set standards of decency by 2010, then it is imperative that decent houses are made affordable.

  We remain committed to the principle of affordability across all sectors and tenures and RICS has recently undertaken specific research into how this can be delivered through the planning system. In addition, RICS' recent response to the proposals outlined for the London Plan contains some purposeful reflections on prospects of achieving a target of 50 per cent affordable housing. It is within this context that we wish to submit evidence.

  We would like to comment on the following issues:


  We have undertaken a survey to examine whether local authorities have a common approach to defining affordable housing for planning purposes and it is clear that a wide range of approaches and language are currently in use. On the supply side, definitions vary from "less than minimum market price" in East Northants to "low cost market" in North Dorset and "subsidised irrespective of tenure" in Birmingham. However, in places such as the London Borough of Camden, low cost market or shared ownership schemes will often not be affordable to local residents. In other areas, such as parts of Teeside and North East Lancashire, the local private housing market has failed, with the result that subsidised housing can be priced at or above alternatives available on the open market ie. it is neither low cost nor less than market price.

  In short, the way in which affordable housing is defined starts from different premises and varies widely according to local housing market circumstances. There is considerable variation, and little apparent consensus in approaches to quantifying affordability. Central government approaches to clarifying what is meant by affordability have provided little practical help at the local level. This position may improve as the Government takes a more prescriptive role in setting sub-market, and housing benefit supported, rents. It should use these developments to review the extent to which it can assist local authorities in the development of their definitions of affordability. Most local authorities have much less detailed knowledge of income, rent, and house price data sources and the inter-relationship between housing costs and welfare benefits. Government assistance, however, can, and should, stop short of eroding local discretion in the setting of local affordable housing policies.


  Currently, there is insufficient knowledge of the level of demand for affordable housing. Local Authorities need to research more rigorously and update local requirements for additional affordable housing provision. Ideally this will involve forecasting, for different time periods, the number of households who are unable to either meet their reasonable housing requirements in the market or from the flow of existing affordable housing.

  The issue of affordable housing is too often equated with demand and supply issues in London and the South East. The problem is equally relevant in many other areas of the country and is particularly acute in rural areas where the influx of second or holiday home owners have pushed up house prices to unsustainable levels.


  There should be no trade-off between quality and affordability in housing provision. If new affordable houses are to be built then they must be in the right place, be suitable for a variety of needs both now and in the future and make the most of sites and contribute to their surroundings. New affordable housing should lift the spirit of an area and should be sustainable in terms of management, maintenance, the environment and what it contributes to the wider community. In the past, new housing has too often failed these tests.

  While new build affordable housing is generally of good quality, the older stock requires far more re-investment. The Government is supporting large scale transfers of the older housing stock where tenants support such a move. Where, however, such transfers do not take place it is essential that local authorities are allowed to borrow to fund repairs and refurbishment. RICS supports the setting by government of stock condition and improvement targets (including energy efficiency) both for the private and social housing sectors, together with demolition and replacement targets for the stock as a whole.


  The current supply of affordable housing (and housing in general) is inadequate. The UK's gross fixed investment in residential buildings as a percentage of GDP is globally low—it appears to have rested on earlier laurels gained through significant investment in the first two thirds of the Twentieth Century.

  With demand for (affordable) homes outstripping supply, Local Authorities need to review the local financial framework in which affordable housing is provided as part of the planning system. This review should be based on the range of needs for affordable housing, what funding is available to meet these needs, and the extent to which Social Housing Grant is needed to bridge funding gaps.


  RICS supports the use of the planning gain to meet affordable housing requirements. However, there are shortcomings in the way the system works at present. Many of these were identified in the report produced last year by RICS and the Housing Corporation, "Delivering Affordable Housing through the Planning System". That report, a copy of which is attached, pointed to various ways in which local planning authorities and central government can improve the present system. Priority should be given to:

    —  improving the quality and evidence underpinning future affordable housing requirements, both locally and possibly via some "industry-standard" approach to housing demand forecasting;

    —  developing and refining corporate working within local authorities, at member and officer level, on planning led affordable housing issues;

    —  increasing the clarity of affordability definitions used in local policies and the types of households targeted. Again central government has a role in bringing together and distilling, for local use, the views it takes on affordability across government;

    —  assessing the relative merits of affordable housing products to be developed on-site, off-site, or via a commuted sum. The presumption in favour of on-site provision should be reviewed as housing authorities' comprehensive strategic role comes even more to the fore;

    —  reviewing procedures for local authorities and developers choosing their RSL partners for affordable housing schemes. Partners are chosen, more or less competitively and formally, for a range of joint commissioning, stock transfer, and regeneration tasks. Choosing affordable housing partners should reflect these other local systems and the lessons from them;

    —  reviewing the local, and where relevant the national and regional, terms on which SHG and other forms of public subsidy are to be made available to support the provision of affordable housing under the planning system; and

    —  reviewing the scope of section 106 agreements, not least the development and use of standard clauses and the detail of Mortgagee in Possession clauses.

  Whilst the planning gain system can make an important contribution, attempts to extract unreasonable amounts of affordable housing will backfire. RICS is strongly of the view that a blanket target of 50 per cent affordable housing in new developments, as proposed in London, will prove counter-productive if rigidly interpreted at local level. It is highly likely that the effect of a single prescribed target would be to reduce the amount of land coming onto the market for housing, particularly in less desirable areas.

  A 50 per cent allocation may be achievable in certain central and waterfront sites, for example, Imperial Wharf at Fulham. In other locations—even in the same borough—this will not prove to be the case. Under such a policy sites would be subject to endless wrangling and appeals, or would not even be brought forward for housing development in the first place. Over the longer term this may lead housing development companies to seek opportunities elsewhere in the south east rather than endure further frustrating delays in London.

  We suggest the adoption of a more targeted and focused approach. The GLA should seek to agree with each London borough, or at least with a sub-region of two to three boroughs, a range of affordable housing targets which reflect local needs and comparative land values and property prices. Flexibility needs to be built into the system to reflect cycles in housing values. What is affordable in today's market might be quite different in three to four years time, as a result of which lower quotas may be needed.

  Other shifts in policy that we believe would improve the flow of affordable housing include:

    —  the targets for additional housing will only be met if higher residential densities are adopted. The UK has some of the least dense residential areas in the world. It is perfectly possible to increase residential densities whilst maintaining a high quality urban environment. The publication in June of the comprehensive guidance on identifying and implementing Transport Development Areas is crucial in this respect. The guidance (drawn up by RICS with the backing of most other relevant professional bodies, the GLA, the Local Government Association, Scottish Enterprise and others) shows how higher densities can be achieved in the most logical and sustainable locations, ie around transport nodes;

    —  in areas of housing shortage there should be a comprehensive review of all potential sites, both public and private. The review should include outmoded industrial areas which are unlikely to be used again for employment purposes; and

    —  public organisations with key worker shortages (NHS Trusts, Metropolitan Police etc) should be encouraged to provide staff accommodation, in conjunction with housing associations, from their own land and property resources, as happened in the past, rather than disposing of sites on the open market on an ad hoc basis.


  Resources can most effectively be directed at the social rented sector which can provide affordable properties in perpetuity. Assistance directed at enabling key workers to move into owner-occupation can be helpful but the overall amounts available are unlikely to make much impression given the scale of the problem. Moreover, extensive help to key workers does run the risk of adding to house price inflation with implications for all those struggling to buy at the lower end of the market.

  The area that should not be overlooked is the private rented sector. For too long the private rented sector has been seen as a small sector catering for those with specialist or temporary housing needs rather than as one capable of meeting main-stream housing needs. In this context we strongly back many of the recommendations in the recently published Joseph Rowntree/Shelter report, "Private Renting: A new Settlement". Some key themes in that report are:

    —  a long term increase in the number of smaller households will translate into increasing demand for good quality, well managed private rented properties;

    —  in principle the private rented market could be an attractive proposition for developers and institutional investors, but both are holding back at the moment;

    —  investment by individuals would be encouraged through the reform of the taxation of small landlords—so that they are treated the same as other small businesses

    —  more flexible use of development subsidies and the planning system would encourage institutions and others to invest;

    —  the private rented sector is accommodating an increasing number of people in housing need. Current support for tenants and landlords is patchy. Action is needed on housing benefit, to help people to secure their tenancies, and to provide appropriate housing management support;

    —  private landlords and private tenants should be recognised as key stakeholders in community regeneration and be given support through more local private rented sector projects; and

    —  a cultural change is needed so that all local authorities recognise the importance of working with the private sector.


  RICS supports the setting of regional targets in line with demographic changes. However, the Government must address the lack of a standard methodology for forecasting which is seriously inhibiting the potential of RPG. There should also be a greater requirement on Local Authorities to adhere to regional guidance in relation to the quantity of affordable housing to be provided.


  It is evident that the UK is failing to meet the demand for additional housing caused by demographic change and economic growth. The UK consistently spends less on housing investment than our EU neighbours and has above EU average rates of housing unfitness and disrepair.

  Whilst there are problems of housing shortages in many areas those in London are among the most acute. A report from the Mayor's Housing Commission highlighted the need for 43,000 additional units per annum, 27,000 of which should be affordable. The current estimated provision of 19,000 per annum for all types of housing clearly falls short of this target by a considerable margin. The GLA has set a target of 23,000 units. This 20,000 unit difference in target needs to be addressed.

  RICS believes that there is a need for Government to set output targets (including affordable housing output targets) to help meet the projected shortfall of homes.


  The creation of mixed communities is a key mantra of Government policy. However, the concept is often unclear—how mixed? mixed use? mixed tenure? mixed income? mixed race? Nonetheless, however mixed communities are defined it does appear to be the case that they are more sustainable than homogenous ones.

  In 1999 a report by the Demos think tank caused a stir by seeming to suggest that mixed tenure did not stimulate the development of strong communities. However, that report missed the point. We agree with the conclusions drawn by Anna Minton in a recent article in The Guardian. The point is not that mixed communities are ideal communities but that they avoid the downward spiral of communities that are universally poor. Whilst there is a need for more empirical evidence, there is a widespread view among housing providers that mixed communities help to raise the aspirations of those from poorer backgrounds. As Peter Redman, Chief Executive of the Notting Hill Housing Trust put it: "We see that families who've had a rough ride and move into a mixed street tend to do much better. It's not about who helps you directly; its about having aspirations and not being a victim of postcode prejudice".

  When new communities are created it is important that the need for a social mix is addressed. Attempts to do so range widely from that of the Duchy of Cornwall at Poundbury to the Guinness Trust scheme at Caterham Barracks. In the latter a conscious attempt has been to pepperpot the scheme by intermingling private with social housing and building both to the same standards.

  Whilst new schemes are important the overwhelming need must be to bolster existing mixed communities and to encourage the growth of successful mix communities where this does not already happen. Government can help in this by:

    —  ensuring that a proportion of housing in new housing schemes is "affordable". Where land prices are high it may sometimes make economic sense for such provision to be made off-site. However, off-site provision can work against the building of mixed communities;

    —  greater scrutiny of and intervention in failing neighbourhoods to ensure that such areas are turned around before the decline becomes irreversible;

    —  a recognition of the crucial role that the performance of local schools play in creating and maintaining mixed communities; and

    —  a review of Right to Buy policies which are resulting in a loss of affordable housing in high cost areas.


  Development on brownfield land should nearly always be preferred to development on greenfield if we want to achieve an urban renaissance. Brownfield land is not, in itself, difficult to develop. The issue is wider, ie how to achieve sustainable urban development. Some sites remain undeveloped for a variety of reasons such as market failure, high costs, poor existing infrastructure and fragmented land ownership.

  In much of the midlands and north the brownfield land target should be 100 per cent initially until all the major regeneration challenges are addressed. The sequential approach to planning should be at a regional or sub regional level. If authorities on the edge of conurbations run out of urban land and start giving permissions to develop on greenfield sites this fatally undermines the efforts of central urban authorities with large supplies of urban land. Sustainable extensions to urban areas may have a limited application in some very specific and constrained locations. However the negative impact of these can spread over a very wide area—development in Milton Keynes has a negative impact on Leicester, for example, and even on inner London.

  The main two barriers to the greater use of brownfield land are the awarding of planning approvals for greenfield sites and the difficulty of assembling land in urban areas. If local authorities stopped giving "out of centre" planning permissions and started carrying out CPOs on good regeneration sites we could transform our urban areas. We very strongly endorse recent government proposals to allow CPOs for regeneration purposes and to introduce better levels of compensation.

  If there are favourable market conditions relating to a site and the costs of bringing it back into use, then the development will be achievable. If the costs are greater than the potential end value then public funds should be deployed to prevent the site from remaining derelict. But this kind of funding has dried up since the Partnership Investment Programme that provided gap funding was judged by the European Commission to be in contravention of its state aid rules in 1999. One of the funding schemes recently developed by the UK government partially to replace gap funding covers housing development on brownfield sites. However, this has not yet been approved by the Commission and only applies to housing for owner-occupation. The scheme should be extended to cover housing for rent.


  For individuals working in low paid professions, a lack of affordable housing imposes considerable restrictions in relation to housing choice. If the demand for certain professions is at its greatest in areas where housing is prohibitively expensive, then local economies will suffer. This problem is particularly acute for low paid key workers in areas of London and the South East who cannot afford to live near their place of work. This will significantly affect the provision of public services and raise the prospect of a loss of skills in vital sectors (as key workers relocate).

  As a lack of affordable homes spills into the labour market, employers may be forced to raise wages in order to retain their workforce even if this is not economically viable. Business competitiveness will therefore inevitably suffer.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 1 July 2002