THIRD REPORT
The ODPM: Housing, Planning, Local Government
and the Regions Committee has agreed to the following Report:
AFFORDABLE HOUSING
Conclusions and Recommendations
More and more people cannot afford to buy or rent
a home. On the one hand, house prices rose continuously from about
1994 to 2002, and have only recently begun to fall in some parts
of London and the South East. On the other, the number of households
is increasing, largely because of the growth in one person households
and international inward migration. At the same time, far fewer
subsidised affordable homes are being built than 10 years ago,
although the number of new private homes built for sale has remained
relatively constant. The problem is most acute in the south, but
hotspots are affected in many other parts of the country.
As a result of these developments more families than
ever are in temporary housing. Children are having to live with
their parents for longer, often well into their twenties. Young
people share homes for longer. Other consequences are less clear.
Employers are finding it difficult to recruit staff because they
cannot afford to buy housing in the area. Public service providers
are worst hit because they cannot raise pay above national limits.
However, there is little evidence that education or health care
is worse in the south than in the north where housing is more
affordable.
Three main types of solution were suggested to the
Committee:
- promote a major private housebuilding programme
- build more housing of all tenures;
- develop an effective regional policy to disperse
demand to less pressured areas in the Midlands and the North.
Building more private homes is not a panacea. The
available research suggests that even a very large scale private
housebuilding programme would only have a very limited impact
on prices and would be impossible to implement due to a shortage
of skilled labour.
Off-site construction might be a partial solution
to this problem, but the industry is currently so small, that
a very large expansion would add few houses. Given the experience
of past disasters it would be rash to encourage more than a modest
increase in off-site construction. In the past, it was largely
used for social housing. We will remain sceptical about off-site
construction, until it is used widely in the private sector. We
do not think it appropriate to experiment with new construction
methods for social housing.
The Government is seeking to increase the provision
of affordable housing. It is increasing funding annually by 4.2%
between 2002-2003 and 2005-2006. It also intends to enable and
encourage local authorities to increase the planning gain contributions
they raise from developers. In addition, it proposes curbing certain
abuses of the Right-to-Buy.
These proposals will undoubtedly lead to more affordable
homes, but the increase will be modest. Increased contributions
from planning gain are likely to have less effect; the planning
gain mainly enables affordable housing to be built on valuable
sites as part of private developments, which is very important,
but adds little to the number of homes. Professor Alan Holmans
has estimated that there is a need for at least an additional
80,000 - 85,000 new affordable homes per year to meet new demands.
Even with the additional funds agreed through the 2002 Spending
Review, there will be a considerable shortfall on this estimate.
There is a strong argument for changes to council
tenants' right to buy their homes, where this right is abused,
although this is unlikely to have a significant impact on the
supply of affordable housing. Too many tenants are buying their
properties and then selling on to unscrupulous landlords who rent
them out at great profit through the Housing Benefits system.
This can have a very detrimental effect on the estate. Currently
the maximum discount is £38,000; if a tenant buys a house,
he loses the discounts if he sells it within three years. We recommend
that this period is extended to seven years. Another abuse occurs
when homes are bought while a major demolition programme is undertaken.
Sometimes huge sums have to be spent just to buy back former council
houses to demolish them. Once a council has agreed the demolition
and reconstruction of an area the right to buy should be suspended.
The Government is proposing a mix of social rented
and low cost homeownership schemes, most of which provide some
form of shared ownership. At present the Housing Corporation spends
89% of its funds on social rented housing and a mere 11% on low
cost homeownership. There is no rationale for this split, and
no good reason for it was offered to our inquiry. It fails to
take account of the fact that many people who cannot afford to,
want to buy. Moreover, if a major justification for increasing
public subsidy to housing is to attract and retain workers in
public sector jobs, it is important to provide them with the type
of accommodation they want. The Housing Corporation and Government
are addressing this situation, but they are not moving far enough
or fast enough. A better assessment of housing needs is required
to establish a set of priorities at a local level between social
rented and low cost homeownership schemes.
The plans for a major housebuilding programme also
offer the opportunity to rebuild parts of cities increasing densities
and helping to promote the reuse of brownfield sites which have
stood vacant for a long time. The environmental benefits are clear
and in some areas they are the only development sites available.
However, new site assembly powers and funds will be required to
ensure an adequate supply of brownfield sites to match housing
demand.
While the Government exaggerates the contribution
which planning agreements with private housebuilders can make
to increasing the supply of affordable housing, such agreements
will be central to ensuring a mix of tenure in new housing developments.
To achieve this local authorities require new planning powers
to ensure that all new developments contain a mix of tenures.
Achieving well integrated mixed tenure development is being hampered
by the priorities of both private housebuilders and social landlords.
The objectives of housing associations need to be changed to reflect
the importance of mixing private, low cost home ownership schemes
and social rented housing. The Government should also consider
new purpose-designed community trusts to manage the mixed tenure
development.
The present situation also has its dangers. The last
major social housebuilding programmes of the 1960s and 1970s have
proved for a variety of reasons to be a disaster. These range
from poor design to single tenure to poor management and maintenance.
We must be very careful not to repeat these mistakes. Our aim
must be sustainable, mixed well-designed communities; we must
avoid the pressure to build as many houses as cheaply as possible,
which will have themselves to be demolished in twenty years time.
The Government's proposed step-change in the provision
of affordable housing presents opportunities over and above the
increased provision of housing. The scale of programme now being
put forward should enable good practice guidance to be developed
on a range of issues. There is a need for a standard workable
form of shared ownership, procedures for negotiating planning
gain, design guidelines for high density housing, strategies for
securing mixed tenure development and a mechanism for ensuring
the lifetime costs of building including management and maintenance
are taken into account when new affordable housing is built.
While we support a significant increase in expenditure
on social housing in the south and other hotspots, it needs to
be stressed that one of the causes of the demand for housing in
these areas is the failure of successive Governments' regional
policies. The Government must not only fund more affordable housing
in the south, but it must also do more to stimulate demand in
northern and midlands towns and cities. Our predecessor Committee
examined one means of addressing this problem in its report on
Empty Homes: it is essential that the Government's Low
Demand Pathfinder Scheme is well funded and lasts for many years
to attract investment in the towns and cities in the North and
the Midlands. The Government's other task will be to meet its
Public Service Agreement target to reduce disparities in economic
prosperity between the regions of England. We will look at how
it should do this in our next inquiry.
Introduction
1. There are very great differences in the housing
markets in different parts of England. In parts of the North and
Midlands there are rows of abandoned terraces. Elsewhere, including
hot spots in these regions, there is a high demand for housing,
high prices and a shortage of affordable housing. Our predecessor
Committee's report on Empty Homes addressed the problems
of abandonment.[1] Here
we consider the problems faced by those who cannot afford to rent
or buy a home. In July the Government announced proposals for
increasing its provision of affordable housing. Thus it is a most
appropriate moment to hold this inquiry.
2. This inquiry follows on from an investigation
begun by the Transport, Local Government and the Regions Committee
which was unfinished when that Committee was abolished. We chose
to return to this topic as our first inquiry. Over both inquiries
six evidence sessions were held. We and our predecessors received
115 written submissions which we commend to the Office of the
Deputy Prime Minister and others. We are very grateful to our
advisors Professor Christine Whitehead, Professor Kelvin MacDonald
and Martin Crookston and all who provided written and oral evidence
to the Committee.
3. The terms of reference, which we announced in
September 2002, were to consider:
- Whether the funds in the Comprehensive Spending
Review will achieve the Government's target of a decent home for
everyone by 2010;
- How spending of the new resources should be balanced
between social housing and options for owner occupation for those
who cannot afford to buy (including shared ownership) and the
mechanisms to be used for their distribution;
- The role of planning obligations in providing
affordable housing;
- The effectiveness of the Housing Market Renewal
Fund in tackling housing needs in areas with low demand; and
- How the quality of new affordable housing can
be ensured and the poor design of previous housebuilding programmes
avoided.
4. There are many definitions of affordable housing.
In this report we define it as subsidised housing required to
meet the needs of those who cannot secure decent housing on the
open market either to rent or buy.
Housing Demand/Need
5. The Government has predicted that there
will be an increase of about 3.12 million in the number of households
between 1996 and 2016. This is a result of diverse social, economic
and demographic factors including changing lifestyles and relationships,
better medical care, uneven regional economic growth and international
migration.[2]
1 Empty Homes House of Commons Transport, Local Government
& the Regions Committee Sixth report of Session 2001-02 HC240-1 Back
2
Analysis of household and population estimates and projections
published by the ODPM in tables 401 and 403 of its live tables
at www.housing.odpm.gov.uk/statistics/live/householdestimates/hhep1gb.xls
The figures take account of the results of the 2001 Census which
have slightly reduced the projections. Back
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