Housing and Planning Bill

Written evidence submitted by the Joseph Rowntree Foundation (HPB 15)

Housing & Planning Bill 2015-2016

The Joseph Rowntree Foundation (JRF) is an independent organisation working to inspire social change through research, policy and practice. We want to see a prosperous UK where everyone can play their part. We work in partnership with individuals, communities and a range of organisations to achieve our goals. We use evidence and experience, and we search for the underlying causes of social issues so we can demonstrate practical solutions that bring about lasting change .

JRF shares staff and trustees with the Joseph Rowntree Housing Trust (JRHT), a charitable housing association operating in Yorkshire and the north east of England. JRHT provides housing, care homes, retirement and supported housing, and demonstrates new approaches in these areas.


The Government’s commitment to increasing supply of housing is to be welcomed. However, this must deliver in variety of stable housing options. At present, a shortage of affordable housing means too many are being forced into the bottom end of the private rented sector with higher rents and less security. We need a much more ambitious plan to supply genuinely affordable homes.

The Housing and Planning Bill contains welcome measures to tackle issues of quality in the private rented sector, and to speed up the planning system. However as currently constituted, the Bill lacks sufficient detail on key proposals.

This evidence summarises JRF’s views on a number of issues. In particular, we argue that:

§ Proposals to allow ‘Starter Homes’ to replace low-cost rented accommodation will reduce the supply of housing affordable to those on low incomes.

§ Action to tackle rogue landlords and estate agents is very welcome and should be the first step in a comprehensive Private Rented Sector strategy.

§ Selling vacant ‘high value’ local authority-owned housing will have an immediate impact on the availability of homes for those in housing need, but this could be mitigated over the longer-term if replacement is on a ‘like for like’ basis.

§ Setting the threshold at which tenants are judged to be ‘high income’ will require sensitivity to avoid including households below minimum income standards. A tapered approach will be required to avoid creating work disincentives.

§ Efforts to improve delivery of homes through the planning system are very welcome, but must ensure a mix of tenures are delivered as a result.

1 Introduction


1.1 The Joseph Rowntree Foundation (JRF) welcomes the opportunity to submit evidence to the Public Bill Committee scrutinising the Housing and Planning Bill. Our dual interest as a research charity and housing association makes us well placed to comment on this important to pic.

1. 2 Our evidence base

1.2 .1 JRF has a long history of research on housing issues, which we continue today within our current programme on Housing and Poverty [1] . This submission draws on evidence from a number of key publications, including:

§ What will the housing market look like in 2040? A quantitative longitudinal study led by Prof. Mark Stephens of Heriot-Watt University (2014)

§ Rethinking Planning Obligations: Balancing Housing Numbers and Affordability A review of the use of section 106 led by Dr. Sue Brownill of Oxford Brookes University (2015)

§ Reviewing the Right to Buy An evaluation of the first wave of Right to Buy completed for JRF by Prof. Colin Jones and Prof. Alan Murie (1999)

§ Understanding the likely poverty impacts of the extension of Right to Buy to housing association tenants led by Anna Clarke of the Cambridge Centre for Housing and Planning Research (2015, forthcoming)

1. 3 Structure of response

1. 3 .1 Our response does not aim to cover every aspect of the Bill , but instead provides analysis of the parts of the Bill where JRF has particular expertise. It is structured around elements of the Bill , examining :

§ Starter Homes

§ Tackling rogue landlords and letting agents

§ Vacant high value local authority housing

§ ‘Pay to Stay’ for social tenants

§ Assessment of Gypsy and Traveller accommodation needs

§ Speeding up the planning system

2 Starter Homes

2.1 Starter homes must be part of a wider commitment to homes of all tenures

2.1.1 The Conservative Manifesto committed the Government to delivering 200,000 ‘Starter Homes’ by 2020. These homes would be available for first time buyers under 40 to buy at a 20% discount. Clauses 1-7 provide a statutory framework for the development of Starter Homes.

2.1.2 JRF welcomes the development of homes of a range of tenures, to meet housing need across the market. Starter Homes may have a role to play in this, but it should be recognised that they are not a proposition suitable for those in poverty, who would lack the ability to raise the deposit and mortgage finance available to purchase these homes.

2.1.3 Forthcoming research for JRF confirms that low cost home ownership serves a very different market to low-cost rented housing. J ust 3% of new social housing tenants could have afford ed to access shared ownership instead [2] . Even if those on poverty were able to access home ownership, it does not provide a route out of poverty on its own.

2.2 The treatment of Starter Homes within planning obligations

2.2.1 Clause 4 allows for provision of Starter Homes through planning obligations. Local authorities will only be able to grant planning permission for certain residential developments if specified requirements relating to Starter Homes are met – e.g. the provision of Starter Homes on site, or the payment of a sum towards the provision of Starter Homes elsewhere.

2.2.2 This will allow Starter Homes to replace affordable rented homes which would have been delivered through a mechanism known as Section 106. Depending on the wording of regulations, this could be mandatory.

2.2.3 JRF has serious concerns about this proposal, as our research [3] shows Section 106 is an important mechanism for the delivery of affordable rented housing:

§ Section 106 delivered 16,193 homes or 37% of all affordable housing in 2013/14.

§ This figure has been higher in the past - 65% of affordable housing was delivered through S106 in 2006/07.

§ In some areas, as much as 87% of affordable housing is delivered through Section 106

2.3 Responding to local housing needs

2.3.1 Affordable rented housing plays an important role in mitigating against poverty. We can only contain poverty at current levels if it continues to represent the same share of the overall housing market [4] . JRF would therefore urge Government to reconsider measures which would oblige local authorities to insist on provision of Starter Homes. Instead, local authorities must be able to utilise their understanding of local housing markets to reach agreements with developers, ensuring that planning obligations deliver homes that help meet local housing need.

2.4 Starter Homes Recommendations

§ Local authorities should be given the freedom to negotiate planning obligations in a way that will meet their local housing need, rather than being obliged by Government to insist on a particular tenure or housing ‘product’.

§ The wording of Regulations in relation to Clause 4 will be important in this respect, and their early publication would support better legislative scrutiny.

3 T ackling rogue landlords and letting agents

3.1 The measures

3.1.1 Part Two of the Bill provides greater powers for local authorities to identify and tackle rogue landlords and letting agents in England. This includes enabling local authorities to apply for orders banning people from acting as landlords and letting agents, and establishing a database of those who have been banned.

3.1.2 The proposed action is very welcome and may drive up standards in the bottom end of the PRS. Private renters and households in poverty are more likely than other households to live in poor quality housing, and there has been no change in the number of non-decent private rented homes over the last five years, while the number of owner-occupied and social rented homes deemed non-decent have fallen substantially over the same period [5] .

3. 2 Affordability and stability

3.2.1 There are 4.2million privately rented homes in England [6] . This makes the sector larger than housing associations and local authorities combined. However, demand for private rented housing is tiered and segmented, according to the income of tenants. The measures proposed in this Bill may go some way to driving up standards in the very bottom of the sector, but they could make a bigger difference if they were part of a wider strategy addressing the private rented sector.

3.2.2 Affordability is a key challenge because the PRS is now home to an increasing number of people in poverty. 4.1m people are now living in poverty in the PRS, compared to 2.1m in 2002/3. Private renters in the bottom fifth of the income distribution spend the highest proportion of their income on housing costs of any group, at 55% of income [7] .

3.2.3 Stability is also important, and the Assured Shorthold Tenancies used in the private rented sector offer little security of tenure. The end of a private tenancy is now the fastest-growing cause of homelessness, up by 200% in the last four years, and the largest single cause in London. JRF’s research in this area [8] suggests that a combination of incentives for landlords combined with checks and balances for tenants could deliver increased stability for tenants. Affordability challenges can be met through increased supply of affordable rented housing, and by maintaining the housing benefit safety net. Without both of these, poverty is likely to increase.

3. 3 Tackling rogue landlords and letting agents : Recommendations

§ Action on rogue landlords and letting agents is welcome, but the government should include these steps within a comprehensive private rented sector strategy which also addresses issues of stability and affordability.

4 Vacant High Value Local Authority Housing

4.1 The measures

4.1.1 Clauses 62-72 enable the Secretary of State to require a payment from local housing authorities based on the market value of the ‘high value’ housing stock they own which would have become vacant during the year. The Conservative manifesto proposed that income from this source would fund Right to Buy discounts for housing association tenants.

4.1.2 JRF’s evidence stresses the critical importance of the availability of low-cost rented housing to containing and mitigating poverty. Selling off high value housing stock when it becomes vacant will have an immediate impact on the availability of homes for those in housing need. In this respect, the sale of local authority vacant stock has a more immediate and damaging affect than the Right to Buy, the impact of which is only felt much later when the property would have become available for re-letting. JRF has commissioned analysis of the impact of both policies on poverty, findings from which are highlighted below.

4. 2 Defining ‘high value’ stock

4.2.1 It is accepted that public assets must be deployed wisely to achieve best value. In this respect, Clause 69, placing a new Duty on local authorities to consider selling high-value stock when it becomes vacant is a reasonable measure, ensuring that assets are managed strategically, but allowing those with a sensitive understanding of local housing markets to make appropriate decisions.

4.2.2 However, other clauses in this Chapter will mean local authorities will effectively be obliged to sell ‘high value’ stock in order to fund the payment government will require them to make. The impact of this measure cannot be fully understood without government defining what constitutes ‘high value’ stock, and how this will be calculated.

4.2.3 Using indicative regional-level thresholds published by the Conservative Party earlier this year, researchers at Cambridge University have attempted to estimate the scale and profile of local authority sales for JRF [9] . Their analysis – which we are happy to make available to the committee in full prior to publication later this month - suggests:

§ Despite the fact that thresholds are set regionally, the impact varies substantially between regions, with much higher proportions of local authority stock likely to be sold off in the East Midlands, East of England and London than elsewhere, due to the more uneven distribution of stock values in these regions.

§ Because of the use of a regional threshold, there are very concentrated localised impacts of the forced sales, with up to 90% of stock estimated to be of high value in some local authorities. Because these authorities tend to own and manage the majority of social housing in their areas, this dramatically reduces lettings in their area – by over two thirds in some cases.

§ Some types of housing are more likely to be classed as high value. For example, bungalows are twice as likely to be classed as ‘high value’ and due to this, and their higher turnover, are likely to constitute something close to a third of all sales.

4.2.3 Whilst the research for JRF uses the most reasonable assumptions available, there is no certainty at present about how the scheme will operate. There are four important areas on which clarity is required:

1. The threshold at which Government believes stock is of ‘high value’. Is this a cash figure, a proportion of the overall stock, or some other measure? Will this be set separately for each bedroom size of stock? Will thresholds be reduced once stock is exhausted? If not, how will discounts be funded over the longer term?

2. If it is a proportion of the stock, at what geography will this be calculated (e.g. within a local authority, a region, or nationally)?

3. What exemptions will be made for stock which is difficult to replace, either due to its location (e.g. in rural areas) or other characteristics (e.g. bungalows, or homes which have been adapted for use by those with disabilities)?

4.3 Replacement of stock sold under Right to Buy and Local Authority High Value Provisions

4.3.1 The analysis conducted for JRF by Cambridge University shows the critical importance of the type of replacement stock built to replace sold properties. If this is ‘like for like’ – e.g. replacing social and affordable rented stock with like-for-like replacements, then it is possible that the policy can have a positive impact on levels of poverty within five years. This is because replacing stock sold under Right to Buy with a new rented unit creates a new letting which would not have existed, assuming that the new home owner would have remained in their property as a tenant instead. This assumes that like-for-like replacement is financially feasible.

4.3.2 However, if replacements are, as the Secretary of State has suggested, on the basis of ‘one for one’ – allowing socially rented stock to be replaced with shared ownership or more expensive rented products – then the scheme will have a negative impact on poverty. In the case of shared ownership, this is because only 3% of new social tenants are in a position to afford to access it; and in the case of market-linked ‘Affordable Rents’ because the rent is usually much higher than a traditional social rent.

4.3.3 A policy which allows low cost home ownership products to replace social rented housing will have stark consequences, with conservative estimates suggesting that 64,000 households will remain in the private rented sector, and a further 14,000 households will remain in homeless accommodation instead of social housing, with consequential increases in the housing benefit bill [10] .

4.4 Vacant High Value Local Authority Stock: Recommendations

§ Ideally, action in this area would be limited to Clause 69 only, placing a new Duty on local authorities to consider selling high-value stock when it becomes vacant

§ If compulsory levies are to proceed, then ‘High Value’ thresholds should be set out on the face of the Bill, in the same way as the maximum value (a ‘price cap’) for Starter Homes is at (Clause 2(8)). At the very least draft regulations should be published. These should set out what constitutes ‘high value’ stock, how this will be calculated, and what exemptions will be allowed.

§ The Committee should consider an amendment ensuring that where stock is sold to fund the levy, like-for-like replacement is achieved.

5 ‘Pay to Stay’ for social tenants

5.1 The measures

5.1.1. These clauses will enable the introduction of market (or near-market) rents for social housing tenants whose households are classed as ‘high income’. This measure has become known as ‘pay to stay’.

5.1.2 The Bill provides the Secretary of State with a power to issue regulations and guidance to ensure that social landlords charge mandatory rents for high income social tenants. The scope of these rents is very wide in scope – it could be equal to market rate, a percentage of market rate or determined by reference to other factors.

5.2 Threshold and taper

5.2.1 The threshold at which ‘high income’ is reached will be very important. The Summer Budget suggested that this will be a household income of £30,000 outside London, or £40,000 inside.

5.2.2. JRF’s research shows that this proposed threshold may be too blunt to accurately reflect the differing needs of households. Each year, we ask members of the public to help us define a Minimum Income Standard, showing how much money people need, so that they can buy things that members of the public think that everyone in the UK should be able to afford. The results of this exercise for 2015 [11] show that a couple with two children would need to earn at least £20,000 each to achieve a basic standard of living. This assumes they live in social housing. By contrast, a single person household would need to earn £17,100, living in basic private rented accommodation. As can be seen, there is a large difference in the income needed to achieve a minimum income standard, depending on household composition.

5.2.3 A blunt threshold at which households begin to pay a market rent would create a ‘cliff edge’ disincentive for households to increase the hours, or value, of their work. The increase in rent therefore needs to be carefully tapered, as is the case in the reduction of Universal Credit as earnings rise. The explanatory notes acknowledge that ‘vital elements’ of the policy will be set out via regulations. As is the case for the definition of ‘high value’ stock, more clarity is required.

5.3 Pay to Stay: Recommendations

§ The threshold for ‘pay-to-stay’ requires sensitive definition, and a taper for rent increases should be included to avoid work disincentives.

§ Consultation on Pay-to-Stay closes on 20th November 2015, and we would urge swift publication of draft regulations following this date.

6 Assessment of Gypsy and Traveller accommodation needs

6.1 The Measures

6.1.1 Clause 84 removes the requirement for local authorities to make an assessment of the accommodation needs of Gypsies and Travellers who reside in or resort to their area. It also removes the Secretary of State’s ability to issue guidance on the carrying out of these assessments and the subsequent preparation of strategies to meet their accommodation needs

6.1.2 The Bill removes the requirement established by the 2004 Housing Act for local authorities to make an assessment of the accommodation needs of Gypsies and Travellers who reside in or resort to their area. It also removes the Secretary of State’s ability to issue guidance on the carrying out of these assessments and the subsequent preparation of strategies to meet their accommodation needs.

6.2 Need for continued focused assessment of Gypsy and Traveller needs

6.2.1 The former Commission for Racial Equality concluded in 2006 that Gypsies and Irish Travellers are the most excluded groups in Britain today [12] . In the past, the accommodation needs of Gypsies and Travellers were not well evidenced, and as a result, provision was lacking. The Equality and Humans Rights Commission, in reviewing activity since the 2004 Act [13] , concluded that the overall rate of progress was slow, but that there were a number of positive aspects emerging, in terms of the types of sites being developed, and their permanence.

6.2.2 The Bill proposes that Gypsy and Traveller needs are instead considered as part of a wider review of district housing needs. This approach, including a generic assessment of need for ‘caravan sites’ may be superficially attractive, but given the small size of the Gypsy and Traveller community, such a strategic assessment is unlikely to pick up this community’s specific needs and provide statistically robust results for a small, heavily excluded group. Hence the need for a continued focussed assessment of this community’s particular needs.

6.3 Assessment of Gypsy and Traveller accommodation needs: Recommendations

§ The existing requirement for an assessment of local Gypsy and Traveller needs should be retained, given the small and highly excluded nature of this group.

7 Speeding up the planning system

7.1 Clause 99: Secretary of State powers on local plans

7.1.1 This clause gives the Secretary of State additional powers to direct a planning authority to prepare, revise or submit a local plan. Government have suggested these powers would be deployed where local authorities do not have a local plan in place by 2017, placing this in context of their commitment to delivering 1million new homes by 2020.

7.1.2 This focus on the delivery of homes is very welcome. JRF’s evidence shows that we cannot contain poverty at the existing high levels unless housing supply increases to at least 200,000 homes per annum [14] . This is the level of supply the Government is aiming for. However, to meet demand, we should be delivering a higher figure - an average of 240,000 – 245,000 homes per annum [15] .

7.1.3 Crucially, though, these homes must comprise a mix of tenures. The most credible recent estimates of demand place the need for social housing at 78,000 homes per annum [16] . Social housing must continue to represent the same share of the overall housing market as it has in the past, if we are to avoid rising poverty. We are falling far short of this at present, as the chart below shows. JRF has developed a new development framework for affordable housing – Living Rents – which can meet this need, but this requires additional capital investment [17] .

7.2 Clause 102: Permission in principle for development

7.2.1 This clause enables the granting of permission in principle for land in England. Land within these zones would then only require technical www.jrf.org.uk 13 details consent to receive full planning permission. It introduces the principles of ‘zoning’ to England.

7.2.2 Research for JRF has shown that zoning is very common practice around the world, though approaches vary in the degree of discretion available to developers once the zone has been fixed [18] . It is not a ‘silver bullet’ for land and housing shortages, and our research identified land shortages in countries even where zoning was commonplace.

7.2.3 Government has stated that - at least initially – powers to grant permission in principle will be limited to sites suitable for housing use. If this increases housing delivery, it will be welcome. It should be recognised that this marks a big change to the operation of planning in England.

7.2.4 Whilst the Government seems to intend only selective implementation of this model at present, it will inevitably set precedents should the approach be rolled out more widely in future. More detail is needed on how this system will operate in practice, including how issues of design and sustainability will be considered, and the approach to planning obligations on such sites.

7.3 Speeding up the planning system: Recommendations

§ The Government’s determination to increase housing supply by ensuring local plans are in place should be welcomed.

§ The tenure of the homes provided requires focus, with 78,000 affordable homes per annum required to meet need.

§ More detail is required on how zoning will operate in practice. It is particularly important that a clear approach is in place with regard to Planning Obligations, which deliver a significant proportion of affordable housing.

8 Conclusion

8 .1 The Housing and Planning Bill’s overall aim of increasing the supply of homes is very welcome. However, the Bill lacks detail in a number of important aspects, and in a number of key points adopts approaches which could reduce the supply of low cost rented homes. We need a strategy which will increase supply of all tenures, rather than substituting one type of homes for another.

November 2015


[1] For a round-up of findings from this programme, see Birch, J. (2015) Housing and Poverty: A Round-Up. York: JRF. Available at: http://www.jrf.org.uk/publications/housing-and-poverty

[2] Clarke, A. et al (2015, forthcoming) Understanding the likely poverty impacts of the extension of Right to Buy to housing association tenants. York: JRF.

[3] Brownill , S. et al (2015) Rethinking Planning Obligations : Balancing Numbers and affordability. York: JRF. Available at: https://www.jrf.org.uk/report/rethinking-planning-obligations-balancing-housing-numbers-and-affordability

[4] Stephens, M. et al (2014) What Will The Housing Market Look Like in 2040? York: JRF. Available at http://www.jrf.org.uk/publications/what-will-housing-market-look-2040

[5] MacInnes , T. et al (2014) Monitoring Poverty and Social Exclusion 2014. York: JRF.

[6] Wilcox, S., Perry, J. and Williams, P. (2015) UK Housing Review. Coventry: CIH. Available at: http://www.york.ac.uk/res/ukhr/

[7] MacInnes , T. et al (2014) Monitoring Poverty and Social Exclusion 2014. York: JRF.

[8] Clapham, D. et al (2012) Housing Options And Solutions For Young People In 2020. York: JRF. Available at: https://www.jrf.org.uk/report/housing-options-and-solutions-young-people-2020

[9] Clarke, A. et al (2015, forthcoming) Understanding the likely poverty impacts of the extension of Right to Buy to housing association tenants. York: JRF.

[10] Clarke, A. et al (2015, forthcoming) Understanding the likely poverty impacts of the extension of Right to Buy to housing association tenants. York: JRF.

[11] Hirsch, D. (2015) A Minimum Income Standard for the UK in 2015. York: JRF. Available at: https://www.jrf.org.uk/report/minimum-income-standard-uk-2015

[12] Commission for Racial Equality (CRE) (2006). Common ground: equality, good race relations and sites for Gypsies and Irish Travellers. London: CRE

[13] Brown, P., Henning, S. and Niner , P. (2011) Assessing local authorities’ progress in meeting the accommodation needs of Gypsy and Traveller communities in England and Wales: 2010 update; Executive Summary. Manchester: Equality and Human Rights Commission. Available at: http://www.equalityhumanrights.com/sites/default/files/documents/research/gt_research_report_68_exec_summary_engli sh.pdf

[14] Stephens, M. et al (2014) What Will The Housing Market Look Like in 2040? York: JRF. Available at http://www.jrf.org.uk/publications/what-will-housing-market-look-2040

[15] Holmans , A. (2013) New Estimates of Housing Demand and Need in England, 2011 to 2031. London: TCPA.

[16] Holmans , A. (2013) New Estimates of Housing Demand and Need in England, 2011 to 2031. London: TCPA.

[17] Lupton, M. & Collins, H. (2015) Living Rents: A New Development Framework for Affordable Housing. London: Savills. Available at: http://www.savills.co.uk/services/housing-and-public-sector/housing-consultancy/living-rents-final-report-june-2015.pdf

[18] Monk, S., Whitehead, C. , Burgess , G., and Tang, C. (2013) International review of land supply and planning systems. York: JRF. Available at https://www.jrf.org.uk/report/international-review-land-supply-and-planning-systems



Prepared 10th November 2015