Memorandum by The Housing Foundation (HOU
*ab Whether the funds in the Comprehensive
Spending Review will achieve the Government's target of a decent
home for everyone by 2010:
Clearly the Government's substantial funding
package must have some effect, but there is substantial confusion
over who and where the funding will apply and of course the conditions
which will attach to its allocation.
Affordable housing for sale
PPG3 has clearly set out the guidelines and
it is to be hoped that those conditions will be adhered to with
some slight modifications. Of paramount importance is that homes
provided under whatever initiative are affordable in perpetuity.
Current qualification criteria and the rigid interpretation of
the cascade effect of those who qualify must be amended, as the
present guidelines do make the availability of mortgages very
tenuous, being seen by most major lenders as far too restrictive,
which would indicate that re-sales or possible repossessions would
be very difficult to achieve.
Building Societies are sympathetic to the tenets
of affordable housing, but quite understandably they are very
loathe to lend where they see a real and quite unacceptable risk
in the longer term of achieving sales in a reasonable period.
The Housing Foundation has been working with
most District Councils in the South West and our 999-year leases,
which protect affordability in the long-term, in perpetuity, are
seen as an ideal model. Homes are available without any form of
public subsidy at no more than 65 per cent of their genuine market
value, and always at least 30 per cent cheaper than renting in
the private sector.
If we can provide quality homes without access
to Government subsidy, we are bound to ask the reason for any
more public subsidy other than for homes for rent, which will
always be necessary to cater for affordable rents at the bottom
end of the need. To provide Government funding for affordable
housing to sell on a shared equity basis is unnecessary and probably
ineffective. Homes for key workers in its widest interpretation
are perfectly possible within the guidelines of PPG3 without subsidy.
What is, however needed is clear guidance to
District Councils on the proactive stance that they should adopt
in encouraging exception policy permissions where local need is
clearly demonstrated. Sadly, this has not been our experience,
although it is fair to say that the enormous publicity of the
serious need for affordable housing for key workers to sustain
local communities has certainly focused the minds of some Councils
who hitherto had been far from supportive.
There must be a very serious doubt that the
simple expediency of providing money will achieve a decent home
for everyone by 2010, and certainly there should be very serious
discussion between Central Government and those of us on the ground
who are fighting often lonely battles to bring the ideals to fruition.
*ab 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 balance between social housing and options
for home ownership is absolutely critical.
Social housing grant to Housing Associations
for the provision of rented accommodation is obviously grant dependent
and an increase will undoubtedly provide more rented housing.
I argue, however that a large proportion of local people seeking
housing for rent are precisely the same people who seek to own
their own homes if only such homes can be provided which are affordable.
Local Councils define affordability as the ability
to purchase a home at a price which represents three times the
average income of a family. In reality this means, in the West
Country, providing new quality homes at no more than £60-£65,000.
We can achieve this by working within the guidelines of PPG3 on
exception policy sites which can be acquired at about £50-£70,000
per acre, giving a plot value of about £5,000. Clearly, at
such land values, affordability within the criteria is perfectly
possible, but it requires more Companies such as the Housing Foundation
to be prepared to operate at minimal profit levels and, as importantly,
to ensure that rent payable on the retained equity does not take
the monthly repayments above the affordable level.
Many shared equity schemes charge a disproportionate
rent linked to market rents and this is unjustifiable. The Housing
Foundation charge a rent equal to just 2.5 per cent of the value
of the retained equity and this is pegged at a maximum of £20
per week. All of this is clearly achievable and Government should,
in my opinion, recognise more publicly the role that well-intentioned
private sector Companies can achieve.
The practise to assume that Section 106 provisions
on development sites can only be achieved by Housing Associations
providing rented homes must be challenged, as clearly the provision
of affordable homes to buy is the preference of most young families
who otherwise will have no alternative but to seek a home to rent.
*ab The role of planning obligations in providing
I have touched on the role of Planning Authorities,
who frequently do not have sufficient dialogue with their Housing
Departments, who do seem to support our contentions in the main,
but we see large numbers of Section 106 agreements which do little
to provide the realistic provision of affordability and frequently
give developers the opportunity to buy their way out of the obligations.
I do not seek to suggest that there are any
simple solutions to the problems, but legislation through PPG3
exists and is far too often resisted by Planners. It probably
takes us in excess of two years to achieve planning on exception
policy sites due to the resistance of Planners. Reliance on brown
field sites in rural areas is a non-starter, they do not exist
other than the odd site for perhaps two or three homes. I do not
advocate the wholesale release of agricultural land, but one cannot
escape the fact that it is the shortage of development land which
causes the escalation of land values and hence high property prices
and the release of land as exception sites must be more widely
As I have already stated, more use could be
made of Section 106 agreements on conventional development sites
to achieve a mix of tenure by permitting affordable housing for
sale as well as social housing for rent. The current practice
of Local Authorities devising their own Section 106 agreements
should be discouraged. House builders who currently attempt to
resist Section 106 agreements would clearly be more amenable to
an agreement of which they were aware before committing themselves
to land purchase and then wasting their own and Council time endeavouring
to negotiate an acceptable agreement.
I have recently attended two Planning Inquiries
into affordable housing and the Inspector in both cases criticised
the Councils for their lack of any realistic policy on this subject,
stating that a non-policy of waiting for some organisation to
suggest a scheme is very far from a policy. I believe that the
current climate will eventually bring about an increase in interest
in the subject of housing which is affordable and maybe it will
no longer just be an irritant, which is how it is perceived by
I hope I will be forgiven for suggesting that
Central Government could make massive strides if people like ourselves
could have access to the policy makers, to at least present the
facts as we experience them day to day.
*ab The effectiveness of the Housing Market
Renewal Fund in tackling housing needs in areas with low demand:
As we only operate in areas where there is a
chronic shortage of housing, I am not qualified to make any observations
on your question other than to confess to a confusion as to why
the Fund needs to be used in such areas, other than perhaps to
clear the many unwanted terraced industrial based homes to replace
them with the sort of property for which there may be a reasonable
demand. We did, for example, purchase large numbers of boarded
up empty properties, refurbish them and leased them back to a
registered social landlord, but this was also an area of high
demand, in Plymouth.
*ab How the quality of new affordable housing
can be ensured and the poor design of previous housebuilding programmes
Surely the quality of new housing is a function
of planning and building control and I certainly would welcome
realistic controls. We do not see the answer to affordability
in reduced standards and it is interesting that the guidelines
in PPG3, indicating 17 homes to the acre, does little to aid good
design and good living environment.