Memorandum by Housing Corporation (AFH
The Housing Corporation (the Corporation) welcomes
the opportunity to give evidence to the Committee's inquiry into
Affordable Housing. Background to the Housing Corporation and
Registered Social Landlordscommonly known as housing associationsis
provided in Annex 1.
2. THE CORPORATION'S
The Corporation distributes funding to housing
associations via its Approved Development Programme (ADP). Over
the three years of Spending Review 2000 the ADP will rise from
£770 million in 2001-02 to over £1.2 billion in 2003-04.
Spending Review 2002, which should be announced in July 2002,
will set the level of ADP resources for 2003-04 to 2005-06.
The Corporation has three key investment objectives:
(i) providing new, affordable housing in
areas of economic and demographic growth;
(ii) contributing to regeneration and neighbourhood
(iii) meeting the needs of a wide range of
(i) Level of Provision
The Corporation's target for the period covered
by Spending Review 2000 (2001-02 to 2003-04) is to complete over
65,000 homes; last year we completed 22,875. The housing is provided
across the ten regional investment areas in England. Table 1 at
Annex 2 shows the number of homes completed each year by housing
associations since 1996-97. Table 2 shows the number of homes
completed in each region last year. Table 3 shows the number of
homes provided by housing association using their own resources.
The ADP funds both homes for rent and low cost
home ownership. In terms of resources the rent/ownership balance
is about 89 per cent/11 per cent of the ADP. In terms of numbers
about 18 per cent of the homes produced are for low cost home
ownership, given their lower grant rates.
The rents in the homes for rent are subject
to the Government's rent restructuring guidelines published last
year. Housing associations were asked to produce rent plans by
April 2002 which set out how they will move towards achieving
restructured rents by March 2012.
Broadly there are two types of low cost home
ownership funded via the ADP: Homebuy where the recipient is given
a grant to help them purchase an existing property (and the grant
must be repaid when they sell the property); and shared ownership
where the recipient buys part of a property provided by the housing
association and pays rent on the part they do not own.
The Corporation has recently carried out a review
of low cost home ownership and is currently revising its low cost
home ownership policy in the light of increasing demand for low
cost home ownership and for affordable housing for key workers.
We are also considering options for funding homes for rent at
levels below market rent but above social rents. These would be
targeted at key workers.
Spending Review 2001 also provided funding for
a Starter Home Initiative which provides low cost home ownership
for key workers, primarily nurses, teachers and police officers.
This programme is providing £250 million towards helping
these key workers into home ownership and the Corporation is funding
the housing association element of this Initiative. It is intended
that around 10,000 homes will be provided.
Within the Corporation's overall target for
the ADP, there is a specific rural target aimed at villages with
a population under 3000. This target is set to rise from 800 homes
approved in rural villages in 2000-01 to 1,600 approved in 2003-04.
We are also working with the Countryside Agency to explore the
role of market towns in our strategy for providing homes for rural
In addition Spending Review 2000 provided resources
for a Safer Communities Supported Housing Fund. Under this programme
housing associations receive funding to provide both new homes
and revenue support for particularly vulnerable groups: people
fleeing domestic violence, ex-offenders, people with drug or alcohol
problems, young people at risk and schemes for teenage mothers.
Around 3,000 new units will be provided under this programme.
In addition to the Corporation programmes, local
authorities also provide social housing grant to housing associations;
about £400 million annually providing around 8,000 homes
for rent and sale.
(ii) Distribution of the ADP
Until recently the ADP was allocated at local
authority level on the basis of an indicator, the Housing Needs
Index (HNI). Following a consultation exercise in 1999 we started
to move away from using the HNI at local authority level in 2000-2001
and base allocations on regional and subregional priorities. These
regional and subregional priorities are derived as follows.
Every year, generally, in each of the regions,
a Regional Housing Statement is produced by the Government Office
and the Housing Corporation. Local and regional stakeholders are
closely involved in the development of these statements, mainly
through housing forums or officer working groups set up in each
area. Where they exist, regional assemblies also contribute to
the development of the statements.
Inevitably, the pattern and type of consultation
vary depending on local and regional circumstances and organisational
structures. In particular, however, closer contact has been sought
with the Regional Development Agencies to ensure that the regional
housing statements are compatible with, and facilitate, the delivery
of their economic strategies. Links have also been developed with
other bodies, such as health authorities, regional planning conferences,
the Chartered Institute of Housing and the NHF.
The main purpose of RHSs is to highlight key
housing issues in each region and to help to identify regional
priorities. These statements are evolving documents that provide
valuable information, helping local authorities and housing associations
to develop housing strategies. It is intended that, over the next
few years, these statements will become more strategic documents
that only need to be revised every three to five years.
In addition the Corporation's offices issue
Regional Investment Strategies each year containing priorities
for the ADP derived from the RHSs. The priorities vary depending
on the region. Thus, for example, in the South East key worker
accommodation is a growing priority and in the East Midlands one
of the priorities is tackling the regeneration of former coalfield
It is the Corporation's intention to base all
allocations on regional and subregional priorities by 2003-04.
This has implications for where we provide funding. For example,
in the South, funding might be concentrated in particular growth
areas such as Thames Gateway, to provide some of the new homes
needed for London.
The HNI is still used to allocate ADP resources
at regional level to the 10 regions. However the former Housing
Minister has asked the Corporation to work with his officials
to develop a more forward looking and responsive mechanism for
the distribution of resources between regions. ODPM will be consulting
on options shortly.
In some areas, particularly London and the South,
social housing grant contributes towards schemes which are part
of Section 106 planning agreements. The social housing grant is
provided either by the Corporation via the ADP or by the local
authority to ensure that provision of social housing on the site
is viable and/or to increase the level of provision.
There is a considerable variation in the provision
of affordable housing through the planning system. The Government
has recently published proposals aimed at improving the operation
of the planning system. The Corporation considers that it is very
important that the planning system operates efficiently to prevent
delays in providing housing. And generally, we consider that it
is preferable for housing provided via section 106 agreements
to be provided on site thus contributing to mixed developments
and communities. However we recognise that this is not always
practicable; and thus in some cases section 106 funding is better
used to provide housing on another site.
The Corporation defines as sustainable homes
that people want to and are able to live in now and in the future.
Housing Associations are required to certify that the homes that
they are bidding for will be sustainable; a sustainability toolkit
produced by the Corporation provides guidance on assessing sustainability.
Mixed communities contribute to sustainability,
which is one of the reasons why we would generally prefer to see
housing provided through section 106 agreements provided on the
site of the development. Low cost home ownership can also be used
to ensure mixed tenure and mixed income communities. The Corporation
monitors the extent of mixed tenure in all ADP funded schemes
of more than 25 units, and encourages inclusion of full or shared
ownership where appropriate.
All the schemes funded by social housing grant
must meet our scheme development standards. These standards, which
include essential and recommended items, aim to ensure that homes
provided by housing associations are of a high quality.
Since 1996, the Corporation and the DTLR have
been developing a system of Housing Quality Indicators (HQIs)
which involve an assessment of the quality of key features of
a housing project in three main categories: location, design and
performance. HQIs have to be used on all new developments receiving
Social Housing Grant from April 2001. Housing associations must
submit HQI data to a national database and within two years, we
believe we will have enough HQI data to prepare quality profiles
of the full range of housing produced. At this point, the quality
aspects of schemes could be determined by prescribed ranges of
HQI, rather than detailed quality criteria within SDS. The HQI
system is expected to become an important tool in measurement,
benchmarking, assessment and continuous improvement in value for
The Corporation is working with the Government
to help meet the target of bringing all social housing to a decent
standard by 2010. The Corporation has issued a circular to housing
associations about the decent home target and is working with
the National Housing Federation to help housing associations achieve
the target. Each year around £50 million of the ADP is used
to fund works to existing housing association stock. The amount
available is limited by other targets that the Minister has set
for the ADP. However we are considering how best to use this funding
to contribute to meeting the decent home target.
The Corporation would like to see greater use
of more innovative design and construction. One of the Corporation's
initiatives is the Kickstart programme which aims to promote the
use of offsite manufacture by housing associations to provide
homes. To date around £56 million has been allocated under
this scheme as part of the ADP and we aim to allocate £80
million over the period from 2001-02 to 2004-05. Given labour
shortages in the construction industry and the potential reduction
in time of development, this type of development needs to be encouraged.
The Corporation is also funding a number of
projects concerning design issues which are aimed at improving
the quality of housing provided by housing associations. We work
closely with CABE, the Commission for Architecture and the Built
Environment on these projects. We also fund projects concerned
with wider sustainability issues.
In line with the Government's policy, the Housing
Corporation aims to develop as much as possible on brownfield
sites. Around 60 per cent of new development takes place on brownfield
sites and a significant proportion of the remainder of our ADP
involves regeneration of existing properties. Thus only about
10 to 15 per cent of the development funded by the Housing Corporation
is on green field sites.