APSE Direct News | The Housing and Planning Bill – what’s the problem?

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 March/April 2016

The Housing and Planning Bill – what’s the problem?

Kate Henderson, Chief Executive of the Town and Country Planning Association, and Paul O’Brien, Chief Executive of APSE, comment on the the key issues in the controversial Housing and Planning Bill.

Currently, the Government’s new Housing and Planning Bill 2015-16 is in the second reading stage in the House of Lords. The Bill has been seen as hugely problematic by many, including APSE and the TCPA, because it is still unclear how the actions described in it will help relieve the housing crisis facing the UK, despite the Government claiming their plans will kick-start a ‘national crusade to get 1m homes built by 2020’ and transform ‘generation rent into generation buy’.

Keen to gauge how others working in local government felt about the proposed changes, APSE teamed up with the TCPA to create and distribute a survey to local authorities across the country. This generated some very interesting, and some rather concerning, results. However, before we look at those in depth, it would help to first contextualise the Housing Bill and look and the problems it raises.

The Housing and Planning Bill 2015-16 aims to speed up the current planning permission process, working on the premise that less bureaucracy means more housing can be delivered quickly. This, the Government expects, will encourage people to self/custom build their housing, as well as giving developers some extra opportunities to build more commercial housing. This is welcome news as it gives authorities, private firms and the general public more freedom to build the houses they require. However, many believe this has come too late; though the permission is there, we will struggle to meet the country’s demand of 250,00 homes each year due to a shortage of workers and supplies.

Alongside this, the Government intend to build more Starter Homes for first-time buyers, namely people under the age of 40 who have not previously owned a home. Offering 200,000 homes by 2020, the Government has said there must be a discount of at least 20% to the buyer. These homes, which should be targeting teachers, police officers, nurses and other professional roles, will have a discounted price of no more than £250k outside London and £450k in London, making these properties unaffordable for most of the target workers. These are the kind of people that starter homes should be accommodating, yet they are the ones who will be unable to afford them.

In terms of social housing, the Bill details a Pay to Stay scheme, in which social tenants with incomes of over £30k – over £40k in London – will have to pay market rent on their properties rather than their current social rent. For local authorities, the money this generates must be given to the Government, whilst Housing Associations are able to keep the extra rent money. Moreover, it is considered unviable by many councils who see this as adding to the ongoing problems of a poor private rented market – so forcing people on affordability terms from secure council tenancies into the private rented sector – will do little to alleviate local problems.

As well as this, the Right to Buy scheme is being extended to housing association tenants. This move is deeply worrying as it will lead to a decrease in the amount of social homes available for those in most need. Despite allowing these properties to be sold off, the Government have no plans to give local authorities the funds needed to build more and replace them. This is a major concern for the already-sahky future of social housing.

So what did the APSE and TCPA survey tell us? Well the headline news is that others share our concerns.

We found that 93% of councils do not think that Starter Homes will address affordable housing need.

Moreover, almost 80% of local councils do not think that Starter Homes should be classified as affordable housing, and only 7% of councils think they will address the need for affordable housing in their local authority areas.

We also found that over two thirds of respondents anticipate that they will be building less social and affordable housing as a result of the Government’s plans to reduce social rents by 1% a year for the next 4 years.

This is against a backdrop of 96% of councils describing their need for affordable housing as ‘ severe or moderate’.

Moreover, nine out of 10  councils are concerned that the extension of the Right to Buy to housing association tenants will mean that there will be well socially-rented homes available.

Most starkly for the Government, 53 of respondents are from Conservative-controlled councils – this clearly shows a huge difference of opinion between Conservative Councils, charged with delivering more homes at a local level, and central Government policy.

So with the House of Lords scrutinising key measures in the Housing and Planning Bill, and pressure to deliver the Bill, is there room for concessions?

The answer has to be yes – there is a growing cross-party consensus for a series of amendments to be tabled which may yet ‘gut’ the worst excesses within the Bill.

APSE and the TCPA hopes that with cross-party working, more sensible approaches can be taken to delivering the homes our communities desperately need. It is time now for the Government to listen to local councils; they are best placed to really know and appreciate the impact of housing policy within their communities.

More details can be found at www.apse.org.uk and www.tcpa.org.uk.

LGA First | Making sense of housing policy

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No. 597 | March 2016

Features | Making sense of housing policy

Cllr Peter Box

Councils are keen to build more homes and the LGA is working hard to ensure proposed housing reforms don’t make that job more difficult.

Councils share the Government’s ambition to increase house building and enable home ownership.

From the outset, the LGA has been working privately and publicly to try to mitigate any of the potential negative impacts and unintended consequences of Government housing reforms on behalf of councils and local communities, But it is clear that the Housing and Planning Bill has wide-ranging implications for local communities.

Measures within the Bill – currently being debated in the Lords – risk combining to reduce the number of existing council homes, which local authorities will be forced to sell and then struggle to replace.

This could lead to an increase in the Housing Benefit bill as more people are forced to move into the more expensive private rented sector. This will do nothing to help councils reduce homelessness and the use of temporary accommodation.

The LGA has opposed plans to force councils to sell off homes to fund the Right to Buy extension to social housing, and a mandatory Pay to Stay policy [see below] and the provision of Starter Homes at the expense of affordable homes to rent. Meanwhile, we have been working at real estate services provider, Savills to understand the impact of these housing policies, as part of our effort to make the case for additional flexibilities to Government, Parliament and partners.

Plans for Starter Homes at discounted prices, for example, will help support home ownership in some areas but will nbe out of reach for all people in need of affordable housing in 220 council areas, according to Savills. We have argued that councils must have the flexibilities to shape the number, location, types and quality of Starter Homes to ensure that they meet local need, alongside other affordable homes for rent.

The LGA also strongly opposes the proposal to require councils to charge mandatory market-based rents to higher income tenants, and to take a sum of money from councils based on a national estimate of the additional income from higher rents. Many social housing tenants across the country will be unable to afford market rents or take up the offer to by their council house under this policy.

This Pay to Stay policy needs to be voluntary for councils – as it will be for housing associations to protect social housing tenants, and avoid hard-working families being penalised, people being disincentivised to work and earn more, and key workers, such as nurses, teachers or social workers, having to move out of their local area. Councils must also retain any additional income generated from rents to reinvest in new and existing homes.

The LGA insists the extension of Right to Buy to housing association tenants must not be funded by forcing councils to sell off homes. As a minimum, the LGA forecasts councils would be forced to sell 22,000 ‘high value’ homes in order to fund this extension.

This number could be much higher depending on how the Government chooses to define ‘high value’. Councils should always be free to manage their assets to meet the needs of local communities and must retain 100% of all receipts to reinvest in new and existing housing.

The LGA will continue to firmly make the case – in both private and public – regarding the importance of councils playing a  lead role in house building, reducing homelessness and benefits, and enabling home ownership.

Cllr Peter Box is Chair of the LGA’s Environment, Economy, Housing and Transport Board.

Analysis: Impact of the Housing and Planning Bill

Savills and the LGA project that 66,000 council homes will be sold to tenants under the existing Right to Buy scheme by 2020.

Local authorities could then be forced to sell a further 22,000 ‘high value’ homes by the end of the decade to fund plans to extend the scheme to housing association tenants. This could vary depending on how the Government defines ‘high value’ for different areas.

Required rent reductions, of 1% a year for the next 4 years, take £2.2bn from council housing budgets by 2020 – making building replacements extremely difficult.

There is a risk that of the 88,000 homes sold up to 2020, 80,000 will not be replaced. This will add £210m to the Housing Benefit bill.

Forcing councils to sell off homes to fund the extension of Right to Buy to housing association tenants could cost councils £6bn by 2020, according to Savills. A total of 5,500 homes would be sold each year should ‘high value’ be defined as the top third value of the regional market.

Discounted starter homes will be out of reach for all people in need of affordable housing – defined as those who would have to spend 30% of their household income to buy or rent a home – in 220 council areas [67%], and for more than 90% of people in a further 80 [25%] council areas.

Should the Pay to Stay policy be mandatory for all social tenants, around 50% of tenants deemed high income in the South East, East of England and London would not be able to pay market rents or take up Right to Buy, and would need to move out of the area to find a similar property.

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The areas of the country that need affordable housing that can afford a Starter Home

FURTHER READING:
LGA Media Release Starter homes will be out of reach for majority of families in need of affordable homes in England  [17 February 2016]