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Interim Housing Policy

Interim Housing PolicyThere are changes afoot in the world of housing.

We all know about sub-prime lending and the credit crunch, and the depreciation in house prices. But there are changes taking place in housing for Government and Councils too, especially in the area of 'social housing' and we think our readers will want to know what's going on, because the changes are going to affect Fylde.

Anyone who thinks politics is not important to their lives would do well to remember the Thatcherite plan to abandon the concept of council housing, and the Blair/Brown philosophy of reintroducing it under a different name using a new form of taxation to provide it.

These moves have made, and will continue to produce, seismic shifts in what happens locally - both to social housing and to the price of new houses, as we shall see.

Mostly, New labour's changes have been concerned with housing for people who are thought not to be able to afford what is now called 'market value' housing.

Using a fairly crude average of wages and housing costs, and a logic that appears to suggest that anyone should be able to afford to live wherever they like, an attempt is being made to use the planning system to tax developers in order to resolve what Government sees as a problem with social housing.

We believe it is an attempt doomed to failure, both for Fylde BC and for the people Government is purporting to 'help'.

We introduced this topic in 'Affordable Housing' back in 2007 - when Fylde was consulting on its housing policy. Our article set out the background at the time.

But things have now moved on., and to understand what's happening, and where they are likely to go in the future, we need to look more closely how we got here.

In the old days... Developers built houses for sale. Other people acted as landlords and rented-out privately owned houses they had bought.

Councils built council houses for rent by poorer people who could not afford a mortgage or 'private' rented property.

Then along came Mrs Thatcher. Under her leadership, Conservatives wanted to do away with what they saw as sink estates of rented council houses, and introduced the right for tenants to buy 'council houses' at up to 75% discount off the market value.

They also starved councils of refurbishment and repair funding for council houses in order to persuade them to undertake 'Large Scale Voluntary Transfer' where council houses were transferred to a new body called a Housing Association that was separate from the Council and not democratically elected. These Housing Associations were however, going to be given Government funding for renewals.

In essence this was a form of 'privatisation' of council housing.

In Fylde, 'New Fylde Housing' was formed after a sort of 'management buy out' of the former housing department. A cluster of former officers formed a company and paid FBC about £2 million (around one fifth of the vacant possession value of the council houses) and used them as security on a commercial loan to fund the purchase. There was a bullish atmosphere and the prospect of bigger salaries and company cars and expenses and so on were being spoken of at the time.

New Fylde Housing became the landlord and operator of all the (former) council houses whilst Fylde Council itself retained responsibility for granting planning permissions for 'private' developments, and for housing the homeless.

Then New Labour took power. This made life financially much tougher for the fledgling Housing Associations who, freed from the encumbrances of democratic accountability, had thought they were about to become profitable businesses for their new owners.

The prospect of profitable operations evaporated almost overnight when New Labour changed the laws governing Housing Associations, and a QUANGO called the Housing Corporation (*See UPDATE at end) was established to regulate them . Rents (which had been expected to increase substantially outside of democratic control) were frozen, and expansionist plans were put on hold.

An uneasy truce prevailed.

Government has subsequently embarked on a policy to provide massive housing development throughout the UK, and especially in the social rented sector. (In effect, it has started to unravel the privatisation policies of Thatcher)

Although housing policy as a whole is at least partially driven by party dogma (by whichever party is in government), the underlying push in the UK was really driven by:

  • a slow burning but vigorous surge in marriage breakdown across the UK, which has doubled the single accommodation required as one household becomes two, and as separation and divorce spread more widely; and
  • the need to house growing numbers of inward migrants following accession of eastern European countries to the EU and New Labour's enthusiastic support for the mobility of cheaper labour that helps to control inflationary wage pressures.

According to Government criteria at the turn of the millennium, Fylde's housing policy was 'failing' because it was not paying enough attention to social rented housing.

We believe this was because the Council of the day was actually reflecting resident's views and not those of the Government. (A relatively affluent, predominantly owner occupied electorate is not typically that bothered about the need for social housing), but for Government, housing the disadvantaged was a central policy aim.

In Fylde, a Conservative administration replaced the former 'no overall control' coalition in 2003, and under the social engineering aims of a newish Chief Executive (since departed) they made 'housing' the number one priority of the Council and started to "turn things around" (to use the Commissar's rhetoric).

We have never quite been able to understand quite why a Conservative administration should embrace the New Labour agenda with such enthusiasm, but they did.

Spin terms like 'Affordable Housing' (which is actually doublespeak for socially subsidised housing) began to appear on agendas, as did the intention to create "a more balanced population" in Fylde.

We have previously criticised this blatant attempt at social engineering.

The Fordham 'Housing Need Survey' Report of 2002 sparked off the changes. It showed that Fylde had:

  • 80% Owner occupied houses
  • 7% Social Rented Houses
  • 13% Private Rented

At 80%, our owner occupied property was much higher than either the north-west or national average (which was 69%) and our social rented provision at 7%was much lower than the 20% or so it was elsewhere.

This data was used to drive the programme forward to 'rebalance' Fylde, and thus get a better mark in the Government's tick-box.

Using averaged national and local data about wage rates, property prices and the proportion of income that 'ought' to be spent on housing costs, in spring 2003; Fordham calculated that 345 new affordable dwellings per year would be needed in Fylde.

They uprated this from the census data of 2004 as it became available, and finally concluded that Fylde had a 'need' for 420 extra affordable dwellings per year

Their report also showed:

  • The highest need was in Lytham/St Anne's.
  • Low-cost market housing (i.e. cheaper, smaller houses) could not meet any housing need (assuming dwellings are offered a 25% discount on the market price).
  • Only 3% of people wanted shared ownership.
  • The overriding need was for social rented housing (found to be 97% of identified need).
  • There was also a need for dwellings catering for people with special needs (e.g. disabilities and the frail elderly).

There is, (as you might expect dear reader), a deal of contention about these figures. (Not least from counterbalance who is firmly of the view they were produced to brainwash unsuspecting councillors and to justify implementing the Government's agenda rather than that of the electorate)

A brilliant analysis and critique of this report was done by a group at Warton called 'CROWD'. They took the data apart and showed the flaws in it. Fordham subsequently admitted the data were only for benchmarking purposes, but the Chief Executive of the day, desperate to keep the tick in the box,  determined to use them as a statement of housing need. (We believe they are actually a statement of desire, which is not the same thing).

At a subsequent public enquiry, Fordham reported that the practical solution was actually trivial, only between one and ten percent of that figure, i.e. only a maximum of 42 new 'Affordable (subsidised) Houses' were actually needed each year.

But then things became even more complicated because in order to focus effort on the regeneration of run down areas of Liverpool, Manchester and East Lancashire, the Government introduced a housing moratorium in wealthier places like Fylde.

The aim here was to make developers focus their activities in deprived areas, and to do so, Government instructed FBC (and many other councils), to put a block on all new developments (except for projects already in the pipeline).

Councillors should have spotted something was wrong in Fylde when the Joint Lancashire Structure Plan (2001 to 2016) showed an annual need for just 155 dwellings of all types in Fylde Borough, and their housing department was saying they needed 420 'Affordable Houses' a year.

This was plainly preposterous..

Echoing this sentiment to some extent, but trying to rationalise it, Fylde's local plan said: "The consequences of not providing fully for this magnitude of new building are likely to include

  • suppression of some new household formation,
  • some households having to pay more than 30% of net disposable income on housing costs,
  • some households moving into, or remaining within the private rented sector with the support of Housing Benefit,
  • some households moving outside the borough to meet their housing needs, and
  • some of the predicted in-migrant households unable to afford market housing choosing not to come to live within Fylde.

Nevertheless, the policies of the plan need to recognise the existence of a significant scale of need for affordable housing found by the 2002 Housing Needs Survey".

You can see in this phrasing the distaste with which the private rented sector is being viewed. In fact the aim seems at least in part to use state subsidy to drive down market value housing rents (Housing Benefit payments only cover about 75% of the typical current rents charged by landlords).

When will they learn? You simply can't buck the market like this.

No wonder there is a huge waiting list in Fylde for subsidised housing!

Even if you are coping well in rented housing already, almost everyone will put their name down if there is a chance of getting it for maybe 25% less rent than they're paying now!

The quote from Fylde's local plan also highlights the false logic that assumes anyone should be able to move to, or to live within, anywhere they like. (counterbalance is off to Henley-on-Thames then).

There will always be places that are better and worse to live than others. But that's no reason to try and equalise them into a one size fits all place. Fylde is like it is, BECAUSE of the high cost of housing. It mostly attracts higher earners and those with substantial capital. It is not the job of the Council to change that and make it less attractive. Its role is to respond to the needs of its electorate, not to re-balance the population by engineering a different electorate.

That process has another name - gerrymandering.

But driven from the very top, no one seriously challenged the plan to rebalance Fylde's population through its housing market, and the former Chief Executive adopted the 420 new Affordable Houses as the baseline.

He had the figures incorporated into the Local Plan, which made them even more 'respectable'

To redress the 'problems' created by Fylde's 'imbalanced' population and 'poor' housing profile, it was decided that in future, what might otherwise be called private housing developments would only be allowed if they comprised:

  • Not more than 40% 'normal' market value housing, together with
  • At least 58% Social Rented Housing, and
  • 2% shared equity housing.

In essence, as Cllr Trevor Fiddler has so clearly pointed out, this is just a new form of taxation to fund the development of subsidised housing.

And if you reflect on it, the plan is absurd...

Think of Cypress Point with almost 60% of its properties built for households in need of state subsidy, and with 97% of this 60% being provided as social rented houses.

Whether or not you like Cypress Point as it is now, if this policy had been in force at the time, Cypress Point would be a very different place, and a good part of Lytham St Anne's would have a different character..

However, this scheme didn't work - mostly because developers laughed at the idea and sat on their landbanks, watching the land value appreciate as house prices went even higher (and made the existing houses even less 'affordable').

So in May 2006, the Council appointed new consultant whose report conveniently suggested a new breakdown of housing types for future developments.

His recommendations were:

  • Not more than 40% normal market value housing (as before)
  • at least 30% Social Rented Housing (previously 58%) to be Affordable
  • at least 30% Social Rented Housing social rented, and
  • 30% shared equity (previously 2%)

Quite how, in just four years since the original Fordham report, the proportions of 'social rented' and 'shared equity' housing can justify such a huge change is again preposterous unless you accept the original one was ridiculous and nothing more than propaganda to justify a reversal in Fylde's housing policy..

The new survey also notes that demand for affordable housing has now increased from 420 'Affordable Houses' a year to 568 'Affordable Houses' a year. This foolish increase perpetuates and compounds the original error by confusing demand and need.

But like Oliver Twist, the Government wants more. It has realised it is not going to hit its housing targets, and is pulling all sorts of levers to get them.

At Government level, the new Regional Spatial Strategy (i.e. the Government's planning requirements) will increase the former 155 dwellings of all types to 306 dwellings of all types a year to be built in Fylde.

There is also a shift in emphasis to say that this is no longer to be regarded as a limit, but a guideline that can be exceeded if necessary.

The Growth Point Scheme will probably lift this number still further (Possibly even before the Government's Regional Spatial Strategy is actually completed).

Privately, we believe Government is also 'threatening' Fylde that if they don't produce the number of houses needed, Government will step in with a presumed approval for developments until the number has been met.

In anticipation of these new RSS numbers, and using its revised housing need analysis, Fylde has just introduced its "Interim Housing Policy"

Broadly speaking, although most people hearing the name will think it is a planning policy for housing, they would mostly be wrong. It is actually the culmination of the plan to make Housing Fylde's number one priority. It does not set out to show where houses should, or should not, be built (as a Planning Policy would do), it sets out the breakdown of types of houses that must be built on sites where approval is given.

It provides targets for the mix of affordable housing, market value housing and intermediate housing that must be built on any site.

It will be helpful to understand the terms here, because Affordable Housing is quite doublespeakish - it may not mean what you think it should. When most people hear "affordable housing" they think it is what council officers actually call "low cost housing"

Fylde's definition of affordable housing includes social rented and intermediate housing that is provided to eligible households whose needs are not met by the market.

Affordable housing: meets the needs of eligible households - including availability at a cost low enough for them to afford, determined with regard to local incomes and local house prices; and it includes provision for the home to remain at an affordable price for future eligible households or, if these restrictions are lifted, for the subsidy to be recycled for alternative affordable housing provision.

Social rented housing is rented housing owned and managed by local authorities and registered social landlords (normally Housing Associations), for which guideline target rents are determined through a national rent regime. It may also include rented housing owned or managed by other persons and provided under equivalent rental arrangements to the above, as agreed with the local authority or with the Housing Corporation as a condition of grant.

Intermediate affordable housing is housing at prices and rents above those of social rent, but below market price or rents and which meet the criteria set out above under 'affordable housing'. It can include shared equity / shared ownership housing and other arrangements where housing is provided at affordable prices by a combination of sale and intermediate rent.

In Fylde Borough, to represent affordable housing, intermediate housing would have to be made available (in terms of monthly outgoings) at prices and rents about (or less than) half way between those of social rent and those of the open market.

Low cost market housing is housing offered for sale at open market prices, but at a relatively low cost because the homes are generally small and or have a relatively low specification. Examples of low cost market housing include the Redrow 'Debut' and Barratts 'I-Pad' ranges both of which have been built elsewhere in Lancashire. Some of these units sell for under £100,000 and are proving popular with young people wanting to get on the first rung of the 'housing ladder' and others with modest incomes, including divorcing couples.

Unless it can meet the above definition for affordable housing, low cost market housing does not fall within the government's definition of affordable housing and is not affordable housing for the purposes of this policy.

For the purposes of Fylde's Interim Housing Policy, low cost market housing is defined as 'market housing which will be offered for initial sale at a price that is no more than four times the current median gross residence-based income for the borough of Fylde'.

In 2007, the median income for Fylde was £24,603, making the maximum sales price for a home to be counted as 'low cost' £98,412. The Council will update this figure each year.

There's also a whole pile of work been done into what a mortgage should cost and how much the rent should be, as Fylde's steps bravely into its new world as a key enabler of social / affordable / subsidised / intermediate housing to get a tick in its housing box from the Government.

If it wasn't so serious, if it wasn't so costly, if it wasn't trying to change the very culture of Fylde, this process could be amusing. As it is, it is a dangerous path that will damage the area if it succeeds to any scale.

So what's in the detail of this new Interim Housing Policy then?

Well. Fylde's new housing policy is separated into urban and rural parts,

In the urban area, if you want to build 10 or more houses, the requirement to deliver 'mixed provision' kicks in.

Broadly speaking, developments of less than 15 houses have to pay 5% of their open market value to FBC for the Council to use to provide affordable housing through appropriate social landlords.

If you want to build more than 15 houses you will have to sell 30% of them at a discounted price to a Registered Social Landlord (but they have to look exactly the same from the outside, so no-one can tell poorer people live in them). This will, of course, make the remaining 'market value' houses less desirable to some folk, and it will make them even more expensive, because the Registered Social Landlord's discount will be recovered from the higher sale price of the Market Value part of the development.

The Registered Social Landlord will then rent out the houses they have bought at rent levels that are compatible with the normal target rent levels of Registered Social Landlords. (ie below the prevailing market value of property rents in Fylde)

This requirement for developers to provide discounted 'Affordable Houses' is on top of the contributions developers already have to make to infrastructure like roads and schools and leisure and so on. (All of which used to be funded from rates or income tax in the past)

The Interim Housing Policy also encourages developers to make prior arrangements with a Registered Social Landlord and to have pre-application discussions with FBC's Housing and Planning departments before they submit a planning application.

In the rural area, 3 or less dwellings attract the 5% contribution, and 4 or more will have 30% of them built as affordable.

There is a lot more detail in Fylde's 'Interim Housing Policy' but the above is the bare bones of it.

In Fylde, the reduction in the social rented housing requirement on new developments (from 58% to 30%) will make developments less draconian and partially more viable for developers.

Applications seem to be starting to flow. Whether or not they become a flood depends on many variables.

This may also be why the Council's own plan to sell some depots and other assets to fund the new White Elephant Town Hall is waking up again after being asleep for a few months (although given the doldrums in the commercial housing market, that plan looks more financially doubtful as time goes by and the vast sums wasted with consultants keep piling up).

Having ticked the 'housing' box for its 'school report' to Government, FBC is now embarking on phase two of our housing transformation as it works with Blackpool and Wyre in something called the 'Multi-Agency Agreement.'

Part of this will produce a single housing policy for the whole of the Fylde Coast (which the North West Assembly has defined as a "Strategic Housing Area") - and before you ask, yes, we're quite sure that will lead to a single housing waiting list, and to unified policies, and to people from Blackpool and wherever being given the same priority as people in Fylde for housing here and so on.

The Commissar and the Chief Executive will tell you otherwise, so you'll have to make up your own mind who to believe.

At Government level, the Second Round of Growth Point Schemes has recently been given the green light. This will promote large new areas of housing just within Fylde's boundaries, especially in St Anne's. We'll be looking more at this in another feature shortly.

There are also administrative changes to housing at Government level too. The Housing Corporation - a QUANGO that oversees (and mostly funds) all Housing Associations and Registered Social Landlords, (and which spends about £8 billion a year doing so) is about to be dissolved.

In its place (by December we understand) will come the 'Homes and Communities Agency' and the 'Tenant Services Authority'  (So there will be two QUANGO's instead of one).

The Tenant Services Authority (TSA) will be responsible for regulating social landlords.

But from next April (2009), the new national housing and regeneration agency, the Homes and Communities Agency (HCA), will be responsible for developing 'Affordable Homes'. This agency is tied in to 'English Partnerships' - (the body that took over the allocation of Government Derelict Land Grants a while back and now has squillions of taxpayer funds to spend). The plan is to bring regeneration and housing into a single national agency.

In Government speak the new agency will "... be local government's best delivery partner, providing practical support and professional expertise to local authorities; enabling them to deliver local outcomes, whilst achieving national targets. It will use its enhanced buying and negotiating power to push up environmental standards, add value and attract new private sector investment".

In other words it will impose yet more Government control on what local councils can do, and despite the rhetoric to the contrary, it will further remove the ability of local people to control what happens in their own area and thus what sort of area it is.

As sure as the commercial housing market has been brought to its knees by bad lending to those unable to repay, and the slice and dice repackaging of that debt to greedy institutions that should have known better and has a longer term business horizon - so eventually there is coming a painful, unpleasant and fundamental shakeout of Government and its machinery to rectify and refocus its attention on representational democracy - government under the direct and representative rule of the people of its jurisdiction.

Dated:  11 August 2008

UPDATE 18 August 2008
We have been asked to point out that the Housing Corporation came into being in 1964 and regulated housing associations from that time. It was thus not a New Labout creation, although New Labour did change the rules for housing associations as stated earlier in the article.


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