Housing White Paper backs councils to build 10/02/2017

The anticipated Housing White Paper was launched earlier this week on 7 February by Communities Secretary Sajid Javid. In it, the government says it's "Backing Local Authorities to Build". What is this likely to mean for stock retained councils and their tenants?

 

The long awaited Housing White Paper 'Fixing our broken housing market' acknowledges what most housing professionals and others working in local government have known for some time - that the housing market does not work for ordinary working people.

 

The White Paper sets out some startling facts:

 

• Since the 1970's there have been on average 160,000 new homes provided in England each year. The consensus is that we need between 225,000 to 275,000 or more homes per year to keep up with population growth.
• More than 2.2million working households with below average incomes spend a third or more of their disposable income on housing costs.
• In the private rented sector the mean rent payment as a percentage of weekly household income is over 50%.
• In 2015 the average home in the South East of England increased in value by £29,000 while the average annual pay in the region was just £24,542.
• In the 1990's a first time buyer couple on low to middle income saving 5% of their wages each month would have enough for an average size deposit after just 3 years. Today it would take the same couple 24 years to save for an average size deposit.

 

The White Paper sets out a list of proposals under four main chapters to tackle the problem:

 

1. Planning for the right homes in the right places
2. Building homes faster
3. Diversifying the market
4. Helping people now

 

Many of the measures under Chapters 1 and 2 focus on planning measures to speed up the delivery of new homes across all tenures, and alongside the White Paper, the government has issued formal consultation on a range of specific planning proposals. Many of these proposals involve yet further amendments to the National Planning Policy Framework and the government intend to publish a revised Framework later this year. 

 

Among the proposals in Chapter 2 is a proposal to increase nationally set planning fees. Councils will be able to increase fees by 20% from July 2017 if they commit to invest the additional fee income in their planning departments. The government is minded to allow an increase of a further 20% in certain circumstances where local authorities are meeting housing targets and will be consulting further on the detail.

 

The government is not intending consulting on proposals under Chapters 3 and 4 other than a separate consultation on the "Build to Rent" proposals in Chapter 3.

 

The White Paper confirms the recent shift in housing policy away from almost a sole focus on home ownership towards a more mixed tenure approach and states that:

 

"This summer, the Homes and Communities Agency will be relaunched as Homes England with a clear purpose: 'To make a home within reach for everyone'. At the heart of this renewed purpose will be the ambition to get more homes for communities across all housing tenures, put in infrastructure to unlock housing capacity and attract small builders and new players to diversify the market on a sustainable basis."

 

In line with this policy shift to a more mixed tenure approach, and encouragingly for the first time since the 2012 self-financing settlement, there a recognition from the Government that local authorities have an important role in delivering new homes and the White Paper claims that the Government is "Backing local authorities to build".

 

Despite the long wait for such backing, the proposals in the White Paper do not go as far as ARCH and the NFA might have liked in terms of addressing the issues preventing councils and ALMOs building more new homes - for example there is no mention of repeal of the high value asset levy to be charged to council's Housing Revenue Accounts after April 2018 and no repeal of the four year 1% rent reductions imposed under the Welfare Reform and Work Act.

 

Neither is there any mention in the White Paper of the impact of recent welfare reform changes on the ability of tenants to pay for affordable housing across both the social and private rented sector; or the impact of the roll out of Universal Credit on tenants' rent arrears and the risks posed to landlords to their income stream as highlighted in the recent ARCH/NFA Welfare Reform Survey.  

 

RENT POLICY

 

The White Paper promises to set out, "in due course", a new Rent Policy for social housing landlords (both housing associations and local authority landlords) for the period beyond 2020 and promises further discussion with the sector before doing so.

 

The Government say their aim:

 

"Is to ensure that they have the confidence they need about their future income in order to plan ahead." 

 

This statement is to be welcomed, providing that by the word "they", the government means they intend to ensure that both housing associations and local authorities have certainty over future rental income and ARCH will be pressing for the re-introduction of a ten year rent policy from 2020.

 

COUNCILS ROLE IN DIRECT PROVISION OF NEW HOMES

 

In "backing local authorities to build" the White Paper recognises that:

 

"Local authorities' role in delivering new housing goes beyond using their planning powers. They also have an important role in delivering homes themselves. We want to make sure that they have the tools they need to get homes built where the market isn't coming forward with enough." 

 

LOCAL HOUSING COMPANIES

 

On Local Housing Companies and/or joint venture models building mixed tenure sites which include new market housing for sale and private rent as well as affordable housing, the White Paper says that the government:

 

"Welcome innovations like these and want more local authorities to get building. To that end(the government)will seek to address the issues that hold them back"

 

However the White Paper strikes a note of caution which may give rise to concerns about the viability of Local Housing Company Business Plans amongst councils who have, or are considering, setting up Local Housing Companies saying:

"We(the government)want to see tenants that local authorities, place in new affordable properties offered equivalent terms to those in council housing, including a right to buy their home"

 

ACCELERATED CONSTRUCTION PROGRAMME

 

The White Paper reinforces the opening up of funding to local authorities under the Accelerated Construction Programme and the offer of tailored support packages to councils who want to build on their own land at pace with priority given to innovative delivery models.

 

COUNCIL HOUSEBUILDING

 

The Housing White Paper acknowledges the long tradition of council housebuilding and acknowledges that council housebuilding:

 

"Continues to provide a small, but important and growing source of new homes. Twice as many council homes were built in England in the last 5 years than were built from 1997 to 2010" 

 

However, the White Paper makes no mention of the hugely significant role that the introduction of the Housing Revenue Account self-financing model has played in the increased provision of council housing in this period. Nor does it commit to review the proposed introduction of the high value asset levy or the overall national Housing Revenue Account debt cap. The White Paper does commit the government to:

 

"Work with local authorities to understand all the options for increasing the supply of affordable housing"

 

It goes on to say that:

 

"Housing markets are different right across the country, and we (the government) are interested in the scope for bespoke housing deals with authorities in high demand areas, which have a genuine ambition to build."

 

It's not clear whether this signals the intention of the government to work with individual local authorities to consider flexibilities in the Housing Revenue finance system or to the wider devolution agenda. However, these sorts of supportive statements and clear messaging from government ministers is something ARCH have asked for in the past and certainly did not receive under the previous administration. As such we believe it is to be positively welcomed.

 

MORE INFORMATION ON THE WHITE PAPER

 

Matthew Warburton, ARCH Policy Adviser, has produced a special briefing on the Housing White Paper. It includes a useful table setting out how the government plans to take forward each of the main proposals in the Housing White Paper, with timescales (where known) to identify opportunities for local authority engagement in policy development and implementation.

This briefing is available to ARCH members only and can be accessed in the members' area.

 

ARCH RESPONSE TO THE WHITE PAPER

 

We'll continue to make the case for council housing through our on-going discussions with the DCLG and the Housing Minister around possible deals/bids to increase housing delivery via the Housing Revenue Account. We've recently confirmed a follow up meeting to discuss our recent joint submission with the NFA, CIH and CIPFA with DCLG officials on 2 March.

 

The ARCH Executive Board and ARCH Tenants' Group will be considering a formal response to the White Paper.

 

John Bibby, chief executive, would welcome discussions with ARCH members with any further ideas or initiatives that the wider sector could benefit from in the light of this White Paper. Please email John at john.bibby@arch-housing.org.uk or call him on 07511 820 750. 

 

In the meantime we are organising a member event for ARCH members which will explore the White Paper and what it will mean for stock retained councils in more detail. Find out more.