What happens next?
Julie Nicholas Policy and Public Affairs manager at CIH Cymru makes the case for longer term thinking despite current pressures.
The theme of TAI 2013 is Here: Now. This aim is to focus delegates on the ‘perfect storm’ facing Welsh housing – economic recession, growing unmet housing need, a stalled construction sector and central government austerity measures.
The number of challenges being faced by landlords, housing professionals and tenants is extraordinary in the context of slashed grants, poor industry growth, enhanced legislative standards, growing homelessness and of course the changes to welfare benefits.
Many predict negative consequences will follow in relation to landlord and tenant relationships, as well as increasing organisational and individual financial risk and consequential pressures.
TAI 2013 aims to rise to the challenge. Yes it’s going to be tough but we need to remember who we are and why we do what we do. Housing people are resourceful and resiliant. It’s alos important that we focus on our longer term aims. So as well as dealing with Here:Now issues we need to keep a focus on the long term challenges. These include:
- how do we get the balance between building more homes and improving standards – quantity versus quality?
- what will the future provision of affordable housing look like?
In this article we will consider both of these challenges in turn and explore the prospects and possible outcomes.
Housing quality vs quantity
If I gave you £20 for a meal of your choice, would you spend it on a nouveau cuisine dish using locally-sourced, sustainably-produced ingredients, that might leave you feeling hungry, or pig out at an all-you-can-eat buffet, using less ethically produced ingredients that will do your arteries no favours, but will leave you feeling full?
Devolution has allowed us to develop a distinctly Welsh approach to housing policy; higher accommodation standards via WHQS and the inclusion of additional priority groups within homelessness legislation for starters. However, these deal with assets we already have and legislative responsibilities we must meet. When it comes to the supply of additional market and non-market housing, raised standards and requirements will directly impact not only on the amount we can buy with our public money, and secure through section 106 agreements for non-market housing, but also on private developer decisions on whether to build in the principality or stay the other side of the border where profit margins look tastier.
Private builders and developers suggest this enables them to pick and choose opportunities from national menus that best meet their shareholder’s demands and maximises profit. In England the new referral right to the Planning Inspectorate to challenge local, conditional Section 106 planning requirements to build affordable homes, may well entice large developers to stay out of Wales where standards are rising and property prices have flat-lined.
The argument goes that lower building standards in England and a recovering market in the South East will inevitably mean higher profit margins, when compared to Wales. In England housing policy is heading in a different direction; less regulation and an emerging taste for sector-led economic regeneration. What will be the incentive for developers, motivated by profit, to do business in Wales?
The counter argument states that higher standards are not necessarily a deterrent to development, and they will improve sustainability and the quality of life of occupiers. The adoption of Lifetime Home standards for all new social housing was initially met with scepticism from the sector who feared extra costs would have a dramatic impact on the amount of new homes built. Ten years down the line it’s obvious that the sector adapted and survived! We should therefore question the assertion that a better regulated housing system, with higher standards across the board, will decrease development in Wales. Institutional investors for example might be tempted by the prospect of a country that insists on high quality delivery of stock, properly managed and regulated, with consistently high consumer demand. Residential properties have given returns that are 30% higher than for commercial properties over the last 20 years in the UK – perhaps enough to entice the investors and offset concerns on costs.
Responsibilities for safeguarding and sustainability are being rightly prioritised by Welsh Government; the new Park Homes Bill, private rented sector registration proposals, revised Part L building standards and the homelessness ‘solutions’ approach are all part of a cross-sectoral strategy aiming to raise standards, protect the vulnerable and future proof our stock by building environmentally-friendly housing, with higher energy performance ratings.
Welsh Government has reasserted its commitment to the supply and protection of affordable housing, both through recent legislation that enables suspension of the Right to Buy in high demand areas, and the continuation of life-time social housing tenancies; in stark contrast to English policy. Do we really think Welsh Government should actively compete with our neighbours in a race to the bottom, for the benefit of addressing supply issues in the short-term? Current market conditions will not be with us for the long-term, but our housing stock will be. And the private sector is far from unanimous in it’s pessimism – a major UK housebuilder and contractor celebrating its 30th birthday recently announced that it has made Wales one of its two major business development areas over the next few years.
The trick is in creating a housing dish for Wales that is both healthy and satisfying. We need to deliver a supply of new-build properties that meets housing need, safeguards our citizens and are an attractive prospect to property developers and investors.
The future of affordable housing in Wales
Social housing provides opportunities of affordability, involvement and quality that can help households to avoid the poverty trap by offering genuine tenure choice and encouraging economic activity that results in mixed communities and social cohesion. Yet the 2007 Hills report on English social housing concluded that it is a ‘residual model’, and that ‘welfare dependency’ and ‘increased polarisation’ are the sectors ‘disappointing outcomes’. Demand is increasing; Cardiff now offers an on-line waiting time calculator for affordable housing and also highlights that there are 12,000 applicants chasing the 1,700 council and housing association lettings that become available every year, presumably in an attempt to manage applicants’ expectations. How did the reality of social housing today move so far from its policy intention of accessible and sustainable properties housing healthy and integrated communities?
Affordability issues persist in the private sector for both renters and those aspiring to home ownership, homelessness is again on the rise in Wales and capital investment reductions and decreasing levels of social housing development has seen waiting lists rise and unmet housing need escalate.
The new localism agenda in England has resulted in emerging discussion regarding fixed-term tenancies, differential (based on tenant income) and intermediate (below market rent) rental charges as options for the future of the social housing sector.
Some social landlords have already started diversifying; providing student accommodation and intermediate rental properties, social lettings agencies are competing with similar ‘for profit’ services and are expected to increase in number when the homelessness solutions model is rolled out, which will introduce statutory discharge into the private rented sector. Likewise some private sector landlords are working with support agencies to provide supported living opportunities for vulnerable tenants. The distinction between social housing and the private sector is becoming increasingly blurred.
A recent consultation by a Welsh housing association on proposed changes to their access criteria, raised fundamental, perhaps uncomfortable questions about the use of social housing; how to achieve a balance between cohesive, integrated communities whilst meeting the needs of vulnerable and marginalised groups; how to allocate an increasingly scarce commodity with reducing investment. Although there may be disagreement about the proposed solutions, the central problems this approach sought to address are universal across the social housing sector.
In Homes for Wales Welsh Government re-affirmed its commitment to the concept of social housing but questions remain; who is it for, how is it defined, what does it provide, how is it allocated and how will it be supplied to Welsh citizens?
In the CIH Cymru White Paper consultation response we asked Welsh Government to lead a ‘once in a generation’ debate on the future of social housing. Do we need to be clearer on the 21st century objectives of social housing, and if so what are they? How do we prioritise housing the vulnerable and disadvantaged without concentrating poverty and increasing social fragmentation? How to we reduce inequality and social exclusion? To assist with developing fair and equitable access and allocation arrangements that deliver safe, healthy and sustainable communities throughout the principality, we need to review the purpose of social housing in Wales.
CIH Cymru wants to hear your views on the future of housing in Wales. if you want to find out more please contact julie.nicholas@cih.org