west*wales*news*review

West Wales News Review — analysis with a sustainability slant

Calon Cymru Minds the Housing Gap

From ‘Affordable Homes and Sustainable Livelihoods in Rural Wales’, report for community interest company Calon Cymru Network, 2017 (slightly amended).  The full report, focused on the Llandovery area, is here. The ongoing introduction of Universal Credit, replacing other benefits including Housing Benefit, does nothing to increase the supply of dwellings but cuts the ability of many lower-income households to afford a home at all. 

Right to Buy and the housing shortage

Each year there are more renters and fewer owner-occupiers. Owner-occupation in the UK peaked in 2008 at 18.184 million households but by 2014 was down to 17.712 million.[1] The fall in owner occupation, and the rent subsidy from public funds in the form of Housing Benefit, both reflect the affordability crisis. In 2015-16 £24.244 billion was distributed as Housing Benefit in the UK: £5.972 billion went to local authority tenants in rent rebates, £9.489 billion to tenants of housing associations and other registered social landlords, and £8.783 billion to tenants of private landlords.

The benefit is payable only to tenants paying rent, not to owner-occupiers, and in 2015-16 there were 4.777 million claimants – people whose incomes were insufficient to pay commercial rents.[2] The claimants amounted to almost one tenant in every two, and their average annual benefit was £5,075.

A significant proportion of all the local authority homes sold under Right to Buy (RTB) were, by 2016, calculated to be in the hands of private landlords:

“It is clear that a significant number of properties sold under the statutory RTB are now in the private rental sector. In August 2015 Inside Housing published an analysis based on Freedom of Information requests to 91 councils, which found that almost 40 per cent of ex-council flats sold through the statutory RTB were now in the private rented sector. There is a similar pattern in Scotland; Dr Mary Taylor from the Scottish Federation of Housing Associations explained that many of the properties sold through RTB ended up “in the private rented sector at rents approximately 50 per cent higher than social rents for the exact same properties, in worse conditions. That has impacted on our ability to manage the assets of social landlords, and on the public purse in terms of the housing benefit bill, and has constrained access for aspiring tenants and for those needing to move.” (Housing Associations and the Right to Buy, report from the House of Commons Communities and Local Government Committee, January 19 2016, Section 4, paragraph 45)

Rents charged by private landlords are normally higher than social rents for equivalent properties. This means that more housing benefit is required. The Communities and Local Government Committee said:

“We note also the finding from our commissioned research of increased housing benefit costs of over £1,000 per year per claimant in the private rented sector rather than in social housing.” (paragraph 46)

Why did former tenants who became homeowners, or their descendants, decide to sell? Diverse reasons, including cashing in and spending the money, moving to another area, or worry about the cost of maintaining their homes, or after their death having the house sold to pay care fees and/or legacies.

Under Right to Buy, central government prevented local authorities from using the proceeds of sales to build replacement homes. Now, when they can afford to, authorities are buying homes on the open market to try and ease their waiting lists, which are exacerbated by the UK’s rapidly rising population. It took 34 years from 1971 to 2005 for the total population to rise from 55.928 million to 60.413 million, and only ten years from 2005 to 2015 to expand from 60.413 million to 65.110 million. The Office for National Statistics estimates that by 2025 there will be 69.444 million people living in the UK, a figure predicated on net migration remaining at 185,000 a year from 2020 (compared with 313,000 in 2014, 332,000 in 2015 and 248,000 in 2016).[3]

The Wales population, mid 2015, was 3.099 million. Since 1971 it has grown by 13%, compared with almost 16.5% for the UK as a whole.

 

No more Right to Buy in Carmarthenshire

Carmarthenshire County Council was the first Welsh local authority to suspend Right to Buy, making the announcement in January 2015, thereby signalling the intention to protect its social housing stock of 9,036 homes.

Carmarthenshire County Council’s housing stock

As at June 5 2017

Type of dwelling Number
Bedsit, ground floor 4
Bedsit, mid floor 15
Bedsit, upper floor 3
Bungalow 2,182
Flat, ground floor 981
Flat, mid floor 56
Flat, upper floor 867
House 4,888
Maisonette, ground floor 15
Maisonette, upper floor 25
Total 9,036

Source: Carmarthenshire County Council

The county council has a strong housing department and officials committed to providing decent homes. Even so, the waiting list signifies a mismatch between homes required and homes available. The waiting list for the Llandovery area at the end of March 2017 was 277, including 128 single people and 36 couples. There is substantial unmet demand for 1-bedroom homes, with 164 applicants on the list, and only 15 suitable properties, all housing association stock. Sixty-six applicants were waiting for a 2-bedroom home, of which there are 97 (80 council-owned and 17 housing association dwellings).

Llandovery has empty private-sector buildings. Fifty were advertised on Rightmove for sale in and within a mile of Llandovery, on June 16 2017. Only five of these properties were under £100,000, and the cheapest home was £77,500 for a 2-bedroom house, with one bedroom leading off the other.  This, and no more, is just about affordable for an individual earning £20,000 a year and with a £15,500 deposit.[4]

The gap between house prices — and private rents — and what local people can afford, is a space where social landlords and not-for-profit groups like Calon Cymru can work.

 

Policy ideas to increase the number of affordable homes

But if land prices do not fall relative to incomes, the crisis of insufficient rural homes will deepen. Abrupt policy changes have the potential to generate severe unintended consequences as well as the desired outcomes, so a gradual approach is safer but results are slow to appear.

Policy changes worth considering include:

  • Introducing a Community Right to Build policy in Wales. Community councils convinced of the need for development in their area could override restrictions in the LDP.
  • Compulsory purchase regulations, requiring full market prices to be paid, have become a brake on provision of affordable homes. Local authorities and partner not-for-profit community organisations should be able to compulsorily purchase land for affordable housing, where there is clear evidence of need, at less than development value. The price ceiling on land zoned for development could be set at half the difference between agricultural and development value. On Rural Exception Sites outside development boundaries, a lower ceiling could apply. The Welsh Government’s role in compulsory purchase is currently unclear because the devolution settlement is silent on the matter – compulsory purchase is neither reserved by the UK Government nor devolved to Wales. However, under the Wales Act 2017, powers to determine compensation would be entirely a matter for the UK Government.[5]
  • Despite the forthcoming absence of power to vary compulsory purchase regulations, the Welsh Government’s new authority over land taxation might be applied to a scheme to persuade landowners to accept less than full market price for compulsorily purchased land in return for exemption from tax liability. Such a policy change could reduce the cost of land for social housing and other essential development.
  • Restrictions on planning permission renewals, so that more land with permission is developed without delay.
  • Planning policy alterations to
    • increase solar energy capture
    • incorporate more green open space in housing developments
    • promote orchards, allotments and wild planting within developments
    • include more live-work homes in new neighbourhoods.
  • Exempting sales of land for Rural Exception housing from tax liabilities.

PDR

 

[1] Housing chart 5-v2, from Department for Communities and Local Government table 101, in ‘UK Perspectives 2016: housing and home ownership in the UK, ONS Digital, May 25 2016.

[2] Department for Work and Pensions benefit expenditure and caseload tables 2017, Office for National Statistics.

[3] Population estimates, 2014-based population projections and provisional long-term international migration estimates, accessed June 5 2017.

[4] Data from an affordability calculator.

[5] See Compulsory Purchase by Katy Orford, The Planning Series 15, Research Briefing, National Assembly of Wales.

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One thought on “Calon Cymru Minds the Housing Gap

  1. Pingback: Calon Cymru Minds the Housing Gap… – Welsh Business News from WelshBiz Blog a Welsh Business News Blog

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