Intelligence: 17 September 2019Shelter's big conversation...

Following the Grenfell Tower fire, Shelter set up the ‘Big Conversation’ Commission to explore ways of responding to this crisis and tackling homelessness in a more fundamental way. The commission has subsequently produced a report with the overarching conclusion that a substantial increase in social rented homes is needed.

To deliver this, they outline a series of policy proposals aimed at boosting social rented housing delivery which targets everything from focused investment and landlord reform, to Permitted Development Rights (PDR) Section 106 Agreements and land value capture.

As our charity partner, we are keen to support Shelter in their activities where possible and have therefore sought to provide an overview of the report’s key proposals as well as some of their potential implications, for your consideration.

Having a stable and safe home has innumerable social benefits but the economic argument is equally compelling. There are 1.1 million people on housing waiting lists and councils across the country spend millions every year on temporary accommodation – often of poor quality and costly.

The Commission’s report therefore calls for the Government to fund a building programme of three million social rented homes over 20 years and has been launched to drive cross-party consensus in delivering this. They believe that this commitment to building over two decades would in turn create more market certainty, preventing price inflation, while also having potential spin-off benefits for the entire industry, such as helping to address the skills shortage across the industry and encouraging investment in modern methods of construction.

Capital Economics (who have supported the Commission’s research) estimates that 39 years after the first homes are built, the programme will have paid for itself with the ‘return on investment’ coming in multiple forms: tax receipts as well as substantial savings on the welfare budget. This is on top of rental income and asset values for housing associations and local authorities.

Beyond investment, the Commission also identified some key current planning policy areas which, following consultation with community groups, local authorities and stakeholders, would also need to change to facilitate this volume of delivery.

Key Development Related Recommendations

The importance of maintenance - Learning the lessons from Grenfell and wider estate renewal needs, the Commission highlight the need for greater planning around the long-term maintenance of projects. Wholesale housing renewal projects are a huge burden on already stretched local authority budgets, so they call for established, funded maintenance plans to save in the long term, albeit they do not outline a workable funding model approach.

Land Value Capture - The Commission cite the price of land as the biggest barrier to delivering affordable homes and as such propose that a lid needs to be put on land prices so that they can be brought into development for housing at a fairer price, not the market value assuming planning permission.

Section 106 - Currently smaller sites are exempt from providing a proportion of affordable housing but the report proposes that this is removed. The report does not specify if there would be a sliding scale of provision depending on the size of scheme and number of homes being built.

Permitted development rights (PDR) - Introduced to stimulate the housing market post the financial crash and breathe new life into redundant commercial buildings, the Commission argue that these conversions have side stepped affordable housing provision and in some circumstances, quality standards. Closing this and the wider ‘loophole’ of Section 106 exemptions would, in the Commission’s view, deliver substantial additional homes.

SOCIAL HOUSING SHOULD BE A NATIONAL ASSET LIKE ANY OTHER INFRASTRUCTURE. A HOME IS THE FOUNDATION OF INDIVIDUAL SUCCESS IN LIFE, AND PUBLIC HOUSEBUILDING CAN BE THE FOUNDATION OF NATIONAL SUCCESS. IT IS ALSO THE ONLY HOPE THE GOVERNMENT HAS OF HITTING ITS TARGET OF 300,000 HOMES A YEAR.
THE COMMISSION’S HOUSEBUILDING PROGRAMME WOULD COST ONLY A FRACTION OF THE GOVERNMENT’S SPENDING - IT’S WELL WITHIN FINANCIAL REACH. ADD TO THAT THE VAST SUMS SPENT ON HOUSING BENEFIT GOING TO PRIVATE LANDLORDS, AND IT’S NOT HARD TO SEE WHAT AN INVESTMENT IN BRICKS AND MORTAR COULD DO TO HELP SOLVE THE HOUSING CRISIS - AS WELL AS BOOST THE ECONOMY.

Polly Neate, Chief Executive, Shelter

Our Senior Partner Mark Sitch responds to the Commission’s recommendations:

"I have a great deal of admiration for the Big Conversation Commission’s articulation of the economic model, which will make a compelling offer to Government. As consultants operating across the private and public sector development industry, we are on the front line of many of the design and planning debates around affordable housing delivery and I am delighted to say that we are driving numerous regeneration schemes and strategic housing projects which seek to renew poor quality housing infrastructure and tackle the wider housing crisis nationally through new provision.

As has been well documented over the past 15 years however, the market can only deliver so much per annum. The only time we have achieved the goal of 300,000 homes per annum was through social housing delivery and as such it remains, alongside an increase in market housing, the only obvious way to achieve the Government’s target.

Reviewing the report’s wider policy related recommendations, I am concerned about the unintended consequences some of these may have on the market. I believe there are approaches we could adopt as an industry which would have a significant impact on the delivery of affordable housing and the markets’ ability to deliver housing for all tenures, but to do so, we need Shelter, the Government and the market to work more closely. Land Value Capture is a much-mooted panacea but could have hugely significant impacts well beyond those intended in the wider market. Extending Section 106 affordable housing provision to smaller sites could render many of these sites unviable if local authorities are not alive to the impact on density required on a site - indeed this is already a challenge we can see playing out in London on small and medium sites where the Mayor’s affordable housing minimum is being implemented.

As such, as an industry we need all parties to fully understand and balance these consequences, to ensure they are not reducing overall housing delivery. We are passionate about ending homelessness and delivering balanced communities across our towns and cities and the provision of considered, high quality affordable housing is a key part of the mix, so we are certainly keen to engage further with Shelter and the Government in understanding the best way to tackle this challenge."

A build programme would have wider benefits for the industry

The built environment sector has a huge skills gap across all job types, from trades to professionals like architects, surveyors and planners. The Chartered Institute of Building (CIOB) estimates that the industry will need to attract an additional 157,000 workers by 2021 to meet demand.

Government investment in such a substantial social rented building programme may well provide a certain amount of stability and certainty for the sector allowing for better training and apprenticeship programmes. Boosting skills would benefit the entire sector in the long term.

Similar arguments could also potentially be made for modern methods of construction. If you know there is going to be a steady stream of demand, it makes building a modular housing factory less risky.

Rethinking housing targets

The report also exposes a fundamental difficulty with the current housing targets, which lump all types of homes under the label of ‘units’.

Could a more granular approach to identifying shortfalls in specific types of housing and delivering to meet those needs be more responsive to changing demographics and regional variances?

The recommendation from the Commission is that housing targets are based on genuine need and affordability rather than purely numbers. There is, however, a dichotomy for councils; targeting social rented provision will inevitably reduce welfare spending but housing development often gets caught up in politics and NIMBYISM, particularly when proposing to develop on the green belt.

These realistic housing targets therefore, must go hand in hand with positive community engagement, driven by all participants in the process, if we are to ensure everyone can feed into and understand the context and ambitions.

The UK2070 Commission Report we have supported over recent months, sets out a plan to address regional inequalities and therefore how we tackle some of the systemic challenges of affordability and homelessness. To read more visit www.uk2070.org.uk

Featured in Update Issue 20.

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