What now for housing? Unravelling the new Government Policies Thursday 15 October 2015
Agenda Alan Benson Senior Manager – Housing Strategy, Greater London Authority (GLA) Nick Duxbury Executive Editor, Inside Housing Andy Belton Chief Operating Officer, Notting Hill Housing Trust Daniel Kaye Director, Sheridan Development Management
WHAT NOW FOR HOUSING IN LONDON? Alan Benson GREATER LONDON AUTHORITY 14 Oct 2015
“The shortage of housing is perhaps the gravest crisis the city faces.”
POPULATION GROWTH London’s population reached its highest ever level in early 2015, passing its previous peak of 8.6 million people in 1939.
JOBS, PEOPLE AND HOMES
HOUSING SUPPLY
THE AFFORDABILITY CHALLENGE
THE AFFORDABILITY CHALLENGE IN LONDON
COMMUTER FLOWS
ECONOMIC IMPACT FIRST • 73% of businesses think London’s housing costs are a significant risk to economic growth • £1.04bn the value of economic growth (GVA) lost every year through high housing costs • £5.4bn the wage premium London businesses faced in 2015 – equivalent to £1,750 per person additional salary to compensate for housing costs • In sales, customer service and care, median rents in London are close to or above 100% of the typical gross earnings of workers in these sectors
TENURE TREND
“If you’ve worked hard and saved, I don’t want you just to have a roof over your head – I want you to have a roof of your own.”
THE HOUSING BILL “ To build more homes that people can afford, give more people the chance to own their own home and ensure the way housing is managed is improved.” • Introduced Oct 2015 - Royal Assent Mar/Apr 2016 • Starter Homes • Right to Buy and high value sales • Self Build and PRS • Housing management • Planning changes
STARTER HOMES • Defines Starter Homes – New dwelling, first-time buyers, discount – SoS has considerable discretion to amend this • Duty of LPAs – General duty to promote Starter Homes – Specific duty to only grant planning permission when the fixed ‘Starter Homes requirement’ is met – Delivered via planning agreements, reducing other affordable housing and infrastructure provision – If LPAs fail to comply the SoS can issue a ‘compliance direction’
EXTENDING RIGHT TO BUY • Gives statutory underpinning to the voluntary deal agreed between the NHF and Govt • Enables SoS, HCA and GLA to pay grants to HAs to cover the costs of the discounts • These payments can be made with conditions • SoS will set out criteria for a new home ownership standard, enforced by the Regulator • HAs that do not enter the voluntary deal will be required to make a “no worse” home ownership offer to their tenants
HIGH VALUE COUNCIL HOMES • Enables SoS to require Councils to make payments to govt based on value of high value homes • Designed to pay for the extension of Right to Buy • LAs required to consider selling such housing but can make bilateral agreements with SoS to reduce liability (in return for new build commitments) • No detail about the scale of the payments – almost all the detail is left open to the SoS to determine through regulations
SELF-BUILD & PRS • Self Build & Custom Build – LPAs will have new duty to grant “sufficient suitable development permissions on serviced plots of land” to meet demand in their area • Private rented sector – Banning orders for rogue landlords – Database of rogue landlords and letting agents – Rent repayment orders for offences – Recovering abandoned premises – HMO licensing; fit and proper persons test – Tenancy deposit scheme info to be shared
OTHER HOUSING MEASURES • SoS will set the rent levels that landlords must charge ‘high income social tenants’ • Landlords, assisted by HMRC, given powers to collect data about their tenants’ incomes • HAs will keep additional incomes, councils must return it to govt • Plus: – Wide-ranging power for SoS to change social landlord regulation – Ending specific duty on councils to assess the housing needs of gypsies and travellers
LOCAL PLANS & THE MAYOR • SoS power to amend local development plans, give direction to examiners and intervene directly to ensure all LPAs have plans in place by 2017 • SoS to define strategic applications by reference to the London Plan or local plans – ie the London Plan can identify areas where the Mayor wants to be consulted on all/certain type of applications • Devolving powers on wharves and views with reduction of referral threshold to 50 units to come
AUTOMATIC PERMISSIONS • A new planning route: Permission in Principle followed by Technical Details Consent • SoS can, by a development order, grant PiP for sites allocated in qualifying documents • The development order will set out the type and amount of development granted PiP • The development order is likely to only include housing, so may exclude mixed use • May have significant implications for the number of schemes referred to the Mayor
OTHER PLANNING ISSUES • LPAs required to compile and maintain a register of Brownfield Land suitable for housing • LPAs to distinguish between these sites and those it considers suitable for PiP • Sites allocated for a non-housing use cannot be placed on the register • Allows SoS to grant consent for homes linked to nationally significant infrastructure project • Changes to CPO to speed process and reduce costs and uncertainty
THE ELECTION & THE BILL Sadiq Khan “I’m going to make the election in May a referendum on London’s housing crisis.” “I’ll be doing everything I can to stop this bill.” Zac Goldsmith “There is no doubt that housing is the number one concern in London.” “I will take a long look at the detail when the Bill is published”
SADIQ KHAN • A New Homes Team at City Hall: – Acting as a developer, building new homes for social rent, London Living Rent and for first time buyers • Putting Londoners first : – 50% affordable housing target for all new development and stop 'buy-to-leave' giving Londoners first dibs • Getting more investment into housing : – Develop 'London Home Bonds' and freedoms for councils to borrow to build • Land for homes: – Identify all developable brownfield land in public and private ownership and no building on the Greenbelt • Private rented sector: – London lettings agency – longer tenancies, responsible landlords and tenants, naming and shaming bad landlords and Mayoral powers on rent controls
ZAC GOLDSMITH • We need land: – Use public land and redevelop social housing estates at much higher densities – but “The Green Belt is a red line” • We need planning: – Mayor and boroughs have the powers – but reluctant to overrule boroughs “unnecessarily”. “ I will give local communities the power to require the Mayor to call in unpopular developments” • We need finance: – Investment vehicle to flip foreign investment/pension funds from purchasing homes to into development • Other issues: – Improve design and work with communities to build homes that enhance communities – recreating street patterns
SO WHAT’S NEXT?
What now for housing? Unravelling the new Government Policies Thursday 15 October 2015
Supply side What do the government’s reforms mean for housebuilding and social housing?
How is housebuilding at the moment? BAD We are only building 131,000 homes a year - up 15% on last year. But starts are actually down 5%. Housing associations are building 20,000 a year and paying for a further 20,000, but now they will build less due to funding and rent cuts. Local authorities are building more than they have in decades. But the number remain feeble and there’s a huge skills gap.
The result? A housing crisis ● House prices in London have doubled in a decade ● Average rents have risen 20% in 5 years ● But wages have only risen 5% ● London is now the least affordable city in Europe and 4th only to Shanghai, Hong Kong and New York in the world. ● Business leaders are now concerned: The CEBR has calculated the economy is missing out on £1.2bn of spend, and 11,000 jobs a year due to housing costs.
What is the government’s plan then? After five years of power, the message now is a bit desperate: build more *homes. *to sell (not to rent).
What does the government want to do? Two weeks ago Communities Secretary Greg Clark told the National Housing Federation (NHF) conference he wanted to build ONE MILLION homes by 2020. That means driving development up by 70,000 homes a year. Even if he does this, that is 40,000 homes a year too few. We need to be building 240,000 homes a year - 1.2 million by 2020 just to keep up with demand.
How does the government intend to do this? 1.The government wants to build 200,000 Starter Homes a year and is allowing developers to build these instead of subsidised rent homes through S106. 2.It is extending the Right to Buy to 1.3 million housing association tenants. Replacement homes will be paid for by forcing councils to sell higher value assets. 3.It is introducing Pay to Stay so higher earners (£40k in London and £30k outside) pay full market rates. 4.It is freeing up free markets to naturally meet demand. 5.It is out of ideas.
Will that get to 1 million homes by 2020? NO
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