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					Shelter
Northern Ireland

Response to Affordability Review

November 2006

Summary
Shelter Northern Ireland recommends an approach to the production of affordable housing involving        A definition of affordability to cover all housing sectors A new legal framework for housing policy development based on a right to housing to ensure access and security of tenure or affordable schemes The provision of affordable land for all housing provision to ensure the delivery of affordable housing with measures to ensure retention in the sector The maintenance of a single comprehensive housing authority to produce and oversee the implementation of a housing strategy to meet housing need and provide affordable housing Increasing the supply of public sector Social housing to ensure housing need be met and access to affordable housing through the right-to-buy is maintained Enabling the Co-ownership Housing Association to commission affordable housing for purchase Providing greater variation in tenure types with regard to co-ownership arrangements

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SHELTER NORTHERN IRELAND

RESPONSE TO AFFORABILITY REVIEW
1. 1.1 Introduction Shelter Northern Ireland believes that secure access to good quality housing is a basic requirement for a decent civilized existence, and therefore as a consequence of good housing as a fundamental requirement of living, we believe that access to housing should be a right set out in legislation. In realizing this right Shelter Northern Ireland argues that housing policy must deal with the fundamental issues of supply, affordability, quality and security of tenure. Given this position we therefore welcome the review as an opportunity to advance a fundamental issue in housing policy. General Comment It follows from the above that Shelter Northern Ireland does not regard housing as “property” but as “a home” – essential for wellbeing, for good health and a base from which we begin the day and organize and move on in our day to day lives. Consequently Shelter Northern Ireland has its focus on housing need, identifying housing need and meeting housing need on the basis of priority. It would be a mistake in our view to believe that access to good housing, which is about supply and affordability, should be left to the uncertainties of the property market which does not focus on housing need but on investment opportunities and in profit. It would therefore be a fundamental mistake for the Review Team to believe that affordable housing will be delivered by leaving it up to the property market. It is our opinion that affordable housing will only be delivered in a context that recognises housing as a fundamental requirement for a decent life and consequently as a social right. Lack of affordability is on the increase in the owner occupied sector. For example, at our recent conference, Professor Stanley McGreal of the University of Ulster pointed out that house prices have risen more rapidly that incomes leading to an earnings gap and more importantly that high land values encourage private housing developments to be focused away from first time buyers towards the middle/upper market sectors. Government needs to recognise the scale of the affordability problem. For example, while only around ten per cent of new annual output is public sector social housing it is estimated that around half of new young households are facing affordability difficulty. This clearly points the way to much stronger government intervention to ensure affordable purchase, with suitable retention arrangements, alongside more types of affordable arrangements and more varied co-ownership options within the overall context of an affordable supply of around 5,000 completions per year in addition to a public social sector supply of also around 5,000 completions per annum. 3

1.2

2. 2.1

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2.3

3. 3.1

Recommendations Twin track approach is required. Shelter Northern Ireland recommends a twin track approach to affordable housing involving (a) (b) Tackling house price inflation in the housing sector Measures designed to lead to the production of affordable housing for those who need it

3.2

Tackling house price inflation in the public social and affordable housing market requires a focus on:(i) Reducing land prices for public sector social housing and affordable housing by either using government land banks or if these are not available zoning land for public sector social housing and affordable housing which could attract a lower compensation price at vesting and making this available for social and affordable housing. A variation of this approach could include a subsidy to a developer to ensure that each affordable unit sold is in the affordable range of around £60,000 to £80,000. As part of this approach that on re-sale, as in the right-to-buy arrangements would be put in place to ensure appropriate levels of “windfall” would be returned to the state or the social landlord Increasing the supply of public sector social housing so as to meet housing need, replenish the supply of public sector stock lost to that sector through the right-to-buy to meet need in the future and also to maintain the supply of affordable housing for owner occupation which the right-to-buy provides by upping the rate of public sector social housing new build to around 5,000 completions per year which will increase the impact of the public sector in the housing market. Reducing the impact of the buy-to-let investor market on the price of housing in the private sector by increasing the supply of public sector social housing and affordable housing; by ensuring that empty fit property pays rates and consideration is given to the use of taxation to maintain steady house prices. Investigating the role of lenders in the availability of credit with a view to assessing the impact on house prices.

(ii)

(iii)

(iv)

3.3

Measures to lead to the production of affordable housing for those who need it will begin from the recognition that public sector social housing already provides access to affordable, quality housing with security of tenure – both for renting and through the right-to-buy to affordable relatively low cost owner occupation accessed on a needs basis. Since the owner occupied sector and the private rented sector are not supplying affordable housing access to many families it is therefore the case that the public social housing sector is the only sector

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meeting the affordability test and the only sector from which affordable housing will emerge. Therefore Shelter Northern Ireland suggests the following approach to the production of affordable housing with security of tenure for both rent and direct purchase. (i) Agreeing a definition of affordable housing which applies to all housing sectors and is given legal backing in legislation Establishing a new legal framework for housing provision based on a right to housing to ensure access to housing Establishing a new framework for the provision of zoned land for housing based on where necessary statutory assemblied housing land banks with vesting compensation at an affordable cost to the state so as to ensure the cost of public sector social housing and affordable housing is around an affordable cost, say £60,000 to £80,000 range per unit in total. In addition ownership of the land by the state would provide a means to ensure return of windfall profits and the dwelling remains in the affordable sector. Recognising that the public social housing sector is the only sector capable of producing affordable housing for rent and owner occupation and therefore (a) increasing the supply of public sector housing for both rent, and through the right-to-buy, for purchase to around 5,000 new completions per year and thereby maintain the organic link between meeting housing need and providing access to low cost owner occupation (b) Considering issuing the mortgage element of the mixed funding regime of housing associations to boost low cost owner occupation further by enabling new housing association tenancies to become tradeable coownership tenancies for those who wish as an alternative to the rightto-by and at an access point at less than 50% equity where the rental charge relates to the level of landlord services. This approach would provide a greater range of co-ownership options and would also include a permanent landlord stock of say twenty five per cent to ensure the dwelling remains in the affordable sector at sale. (c) Permitting the Co-ownership Housing Association to commission the building of affordable housing for owner occupation from other housing associations or directly from developers. Construction costs per average unit should be affordable at around £60,000 to £80,000 range, including the price of land, and access to the scheme should be income based on a first come first served basis. (d) Bringing the right-to-buy discount into line with the total production and maintenance cost of the dwelling against the total rent paid by the

(ii)

(iii)

(iv)

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tenant so as to ensure value for money and fairness to other householders (e) Providing for a right to rent which would enable those in mortgage difficulty to revert to a total or co-ownership renting regime. (f) Assessing the implications of organising the Housing Executive stock into a housing association regime. (g) The continued monitoring of and research into both housing needs issues and affordability issues in the housing market and therefore, recognise the requirement for a coherent housing strategy for Northern Ireland which has supply, affordability, quality, and tenure security at its heart. This further requires the existence of a single comprehensive housing authority to deliver the necessary structured and coherent approach and therefore flies in the face of the recent government announcement to abolish our single comprehensive housing authority – the Housing Executive, which we in Shelter Northern Ireland oppose as very much a backward step, lacking in any merit. 3.4 Shelter Northern Ireland also supports affordability and security of tenure in the private rented sector and therefore recommends the provision of fair rents related to graduated levels of security of tenure and levels of landlord service. The role that private sector shared equity products might play will depend to a large extent on the price of the property and the cost of borrowing and we do not rule out that they might have a role to play in providing access to affordable housing but in our view the real challenge is for government to establish a policy and legal framework which will deliver affordable housing in all sectors and in this context with regard to private developers tax breaks might play a part in encouraging them to develop equity sharing options, perhaps administered by housing associations

3.5

Shelter Northern Ireland 17 November 2006

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