Lee Harris, Chief Executive of Crawley Borough Council and SOLACE Lead on Housing Policy posts his views on the Communities and Local Government Select Committee’s report on the Financing of New Housing Supply.
I’m glad to see that the issue of homelessness and housing supply is receiving more public attention.
First a bit of background before I share our story.Crawleyis a post war “new town” which has grown rapidly from small beginnings to over 100,000 people. It is home toGatwickAirport(20,000+ jobs) and the Manor Royal Business District (30,000+ jobs). There are some 42,000 dwellings in the town. Approximately 69% is owner-occupied, 23% social rented (including over 8,000 council homes) and 8% private sector rented.
The story in Crawley over the last couple of years is one of rising homelessness. You will all be aware of the social and financial pressures that this creates. For example, homelessness applications have increased from 244 in 2009/10 to 389 in 2011/12 and are projected to rise throughout 2012/13. Homelessness acceptances have almost doubled from 83 in 2009/10 to 150 in 2011/12.
A few years ago (2009/10) we had no one in bed and breakfast. Now we have over 60 households, sadly including 40 families and yes, regrettably, some are placed out of borough. Most of this is short term. On the positive side, we’ve done a lot of work to reduce demand for social housing by utilising the private rented sector and in particular we’ve worked hard with our County Council colleagues to eliminate homelessness amongst 16/17 year olds.
The increase in homelessness has not been from the usual family exclusions route. This was 42% in 2009/10 but has fallen to 28%. The worrying trend has been the dramatic increase in people who have come to us because they’ve lost their private rented home. In 2009/10 this stood at just 9%. It is now 45%.
What we are seeing is a shift in behaviour as people who would have moved into home ownership are less able to access this market. These households can afford the mortgage payments but can’t get the mortgage finance, generally through a lack of deposit. They therefore move into or remain for longer in the private rented sector, because they can afford market rents. This is compounded inCrawley where market rents are lower than the surrounding areas, such asSouth London, and hence we are also finding that households are moving intoCrawley. We also have work which is attractive.
We are finding that lower income local households are being priced out of the private rented market and are coming through our doors as homeless. It is increasingly difficult to source temporary accommodation from the private sector and to help these low income households via our rent deposit schemes. Landlords tend to prefer working households and are uncertain and uneasy about the welfare reform impacts.
These circumstances are also dampening the supply of new housing and new starts have significantly reduced, from a peak of almost 700 in 2007/08 to some 380 in 2010/11, and reducing further.
This leads me to conclude that the best way of reducing our homelessness problem is for the Government to take steps to get the housing supply market moving and break the log jam that is preventing people from moving into home ownership and the private rented sector from expanding. The Select Committee identified three key blockages – land supply, planning and finance. The first two look like a way to bash local government.
In the short to medium term in Crawley, this is not really about planning and sites and so I don’t feel that the Select Committee’s recommendations in this respect are terribly helpful to my area. There’s also a fixation with Right to Buy. Whether or not a tenant buys their home does nothing to increase overall supply as the home is occupied! I also don’t believe the solution lies in simply building more public sector housing, although this will help.
The recommendations in the report about freeing up local government’s ability to borrow are encouraging and should be supported from a localist perspective; however, in Crawley we have taken on a £260m housing debt to exit the Housing Revenue Account and, rather than worry about borrowing headroom, my Members have taken a bold decision to repay interest only on the loan for the first 10 years and to use the significant balances built up to invest in new homes.
I think the big challenge is to make it easier for developers and home buyers to access finance and to improve the viability of schemes to get the housing market moving. In my view the Select Committee has struggled to find any meaningful recommendations. The request to review the Government’s NewBuy Guarantee scheme feels a bit lame and I think that SOLACE should be pressing the Government to do more to make the finances for house building stack up for developers, owner occupiers and private landlords.
These are my views from Crawley’s story – if you’re a member of SOLACE, why not let me know what you think or respond to SOLACE’s discussion paper on the funding of new housing supply?
These, and other challenges facing local public services will be the focus of discussions at the SOLACE Summit in Coventry on 16-18th October. More information and details of how to book are available here.