Outer Hebrides Housing Need and Demand Assessment 2011

OUTER HEBRIDES HOUSING NEED AND DEMAND ASSESSMENT 2011

2 December 2011

INTRODUCTION...... 4 1.1 Study background and objectives...... 4 1.2 Report structure...... 5 1.3 HNDA process and conformity with Scottish Government guidance ...... 5 1.4 Other matters...... 7 2. SPATIAL PROFILE OF THE OUTER HEBRIDES...... 8 2.1 Introduction...... 8 2.2 The geography of the Outer Hebrides ...... 8 2.3 Functional housing and labour markets...... 9 2.4 Internal structure of the Outer Hebrides HMA...... 10 3. DEMOGRAPHIC AND ECONOMIC DRIVERS ...... 16 3.1 Introduction...... 16 3.2 Population trends...... 16 3.3 Migration trends...... 19 3.4 Household trends...... 23 3.5 The local economy and economic trends to 2008 ...... 27 3.6 Economic developments since 2008 ...... 30 3.7 Earnings and income...... 34 3.8 Deprivation and poverty...... 39 3.9 Summary and key messages ...... 42 4. THE HOUSING SYSTEM AND RECENT HOUSING MARKET ACTIVITY...... 44 4.1 Introduction...... 44 4.2 Overview of the housing stock...... 44 4.3 Second home and vacant dwellings ...... 45 4.4 Composition of the housing stock composition...... 47 4.5 Housing stock flows...... 50 4.6 Quality and suitability of the housing stock ...... 54 4.7 Housing market activity...... 58 4.8 Private rental dynamics ...... 63 4.9 Social renting and homelessness ...... 65 4.10 Summary and key messages ...... 69 5. THE FUTURE HOUSING MARKET ...... 71 5.1 Introduction...... 71 5.2 Economic outlook ...... 71 5.3 Demographic projections ...... 76 5.4 Short to medium term outlook for the housing market ...... 82 5.5 Long term outlook for the housing market ...... 85 5.6 Summary and key messages ...... 89 6. ESTIMATE OF NET ANNUAL HOUSING NEED...... 92 6.1 Introduction...... 92 6.2 Summary description of the model for assessing net annual housing need ...... 92 6.3 The incidence of current housing need...... 94 6.4 Moving from the incidence of current need to a count of current need ...... 97 6.5 Emerging (future) need...... 98 6.6 Supply of Affordable Housing ...... 103 6.7 Central estimate of net annual housing need ...... 105 6.8 Comparisons with Other Housing Needs Assessments...... 106 6.9 Sensitivity Tests...... 107 6.10 Probable range of the estimate of net annual housing need...... 109 6.11 Future housing need and the net stock requirement ...... 110 6.12 Low cost intermediate housing interventions ...... 111 6.13 Summary and key messages ...... 113 7. HOUSING REQUIREMENTS OF SPECIFIC HOUSEHOLD GROUPS...... 115 7.1 Introduction...... 115

7.2 The potential housing requirements of older households ...... 115 7.3 Specific housing needs of individuals aged 16-64 years with disabilities...... 121 7.4 Households from an ethnic minority background...... 126 7.5 Gender and Sexual Orientation ...... 128 7.6 Summary and key messages ...... 129 8. CONCLUSIONS...... 131 8.1 Introduction...... 131 8.2 Ensuring an adequate supply of housing...... 131 8.3 Ensuring households live in good quality warm housing...... 133 8.4 Improving housing outcomes for those with specific needs ...... 133 8.5 Future Monitoring ...... 134

INTRODUCTION

1.1 Study background and objectives

The Scottish Government requires local authorities to ensure that their Development Plans and Local Housing Strategies (LHS) are closely aligned and underpinned by an assessment of housing need and demand (HNDA). This report has been carried out in accordance with Scottish Government Guidance (2008) on assessing housing need and demand which sets out a broad framework to assist local authorities and their partners to develop a deeper understanding of how housing systems operate. It is referred to as the guidance in the rest of this report.

The guidance stresses that the assessment is not policy itself. It explains that because housing systems are dynamic and complex no assessment can provide definitive estimates of future housing need and demand. It is, however, expected that an assessment should consider the characteristics of the housing system, how key factors work together to influence the operation of a housing system and the probable scale of change in future housing need and demand.

Consistent with this, the objectives of this report are to:

• Describe the spatial structure of the local housing system and the degree of ‘containment’ exhibited by the Outer Hebrides housing market as well as the spatial extent of discernable localised housing markets that operate across the Outer Hebrides, such as the Stornoway housing market area (Stornoway HMA).

• Provide an up to date understanding of the operation of the housing system and how this has been shaped by economic and demographic drivers.

• Explore the housing related needs and demands of residents of the Outer Hebrides and examine the adequacy of existing stock to meet these needs and demands.

• Consider potential future scenarios for the Outer Hebrides and what impact these might have upon the future demand and need for housing provision.

This assessment is intended to provide evidence on which the Comhairle Eilean Siar and its partners can discuss and agree planning and policy interventions that will help deliver better housing for those living in Outer Hebrides and forms a key component of the modernised spatial planning framework.

This study draws on a range of existing sources of statistical data as well as findings from previous assessment studies carried out in the Outer Hebrides. This includes studies by Glasgow University, DTZ Pieda, Hall Aitken and the Macpherson Report. It also includes the 2006 based HNDA carried out by Newhaven Research and Craigforth as well as the 2008 based HNDA update produced in 2009/10.

1.2 Report structure

This report is structured to reflect the HNDA guidance. Chapter 2 reviews the functional geography of the Outer Hebrides and sets out the housing market boundaries for the Outer Hebrides. Chapter 3 explores developments in the wider environment, with particular reference to demographic and economic trends. Chapter 4 profiles the current housing stock and examines the active housing market and the relative severity of housing pressures at the local area level. Chapter 5 considers the possible direction of future demographic and economic trends and how these might influence the future of the housing system in the Outer Hebrides.

Chapter 6 considers housing need, and uses the approach set out in the guidance to estimate net annual housing need for the coming 10 years. It is important to stress that the estimate of net annual housing need is primarily intended to quantify the projected potential deficit or surplus of affordable housing supply at the housing market area level. It is not intended to look at the needs of specific household groups. Chapter 7 therefore looks at the housing related requirements of specific household groups, including older people, and vulnerable adults with housing support related needs. Finally chapter 8 sets out our conclusions and explains how the assessment findings have or will be monitored and updated.

1.3 HNDA process and conformity with Scottish Government guidance

Local authorities must submit the HNDA to the Scottish Government for assessment. The purpose of this assessment is to appraise whether the process and methods used to prepare the HNDA are “robust and credible”. The guidance identifies a set of core outputs expected of an HNDA. These core outputs and where these can be found within this report are summarised in table 1.1.

Table 1.1: Housing need and demand assessment core outputs No Core output Chapter 1 Estimates of current dwellings in terms of size, type, condition, tenure, occupancy 4 and location. 2 Analysis of past and current housing market trends, including balance between 3 & 4 supply and demand in different housing sectors and price/affordability. Description of the key drivers underpinning the housing market. 3 Estimate of total future number of households. 5 4 Estimate of household groups who have specific housing requirements e.g. families, 3 &7 older people, minority ethnic groups, disabled people, , etc. 5 Estimate of current number of households in housing need. 6 6 Estimate of future households that will require affordable housing. 6 7 Estimate of future households requiring market housing. 5& 8 8 Estimate of total future households requiring either affordable or market housing. 5 & 8

The Comhairle Eilean Siar believes that the HNDA is an ongoing process and have looked to undertake or commission analysis on specific issues as and when available resources have permitted. This ongoing process has sought to adhere to the Scottish Government’s process checklist, which is shown in table 1.2.

Table 1.2: Housing need and demand assessment process checklist No Core output 1 Approach to identifying housing market area(s) is consistent with accepted approaches to identifying housing market areas 2 Housing market conditions are assessed within the context of the housing market area and any component markets contained within it. 3 Involves key stakeholders. 4 Contains a full technical explanation of the methods employed, with any limitations noted. 5 Assumptions, judgements and findings are fully justified and presented in an open and transparent manner, in particular in relation to economic growth, demographic change and migration, income estimates and translation of the assessment of need and demand at housing market area level into housing supply targets. 6 Uses and reports upon effective quality control mechanisms. 7 Explains how the assessments findings have or will be monitored and updated (where appropriate).

The LHS Multi-Agency Officer Group has overseen the ongoing development of the housing need and demand assessment. The membership of the group, which effectively acts as the Housing Market Partnership for the Outer Hebrides is set out in table 1.3.

Table 1.3: Members of the LHS Multi-agency Group

Comhairle nan Eilean Siar Partners Iain Watson: Housing Services Manager Hebridean Housing Partnership Isobel Mackenzie: Housing Strategy Officer Angus Lamont Chief Executive Andrew White: Private Sector Housing Manager John Maciver Director of Operations Matt Bruce Housing Strategy Officer Tighean Innse Gall Kathleen Shirkie Research Officer Stewart Wilson Director, Isla Macarthur Planning Officer Donald MacKinnon Acting Depute Director Alison MacCorquodale Economic Development Highlands and Islands Enterprise Officer Anne MacAulay Head of Operations Ella MacBain Interim Head Community Care Scottish Government (Advisory only)

In terms of the HNDA, the main tasks of the LHS Officer Group have been to:

• Have oversight of the HNDA study and associated processes and to provide much of the local secondary data required to carry out and update the HNDA

• Contribute to the interpretation of housing market intelligence through commenting and feeding back of interim and draft findings presented in the original HNDA, the HNDA update, the draft of this report and through participation in events to present and discuss the findings with elected members of the Comhairle.

• Agree the key variables that feed into the estimate of net annual housing need.

• Sign off the final study and further considering the implications of the assessment and any follow-up actions which may be required.

The findings from the 2009/10 HNDA Update and the potential priorities for the Local Development Plan and the LHS have been subject to extensive consultation with a wide range of stakeholder groups throughout the islands during 2010. These events involved community interests, including community groups, local house builders and community land trusts.

Members of the multi-agency Diversity and Equality Steering Group were also asked to communicate with the equalities groups they represent in order to ascertain if there were any barriers to securing equal and fair access to housing. The feedback received did not identify any negative discrimination. The membership and remit of the group can be found in appendix 3.

Although lack of resources have prevented the Comhairle from undertaking a detailed formal assessment of the housing and community related needs at small area level, these consultation events have provided a better qualitative understanding of the perceived needs and expectations of local communities. Workshops and briefings have also been held with elected members to allow them to consider and discuss interim findings and updates.

Over the past 4 years, there has been close liaison between staff responsible for the preparation of the Comhairle’s Local Development Plan and LHS. This has ensured that these two strategic planning processes have developed in tandem. This has been particularly beneficial in identifying available land and considering its potential use.

Although the drafting of this report has been undertaken by Newhaven Research, the project has been managed by the Comhairle’s Housing Services. In particular, all significant decisions, assumptions and judgements that have been applied have been agreed by council officers, in the main following liaison with key internal and external partners.

1.4 Other matters

This report has sought to take some account of the impact of the events that have unfolded since the start of the ‘credit crunch’ and the consequent economic downturn. However, short and long run prospects are very uncertain and it remains difficult to draw any definitive conclusions. It should also be noted that this HNDA Update is only one source of evidence required to inform both the Local Development Plan and the Local Housing Strategy.

As from the 1 April 2011, the General Register Office for Scotland merged with the National Archives of Scotland to become the National Records of Scotland (NRS). For ease of reference all statistics previously published on the GROS website are referred to as NRS statistics.

If you have comments and queries regarding this report please contact:

Isobel MacKenzie Housing Strategy and Development Officer Comhairle nan Eilean Siar (CnES) Tel: 01851 822691 e-mail: [email protected]

2. SPATIAL PROFILE OF THE OUTER HEBRIDES

2.1 Introduction

Scottish housing policy and land planning policy has long stressed the requirement to think spatially about the operation of local housing systems. This chapter introduces the spatial framework used to analyse the Outer Hebrides housing system in the following chapters. It refines the Stornoway HMA, which was initially defined by Glasgow University (Maclennan et al, 2004). It also highlights other important spatial sub-divisions within the housing market area.

2.2 The geography of the Outer Hebrides

The Outer Hebrides is situated in the Atlantic Ocean some 30 miles off the West coast of Scotland. It is a chain of over 70 islands that extends 160 miles from Lewis and Harris in the north to Barra, Vatersay and Mingulay in the south, although only 11 are occupied at present.

During the 20th Century, the Outer Hebrides population was characterised by depopulation and out migration. The Outer Hebrides 2009 Single Outcome Agreement reports that the population fell by 42% during this period. The Outer Hebrides is amongst the most sparsely populated areas of Europe. With an estimated population of less than 26,200 and a land area of 3,071 km2 it has an average of just 9 persons per square km. Most residents live close to the coast and its in-shore waters.

Table 2.1: Estimated population and household numbers, 2009 households population sub-area No % No % Stornoway Town 2,880 24 6,260 24 Point 1,200 10 2,820 11 Broadbay 1,370 12 3,300 13 North West Lewis 1,780 15 3,930 15 South Lewis 1,120 9 2,260 9 Harris and Scalpay 870 7 1,880 7 North Uist and Benbecula 1,300 11 2,710 10 Barra and South Uist 1,380 12 3,030 12 Outer Hebrides 11,900 100 26,180 100 Source: Scottish Neighbourhood Statistics (2011) and NRS (2011) mid-year population estimates and occupied dwellings and percent households. Notes As from the 1 April 2011, the General Register Office for Scotland (GROS) merged with the National Archives of Scotland (NAS) to become the National Records of Scotland (NRS). The latest published small area population estimates at the start of June 2011 refer to 2009. NRS estimates published on April 27 2011 (after this chapter was drafted) indicate that in June 2010 the population had increased marginally by 10 to 26,190. Small area population estimates rounded to nearest 10 and may not sum to 26,180. Occupied dwelling estimates are also rounded to nearest 10 and the share assigned to each small area has been adjusted to aggregate to align to NRS household estimates for Eilean Siar as a whole

Table 2.1 indicates that the northernmost and most heavily populated island is Lewis, which includes the administrative centre of Stornoway (Steòrnabhagh), which is the only settlement that has any discernable 'urban' characteristics in the Outer Hebrides. The town is home to an estimated population of 6,260 and 2,880 households.

Outside the Stornoway and the surrounding area, the two largest localities are Ness and Balivanich. In 2001 these two townships had a population of around 480 and 440 respectively and a population density of around 1.18 and 0.66 per hectare respectively. Thus none of the 280 townships situated elsewhere in Outer Hebrides fall within the NRS definition of a locality or settlement, which is defined as an area with a minimum population of 500 and at least 5 people per hectare. This confirms that the population outside Stornoway and its surroundings generally live in very small and highly dispersed communities.

2.3 Functional housing and labour markets

Thinking spatially about the way the housing market operates is central to understanding how housing demand and supply interact. Likewise, an early first step towards producing meaningful projections of net annual housing need is to establish the spatial extent of housing market areas. It is therefore important to understand what is meant by the term ‘housing market area’.

Markets exist when substantial numbers of buyers and sellers come together to trade goods and services. Most households looking to move house want to continue to live in the same general area where they have family, friends and can commute to work. The market for housing therefore functions over a spatial area that reflects the housing and location choices of consumers.

There are two defining characteristics of a housing market area. The first is that it should be relatively self-contained and represent a geographically defined area where most households look to move home without an associated change in place of employment or lifestyle, such as retirement. The second is that the numbers of households and housing transactions should be sufficient to permit patterns of residential mobility and commuting flows to be observed.

The two widely used methods to define a housing market area (HMA) rely on evidence regarding:

• Commuting patterns, which can be used to define the area where most people work and live.

• Residential mobility and house purchaser search patterns, which show the area where most people relocate without an associated change in employment or lifestyle.

Eilean Siar Travel To Work Areas (TTWA)

As the Local Housing System Good Practice Guide (O’Sullivan et al 2004) explains, there is usually a close relationship between the boundaries of major housing markets and local labour markets, also known as Travel To Work Areas (TTWAs). As TTWAs reflect the spatial concentration of commuting flows between home and place of work, they are often used to approximate housing market areas.

The Office for National Statistics (ONS) and the Centre for Urban & Regional Development Studies at Newcastle University review and, if necessary, revise TTWA boundaries each decade to take account of new information on commuting flows from the Census. The latest TTWA boundaries were published in October 2007 and are based on Census 2001 evidence. TTWAs, like housing market areas, require a minimum population threshold in order to observe meaningful patterns. The 2001-based TTWAs in rural areas are based on a minimum economically active population of 3,500, and a minimum self-containment threshold of 75%. As a result of a fall in the economically active population, the former TTWAs of Lewis & Harris and Uists & Barra were combined to form a single TTWA for the Outer Hebrides.

As reported in the 2009 HNDA update, it has been judged that the Outer Hebrides TTWA provides an appropriate scale for assessing current and possible future trends in economic performance and demographic change. As such, it provides an important spatial basis for understanding the relationship between economic performance and demographic change and how this is shaping the way in which the housing market is operating and changing.

2.4 Internal structure of the Outer Hebrides HMA

Although the Outer Hebrides can be identified as a single housing market area, few households move the kind of distance suggested by the Outer Hebrides TTWA to secure alternative housing without also changing employment. Census evidence confirms that although there has been an increase in the numbers of households willing to live some distance from their place of work, most households move relatively short distances. This illustrates the fact that housing systems can operate at different spatial levels. It is therefore useful to view a housing market area as a tiered entity where different spatial areas nest into each other.

Stornoway HMA

Housing market areas that cover a large geographical area often include more localised markets based around local centres of employment. Consistent with this, Glasgow University (Maclennan et al, 2004) undertook analysis of the movement patterns of house buyers using sasines data to establish the spatial extent of the local housing markets across the Outer Hebrides. To allow for the very small numbers of sales and the lack of a new build housing market in the Outer Hebrides1, the study team judged that market linkages existed if at least 20% of resale purchasers came from or moved to Stornoway2. The study team reported that:

• The Outer Hebrides had a very low rate of housing market activity. The local rate of house sales per 1,000 population (9.7) was less than half the Scotland wide rate (23.9) and upwards of 80% of resales in the 10 years to 2002 had occurred in Lewis.

• The Stornoway HMA was the only discrete local housing market area that could be identified. In the rest of the Outer Hebrides, there were too few transactions to observe functional linkages.

1 For example the HNDA Datapack sasines dataset for 2009 coded just 4 new build sales. 2 This approach builds on DTZ Pieda (2003 a-c) and O’Sullivan et al (2004) LHSA Good Practice Guide.

Recent Sasines data

Analysis of sasines data from 2003 to 2009 confirms that the Stornoway HMA remains the only discrete functional local housing market area that can be defined. Following an extensive manual screening and cleaning exercise, 965 resale transactions were identified where it was possible to identify the origin of resale purchasers that moved within the Outer Hebrides in the 7 years to December 2009. Consistent with the Glasgow University findings, table 2.2 shows that:

• Some 83% of the 965 known resident households that purchased an existing property on the open market in the Outer Hebrides originated from Lewis. Virtually all of these 804 buyers (97%) moved within Lewis.

• The number of internal purchasers that moved within or to the Uists and Barra during this 7-year period is judged too low to draw meaningful conclusions about functional linkages. The same is true for the Harris and Scalpay area. Nonetheless it is evident that few purchasers move from one island to another.

Table 2.2: Purchasers that originated from and moved within Outer Hebrides, 2003-9 Destination of internal purchasers ( where moved to) Uists and Harris and Total origin of purchaser Barra Scalpay Lewis ( where came from) (%) (%) (%) (%) No (%) Uists and Barra 90 2 8 100 115 12 Harris and Scalpay 3 60 37 100 46 5 Lewis 1 2 97 100 804 83 All (%) 11 4 85 100 965 100 Source: Scottish Government Datapack (2009 and 2010 ) Sasines dataset 2003-2009

Table 2.3 summarises the proportion of households that bought a property in different sub-areas of Lewis that came from the settlement of Stornoway3. If a 20% threshold of all internal resale buyers (i.e. purchasers that originate from somewhere within the Outer Hebrides) is taken to demonstrate sufficient linkage for establishing inclusion of a sub-area in the Stornoway HMA:

• Broadbay and Point both fall within the sphere of influence of the Stornoway HMA. In both sub-areas, over a third of all internal households that bought a second hand property in Broadbay or Point had come from the settlement of Stornoway.

• The proportions of buyers in Northwest Lewis and South Lewis that had come from Stornoway remained below the 20% threshold.

To allow for the small numbers of purchasers involved, we also calculated the number of buyers known to originate from Stornoway as a proportion of the local household population. As table

3 Essentially purchasers that originated from the Scottish Government pre-defined intermediate sub-areas of Stornoway East or Stornoway West that moved to one of the other intermediate geographical areas in Lewis or elsewhere in the Outer Hebrides.

2.3 shows, almost 4% of households in Point sub-area in 2009 were owners that had come from Stornoway in the 7 years to 2009 inclusive. The figure for the Broadbay sub-area was the same.

Table 2.3: Purchasers that originated from Stornoway settlement that moved within Lewis , 2003-9 sub-area Buyers that came from Stornoway Buyers that come from Stornoway as (intermediate town as a % of all internal buyers % of all households in the sub-area zone) Broadbay 35% 4% Northwest Lewis 14% 1% Point 36% 4% South Lewis 18% 1% Stornoway 60% 7% Source: Scottish Government Datapack (2009 and 2010) Sasines dataset 2003-2009 Notes: Column 2 percents are based on the movement patterns of some 965 households that are known to have originated within the Outer Hebrides. Thus the percentages refer to the number of purchasers that come from Stornoway as a proportion of all resale purchasers that moved within or to the area from somewhere within the Outer Hebrides.

We also looked at whether purchasers that originated from Stornoway move to adjacent localities or further afield. This analysis confirms that:

• Purchasers in Point that originated from Stornoway tend to move to Melbost, Knock and Braighe although there has also been a clear upward trend in the proportions moving to Upper Bayble, Lower Bayble, Garrabost and Aird in the eastern half of Point relative to the decade to 2002/3.

• Of those purchasers that moved to the Broadbay area from Stornoway, half move to Newmarket and some 48% move to the area centred on Tong and Back. Very few buyers move to the northern end of Broadbay which includes Gress or Tolsta.

• Although there has been some increase in the flow of purchasers from Stornoway to the Leurbost and the North Lochs area, the numbers remain too low to suggest a significant market link.

On the basis of the available evidence, the Stornoway HMA has been defined to include Stornoway, the whole of Point and most of Broadbay, including Newton, Plasterfield, Newmarket, Tong, Upper Coll, Coll and Back. In reaching this judgement, account was also taken of the fact that:

• House prices in this area have remained consistently higher than elsewhere in Lewis in the period from 2003/9.

• Local knowledge indicates that the Stornoway HMA continues to operate over a relatively tightly defined area because of a mix of geographical constraints and the limited ability of lower income households to travel significant distances due to a lack of public transport.

• Census 2001 travel to work patterns indicates that 4 out of 5 working adults in the Point and Broadbay areas worked in and around the settlement of Stornoway.

• All the settlements in Point fall within a single HHP letting area whereas Broadbay is split into two letting areas. North Tolsta forms a distinct letting area whilst the southern half of Broadbay, which includes Back, Coll and Tong, forms another.

• Waiting list data provided by HHP indicates that applicants whose first preference is to be rehoused in Stornoway for the most part choose Point or the opposite side of Broadbay (excluding Tolsta) as their second preferred area and vice versa.

• The spatial area is consistent with previous findings by Glasgow University definition4.

The area is home to an estimated 11,670 people and 5,180 households. As this is close to the very minimum population for which the potential error margin for projections may be acceptable, we judge that the Stornoway HMA represents the smallest scale at which it is appropriate to project the estimate of net annual housing need.

Rural HMA

The term Rural HMA has been used to refer to the rest of the Outer Hebrides area in the following chapters of this report. This area has an estimated population of 14,510 and an estimated household population of 6,720.

As noted above, it is not possible to define functioning localised housing market areas outside of the Stornoway area. In reality the Rural HMA is made up of several distinctive local areas which operate as standalone areas with little interaction between them. The projected estimate of net annual housing need reported in section 6 cannot allow for these very localised circumstances. Nor is it possible to produce statistically credible projections for sparsely populated areas. Hence the reported figures for the Rural HMA may somewhat under-estimate the potential scale of shortfall (or surplus) of affordable housing supply by some margin.

Rural HMA sub-areas

Although locally functioning housing market areas cannot be defined, the operation of the housing system does vary across the Rural HMA and it is important to look at current imbalances in the housing system that may prevent households that live in rural areas from securing suitable housing. Taking account of the community groupings referred to in the Outer Hebrides Single Outcome Agreement, data constraints and resource limitations, the Rural HMA has been sub-divided into the following areas:

• Rural Lewis and Harris (including Scalpay), which extends across three wards that cover Westside & Ness, Uig & North Lochs, and Harris & South Lochs plus the northern tip of the Broadbay ward. Whilst often referred to as if they were separate islands, in fact they form a single land mass.

4 The Glasgow University report did not provide a detailed description of the Stornoway HMA but discussions with the research team in 2007 confirmed the area included Point and Broadbay. It should also be noted that the 2006 housing need survey weightings reported later on in this report have been adjusted to allow for the exclusion of the Tolsta datazone from the SHMA and more recent demographic estimates. Thus some of the percentages may differ marginally (by 1-2%) from those reported in 2007.

• North Uist and Benbecula, which corresponds to the ward of Beinn na Faoghla Agus Uibhist A Tuath

• South Uist and Barra (including Eriskay and Vatersay), which corresponds to the ward of Barraigh, Bhatarsaigh, Eirisgeigh Agus Uibhist.

Figure 2.1: Map of the Outer Hebrides and reporting geographies

Source: CnES (2011)

Summary and key messages

The geography of the housing system in the Western Isles is shown in figure 2.1. It is multi- layered and is best characterised as consisting of three broad tiers that nest into each other. These three layers of geographies, which are used in the rest of this report, are:

• Tier 1- The Outer Hebrides HMA. This reflects commuting flows and is the spatial level at which inter-connections between the housing system and broader demographic, social and economic trends are most evident and best explored.

• Tier 2 - The local housing market areas of the Stornoway HMA and the Rural HMA. The Stornoway HMA has been defined on the basis of patterns of residential mobility and is the only discrete functional housing market area within the Outer Hebrides. By contrast, the Rural HMA is a somewhat artificial and extends across the rest of the Outer Hebrides which is largely comprised of townships with very small and highly dispersed populations.

• Tier 3 - Localised areas that nest within the Rural HMA. The 3 areas have been defined on the basis of local knowledge but allow for data and resource limitations and are (a) Rural Lewis and Harris and (b) North Uist and Benbecula and South Uist and Barra.

This geography framework reflects a trade off between:

• Conceptual understanding of the spatial extent of functional housing market areas.

• A desire to understand the housing imbalances and problems that face local communities throughout the rural area of the Outer Hebrides.

• Practical limitations in terms of data constraints and data protection.

The estimate of net annual housing need, reported in section 6 has been prepared at the Outer Hebrides and Stornoway HMA level. Although a projection for the Rural HMA has been reported, this provides only a broad-brush indication of the potential shortfall (or surplus) of affordable housing supply.

It is not possible to produce robust and credible projections for the localised areas that fall within the Rural HMA. This is partly because of data constraints5 but more importantly, the population numbers in the different highly localised areas within the Rural HMA are too small to permit trends to be clearly observed from statistical data and for projections to be made.

The Comhairle is seeking to build up a series of community based assessments using a common format as and when resources permit. Over time this will provide a better understanding of the range of issues associated with community sustainability including the relative severity of housing problems affecting small-scale communities across the Outer Hebrides and help to inform policy-makers engaged in housing, economic development, social care, spatial planning and other areas of policy.

At present however, there remains only very limited evidence to assess and monitor the relative severity and depth of housing pressures in local communities throughout the Outer Hebrides. An important task for the LHS Officer Group is therefore to ensure cost effective options for addressing some of these evidence gaps is built into the community assessment process.

5 NRS indicate that projections for the 16-64 age group for the Outer Hebrides are subject to significant error when looking 4+ years ahead due to the combined effect of the relatively small population in this age group and because of the inherent difficulty in projecting migration flows (see http://www.gro-scotland.gov.uk/files1/stats/ppwg06-09- accuracy-sub-national-pop-proj-scotland.pdf )

3. DEMOGRAPHIC AND ECONOMIC DRIVERS

3.1 Introduction

This section sets out the national and local demographic and economic context in which the housing system of the Outer Hebrides has evolved.

3.2 Population trends

Population numbers

Between 1901 and 1991 the population of the Outer Hebrides declined by almost 40%. In line with this underlying trend, the population declined by almost 10% between 1991 and 2001. This was the highest percentage rate of decline of any Scottish local authority area over this period. As table 3.1 shows, population decline during the 1990s arose from a combination of natural population decline (more deaths than births) and net out-migration as more people opted to move out than move to the Islands.

Table 3.1: Components of population change 1991 to 2001

Est. Pop Natural Migration & Est. Pop Population Area 1991 Change Other Changes 2001 No. % Scotland 5,083,330 -6,345 -12,785 5,064,200 -19,130 -0.4 Outer Hebrides 29,330 -1,354 -1,526 26,450 -2,880 -9.8 Source: NRS Population Estimates and Projections - Revised September 2010

Table 3.2 shows that in 2010 the Outer Hebrides had an estimated population of 26,190. Over the 2001/10 period the Outer Hebrides experienced net inward migration. Although the scale was modest compared to elsewhere in Scotland, this trend was in marked contrast to the long- term trend. Moreover net-migration led to a sharp fall in the rate of population decline but as discussed below, the upturn in inward migration may have been a temporary or cyclical event.

Table 3.2: Components of population change 2001 to 2010

Est. Pop Natural Migration & Est. Pop Population Change Area 2001 Change Other Changes 2010 No. % Scotland 5,064,200 -4384 162,284 5,222,100 157,900 3.1 Outer Hebrides 26,450 -1,166 906 26,190 -260 -1.0 Sources: NRS (2011) Components of population change 2009-10 and NRS (2010)Components of population change 2001-2009

Looking across the Outer Hebrides, table 3.3 indicates that between 2001/ 9 the population of the Stornoway HMA expanded by 2.7%, broadly in line with national trends. By contrast the population of the Rural HMA continued to decline in all three sub-areas, although the overall fall was relatively modest in South Uist and Barra. In the case of Rural Lewis and Harris, population decline was concentrated in Harris.

Table 3.3: Population by housing market area and sub-area 2001 to 2009 Change 2001-09 2001 2009 No % Stornoway HMA 11,355 11,666 311 2.7% Rural HMA 15,095 14,514 -581 -3.8% Rural Lewis and Harris 9,066 8,773 -293 -3.2% North Uist and Benbecula 2,910 2,707 -203 -7.0% South Uist and Barra (and Vatersay) 3,119 3,034 -85 -2.7% Outer Hebrides 26,450 26,180 -270 -1.0% Source: NRS (2010) Population estimates for datazone and intermediate geography areas via SNS Note: As at the start of June 2011, NRS small area population estimates for 2010 had not been released on the Scottish Neighbourhood Statistics (SNS) website.

Population age structure

Figures 3.1 and 3.2 confirm that population decline has been accompanied by an aging of the population of the Outer Hebrides.

Figure 3.1: NRS 2009 population estimates for Scotland and Outer Hebrides by age band

Source: NRS (2010) Population estimates for datazone and intermediate geography areas via SNS

The Outer Hebrides has a higher proportion of older adults and a correspondingly lower proportion of adults below retirement age than Scotland as a whole. Currently some 22% of the population is aged 65+ years compared to 17% of Scotland’s population. Likewise, 61% of the population is aged 16-64 years compared to 66% of Scotland’s population.

In recent years the growth in the numbers of adults aged 65+ years has been slightly below the Scottish average. Between 2001/10 the Outer Hebrides the numbers of older people increased by 7.8% to 5,667, whereas Scotland’s older population increased by 9%. This difference was largely due to the lower rate of growth of women aged 80+ years locally. Over this period, the numbers of females aged 80+ years in the Outer Hebrides increased by 4% compared to 11% for Scotland as a whole. Nonetheless, at 6%, the proportion of the Outer Hebrides population aged 80+ remains the highest of all Scottish local authority areas and remains above the Scottish average (4%).

Figure 3.2: Percent population change in Outer Hebrides and Scotland by age band, 2001-10

Source: NRS (2011) Mid-year population estimates 2010 and NRS (2010) Mid-year population estimates 2001-9

The proportion of the Outer Hebrides population that is made up of children less than 16 years (17%) is similar to the Scotland wide rate (17.5%). Likewise, the proportion of the population aged 35 to 64 years (43.5%) is reasonably similar to the Scotland wide rates (41%).

By contrast the proportion of the Outer Hebrides population aged 16-34 years (18%) is well below the Scotland wide rate (24%). Moreover, this gap has been increasing over time. From 2001/10 the Outer Hebrides continued to experience a fall in the numbers of adults aged 16 to 34 years (-12%) whereas the numbers in Scotland increased by just under 2%. This is the age range during which most people form a household and thus has a substantial impact on the aggregate demand for housing.

Across the Outer Hebrides there has been an increase in the proportion of the population comprised of adults aged 50 years or above. Table 3.4 shows that:

• The growth in the Stornoway HMA population has been driven by an expansion of the numbers of people aged over 35 years, mainly those aged 50 to 64 or 80+ years.

• Population decline in the Rural HMA has also been concentrated amongst children and adults under 50 years, although there has been a modest growth in households aged 35- 49 years in Rural Lewis and Harris – mainly Rural Lewis.

Table 3.4: Population by housing market area and sub-area 2001 to 2009 split by age 0-15 16-34 35-49 50-64 65-79 80+ total 2009 Outer Hebrides 4,511 4,684 5,638 5,731 4,058 1,558 26,180 SHMA 2,116 2,312 2,526 2,401 1,568 743 11,666 RHMA 2,395 2,372 3,112 3,330 2,490 815 14,514 Rural Lewis and Harris 1,400 1,388 1,860 1,999 1,584 542 8,773 North Uist and Benbecula 420 466 628 634 423 136 2,707 South Uist and Barra 575 518 624 697 483 137 3,034 2001 Outer Hebrides 4,954 5,323 5,567 5,350 3,835 1,421 26,450 SHMA 2,085 2,576 2,423 2,152 1,507 612 11,355 RHMA 2,869 2,747 3,144 3,198 2,328 809 15,095 Rural Lewis and Harris 1,584 1,564 1,833 1,949 1,561 575 9,066 North Uist and Benbecula 593 601 664 601 350 101 2,910 South Uist and Barra 692 582 647 648 417 133 3,119 change Outer Hebrides -443 -639 71 381 223 137 -270 SHMA 31 -264 103 249 61 131 311 RHMA -474 -375 -32 132 162 6 -581 Rural Lewis and Harris -184 -176 27 50 23 -33 -293 North Uist and Benbecula -173 -135 -36 33 73 35 -203 South Uist and Barra -117 -64 -23 49 66 4 -85 Source: NRS (2010) Population estimates for datazone and intermediate geography areas via SNS

Overall, the population age imbalance in the Stornoway HMA and the Rural HMA reflects the continuing trend for a high proportion of younger adults to leave the Outer Hebrides to pursue education and employment opportunities elsewhere. It also reflects the upward trend in life expectancy, although NRS figures confirm that there remains a distinct difference in the life expectancy of males (73.5 years) and females (82 years).

3.3 Migration trends

Migration is an important driver of demographic change and central to the ambitions of the Outer Hebrides Community Planning Partnership (OHCP) to stem population decline and redress the present demographic imbalance.

Trends up to 2001

Historically, the Outer Hebrides has been an area of net out-migration, with more people leaving to live elsewhere than moving to live in the Outer Hebrides. This remained the case in the year prior to Census night when there was a net loss of 264 people to elsewhere in the UK. Overall:

• Some 987 people moved away from the Outer Hebrides to somewhere else in Scotland (757) or the rest of the UK (230). Half of all out-migrants were between the ages of 16 and 29. Some out-migrants of all ages also moved abroad but these numbers are not known.

• Some 764 people moved to the Outer Hebrides, including 723 from elsewhere in Scotland (466) or the rest of the UK (257). Most in-migrants were aged over 30 years and it is likely that a large proportion of these individuals were returnees to the island after a period of study or employment on the mainland. It is believed that many moved into property that they or members of their family already owned.

The net gain in adults aged 45 years or above alongside the significant net loss of adults aged less than 30 years in the year 2001 confirms the OHCP view that migration has contributed to the problems of population decline and demographic imbalance.

Trends since 2002

In common with Scotland as a whole, the Outer Hebrides experienced a return to net in- migration during the “noughties”. NRS estimates, which are shown in table 3.5, provide a good indication of recent trends. However, the annual numbers should be treated with caution because of difficulties in monitoring migration flows, especially out-migration.

Table 3.5 Total migration flows to and from the Outer Hebrides, 2002/3 to 2008/9 inward migration out migration net migration 2001-02 952 1,016 -64 2002-03 1,010 934 76 2003-04 1,253 931 322 2004-05 1,218 962 256 2005-06 1,106 982 124 2006-07 1,026 983 43 2007-08 1,022 1,026 -4 2008-09 968 912 56 2009-10 983 822 161 Annual average 2002-9 1,073 944 129 Source: NRS (2010) Population estimates – migration assumptions

Between 2002/9 younger adults aged 16-29 years accounted for the majority of all individuals that moved away from the Outer Hebrides. This pattern is replicated throughout much of rural Scotland. It reflects the nationwide trend for young adults to move to cities to pursue education and employment opportunities.

Figure 3.3: Average migration as a percent of population in year 2007-2009

Source: NRS (2010) Population estimates (note NRS had not published 2010 figures by early June 2011)

What is distinctive about the Outer Hebrides is the high proportion of individuals that choose to move away on reaching their late teens. Figure 3.3 shows that from 2007/9 almost a quarter of all individuals moved away from the Outer Hebrides to the rest of the UK on reaching the age of 18 or 19 years. The comparable proportion for Shetland and Orkney was around 20% whilst for mainland rural areas like Highlands the proportion was 15% or less.

Migration to and from elsewhere in the UK

During the ““noughties”” there was an upturn in net-migration from elsewhere in the UK. Figure 3.4 shows that from 1995/2001 net migration between the Outer Hebrides and elsewhere in the UK averaged -126 each year whereas from 2002/9 it averaged 139 each year.

This fall in out-migration mainly reflects a gradual decline in the teenage population and thus the numbers of individuals leaving the Outer Hebrides on reaching 17 to 20 years of age.

In terms of inward migration, the Hall Aitken (2007) Outer Hebrides Migration Study reported that the increase was due to some increase in the numbers of:

• Individuals returning to the Outer Hebrides after a period of study or employment on the mainland, which was particularly evident in the Stornoway HMA.

• Empty nest households and other older households making a lifestyle choice to relocate and buy property in more remote and scenic areas of Harris, South Lochs, Uig and Bernera.

• Professional workers recruited from the mainland, although some of this group plan to stay for only a short period and return to their family home on the mainland at weekends.

Figure 3.4: In, out and net migration between Western Isles and elsewhere in the UK 1995-2009

Source: NRS (2010) In, out and net migration between NHS Health Boards and the Rest of Scotland plus in, out and net migration between NHS Health Boards and the Rest of UK

Traditionally, more women than men have left the Outer Hebrides on reaching their late teens and fewer women have returned. NRS (2010) figures indicate that in the period from 2002/9, more women in their late teens continued to move to the mainland. However, the number of women than came to the Outer Hebrides was greater than the number of men. As a result, the annual average level of net in-migration for men (75) and women (64) were reasonably similar. It is likely that the increase in public sector jobs during this period contributed to the growth in the numbers of women that returned or moved to the Outer Hebrides6.

Overseas migration

Another reason for the upturn in net migration during the ““noughties”” was the increase in the numbers of overseas in-migrants. De Lima et al (2005) reported that migrant workers from the European Accession countries7 became a significant component of the labour force throughout the Highlands and Islands after 2002. National Insurance (‘NiNo’) registrations8, which provide a

6 As noted below, around 3 out of 5 female employees in the Outer Hebrides currently work in the public administration, education and health service sector. 7 Accession nationals refer to people from the 12 Accession countries. These are Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia, which joined the European Union (EU) in May 2004, and Romania and Bulgaria, which joined in January 2007. 8 National Insurance Numbers (NiNo) allocated to adult overseas nationals entering the United Kingdom (UK) provide some indication of in-migrant trends for adult overseas nationals moving to the UK but do not measure either out- migration (i.e. migrants who leave the UK) or the total migrant population at any point in time. It is also possible that some migrant workers register in a different location from where they work.

measure of in-migration trends for adults moving from overseas to the UK, support the study team’s observation. Table 3.6 indicates that 560 migrant workers registered in the Outer Hebrides in the 8 years to 2009/10. The large majority came from Poland or elsewhere in Europe and over two thirds were aged 18 to 34 years at the point of registration. Table 3.6 also shows that there has been a fall in the annual figures of NiNo registrations since 2007/8 at the UK, Scotland and Outer Hebrides level subsequent to the onset of the economic recession.

Table 3.6: National Insurance Number Registrations by overseas nationals UK Scotland Outer Hebrides 2002/3 349,240 14,730 20 2003/4 370,750 15,960 30 2004/5 439,730 23,440 80 2005/6 663,060 41,400 130 2006/7 705,840 51,890 90 2007/8 733,090 52,410 110 2008/9 686,110 46,260 60 2009/10 572,740 36,300 40 Source: DWP (2011) NiNo registrations online tabulation - note figures are rounded by DWP

NRS (2011) estimates of the numbers of people moving between the Outer Hebrides and the rest of the world indicate that that in the 2 years to 2008/9 inclusive, an average of 36 more people from Outer Hebrides each year moved abroad than came to the area from abroad. Little is known about the composition of migrants that move to or from abroad. That said, NRS data adds further support to local stakeholder perceptions that the numbers of overseas migrant workers living in the Outer Hebrides has fallen since 2008 and the onset of the economic downturn.

Continuing difficult economic conditions and incoming cuts in public expenditure make it difficult to predict future migration rates. However, past trends throughout the UK indicate that internal and overseas migration typically decline rapidly in recessionary conditions.

Residential mobility within Western Isles

Residential mobility within the Outer Hebrides is low. According to the Census, just 4.7% of the Outer Hebrides population changed their local address in the year prior to the Census compared to a national average ‘churn’ rate of 6.5%. The 2006 Local Housing Need Survey confirmed that whilst churn rates across the Western isles remained low, there was a discernible shift in economically active adults from the most remote areas moving to the areas in and around Stornoway and Balivanich. Aitken and Hall (2007) also observed that housing demand, planning applications and school roll changes pointed to a shift of population towards larger centres, particularly Stornoway and Balivanich. As they commented, this trend reflects “greater demand for proximity to services and transport links as well as the wider housing and employment opportunities available in Stornoway and Balivanich”.

3.4 Household trends

Table 3.7 shows that from 2001/10 the number of households in the Outer Hebrides increased by 6.7% to 12,018, although much of this growth occurred in the 2005/10 period. As table 3.8

shows, the continuing upward trend in households has been evident across the Stornoway HMA and the Rural HMA.

Table 3.7 Household estimates, 2001-2010 change 2001-10 change 2005-10 Area 2001 2005 2010 No % No (%) Scotland 2,195,033 2,271,353 2,357,424 162,391 7.9% 86,071 3.8% Eilean Siar 11,283 11,486 12,018 735 6.7% 532 4.6% NRS (2011) Household estimates

Table 3.8: Households in Stornoway HMA and Rural HMA 2007-10 (No) 2007 2010 change Stornoway HMA 5,082 5,228 2.8% Rural HMA 6,624 6,790 2.5% Rural Lewis and Harris 3,964 4,052 2.3% North Uist and Benbecula 1,295 1,330 2.6% South Uist and Barra 1,365 1,408 3.2% Outer Hebrides 11,706 12,018 2.7% NRS (2011) - Small area occupied stock estimates published on SNS aligned to LA household estimate totals. Note: Small area occupied stock estimates have only been available since 2007.

Looking across the Outer Hebrides, some 5,228 households were residents of the Stornoway HMA in 2010, which was equivalent to 44% of all households. A further 6,790 households live in the Rural HMA (56%), of which 4,052 live in Rural Lewis and Harris (34%), 1,330 live in North Uist and Benbecula (11%) and 1,408 live in South Uist and Barra (12%).

The continued growth in household numbers reflects the growth in the numbers of people living in smaller one or two adult households and a fall in the number of households that include dependent children (see table 3.9). The average size of households living in the Outer Hebrides is currently around 2.18 compared to 2.26 in 2001.

Table 3.9: Estimated households in Outer Hebrides by household type, 2002-10 (%) Household Type 2002 2010 Household with 1 adult 34 37 Households with 1 adult with Child(ren) 4 5 Households with 2 or more adults with Child(ren) 22 17 Households with 2 or more adults 40 41 All (percent) 100 100 Number 11,224 12,018 NRS (2011) household estimates and projections

Household composition and tenure

Evidence from the Scottish Household Survey indicates that at the Outer Hebrides level, the composition of households is reasonably similar to that for Scotland. Table 3.10 shows that:

Table 3.10: Household type of Outer Hebrides household population by sub-area (%) Outer Stornoway Rural Lewis and Uists and Scotland Hebrides HMA Harris Barra Single Person 16 13 12 12 15 Single Pensioner 17 19 19 21 20 Older smaller couple 16 19 15 20 15 Couple/small adult 17 14 13 13 14 Family 20 19 18 17 18 Lone Parent 5 3 4 3 4 large adult (3+ adults) 9 13 19 14 14 Total 100 100 100 100 100 Sources: SHS 2007-09 interactive tables - Scotland and Eilean Siar (household type percents rounded) and 2006 Housing Needs Survey - Sub-area household type percents based on weighted 2,250 household representative responses where it was possible to code household type. Note: HNA 2006 survey results for North Uist & Benbecula and South Uist & Barra are subject to a high margin of error and are therefore not reported.

• Some 38% of households in the Outer Hebrides comprise of older single pensioner households (19%) or older pensioner couples (19%). This evidence is supported by NRS 2008 based household projections, although these suggest the percentage of households represented by someone aged 64 years or above is around 33%.

• Relative to Scotland, the Outer Hebrides has a low proportion of lone parents but a high proportion of large adult households. Evidence from the 2006 Housing Needs Survey indicates that the higher proportion of large adult households reflects the higher concentration of adult offspring that live with one or more of their parents.

Figure 3.5: Percent of households by tenure, 1971 to 2001

Source: Census 1971 to 2001 (2001 figures adjusted to re-allocate living rent-free by tenure)

Findings from the 2006 Housing Need Survey, which are shown in table 3.9, suggest the composition of households in the Stornoway HMA and the Rural HMA are reasonably similar. The main difference would appear to be that there are higher proportions of pensioner households living in the Rural HMA and higher proportions of large adult households in the Stornoway HMA.

Figure 3.5 highlights that the Outer Hebrides has long had a distinctive tenure profile. Throughout the period from 1971/2001 around 7 out of 10 households were homeowners and 2 out of 10 households have rented their home from a social landlord, although the precise proportions have fluctuated somewhat over time. The sustained high level of owner occupied housing over this period reflects the existence of some 6,000 crofts in the Outer Hebrides.

Evidence from the Scottish Household Survey 2007-8 suggests that some 75% of households are homeowners, 17% rent from a social landlord, 4% rent from a private landlord and 4% are classed as other9.

Looking across the Outer Hebrides, figure 3.6, indicates that:

• The proportion of homeowners ranges from 74% in the Stornoway HMA to 78% in the Rural HMA. Within the Rural HMA over half of all households own their house outright, reflecting the dominance of croft housing in many townships in the Rural HMA.

Figure 3.6: Percent of households in the main tenure by HMA, 2006-7

Source: Housing Needs Survey 2006 (re-weighted 2,250 household representative responses)

9 This classification will include those renting a croft as well as a range of other living arrangements.

• The proportion of households living in the social rented sector ranges from 14% in the Rural HMA to 20% in the Stornoway HMA.

• Slightly more households in the Rural HMA (9%) live in private rented/other tenure than in the Stornoway HMA (6%), but this is mainly due to the higher proportion of rented crofts and informal letting to family and friends outwith the Stornoway HMA.

One consequence of the historically high levels of owner occupation is that a high proportion of older households own their home. Findings from the 2006 study suggest that almost 4 out of 5 older householders live in the owner occupied sector. This is discussed further in section 7.

3.5 The local economy and economic trends to 2008

The decline and aging of the population of the Outer Hebrides is inextricably linked to the structure and performance of the Outer Hebrides economy, which in turn has been shaped by the area’s remote location and the rural nature of its communities.

Economic activity and employment rates

ONS typically divide the working age population (16 to 64 years) into two groups. The term ‘economically active’ refers to people who are in employment, on a government supported training programme or are unemployed and actively seeking work. The term ‘economically inactive’ is applied to people who are not actively seeking work such as those looking after the family/home and people that are retired or sick/disabled.

Figure 3.7: Adults in employment as percent of working age 16-64 population, 2001-2010

Source: ONS Annual Population Survey (Nomis, June 2011)

From 2001/8 the Outer Hebrides maintained a high economic activity rate. In the year to September 2008, around 13,300 residents were economically active. This was equivalent to 82% of the working age population, which was above the comparable rate for Scotland (78%). The Outer Hebrides also maintained a high rate of employment relative to Scotland and Britain (see figure 3.7). In the year to September 2008, around 12,600 residents were in employment, including 1,500 self-employed individuals. This was equivalent to 78% of the working age population and over 95% of the economically active population.

Economic productivity (GVA)

ONS calculate that the unemployment rate for the Outer Hebrides, which refers to people without a job who are available to start work, who have looked for work in the past four weeks or who are waiting to start a job they have already secured, generally fluctuated within 1% or so of the Scotland wide rate between 2001/8. In 2008 the average annual unemployment rate for the Outer Hebrides was 4.6% whilst the Scotland wide figure was 4.9%.

In spite of high rates of employment and a period of uninterrupted economic growth to 2008, economic performance continued to lag behind the rest of Highlands and Islands and Scotland as a whole. In terms of Gross Value Added (GVA)10, which is the ONS preferred measure for the monitoring the economic performance and productivity at the regional and local level:

• ONS (2010) report that in 2008 total GVA for the Outer Hebrides was around £358 million. This equated to £13,678 per head of population compared to £15,426 for the Highlands and Islands and £20,031 for Scotland. However, the lower GVA per head of population rate for the Outer Hebrides is somewhat affected by the high numbers of older residents.

• Oxford Economics and SLIMS (2009) estimated that GVA for the Outer Hebrides increased on average by 1% each year between 2001/7 whereas the GVA for Scotland averaged around 2.8% over this period.

Structure of local labour market

The continued low productivity of the local economy in the years to 2008 reflects the fact that:

• The local economy became increasingly dominated by public services, which involve low value outputs. By contrast, the scale of the financial & business services sector, which was the main driver of UK economic growth in the decade to 2008, remained little changed.

• The vast majority of private sector employees in the Outer Hebrides were employed by companies with fewer than 50 employees. As Highland and Islands Enterprise (HIE, 2007) observed, these small firms were unable to benefit from economies of scale and often their productivity was subject to seasonal variation.

10 Gross Value Added (GVA) is a measure of the difference between the value of goods and services produced in a local economy and the cost of raw materials and other inputs which are used up in production. GVA figures for the Outer Hebrides are considered indicative only because they are subject to quite a high margin of error.

Figure 3.8 summarises the main changes in the structure of the employee labour market from 2001/8, although 2001 figures should be considered indicative because of discontinuities in data collection.

In 2001 the public administration, education and health sector was the largest industrial sector in terms of employees (33%). It was also was the fastest growing sector. By 2008, some 43% of all employees (4,500) in the Outer Hebrides worked in the public services sector compared to 30% of Scottish employees and 27% of GB employees.

Aside from the public service sector, construction was the only sector in the Outer Hebrides economy to see any discernable increase in employee numbers. In 2008 some 7% of all employees (800 people) worked in construction compared to 3% in 2001. Oxford Economics and SLIMS (2009) estimated that there were a further 300 self–employed construction workers. The expansion of construction jobs was aided by a growth in housing investment and the tendency to favour local builders over contracting work from mainland builders (HIE 2007).

Figure 3.8: Proportion of employees by industrial sector, 2001 and 2008

Source: ONS Annual Business Inquiry -Employee jobs (Nomis June 2011) Notes: ONS report that discontinuities in data collection mean some figures are not strictly directly comparable.

In contrast to Scotland as a whole, there was little (if any) change in the numbers of employees working in the banking, finance and insurance sector in the Outer Hebrides but there was a perceptible reduction of employees working in tourism related activities as well as distribution, hotels and restaurants. This appeared to be at least partly due to a loss of part time jobs in both sectors locally.

Although the rate of decline in the numbers of employees in the Outer Hebrides engaged in manufacturing was low relative to the Scotland wide trend, there was little evidence of a shift towards higher value added manufacturing activities. HIE (2011) report that in 2007 GVA per full-time equivalent employee in the manufacturing sector was £28,865 for the Outer Hebrides compared to £62,030 in Scotland.

In 2008 some 4% of employees worked in the agriculture and fishing sector, but this figure excludes people who made at least part of their living through crofting. Historical figures for this sector are not reliable, but local knowledge confirms there was a modest upturn in the numbers of employees working in this sector due to the expansion of fish processing and fish farming.

Full and part time employment

Figures from the Annual Population Survey show that there was a shift from part-time to full time jobs in the Outer Hebrides in the decade to 2008. This was in contrast to Scotland and the UK where there was a substantial increase in people working full time and part time. In 2008 some 9,000 residents of the Outer Hebrides worked full-time, including some 7,300 employees. Nonetheless, the proportion of workers in full time employment (75%) remained slightly below the Scotland wide rate (77%).

In 2008 some 60% of all female employees in the Outer Hebrides worked in the public administration, education and health sector. In spite of the growth in jobs in this sector and the comparatively higher numbers of inward female migrants noted earlier, there was no discernable change in the overall numbers of women in employment across all industrial sectors in the period to 2008. The loss of retail and catering jobs, the fall in part-time jobs and the possible retirement of a higher proportion of women than men from the labour force most likely explain this apparent contradiction.

Occupational structure

The Annual Population Survey indicates that in 2008 the Outer Hebrides had a lower proportion of its workforce in professional, managerial and associated technical occupations (37%) compared to Scotland as whole (41%). However this gap has reduced in recent years, presumably because of the growth in public service jobs in the Outer Hebrides. There was also some increase in the numbers and proportion of individuals employed in administrative & secretarial occupations and skilled trades, again consistent with the growth in employees working in the public service and construction sectors.

3.6 Economic developments since 2008

The UK and Global recession

ONS figures confirm that total GVA for Scotland contracted by -£980 million between 2008/9 as the UK entered the longest and deepest recession since World War 2. This followed in the wake of the global financial crisis known as the credit crunch.

During 2009 the UK recession deepened in spite of various UK Government measures to shore up the economy. This included a cut in interest rates from 5% to less than 1% in the 6 months to

February 2009. However, because the UK banks tightened their lending policies in order to rebuild their balance sheets, companies found it difficult to secure working capital to help them adjust to the downturn and output continued to fall back. Mortgage lending constraints and faltering labour market conditions also led households to scale back spending which reduced aggregate domestic demand for housing and other goods and services. This resulted in a sharp downturn in housing construction, property transactions and house prices across the UK including Scotland, and as discussed in chapter 4, the Outer Hebrides.

During 2010 the UK economy eased out of the recession. However, there remains a great deal of uncertainty regarding how quickly economic and labour market conditions in the Outer Hebrides and the rest of Scotland will recover and what scale of recovery is likely. The pace of recovery across Scotland is likely to be shaped by the underlying strength of individual local economies and the extent to which they will be affected by public fiscal tightening. As discussed further in chapter 5, the fragile Outer Hebrides economy appears to be vulnerable because of its reliance on comparatively high levels of public spending, the high share of jobs in the public service sector, and the high proportions of households reliant on state benefits.

Outer Hebrides economy and labour market since 2008

There is little statistical evidence about changes in the productivity or performance of the Outer Hebrides economy since the onset of the economic recession in 2008. That said, labour market trends provide some indication of the impact of the recession across the Outer Hebrides.

Figure 3.9: Economic activity and unemployment rates, September 2008 to September 2010

Source: ONS Annual Population Survey (Nomis, June 2011)

Figure 3.9 compares the economic activity rates for 16-64 year olds for the Outer Hebrides, Scotland and Britain from September 2008 to September 2010. It also compares unemployment rates for these geographies (the dotted lines). It shows that:

• Since the onset of the UK recession, the unemployment rate for Outer Hebrides has been on the increase. ONS figures indicate that the unemployment rate for the Outer Hebrides increased from was 4.1% to 6.7% over the period.

• Whereas the unemployment rate for the Outer Hebrides has increased more slowly than the rate for Scotland or Britain, the economic activity rate for the Outer Hebrides has fallen at a much sharper rate. Over the period, the economic activity rate for the Outer Hebrides fell by 11% to 71% whereas economic activity rates for Scotland and Britain fell by 1%.

• Since early 2010 the rate of economic activity in the Outer Hebrides has fallen below the comparable rate for Scotland. This is in marked contrast to the trend prior to 2008.

Some of the variation between local trends and those for Scotland and Britain may be due to sampling error. Nonetheless, the figures presented in figures 3.7 (employment rates) and 3.9 support perceptions that a growing proportion of the working age population that have been made redundant are choosing to leave the labour market altogether. This is probably linked to the high proportion of the population aged 50 to 64 years.

Claimant count unemployment amongst working age adults

Between October 2008 and January 2011 the claimant count unemployment rate for the Outer Hebrides increased by 1.6 percentage points to 3.6%. Claimant count rates are lower than the ONS unemployment rates for various reasons, but in particular the claimant count is now based on the total working age population and not the economically active working population.

In April 2011 the claimant count unemployment rate fell back to 3.1%, reflecting the importance of seasonal employment and the long established trend for this rate to dip between April and September. Looking at the spatial distribution of claimant count unemployment, in April 2011:

• The claimant count unemployment rate for the Stornoway HMA stood at 3.2%, which was slightly below the rate for the Rural HMA, which stood at 3.3%.

• Across the Rural HMA, claimant count unemployment was lowest in North Uist & Benbecula (2.9%) and South Uist & Barra (3.1%) and highest in Rural Lewis & Harris (3.7%).

• Within the Stornoway HMA, claimant count unemployment was significantly higher within Stornoway (3.8%) than in the surrounding Broadbay and Point area (2.5%).

Although the precise numbers and proportions have varied, the spatial distribution of claimant count unemployment has remained little changed for the past 2-3 years.

The proportion of Outer Hebrides residents aged 18-24 years that are unemployed (6%), remains below the comparable Scotland wide figure (8.1%).This is mainly because a higher proportion of local residents in this age group are in full time education or otherwise

economically inactive. Nonetheless, the numbers of claimants aged 18-24 years or less has been rising. As at April 2011, there were 100 claimants aged 18-24 years compared to 55 in October 2008. The severity of youth unemployment can be gauged from the fact that those aged 18-24 years make up just 6.4% of the Outer Hebrides population but 20% of claimants.

Finally, it is worth noting that there are few job vacancies. In May 2011 there were 16 claimants for every unfilled job centre vacancy in the Outer Hebrides. The comparable rate for Scotland and Britain were 9 and 6 respectively.

Key out-of-work benefits amongst working age population

The claimant count provides a partial picture of the number of individuals of working age who depend primarily on income related benefits. We therefore also looked at working age householders in receipt of ‘key out-of-work benefits’. This count is based on those in receipt of Job Seekers Allowance (JSA), Employment and Support Allowance (ESA), incapacity benefits, lone parent benefit and others on income related benefits. According to DWP, these benefits best represent recipients that cannot be in full-time employment as a condition of entitlement.

Figure 3.10 shows that the proportion of individuals in receipt of such benefits has fluctuated between 11% and 13% over the 5 years to November 2010, largely mirroring trends in claimant count unemployment.

Figure 3.10: Percent of working age persons in receipt of key out of work benefits, 2006-2010

Source: DWP Key ‘out of work’ benefit claimants - working age client group (via NOMIS)

Older people and benefit dependency

The proportion of pensioners living in low-income households (defined as 60% of median household income after deducting housing costs) has been falling sharply. The New Policy

Institute (2010) report that in the decade to 2008/9 the pensioner poverty rate for Scotland fell from 31% to 16% and that the numbers of pensioners in low-income households in Scotland fell by more than 100,000. This positive national development does however conceal the fact that rates of pensioner poverty vary across the county.

It is not possible to replicate the national indicator at local level but DWP statistics confirm that a high proportion of pensioner households in the Outer Hebrides rely solely on the state retirement pension and means tested benefits. In 2010, some 26% of the Outer Hebrides population aged 60+ were in receipt of the guaranteed part of Pension Credit. To put this in context, only Glasgow City (35%) and West Dunbartonshire (27%) had a higher rate. In most council areas the rate was well below 20%, including Highland, Orkney and Shetland, all of which had a rate of 15% or less.

3.7 Earnings and income

Earnings data

The Annual Survey of Hours and Earnings (ASHE) is the Scottish Government’s preferred data source for earnings. Figure 3.11 summarises the most recent reported earnings. These figures must be treated with caution11 but they do indicate that earnings in the Western Isles remain below those for Scotland at the lower and middle end of the earnings distribution.

Although figures for the upper quartile earnings are no longer published, the mean earnings for Western Isles remain well below that comparable figure for Scotland. This suggests that relatively few individuals earn in excess of £35,000 per annum, which was the upper quartile point for earnings in Scotland 2010.

The figures reported in 3.11 are based on full time employees, but some 40% of Outer Hebrides residents that are in employment are not full time employees. Some 25% of those in employment work part time but there is no reliable data on the earnings of this large group of local employees. Little is also known about the earnings of self-employed workers, who comprise 14% of those in employment.

Highland and Islands Enterprise (2007) suggest many self-employed individuals are in low paying sectors such as tourism, or work on their croft, which typically yields low incomes. Glasgow University (2005) also report that some 90% of crofts provide less than 2 days work per week for their occupiers and many crofters sought to undertake additional activities to supplement their earnings.

Some workers are also subject to seasonal fluctuations in demand for their labour and experience periods of under-employment during the winter months.

12 Many ASHE outputs for the Outer Hebrides are not published because they are subject to high margins of error. Most pre 2009 outputs, including lower quartile wage, have also been withdrawn in the past year.

Figure 3.11: Annual earnings for full time employees in Outer Hebrides and Scotland, 2009-10

Source: ONS Annual Survey of Hours and Earnings (via Nomis, June 2011)

Net household incomes

Evidence on the incomes of households is scarce and it is not possible to explore trends over time. However, evidence from the Scottish House Condition Survey 2007/9 illustrates that households living in the Outer Hebrides tend to have lower incomes than households living in Scotland as a whole. This is in keeping with the comparatively higher rate of older households and the lower rate of full time employees in the Outer Hebrides.

Table 3.11: Median annual net respondent and partner income (£) Private Social Eilean Siar £15,400 £10,700 Highland £19,200 £11,800 Orkney Islands £17,100 £10,700 Shetland Islands £21,200 £14,300 Scotland £19,600 £10,700 Source: Scottish Government (2011) Scottish House Condition Survey LA tables 2007/9

In terms of net household income, which is the income of the householder and (if any) their partner, after taxation, tables 3.11 and 3.12 suggest that:

• The median income of households living in the Outer Hebrides is lower than the comparable figure for Scotland and elsewhere in the Highlands and Islands.

• The median income of households living in the social rented sector is much lower than the comparable figure for households that own or rent private housing.

Table 3.12: SHCS Net annual household income band, 2007-9 (%) Household income band Scotland (%) Outer Hebrides (%) Less than £199 per week (£10,399 pa) 24 27 £200 -299.99 per week (£10,400-£15,599) 20 23 £300 -399.99 per week ((£15,600-£20,799) 14 13 £400+ per week (£20,800+) 42 37 Total 100 100 Source: Scottish Government (2010) Scottish House Condition Survey Derived Dataset 2007/9

Further analysis of the Scottish House Condition Survey suggests that:

• Around 3 out of 5 outright owners and 3 out of 4 social renters reported a net annual income of less than £15,600.

• Around 69% of householders aged 16-34 years have a net annual income of less than £20,800, which is slightly higher than the household population as a whole (63%). This difference is due to by the low incomes of householders under the age of 25 years.

• The proportion of householders aged 25-34 years that fall within each of the income bands reported in table 3.12 is within 2 to 4 percentage points of those for all households. For example, 36% of householders aged 25-34 years have an income in excess of £20,800

The income figures for the Outer Hebrides, especially for those aged less than 35 years, are subject to considerable margins of error. They must therefore be considered indicative as opposed to definitive. Nonetheless, in the absence of evidence to the contrary, it seems reasonable to assume that the income distribution amongst householders less than 35 years is not markedly different from that of the household population as a whole.

CACI household incomes

In terms of estimating net annual housing need and demand it is preferable to use gross annual household incomes, which is income from all sources including earnings, investments, state benefits, before tax and other deductions such as housing costs.

Figure 3.12 compares the CACI annual gross income distributions for the Outer Hebrides and Scotland. CACI Paycheck is the only source of such information for the Outer Hebrides. CACI

Paycheck uses a variety of datasets such as the Census, lifestyle data and market research to estimate gross household income down to small area level12. It suggests that in 2009:

Figure 3.12: CACI income distribution for Outer Hebrides and Scotland compared, 2009

Source: CACI (2010) Paycheck

• Almost 27% of households in the Outer Hebrides had an income from all sources of less than £15,000 compared to 25% of the Scottish household population.

• Almost 39% of households in the Outer Hebrides had an income of less than £20,000 compared to 37% of the Scottish household population.

• Almost 70% of households in the Outer Hebrides had an income of less than £35,000 compared to 65% of the Scottish household population.

The differences between the income distribution for the Outer Hebrides and Scotland may appear smaller than expected but there are a number of possible reasons for this:

• Whereas the survey estimates report on the income of the household reference person and any partner, the CACI data includes incomes from all adults living in a household. In an area like the Outer Hebrides with a relatively high rate of large adult households this will tend to boost gross household income.

12 CACI Paycheck does not provide a precise measure of gross household income but instead estimates the probability that a household selected at random within a particular area will fall into a particular income band. CACI do not publish their method but the data is routinely used by local authorities throughout GB and is generally believed to provide a reasonable approximation of the distribution of gross household incomes.

• Survey based net income estimates are known to significantly under-estimate net incomes, especially for low income and more affluent households (See Rabb et al 2004).

• The CACI Paycheck model allows for state benefit and tax credit transfers. This has the effect of ascribing similar gross incomes to households solely or largely dependent on state benefits regardless of location and whether benefits are claimed

On the other hand, CACI Paycheck may slightly under-estimate the proportion of low-income households across the Outer Hebrides. This reflects the fact that a limitation of all models of this kind is that they have to rely on assumptions derived from national data sources for sparsely populated areas for which there is little local evidence. Keeping this qualification in mind, table 3.13 summarises the income distribution profile across the Outer Hebrides.

Table 3.13: CACI PayCheck Gross Annual household income band, 2009 Area Lower quartile Median Upper quartile Outer Hebrides £14,512 £24,575 £39,466 Stornoway HMA £15,451 £26,396 £42,671 Rural HMA £13,765 £23,176 £36,790 Rural Lewis and Harris £13,311 £22,369 £35,367 North Uist and Benbecula £15,494 £26,035 £41,038 South Uist and Barra £13,927 £23,393 £37,080 Source: CACI PayCheck, 2010 (estimates are 2009 based)

Saving, equity and wealth

With the introduction of the ‘Scheme of Assistance’ and the recent move by lenders to require prospective mortgagees to provide much larger deposits, evidence of the savings and wealth of householders, including equity that owners hold in their properties, has become an increasingly important issue.

At present there is no robust or credible source of data on the housing equity or other forms of wealth and assets for households living in the Outer Hebrides or other local authority areas across Scotland. Although the 2006 Local Housing Needs Survey asked owners to provide an estimate of how much equity they would receive if they sold their house after paying off any outstanding mortgage and other associated debts, the data collected was not robust due to very low response rates.

The Scottish Household Survey suggests that perhaps half of all households living in the Outer Hebrides may have savings, of which most have savings of less than £10,000. Overall the findings from the national survey suggest that over 8 out of 10 households living in the Western Isles have no savings or saving of less than £10,000. At the other end of the spectrum, less than 5% of households reported having savings of £30,000 or more.

3.8 Deprivation and poverty

Scottish Index of Multiple Deprivation

According to the Scottish Index of Multiple Deprivation for 2009, (SIMD 2009) none of the 36 Outer Hebrides datazones are amongst the 20% most deprived datazones in Scotland. This also holds true for Shetland and Orkney. This is because the SIMD 200913 is primarily intended to identify spatial areas where deprivation is concentrated and not deprivation amongst the population at large. The overall deprivation index therefore simply highlights that households living in Outer Hebrides that experience poverty and deprivation are not spatially concentrated in specific areas.

There is only one predominately ‘rural’ indicator embedded in the SIMD 2009, which is access to services. The SIMD 2009 shows those households outwith Stornoway HMA area have, relatively speaking, very poor access to key services such as GPs, petrol station, schools, post offices and shopping facilities. In 2010 the Scottish Government reported that 86% of all Eilean Siar datazones were in the 15% most deprived on the access domain. This was higher than for Shetland (73%), Orkney (73%) and Argyll & Bute (57%).

In terms of the prevalence of poverty in rural areas such as the Outer Hebrides, arguably more relevant indicators are relative poverty and fuel poverty.

Relative poverty

The SIMD 2009 income deprivation indicator measures the numbers of adults and children in receipt of selected means tested benefits or tax credits. It makes no allowance for other forms of income deprivation common in rural areas. It does not take account of the seasonal nature of private sector employment in the tourism, hospitality, agriculture and food processing sectors of the local economy. It also does not take account of the lower rates of take up of state benefits often found in rural areas due to a combination of poor access to advice, fears of being stigmatised and eligibility issues associated with seasonal employment.

Government funded studies that explore income related poverty typically assume that a household is in relative poverty if the income of a household (adjusted for the size and composition of the household) is less than 60% of median household income. This measure therefore looks at whether the incomes of households at the lower end of the income distribution are keeping pace with the growth of incomes in the economy as a whole.

In August 2010, the Scottish Government for the first time published initial estimates of relative poverty across Scotland, which are summarised in table 3.14. These estimates do not allow for differences in housing costs and are subject to further quality assurance work.

13 The SIMD 2009 draws together a wide range indicators across a number of domains such as income, employment, housing and access to services in order to rank 6,505 datazones across Scotland from most deprived (1) to least deprived (6,505) for the SIMD index as a whole and for each individual domain.

The figures suggest that between 2002/8 the percentage of households in relative poverty living in the Outer Hebrides was around 23%. This was the highest rate of relative poverty in Scotland, comparable to those of Glasgow.

Table 3.14: Percentage of households in relative poverty, 2002 to 2008 Area 2002-5 2003-6 2004-7 2005-8 Estimated 95% CI +/-% Outer Hebrides 23 23 22 25 3.1 Glasgow 22 23 22 23 1.3 Highlands 16 16 16 17 1.8 Orkney 21 21 20 21 2.8 Shetland 20 18 15 15 2.6 Scotland 18 19 19 19 0.4 Source: Scottish Government (2010) Relative poverty across Scottish Local Authorities

Fuel poverty

The Scottish Government aims to ensure that by November 2016, so far as is reasonably practicable, people are not living in fuel poverty in Scotland. The Outer Hebrides Community Planning Partnership (OHCPP) shares this aim. Although fuel poverty is widespread and affects both urban and rural communities, it has long been recognised that rural households are more susceptible to fuel poverty than urban households.

In Scotland, a household is considered to be in fuel poverty if required to spend more than 10% of its income (including any government payments towards housing costs) on fuel use in the home. A household is considered to be in extreme fuel poverty if required to spend more than 20% of its income on fuel.

Figure 3.13 shows there have been a rise in fuel poverty rates both nationally and locally in the years since 2003/6. In 2003/6, 44% of households in the Outer Hebrides were assessed to be fuel poor but this figure had increased to 58% by 2007/9.

The number of households living in extreme fuel poverty has also increased. In 2007/9 some 31% of all households in the Outer Hebrides were in extreme fuel poverty14, which was almost four times greater than the comparable figure for Scotland (8%).

Fuel poverty rates are influenced by net household income, fuel prices and the energy efficiency of a dwelling. The very high incidence of fuel poverty in the Outer Hebrides relative to every other local authority area in Scotland is linked to:

• The lack of access to the mains gas network, which means that households must rely on more expensive sources of fuel such as electricity, oil and coal. This is further compounded by the extended winter conditions that exist locally and the inability of households to benefit from dual tariff discounts offered by energy companies.

14 In other words, some 57% of the 7,000 households in the Outer Hebrides estimated to be in fuel poverty in 2007-9 were assessed to be in extreme fuel poverty.

• A high prevalence of solid wall construction dwellings that generally have poor energy ratings and are much harder to heat and much more costly to treat than cavity wall dwellings. In 2007/9 the mean NHER rating for the Outer Hebrides dwellings was 3.6 compared to the Scotland wide mean of 6.3.

• The tendency for Outer Hebrides residents to occupy larger dwellings than households living elsewhere in Scotland.

• The relatively high proportion of households that are single pensioner or older smaller households in the Outer Hebrides, many of whom rely on pension credits. In 2007/9 some 86% of pensioner households in the Outer Hebrides were fuel poor compared to 50% of all pensioner households living in Scotland.

• The low wage and seasonal nature of the local labour market means that fuel poverty is also a problem for many families (37%) and other working age households (49%) living in the Outer Hebrides.

Figure 3.13: SHCS estimates of percent households in fuel poverty, 2003-6 to 2007-9

Source: Scottish Government – Scottish House Condition Survey LA tables

The OHCPP have made concerted efforts to improve benefit take up and to secure funding packages to improve the thermal efficiency of homes but these measures have been more than offset by UK wide rising fuel prices. The indications are that fuel prices will continue to increase for some time. When viewed alongside the programme of welfare reforms discussed in chapter 5, there is a strong possibility that fuel poverty rates will rise still further.

3.9 Summary and key messages

The population of the Outer Hebrides has continued to decline over the past decade. However, the rate of decline slowed after 2003 in the wake of an upturn in inward migration from outside Scotland. This went some way to compensate for natural population decrease and has helped to reduce the rate of population decline in some of the more remote areas of the Rural HMA. That said there is still a discernable trend for long-standing residents to move from more remote areas to the main settlements of Stornoway and Balivanich.

One consequence of the continuing decline in the Outer Hebrides population is that the rate of household growth has been rather lower than the Scotland wide rate. Nonetheless, continued growth in the numbers of households has added to the overall aggregate requirement for housing over the past decade, especially after 2004, when the rate of household growth quickened, in part due to the upturn in inward migration.

Another consequence has been that the demographic profile is becoming increasingly orientated towards older people, with an above average proportion of the population aged over 45 and over 80 years. As the Outer Hebrides LHS 2004-9 acknowledges, catering for a growing older population will remain a key challenge in the years ahead.

The increase in inward migration has been partly shaped by employment growth, primarily in the public service sector. This has resulted in real growth in earnings and incomes for some households. Nevertheless, household incomes across the Outer Hebrides have remained low relative to the Scotland wide income profile. As explored in chapter 4, the rise in house prices in the period to 2008 therefore led to an increase in affordability pressures for those in a less advantageous position in the local labour market.

After more than a decade of uninterrupted growth, the UK economy fell into recession. As discussed in chapter 4, this has brought about changes in the price, demand, availability and delivery of housing. Intuitively, the economic recession seems very likely to have led to a reduction in the levels of economic inward migration into the Outer Hebrides and an increase in outward economic migration from the Outer Hebrides as in the rest of the UK but evidence to support this assumption (or otherwise) remains scarce.

Evidence confirms that the economic downturn has led to a fall in employment and a rise in economic inactivity and (to a lesser extent) unemployment throughout the Outer Hebrides. The fact that young adults under 25 years appear to have been badly affected by the fall in job opportunities is of particular concern given the Outer Hebrides Community Planning Partnership long standing aim to address demographic imbalances through attracting or retaining higher numbers of younger working households.

A large share of the new jobs created in the ““noughties”” was directly linked to the growth in public spending. Following the UK Coalition Government’s Comprehensive Spending Review public spending is now being scaled back in order to rebalance the public sector finances and reduce Government debt.

From a housing perspective, the recession and contraction of the labour market will shape future patterns of housing need and demand as well as future housing supply for some time to come. The nature of these effects however remains extremely uncertain. The local economy is

currently characterised by high levels of dependency on public sector investment and employment. This suggests that the extent to which the OHCPP can facilitate a move to a more diverse and vibrant economy that can support and sustain greater levels of employment in the private sector will have a major impact on housing demand in the longer term.

More immediately, the worryingly high levels of fuel poverty in the Outer Hebrides point to a need for concerted action to address the poor energy performance of the existing stock of housing in the Outer Hebrides, especially in the private sector. This will be vital if pensioner households as well as low to modest income working age households are to be at least somewhat cushioned against the anticipated rises in fuel costs.

Access to services is problematic in the Outer Hebrides. There is a strong risk that public sector funding cuts will further limit access to services. Older residents and lower income working age households that rely most on services provided by the public sector or provided by third-sector organisations that rely on public funding may be most adversely affected.

The Comhairle is aware of the continuing absence of fine-grained evidence on a diverse range of topics such as fuel poverty, incomes and community well being indicators that could inform policy decisions on how best to prioritise scarce resources. The lack of fine-grained data is compounded by the fact that much published national statistics are not particularly robust at the Outer Hebrides level. although there is some scope to make better use of administrative data and the forthcoming Census 2011 results, these evidence gaps will be difficult to resolve in the short to medium term due to competing priorities for scarce public sector resources.

4. THE HOUSING SYSTEM AND RECENT HOUSING MARKET ACTIVITY

4.1 Introduction

This section explores the profile of the Outer Hebrides housing stock and recent housing system dynamics in terms of the inter-relationship between housing demand and supply.

4.2 Overview of the housing stock

Changes in total housing stock numbers

Table 4.1 indicates that there were 14,292 dwellings in the Outer Hebrides in 2010, of which 40% were situated in the Stornoway HMA. In the 5 years to 2010, in contrast to historical trends, the net increase in the Outer Hebrides housing stock (4.3%) exceeded the comparable Scotland wide figure (3.8%). As discussed below, this reflects the recent upturn in housing construction.

Table 4.1: total stock by occupation category, 2003-2010 total stock Change stock 2010 category

second 2003 2010 2003-10 2005-10 occupied vacant homes Stornoway HMA 5,363 5,788 7.9% 5.7% 93% 4% 3% Rural HMA 8,288 8,504 2.6% 3.2% 82% 8% 10% Rural Lewis & Harris 4,980 5,084 2.1% 2.4% 82% 8% 10% North Uist & Benbecula 1,604 1,609 0.3% 3.1% 85% 7% 8% South Uist & Barra 1,704 1,811 6.3% 5.5% 80% 10% 10% Outer Hebrides 13,651 14,292 4.7% 4.3% 87% 6% 7% Scotland 2,356,176 2,488,496 5.6% 3.8% 96% 2.8% 1.4% Source: SNS (2011) dwelling estimates by datazone Note: the net increase for North Uist and Benbecula has been affected by a downward adjustment to the total stock in 2004. This adjustment appears to be due to demolition and the transfer of dwellings let out as holiday homes more than 140 days and are thus classed as businesses rather than dwellings

The net increase in the total housing stock has been concentrated in the Stornoway HMA. Between 2003/10 the total housing stock in the Stornoway HMA increased by 425 units, which was equivalent to 66% of the net increase in the housing stock for the Outer Hebrides as a whole (641 units). Within the Rural HMA, the South Uist and Barra sub-area experienced a higher net increase in the housing stock than the other two sub-areas.

Occupancy arrangements

Virtually all the population of the Outer Hebrides live in private households that occupy single- family units. Houses in Multiple Occupation (HMOs) and other forms of shared housing are not a significant feature of the Outer Hebrides housing system. The Census records that just 2 households living in shared housing in 2001. Between 2007/11, the numbers of licensed HMOs increased from 4 to 24, but most of these HMOs provide specialist accommodation. Just 5 are ordinary residential dwellings let to 3 or more separate households.

The 2001 Census records that 370 individuals lived in communal establishments, most of whom were frail older people that lived in one of the Outer Hebrides care homes or care units. Although the development of the Foyer in Stornoway has provided communal provision for younger adults, the reprovisioning of the CnES Care Units (ODS, 2008) and the fall in the numbers of older people living in care homes15 has meant that the numbers of adults living in communal establishments has declined over the past decade. NRS estimates indicate that in 2010 some 275 individuals lived in communal establishments, most of whom were older people.

In 2001 some 51 households lived in caravans and other mobile homes, which at 0.45%, was twice the Scotland wide rate of 0.21%. We do not have statistical evidence to quantify the scale and direction of any subsequent change.

4.3 Second home and vacant dwellings

In 2001 the Census recorded that 15% of the local housing stock was not in use as permanent accommodation compared to 5% of Scotland’s housing stock. Since 2001 there has been a reduction in the number of empty dwellings but also an increase in the numbers of dwellings that are only in use part of the year as second or holiday homes. Consequently, as shown in table 4.1, the proportion of the Outer Hebrides housing stock in permanent occupation (87%) remains well below the Scotland wide rate (96%).

A minimum level of vacant dwellings is required to allow households to move from one dwelling to another. At any given point in time a number of dwellings will also be empty because they are undergoing repair or have just been constructed. In looking at the balance between the supply of dwellings and the numbers of dwellings required to meet the housing requirements of households some allowance must therefore be made for vacancies. Custom and practice suggests that a vacancy rate of 4% is typical for the housing sector as a whole. Rates in excess of 7% are customarily assumed to indicate relatively weak demand whilst rates below 2% are assumed to indicate excess pressure on the stock.

Looking more closely at the pattern of empty property across the Outer Hebrides and keeping these benchmarks in mind:

• Around 3 out of 4 of the 916 empty properties that NRS reported as empty in 2010 were located in the Rural HMA.

• Some 4% of the Stornoway HMA stock (216 units) was empty in 2010. The downward trend in vacant dwellings in this area in the past 10 years was linked to renewed confidence in the local housing market for much of the “noughties”.

• The vacancy rate for the Rural HMA is 8% but exceeds 10% in South Uist and Barra. Of the 710 or so empty dwellings located in the Rural HMA, some 420 are in Rural Lewis and Harris, 110 are in North Uist and Benbecula and 180 are in South Uist and Barra.

15 Down from some 233 places in 2000 to 216 in 2010

• Most empty dwellings are in the private sector. In 2010 less than 40 social rented units were void awaiting relet or empty awaiting repair or disposal.

The vacancy rates indicate there may be some potential to make better use of unoccupied properties to address affordable housing needs, predominately in the Rural HMA. That said, much would depend on the willingness of property owners to sell or lease property and the economic viability of bringing empty units back into use. Moreover, the potential to bring empty units back into permanent occupation is no doubt less than the above headline figures suggest.

Table 4.2: Reasons recorded on CTR database for properties lying empty, excluding those used as a second home Stornoway Rural HMA All reason HMA (%) (%) (%) Empty property on land used for agricultural purposes 15 26 24 Empty property where last occupant has died 27 21 22 Person left empty by person moved to receive/provide 15 8 9 care (including those in care home/hospital) Empty and occupation prohibited/demolition order 2 6 5 Unoccupied under repair 3 1 2 Unoccupied MOD, manse or job related dwelling 1 3 3 Unoccupied property repossessed 1 1 1 Long term empty 17 21 20 Other empty property with CTR exemption or discount 19 13 14 Total 100 100 100 Number of records 195 715 910 Source: CnES compiled data from Council Tax Register , 2011 Note: the 910 dwellings received a CTR exemption or discount for lying vacant in early 2011. It excludes properties classed as second homes but includes dwellings that CnES has declared uninhabitable and/or subject to a demolition order, which are excluded from the NRS estimate of 916 empty units.

Table 4.2 looks at the reasons why properties are empty. It suggests that less than 4 out of 10 empty properties on the council tax database may offer any potential to be brought back into permanent use. More specifically:

• 24% of all empty properties, rising to a third of all properties in Rural Lewis and Harris, are located on agricultural land. In the main this sub-group comprises of croft or former croft houses that have been replaced by a more recently constructed home on the same croft. These empty properties are generally difficult to access and are in varying states of disrepair.

• 22% are empty because their owner or former resident has recently died and most are likely to be sold or re-occupied in the reasonably near future.

• 9% are lying vacant because the current resident has moved for social and health care related reasons. This group of owners mainly include older people that are currently in hospital or a care home.

• 7% are uninhabitable or under repair, rising to some 15% in South Uist and Barra.

The 2006 Local Housing Needs Survey also included questions relating to the ownership of empty properties. This survey evidence suggests that a minimum of 450 resident households own two or more dwellings in the Outer Hebrides, including at least one property that was not permanently occupied. When asked why their property was not permanently occupied, most indicated that the property was either, used as a second home, occasionally occupied by other family members or was uninhabitable and/or lying derelict. The large majority of this group of respondents also indicated no plans to sell their second property.

4.4 Composition of the housing stock composition

Tenure of the housing stock

Allowing for the fact that almost all empty and second home properties are privately owned, we estimate that in 2010 around 85% of the 14,292 dwellings in the Outer Hebrides were in private ownership.

Some 77% of the land area of the Outer Hebrides is held in crofting tenure and there are in excess of 6,000 crofts distributed among the Outer Hebrides 280 townships. Housing provision in the Outer Hebrides, especially in the Rural HMA, is therefore closely linked to the crofting system. Over 9 out of 10 properties in private ownership in the Rural HMA are situated on croft land or land that had been de-crofted compared to just over half of such properties in the Stornoway HMA.

Owner occupation

In 2010 there was an estimated 9,100 occupied dwellings in the owner occupied sector. According to the Scottish Housing Regulator (SHR), at March 2009 there were just 3 shared ownership units in the Outer Hebrides. CnES figures also indicate that just 11 Rural Home Ownership Grants (RHOGS) were pursued in the 5 years to March 2009. A handful of shared equity units have also been developed in recent years.

A large share of the owner occupied housing stock was constructed with financial assistance through the Crofters Building Grant and Loan Scheme (CBGLS) and since 2005 through the Croft House Grant Scheme (CHGS). The existence of this funding option is one reason why few low cost home ownership units (LCHO) have been developed historically, although research suggests that the revised CHGS is not popular with crofters (Satsangi et al, 2006).

In the past couple of years CnES has found it difficult to establish a market for a number of serviced plots that were developed with the use of Private Sector Housing Grant funding. HHP have also had to convert two rural shared equity units into social rented housing. The economic recession and tight mortgage lending criteria have contributed to the weakening of demand but the underlying trend suggests the local market for the sale and resale of LCHO is relatively small.

Private renting

According to the Census, over 940 households rented their home from a private landlord in 2001, which was equivalent to 8% of all households16.If households whose tenure was classed as “other” are included, the percentage was just under 10%.

Findings from national surveys, although subject to sampling error, consistently point to a slight decline (of around 2%) in the proportion of households that rent their home from a private landlord. This is in contrast to the upward trend in private renting at the Scotland wide level. However, which segments of the private rented sector appear to be declining is unclear.

In 2001 less than 10% of households in the Rural HMA level and in each of its three sub-areas were private renters. This was in contrast to many other rural areas in Scotland where upwards of a quarter of households rented from a private landlord. The Scottish Government’s (2009c) review of private renting suggested that this remained the case in 2009.

Social renting

At the start of 2010 there were 2,233 social rented units in the Outer Hebrides compared to some 2,140 in 2001 and some 2,420 in 1981. The rate of decline in the scale of the social rented sector in the Outer Hebrides has been much lower than the Scotland wide trend. For example, between 1981/2001 the number of households renting from a social landlord in the Outer Hebrides and Scotland fell by 11% and 36% respectively.

There are several reasons why the social rented sector declined at a slower rate in the Outer Hebrides, but two stand out. Historically, very few social rented dwellings have been demolished or disposed off in the Outer Hebrides, which is in contrast to some urban areas of Scotland. In addition, the construction of new social rented units has gone some way to replace properties sold through the ‘Right To Buy’, especially in the 7 years to 2010.

Nonetheless, with just 15% of the total housing stock comprised of social rented dwellings and just 18% of households renting from a social landlord, the Outer Hebrides has one of the smallest social rented sectors in Scotland.

Hebridean Housing Partnership (HHP) is the largest social landlord in the Outer Hebrides and owns over 98% of all social rented stock. At April 2011, HHP’s stock portfolio included 2,085 self-contained dwellings and 86 ‘other’ properties. This latter group included caravans and chalets which are being phased out, dwellings leased to other agencies and dwellings let on a temporary basis. The remaining 62 self-contained units are owned by Trust HA, which provides sheltered and very sheltered housing in Stornoway.

Table 4.3 shows there is considerable variation in the level of social housing available across the Outer Hebrides:

16 The Census analysis is based on the “living rent free” adjusted tables issued by the then Scottish Executive in 2004/5 and excludes households whose tenure was classed as “other” as well as social renters that were wrongly coded as living rent free.

• Stornoway HMA has the highest rate of social renting at 22%, reflecting the fact that over half of all social rented units are located in this area. Some 890 units are located in Stornoway. This is equivalent to 75% of all social rented dwellings in the Stornoway HMA and 41% of all social rented dwelling in the Outer Hebrides.

• Less than 14% of households in the Rural HMA lived in the social rented sector, although within the 3 sub-areas the proportion ranges from less than 12% in Rural Lewis and Harris to some 18% in South Uist and Barra.

Table 4.3: Social rented self contained dwellings intended for permanent occupation, 2011 Units share% % of occupied stock SHMA 1,178 54.9 21.9 Rural HMA 969 45.1 13.8 Rural Lewis and Harris 480 22.4 11.5 Benbecula and North Uist 225 10.5 16.5 Barra and South Uist 264 12.3 18.2 Outer Hebrides 2,147 100.0 17.3 Scotland (2010) 595,539 NA 24 Source: HHP stock database, SHR on-line statistics and NRS small area stock estimates

Dwelling characteristics

NRS 2010 dwelling estimates confirm that the Outer Hebrides has a much higher concentration of houses (95%) than Scotland (64%) as a whole. Indeed, 64% of the existing stock comprises of detached dwellings and this proportion has been on the increase since 2001. Of the 630 flats in the Outer Hebrides, over 94% are situated in the Stornoway HMA.

The Census 2001 and the 2006 Local Housing Needs Survey suggest 98% of owners and 88% of private renters live in a house or one form or another. This proportion falls to 78% in the case of social renters, reflecting the fact that around 3 out 5 flats are to be found in this sector.

The Outer Hebrides housing stock is somewhat newer than Scotland’s housing stock as a whole. Findings from the SHCS 2004/7 indicate that 70% of Outer Hebrides households live in properties constructed since 1945 and only 17% occupy properties build prior to 1919. The comparable figures for Scotland are 67% and 19% respectively.

Households in the Outer Hebrides also tend to occupy more spacious dwellings than households living elsewhere in Scotland. NRS estimates suggest just 25% of all dwellings in the Outer Hebrides contain 1-3 rooms compared to 42% of all dwellings in Scotland. Smaller units that contain 1-3 rooms are concentrated in the Stornoway HMA and other localities where there is a concentration of social rented housing.

The Outer Hebrides has traditionally been a low value housing market. In 2010 around 4 out of 5 of the housing stock comprised of dwellings which fell within Council Tax Bands A to C and just 1% fell within Council Tax bands F to G. This pattern has remained more or less unchanged since 2001. The comparable figures for Scotland were 62% and 12 % respectively.

4.5 Housing stock flows

Housing completions and starts

In common with other local authority areas, it is not possible to combine Outer Hebrides dwelling estimates at a point in time with estimates of completions, demolitions and other flows to map precisely changes in the numbers of houses from one year to another. For the most part this is due to past inconsistencies in reporting completions and more especially demolitions and conversions.

Figure 4.1 presents the number of new dwellings completed in the Outer Hebrides from 1999/ 2010. Although the numbers of completions vary from one year to another, it is evident that there was a marked upturn in private and social completions from 2005/9. Completions fell back in 2010, linked to the fall in new starts following the downturn in the local and national housing market in the wake of the global credit crunch.

Figure 4.1: Number of house completions in Outer Hebrides, 1999-2010

Source: Scottish Government housing completion and starts statistics (calendar year) and CNeS records

It is instructive to compare the annual rate of house completions per 1,000 households in the Outer Hebrides with the rate for Scotland. Until 2004 the Outer Hebrides had a relatively low rate of completions at less than 7 per 1,000 households compared a Scotland wide rate of 10 completions per 1,000 households. By contrast, between 2005/9 local completion rates have exceeded Scotland wide rates. Over this period, the Outer Hebrides rate of completions averaged around 15 units per 1,000 households compared to a Scotland wide rate of 11 units per 1,000 households.

This upturn in local house completions reflected a combination of:

• Some growth in aggregate housing demand as evidenced by the growth in household numbers and the rate of inward migration outlined in chapter 3.

• An increase in Croft House Grant Scheme (CHGS) approvals. In the 2 years to March 2009, the Crofters Commission approved 130 CHGS grants in the Outer Hebrides. This historically high level of awards has been partly attributed to pent-up demand following the closure of its predecessor, the Crofters Building Grant and Loan (CBGLS), in 2004/5.

• A relatively high number of social housing completions subsequent to an upturn in public funding for affordable housing provision. Annual AHIP expenditure averaged £5 million in the 5 years to 2008/9 inclusive compared to £1.75 million in the 4 years from 2000/1 to 2003/4. The total number of social housing completions in the 5 years to March 2009 was equivalent to 17 units per 1,000 households, which was substantially higher than the comparable figures for Scotland (9) and Highland and Islands Region (14).

Private sector housing construction

To appraise the operation of a housing market, it is customary to assess the responsiveness of speculative housing builders to changes in house prices because this usually drives the extent to which the housing market is responsive to changes in housing demand.

One of the most striking features of the Outer Hebrides however, is the absence of speculative housing development and the paucity of new constructed private housing specifically for sale on the open market. What is defined as private housing construction, especially in the Rural HMA, is mainly comprised of dwellings that individuals commission local firms to build. Moreover, many new private dwellings continue to be supported with financial assistance from the public purse, mainly through the CHGS. Comhairle officers also report that some of these new private homes are intended to replace existing structures, including those in a serious state of disrepair, rather than add to the total effective housing stock, although the scale of this is hard to quantify.

Consistent with the high preponderance of self-build, the majority of new private dwellings continue to be constructed on individual “windfall” sites on an ‘ad hoc’ basis rather than on sites identified through the land planning process. This long-standing trend is expected to continue.

In parallel with the rest of the UK, housing construction has experienced a downturn in the past couple of years. In 2009 some 92 private sectors dwellings were started compared to an average of 147 private sector starts in the 5 years to 2008 inclusive. During 2010, the numbers of private sector starts increased to 139, but this may include some dwellings that went on site at the end of 2009.

Figure 4.2 shows that private sector construction rates for in the Outer Hebrides remain above the rates seen at the start of the decade in contrast to the Scotland as a whole. However, local knowledge suggests that this may be due in part to the backlog of Croft House Grant Scheme (CHGS) assisted units that have gone on site in recent months and in part to the historically low level of starts recorded for the Outer Hebrides at the start of this Century.

Figure 4.2: Index of private sector starts for Outer Hebrides and Scotland 1999-2010 (1999=100)

Source: Scottish Government housing completion and starts statistics (calendar year)

Affordable housing completions

In the 7 years to the March 2011 there were 341 social housing starts compared to 128 in the preceding 7-year period, in line with the upturn of public funding for affordable housing provision noted above. The number of starts was significantly higher than the number of dwellings lost to the social rented sector (200) through RTB sales over this period17.

Table 4.4: Housing association estimated completions, 2000/1 to 2008/9 2000/1 -2003/4 2004/5 -2008/9

Number (%) Number (%) Stornoway HMA 25 50 158 79 Rural HMA 25 50 42 21 Total 50 100 200 100 Sources: CnES, Scottish Government Housing Investment Team and Scottish Government Housing Statistics Note: Numbers have been aligned to Scottish Government completions for each time period.

There is no definitive source of data on the distribution of social rented housing completions over the past decade and different data sources report slightly different figures. Table 4.4 therefore presents our best estimate of the numbers and spatial distribution of completions from 2000/1 to 2008/9 inclusive. It suggests that in the period to 2003/4 new social housing development was more or less evenly spread between the Stornoway HMA and the Rural HMA. However in the 5 years to March 2009, most affordable housing completions were located in the Stornoway HMA.

17 Scottish Government statistics also indicate that social sector completions for the 7 years to March 2011(250) were also higher than the volume of RTB sales.

The concentration of completions in the Stornoway HMA is broadly consistent with the spatial distribution of housing need identified in 2006 (Newhaven Research, 2007). However the pattern of new build has also been shaped by the challenges of identifying sites in the Rural HMA that offer realistic development potential and are of a scale that Grazings Committees and their communities find acceptable.

RTB trends

Table 4.5 shows there has been a fall in the annual number of RTB sales in the Outer Hebrides in line with the Scotland wide trend. In the 3 years to March 2011 an annual average of 18 dwellings were sold through RTB, down from a peak of 56 sales in the 4 years to March 2004. The fall in RTB sales reflects:

• The growing proportion of social rented tenants reliant on income related state benefits that cannot afford to purchase their home through RTB.

• An increase in the proportions of HHP tenants that are either eligible for the modernised RTB which offers much lower discounts than the ‘old’ RTB or are living in a newly constructed dwelling which is effectively exempt from being sold for a number of years.

The difficult labour market and housing market conditions that have emerged in the wake of the credit crunch, which has lowered consumer confidence in the housing market.

4.5: RTB Sales in the Outer Hebrides, 2001-2 to 2010-11 Stornoway HMA Rural HMA Total 2001-2 17 14 31 2002-3 42 49 91 2003-4 32 16 48 2004-5 33 20 53 2005-6 23 26 49 2006-7 7 10 17 2007-8 16 12 28 2008-9 11 8 19 2009-10 9 9 18 2010-11 6 10 16 Ave 4 years March 04 31 25 56 Ave 3 years to March 08 15 16 31 Ave 3 years to March 11 9 9 18 Source: CnES records and HHP records cross checked against Scottish Government published figures Note: Trust HA stock is exempt from RTB

Continuing difficult market conditions and legislative changes to further limit RTB discounts and sales means that RTB sales are likely to remain low for the next 5 years and most likely beyond.

Conversions and demolitions

In the 10 years to March 2010, 193 dwellings were demolished, all but 24 of which were dwellings in private ownership. Most private sector demolitions have involved dwellings assessed to be uninhabitable.

With an average of less than 20 per annum, demolitions have had minimal impact of the changing scale and composition of the housing stock. CnES has not established a housing renewal area and HHP stock disposal plans mainly centre on the disposal of temporary structures such as caravans and mobile homes. It is therefore likely that the underlying historic trend will continue for the foreseeable future unless there is a change in policy.

A conversion may involve renovating a non-domestic property such as a shop or barn into a residential dwelling. It may also involve the sub-division of a larger residential dwelling into two or more smaller dwellings or ‘merging’ two or more dwellings to form a larger dwelling. In the 10 years to March 2010 just 7 conversions were recorded for the Outer Hebrides. Available statistics are known to under-report the numbers of conversions that take place, both nationally and locally. Nonetheless, the small number is consistent with local perceptions that conversions are not a significant feature of the Outer Hebrides housing market.

A number of former residential dwellings used for holiday accommodation also appear to have transferred to the non-domestic rates valuation roll.

4.6 Quality and suitability of the housing stock

An important dimension of any housing need and demand assessment is to consider the physical condition of the housing stock and the extent to which the dwellings are suitable for the current occupant and their family.

The Scottish Housing Quality Standard (SHQS) is routinely used as a statistical measure to assess the quality of housing stock, but only social landlords have a duty to ensure their housing stock attains this standard by 2015. To meet the Standard a dwelling must be:

• Compliant with the tolerable standard • Free from serious disrepair • Energy efficient (e.g. must have an NHER rating of 5 or higher) • Provided with modern facilities and services that are in a good and safe condition • Healthy, safe and secure - for example, it should have safe electrical and gas systems.

The following paragraphs look at each of the above measures in turn. Consistent with Scottish Government (2008) guidance, overcrowding and under-occupation are also discussed.

Households living in dwellings that are BTS or in serious disrepair

An important input into the estimate of housing need is the number of households living in properties in very poor physical condition. Two important measures in this respect are the number of households living in a property that is Below the Tolerable Standard (BTS) and/or living in a property in serious disrepair.

Estimates derived from the 2006 Local Housing Needs Survey suggest that 7% (+/-2%) of households experienced serious problems connected to the repair and maintenance of their home in 2006. Of the 800 or so households estimated to be living in a dwelling in poor condition, upwards of 95% lived in private sector housing and in the main comprised of older homeowners.

The Scottish House Condition Survey (SHCS 2002) also suggested that 8% of households in all tenures lived in properties that were BTS or suffered from serious disrepair. SHCS estimates for 2007/9 suggest some 5% of households may be living in dwellings that are BTS or in serious disrepair but the true percent could lie anywhere in the range from 2% to 8% of households. The error of margin associated with the SHCS 2007/9 means it is not possible to judge if the rate of BTS and serious disrepair has changed significantly in the period since 2002.

Local CnES estimates derived from the 2006/7 Local Private House Condition Survey and local administrative records suggest the that up to 10% of households living in private dwellings live in a property that is in serious disrepair or Below the Tolerable Standard.

It is difficult to gauge the extent to which the proportion and numbers of households living in properties in poor physical condition has declined since 2002. Nonetheless, it is clear that this problem is continues to be much more prevalent locally than nationally18.

It is also evident that older homeowners remain at a much higher risk of living in housing that is in very poor condition. Finding from the SHCS from 2002 onwards illustrate that close to 9 out 10 households living in property in poor condition are homeowners, the large majority of whom are older households aged 65+ years.

Energy efficiency of the housing stock

As noted in chapter 3, the poor energy efficiency of dwellings has contributed to the very high rates of fuel poverty recorded in the Outer Hebrides. The lower levels of energy efficiency are linked to lower levels of the installation of insulation and full central heating systems and well as a greater proportion of hard to treat dwellings in the form of solid wall construction dwellings.

In spite of investment to improve the thermal comfort of the housing stock in recent years, there has been only very limited improvement in the energy efficiency of Outer Hebrides housing stock in recent years. In 2007/9, only 25% private sector homes had an energy efficiency rating that achieved or exceeded the SHQS prescribed minimum standard compared to 81% of private homes in Scotland. Evidence from the SHCS 2007/9 (see table 4.6) indicates that:

• Whereas the average NHER for Scotland’s housing stock has increased to 6.3 the comparable figure for the Outer Hebrides has remained little changed since 2003/6, at 3.6.

• 30% of households in the Outer Hebrides occupy a dwelling with an NHER rating of 0-2 compared to just 3% of all households in Scotland. At the other end of the spectrum just

18 The BTS figures reported above do not take account of the refinements to the detailed specification of the tolerable standard which was recently introduced as a result of the Housing (Scotland) 2006 Act.

5% of households live in a property with an NHER rating of 7 or more compared to 52 % of all households in Scotland.

• Just 7% of households in the private sector occupy a dwelling with an NHER 6-10 rating. In light of the high numbers of private sector completions since 2003 it is perplexing that this proportion has remained more or less unchanged since 2003/6.

• 40% of households in the social rented sector live in a building with a NHER 6-10 rating. Whilst this is 20% more than reported for 2003/6, HHP own stock survey confirms that improving the NHER rating for all HHP owned stock remains a significant challenge.

• Over 9 out of 10 pensioner households in the Outer Hebrides live in a dwelling with a NHER 0-5 rating compared to a third of all pensioner households in Scotland.

Table 4.6: NHER by tenure, 2007-9 Outer Hebrides Scotland NHER band No % No % Private 0-5 9 93 618 37 6-10 1 7 1,071 63 Total 10 100 1,689 100 Social 0-5 1 60 113 18 6-10 1 40 528 82 Total 2 100 641 100 All 0-2 4 30 81 3 3-6 8 65 1,041 45 7-10 1 5 1,208 52 Total 12 100 2,330 100 Average (mean ) NHER rating 3.6 NA 6.3 NA Source: SHCS 2007/9 –published tables

Safety, security and modern facilities

In contrast to the picture in relation to disrepair and energy efficiency, much of the Outer Hebrides housing stock performs comparatively well in respect of this aspect of the SHQS. The SHCS 2007/9 suggests that up to a fifth of the stock fails the healthy, safe and secure component of the SHQS. A very similar proportion of dwellings fail the modern facilities component of the SHQS. These rates are in line with the proportions for Scotland’s housing stock as a whole.

However, the presence of lead piping and some other aspects of the healthy, safe and secure component of the SHQS are difficult to quantity through a non-disruptive survey.

Overcrowding and under-occupation

The Bedroom Standard is used in government surveys to measure overcrowding and under- occupation. The number of bedrooms required is calculated for each household in accordance with the age, gender and relationship of each member of the household to one another19. Both national surveys and the 2006 local housing needs study, report that overcrowding is not a significant issue for the Outer Hebrides, with most studies suggesting less than 2% of households had fewer rooms than they require.

Findings from the Scottish Household Survey from 2005/6 indicate that 2 out of 3 households in Scotland occupy dwellings that have at least one more room than the bedroom standard suggests is strictly necessary. In the case of the Outer Hebrides this figures rise to 4 out of 5 households. Indeed around half of all households in the Outer Hebrides occupy dwellings with 2 or more dwellings than the bedroom standard suggests is necessary.

Figure 4.3: Percent households by number of bedrooms above or below the bedroom standard

Source: Scottish Household Survey 2003-5

These figures confirm that most households, and in particular homeowners, generally choose to occupy dwellings that are larger than the bedroom standard allows for. Families often want to ensure each child has their own bedroom. Some households also want at least one additional room to pursue hobbies, to enable them to work from home or allow other family members and visitors to stay overnight.

On the other hand, the scale of fuel poverty in the Outer Hebrides indicates that many working age households as well as pensioner households that live in larger homes appear to lack the resources to heat their homes adequately or to take the necessary steps to achieve greater energy efficiency. This problem is compounded by the limited equity many households can realise and the very limited supply of energy efficient smaller 1-3 bedroom dwellings available outside the social rented sector.

19. A more detailed description of the bedroom standard can be found in appendix 2.

4.7 Housing market activity

The sasines dataset supplied by the Scottish Government to the CnES does not provide a reliable picture of new build transactions and prices for the Outer Hebrides because very few sales are recorded as being new build sales. Although the numbers of assumed new build sales is incorrect, it does highlight the lack of speculative private housing building (as opposed to single unit house building) in the Outer Hebrides.

The following analysis is therefore based on transactions that could be identified to be resales of existing properties. To allow for the high incidence of the sale of plots at the lower end of the market in the Outer Hebrides, lower quartile, median and upper quartile figures were based on sales with a recorded value of between £25,000 and £100,000. For example, in 2009 we discounted 29 of the 180 sales coded as a resale (i.e. person-to-person sales) from our analysis. Of these 29 cases, 27 had a price of less than £5,00020.

With just 151 valid resales for the whole of the Outer Hebrides in 2009, the numbers of resales are too small to produce robust and credible price trends for the three sub-areas within the Rural HMA. Resale rates in the Rural HMA prior to 2009 were also modest. Evidence from sasines suggests that no more than 3% of the privately owned stock became available for purchase in the 7 years to 2008 inclusive.

Figure 4.4: Median resale house prices, 1997- 2008

Source: Registers of Scotland with further processing by Scottish Government (Datapack)

20 The net effect of this adjustment is that the lower quartile price for the Outer Hebrides was estimated to be £70,000, which is £10,000 higher than the equivalent figure the Scottish Government estimate circulated with the Datapack.

One reason for the low rate of resales across the various Island communities that make up the Rural HMA is the fact that houses are often passed on through families. Prices at the lower to middle end of the market, especially in the Rural HMA, are also affected by the fact that resale properties are rarely in walk-in condition (Hall Aitken, 2007).

House price trends

Resale price trends to 2008

Looking at figure 4.4 and table 4.7, there was a general upward trend in resale house prices across all price segments of the market at both the Outer Hebrides and Scotland level. In the 6 years to 2008 inclusive, the median resale price in the Outer Hebrides more than doubled from £50,500 to £103,250. Moreover, house price inflation was evident at the lower, middle and upper ends of the price range in both the Stornoway HMA and Rural HMA. Nonetheless prices at all price segments of the Outer Hebrides housing market remained significantly below those for Scotland as a whole.

Table 4.7: Resale prices across the Outer Hebrides, 2002-2009 2009 Housing Market Volume Lower Upper Year Areas of Sales Average Quartile Median Quartile 2002 Stornoway HMA 132 £58,494 £41,950 £53,260 £69,000 Rural HMA 154 £44,334 £30,000 £40,250 £55,000 All 286 £50,869 £34,000 £47,500 £60,000 2003 Stornoway HMA 114 £59,223 £40,000 £52,500 £77,125 Rural HMA 146 £53,618 £35,000 £50,000 £65,125 All 260 £56,076 £38,000 £50,500 £70,188 2004 Stornoway HMA 76 £71,161 £48,000 £69,000 £90,000 Rural HMA 106 £68,351 £45,750 £60,000 £84,250 All 182 £69,525 £47,750 £64,630 £85,250 2005 Stornoway HMA 108 £89,236 £61,763 £77,000 £96,750 Rural HMA 165 £78,899 £55,500 £75,000 £95,000 All 273 £82,989 £60,000 £77,000 £95,625 2006 Stornoway HMA 98 £94,104 £70,000 £81,000 £116,375 Rural HMA 149 £83,817 £55,000 £80,000 £108,857 All 247 £87,898 £62,000 £80,000 £110,000 2007 Stornoway HMA 117 £113,999 £83,150 £100,000 £139,440 Rural HMA 177 £93,354 £66,750 £85,000 £115,000 All 294 £101,570 £72,000 £92,600 £125,000 2008 Stornoway HMA 100 £128,609 £86,063 £117,050 £154,250 Rural HMA 112 £106,798 £73,500 £94,000 £140,000 All 212 £117,086 £80,000 £103,250 £143,000 2009 Stornoway HMA 81 £118,335 £88,250 £105,000 £135,000 Rural HMA 70 £94,184 £61,500 £77,625 £107,500 All 151 £107,139 £70,000 £95,000 £127,000 Source: Registers of Scotland with further processing by Scottish Government (Datapack)

House prices remained significantly higher in the Stornoway HMA in the period to 2008. In 2008, for example, the median price was £117,050, some £14,000 higher than for the Outer

Hebrides as a whole. On the other hand, prior to the housing market slump that the difference between resale prices in the Stornoway HMA and the Rural HMA appeared to be closing, in proportionate if not in actual cash terms.

An important consideration from a housing need and demand perspective is the entry-level price that a prospective purchaser might be expected to pay. It is generally assumed that the lower quartile resale price provides a reasonable approximation of this price threshold. In 2008, the lower quartile price for all resales in the Outer Hebrides was £80,000, ranging from £86,063 in the Stornoway HMA down to £73,500 in the Rural HMA.

Resale price trends after 2008

The downturn of the Scottish housing market started in the first half of 2008. In the second half of 2008 the Outer Hebrides housing market followed suit and house prices in the Outer Hebrides began to fall back. This downward trend continued during 2009. Analysis by housing market area indicates there were important differences in house price change between the third quarter of 2008 and the fourth quarter of 2009. As figure 4.5 shows:

• The median price in the Rural HMA fell very sharply during the end of 2008 and early 2009. It then remained static until the last quarter of 2009 when prices increased slightly. Prices at the upper end of the market more or less followed this pattern. By contrast entry- level prices in the Rural HMA showed no sign of any recovery and continued to hover around £61,500 for most of 2009.

Figure 4.5 Median quarterly house price trends, 2002-2009

Source: Source: Registers of Scotland with further processing by Scottish Government (Datapack)

• In the Stornoway HMA, median prices fell back in the second half of 2008 but to a much lesser extent that occurred in the Rural HMA. Although prices fluctuated from one quarter to another during 2009 the overall pattern was one of broadly static prices.

• By contrast house prices at the lower end of the Stornoway HMA have continued to fluctuate by a considerable margin increasing by over £15,000 in one quarter only to fall back by a similar amount the following quarter. This fluctuation may be due to differences in the mix of dwellings sold from one quarter to another. On the other hand, in the absence of evidence to confirm whether this is the case it is perhaps best to assume that prices at the lower end of the Stornoway HMA remained volatile.

Reports published by the Register of Scotland and other sources of market intelligence suggest that there was a slight upturn in transaction rates in Scotland during 2010 as well as some increase in first time buyers entering the market. However, transaction rates remained low and price movements remained volatile.

In terms of the Outer Hebrides the Registers of Scotland bulletins suggest that there was a further fall in the average house price during 2010 and early 2011. The most recent published figures by the Register of Scotland (2011) indicate:

• The average house price in the Outer Hebrides for January to March 2011 was £95,771, which was a third lower than the Scotland wide average house price of £146,253.

• The average price ranged from £114,223 for a detached house, which accounted for 3 out of 5 of all sales down to £69,500 for semi-detached houses, terraced houses and flats21.

The affordability of local house prices

To examine the affordability of house purchase at the entry level of the market we calculated house price to full time earnings ratios. These are presented in table 4.8. According to the Scottish Government (2008b) a household should be able to afford a home that costs 3.5 times gross income for a single earner household, and 2.9 times for dual income households. When compared to this benchmark, the outputs in table 4.8 suggest that:

• Affordability ratios increased during the period to 2008, reflecting the fact that entry level (i.e. lower quartile resale) house prices increased at a much sharper rate than wages.

• Despite the increase in prices, households with two full time earners did not face major affordability problems in seeking to buy a home even at the peak of the boom in 2007/8.

21 The average price for non-detached dwellings was calculated by multiplying the price for each property type by the number of units sold. The sum for each property type were then added together and divided by the total number of sales (21 sales).

• Single person households in low paid employment have had and continue to face affordable housing problems, possibly aggravated by the limited supply of smaller one and two bedroom properties in the Outer Hebrides.

• Single person households earning around the median wage had faced growing affordability problems but the fall in house prices in 2009 has seen entry level price to income ratios fall back below the suggested Scottish Government threshold.

Table 4.8: House price to earnings ratios 2002 2004 2005 2006 2007 2008 2009 Quartile 1 £11,294 £12,464 £12,480 £12,974 £14,950 £16,084 £16,284 Single earner Median £15,803 £15,486 £16,687 £18,788 £20,150 £22,105 £23,455 Quartile 1 £22,589 £24,929 £24,960 £25,948 £29,900 £32,167 £32,568 Dual earner Median £31,606 £30,971 £33,374 £37,575 £40,300 £44,210 £46,910 Sasines resale Quartile 1 £34,000 £47,750 £60,000 £62,000 £72,000 £80,000 £70,000 price Median £47,500 £64,630 £77,000 £80,000 £92,600 £103,250 £95,000 Price: income ratio 2002 2004 2005 2006 2007 2008 2009 Single Earner Q1 price/Q1 earnings 3.01 3.83 4.81 4.78 4.82 4.97 4.30 Q1 price/median earnings 2.15 3.08 3.60 3.30 3.57 3.62 2.98 Dual earner Q1 price/Q1 earnings 1.51 1.92 2.40 2.39 2.41 2.49 2.15 Q1 price/median earnings 1.08 1.54 1.80 1.65 1.79 1.81 1.49 Sources: Registers of Scotland with further processing by Scottish Government for prices and ASHE for earnings Note: As noted in chapter 2, the ASHE earnings data for the years prior to 2008 has been withdrawn in the past 12 months by ONS because it is no longer judged to fall within acceptable margins of error. The ratios therefore should be treated with caution and should be considered illustrative only.

As discussed in section 3, upwards of 50% of those local workers are not permanent full time employees. CACI gross household income estimates to price ratios for 2009 suggest that:

• The lower quartile resale price (£70,000) to lower quartile income (£14,512) ratio for the Outer Hebrides was 4.8 whilst the lower quartile resale price to median income (£24,575) ratio was 2.8.

• The lower quartile resale price for the Stornoway HMA (£88,250) is much higher than the comparable Outer Hebrides price whereas the lower quartile income (£15,451) and median income (£26,396) are only slightly higher. Consequently, the lower quartile income to lower quartile resale price ratio (5.70) and median income to lower quartile resale price (3.3) are higher.

• In the Rural HMA the lower quartile resales price (£61,500) is significantly lower that the Outer Hebrides wide figure but lower quartile (£13,765) and median (£23,176) household incomes are also slightly lower. Consequently, the lower quartile resale price ratio (4.5) and median income to lower quartile resale price (2.7) are lower.

Change in the house price to earnings relationship since 2008

The above analysis confirms that there has been a change in the house price to income relationship since 2008. Assuming house prices remain broadly static for some time, the housing market should become easier for newly forming households in full time employment to access over the next couple of years.

More immediately, the ongoing reluctance of lenders to relax their mortgage criteria and growing uncertainty in the labour market continues to limit the capacity or willingness of younger working households seeking to buy their first home. The Bank of England Credit Conditions Survey Q4 2010 confirmed that most mortgage products have a LTV of 75% or less. This is a major barrier for first time buyers that have to save a deposit from their own earnings and cannot rely on support from their family.

These short-term difficulties accessing the owner occupied market may not necessarily see a substantial increase in the numbers of younger households turning to the social rented sector. Some will choose to remain in or return to their parental home. Others may choose to remain in the private rented sector for longer periods.

Although market conditions have further constrained the choices available to prospective first time buyers, available evidence suggests that the recession has not created widespread affordability problems for existing owners.

Statistics on the numbers of repossessions and households with mortgage arrears for the Outer Hebrides are not accessible. However, at the UK level, the numbers of borrowers that have substantial mortgage arrears or have had their house repossessed remain much lower than in the recession of the early 1990s. DCLG live tables (2011) report that in 2010 there were 36,300 repossessions in the UK which was well below the numbers projected by CML and half the numbers of repossessions recorded in 1991 during the last major housing market slump. Likewise, whilst 140,200 households had mortgage arrears of 6+ months in 2010, this was less than half the number of households in this position in 1991/2.

Measures by the UK and Scottish Government to enhance the level of support for homeowners at risk of repossession have had some impact. Of greater significance however, has been the fact that mortgage interest rates have remained below the long-term annual average UK interest rate of 3.6% since the latter half of 2008. This has kept mortgage repayments affordable for existing borrowers.

4.8 Private rental dynamics

CnES maintains a register of private landlords. This register includes owners of tied accommodation but it excludes those who provide lets in crofting tenure, those who only let to family members, and those who sub let part of their home to lodgers – collectively these make up a large share of the private rented stock in the Rural HMA. Figures CnES derived from this private landlord register suggest that in spring 2011:

• There were 354 registered landlords in the Western Isles and 460 privately rented units, which is equivalent to just 3% of the total housing stock.

• Of the 460 units owned and managed by private landlords, 36% were situated in Stornoway, 44% were situated in the rest of Lewis and just 20% were located in Harris, the Uists and Barra (93 units).

• 9 out of 10 registered private landlords in the Outer Hebrides own just one dwelling.

The above findings are consistent with previous analysis by the Scottish Government (2009c). It reported that less than 5% of the registered private rental stock in the Outer Hebrides belonged to landlords with more than 10 properties. At the other end of the spectrum, over 60% of the registered private rented stock belonged to landlords that owned just one property, which was the highest rate for any local authority area in Scotland.

Private renting is of considerable interest to the Scottish Government but reliable evidence about this sector remains elusive. CnES, in common with other local authorities, have found it difficult to secure information on rents and turnover in the private rental market. It has also proved difficult to find out why private landlords invest in the sector and their future plans. The absence of such information makes it difficult to appraise the potential for addressing housing need in the private rented sector.

Local knowledge suggests that many private landlords, especially in the Rural HMA, do not operate on a strictly commercial basis. Contact with private landlords by members of the homeless team and other officers indicate most private landlords see little reason to engage with CnES. For example, the homeless team contacted all known private landlords to encourage involvement in the rent deposit scheme but only 5% responded.

Local stakeholders also report that private landlords generally ‘cherry pick’ tenants and in the main prefer to rent to households not reliant on housing benefit and /or households known to them. Estimates derived from DWP Housing Benefit statistics support this perception. In 2010, no more than 1.5% of households in the Outer Hebrides were private renters in receipt of full or partial housing benefit.

Changing market conditions are believed to have impacted on private renting in many urban and rural areas of Scotland, through an increase in demand from households deferring or purchase and an increase in supply from property owners deferring or unable to sell. So far however, there is little evidence that this has occurred in the Outer Hebrides.

A recent study into youth homeless in the Outer Hebrides (Rosengard et al 2008) reported that private renting does not play a large role in housing young households, especially those with low incomes and/or at risk of homelessness. Aside from the reluctance of most private landlords to accept tenants on housing benefit, the study team noted that few private lets involved the provision of shared accommodation. The study team concluded that unless a private landlord was willing to set low rents for 1 and 2 bedroom properties it was rarely possible for a single person aged under 25 years to afford the rent because of the Housing Benefit single room allowance rule.

The Local Housing Allowance (LHA) is the cornerstone of the Government’s Housing Benefit (HB) reform programme. From April 2001 the LHA rates were reduced across the UK. As at June 2011, the weekly maximum permitted rent for a 1 bedroom property was set at £90 per week (£4,680 pa) whilst a 2 bedroom property was set at just under £110 per week (£5,700 pa).

By comparison, the single room rate was just £63.46 per week (£3,300 pa). From January 2012 single person householders less than 35 years will only be entitled to claim the single room allowance. The lack of shared tenancies in the private sector is likely to limit further the opportunities of lower income single person households to access the private rental market.

According to the Census 2001, around 9 out of 10 private rented properties comprise of 3 or more bedrooms. There is little reason to believe this proportion has changed significantly in the intervening period. The Outer Hebrides falls within the Highlands and Islands Local Housing Allowance (LHA) area. In June 2011, the LHA limit for a 3-bedroom property was £126.92, which was equivalent to an annual rent of around £6,600. As discussed in chapter 6, this is considerably higher than the mortgage cost for an entry level priced property.

Overall, the lack of smaller and/or shared properties, the high cost of private rents relative to the purchase price of entry-level housing and private landlord attitudes all suggest the potential contribution which the private rented sector can make in addressing the housing needs of lower income households, especially single person and to a lesser extent couples, is limited.

4.9 Social renting and homelessness

Social rented sector lettings

In terms of responding to the expressed requirement for social housing recorded on the housing register, a key consideration is the number of social rented properties that become available for re-let each year. In the 3 years to the end of 2010:

• The annual number of self-contained social rented dwellings (i.e. excluding the first let of newly built dwellings) relet on a permanent basis averaged around 200.

• The annual number of self-contained permanent relets made to new tenants (including homeless applicants but excluding transfer applicants) averaged around 165. Moreover, the share of relets allocated to new tenants has been increasing over time.

• Almost 9.5% of the effective stock of self-contained social housing was re-let each year, including almost 8% to new tenants (including homeless) and 1.5% to transfer tenants.

• An annual average of 110 of all relets occurred in the Stornoway HMA and 90 relets occurred in the Rural HMA. Within the Rural HMA the average number of relets each year has ranged from 45 in Rural Lewis and Harris down to 20 relets in Benbecula and North Uist and 25 in Barra and South Uist. However there is considerable fluctuation in the number of lettings across the Rural HMA from one year to the next.

• The Stornoway HMA has a lower relet rate to new tenants (7.6%) than the Rural HMA (8.3%). This partly reflects the higher incidence of churn within the Stornoway HMA, which presumably reflects the greater opportunity for existing HHP tenants to relocate within the Stornoway HMA as their housing circumstances change.

• Relets rates for Trust HA are slightly higher than those for HHP, reflecting the different client group of these two housing associations.

In contrast to other parts of Scotland, there has been no sharp and sustained downward trend in the numbers of properties becoming available for permanent relet to new tenants in recent years. One possible reason for this is that former HHP tenants have faced fewer barriers to moving into the owner occupied sector than elsewhere in Scotland. Another more likely explanation is that the high rates of new social rented housing construction have helped to maintain the annual flow of lettings at reasonably buoyant levels relative to elsewhere in Scotland. The increase in the share of lettings to new tenants together with improvements in the management of voids has also had a beneficial impact.

Expressed requirement for social housing

The HHP housing list (and prior to October 2006 the Comhairle housing list) is in effect a common housing register and therefore provides a good representation of the expressed requirement for social rented housing in the Outer Hebrides.

Between 2004/8 the numbers of households living in the Outer Hebrides that had a live application for social housing increased from around 600 to over 900 but this number had fallen back to 757 by spring 2011.

Prior to 2008, the increase in housing register applications was heavily influenced by an increase in homeless applications following changes in legislation that required local authorities to provide temporary accommodation for all applicants assessed as homeless.

The decline in the number of total live applications since 2008 has been shaped by several factors. There has been a slight decline in the annual number of new applicants (including homeless applicants) joining the housing register. Fewer internal transfer applicants that wish to transfer to an alternative property or location now renew their application each year. As discussed in appendix 2, more rigorous management and updating of the housing list have also had some impact. The comparatively high flow of annual lettings has also contributed to the fall in the backlog of applicants on the housing register for a year or more.

In terms of the housing requirements of applicants:

• Some 66% of live applicants are seeking accommodation in the Stornoway HMA. A further 18% are seeking accommodation in Rural Lewis and Harris and the remaining 16% are seeking accommodation in Uist and Barra.

• There are no substantive differences in the location preferences of new and transfer applicants but applicants awarded housing stress points by HHP were more likely to express a preference to live in the Stornoway HMA (69%).

Although the HHP could not provide comprehensive data on the socio-economic profile of applicants and their households, previous analysis in 2006 and 2008 indicates that over half of new applicants are living with family or friends and a further quarter are seeking a move from the private rented sector. Around 9 out of 10 applicants require a 1 or 2-bedroom property.

Pressure ratios

A measure that is sometimes used to assess the pressure for social renting housing is to calculate housing register applicants to letting ratios. A ‘pressure ratio’ is a measure of how many households are looking for social housing in a given area at a given point in time relative to the amount of properties that become available for let each during a 12 month period. Although there are differing interpretations in relation to how social rented pressures should be calculated, there is growing acceptance that such ratios provide a useful indication of changes in the relative pressure between areas.

Table 4.9: Total applicant to let ratio 2004, 2006 and 2009 App to Let App to Let App to Let Ratio App to Let ratio Ratio 2011 Ratio 2009 2006 2004 Stornoway HMA 4.5:1 7:1 5: 1 6:1 Rural HMA 3.5:1 5:1 4: 1 3:1

Table 4.9 presents applicant to letting ratios (the number of housing list applicants compared to the number of properties becoming available for let). Data constraints mean it is not yet possible to assess the relative pressure for dwellings of different sizes, although this should be possible in the near future.

Research by Centre for Urban and Regional Studies (2003) indicates that a ratio of less than 3 applicants to 1 letting is evidence of a potential risk of low demand whilst a ratio of more than 6 applicants to 1 letting is symptomatic of excess pressure for social rented accommodation. Taking this as a benchmark, it appears:

• Expressed demand for social housing steadily increased in the period to 2008-9 but has now fallen back, reflecting the fall in the numbers of valid applicants on the housing register.

• Although new social rented provision has mainly been constructed within the Stornoway HMA area, pressure for social housing in the Stornoway HMA remains significantly above the rate for the Rural HMA.

The above patterns are also consistent with the fact that although numbers fluctuate from one year to another, the majority of homeless presentations continue to be made to Stornoway.

Homelessness

Homelessness generally arises from a complex mix of personal circumstance and deficiencies in the local housing system. Homelessness can make it more difficult to treat someone with health needs and can disrupt the schooling and educational development of children. In recognition of the traumatic effects of homelessness, the Comhairle is working towards the Scottish Government target that all applicants assessed to be unintentionally homeless from 2012 onwards will be found permanent settled accommodation.

As table 4.10 shows, the number of persons applying as homeless has fallen back since peaking at 283 in 2006/7. In the year to March 2011, 203 households applied as homeless to

the Comhairle but it is difficult to predict if this positive trend will continue. In spite of the economic recession there has been no significant increase in the numbers applying because of repossession, mortgage default or eviction due to rent arrears. However there are major concerns that the welfare reform programme outlined in chapter 3 may see more households at risk of homelessness because of their inability to pay their housing costs.

Table 4.10: Homelessness trends in Outer Hebrides, 2005-6 to 2010-11 2005- 2006- 2007- 2008- 2009- 2010- 2006 2007 2008 2009 2010 2011

Number of homeless applications received 242 283 252 239 202 203

Number of applications assessed as homeless 163 166 142 184 158 159

Number assessed as homeless and in priority 100 106 101 139 121 132 need % of those assessed as homeless assigned 61% 64% 71% 76% 77% 84% priority need Priority need: permanent housing allocations 55 66 76 74 96 57 made Priority need waiting to be housed 22 33 40 70 64 103 Source: Scottish Government Homeless Statistics (2011) and CnES homeless records

Table 4.10 also confirms that steady progress has been made towards the Scottish Government target to abolish priority need by 2012. Of the 159 households assessed as homeless or potentially homeless in 2010/11, 84% were assessed to be in priority need, up from 61% in 2005-6.

Homeless households make up a growing share of those seeking to access social housing. In spring 2011 homeless applicants accounted for over a third of applicants assessed to be in some form of current housing need. What is particularly striking is that the profile of homeless applicants and waiting list applicants is becoming increasingly similar. In general both new waiting list applicants and homeless applicants tend to be single person or lone parent households, in the main aged over the age of 25 years.

Up to 3 out of 4 homeless applicants want to be rehoused in the Stornoway HMA. This reflects the Scotland wide trend for homeless households to gravitate towards local centres of employment but it has added to the pressure for social housing in the Stornoway HMA. Currently over half of all HHP permanent housing allocations in and around Stornoway are to homeless households. In spring 2011, some 103 households assessed to be homeless and in priority need were waiting an offer of permanent housing. As table 4.10 shows, the number of households in this position has increased sharply since 2005-6. Local stakeholders believe this is indicative of:

• The pressures on the general HHP housing list, particularly in the Stornoway HMA area.

• The limited supply of temporary accommodation and of housing options, including private sector tenancies, for lower income households, but especially single person households at risk of homelessness.

Analysis of CnES homeless records confirms many homeless people have complex health and support needs that require intensive support and care. Of those assessed to be in priority need:

• 14% required support to develop skills required for living independently

• 16% required support because of mental health problems

• 14% required support because of alcohol or other dependency problems

• 6% required support because of learning difficulties

• 10% required support because of a physical disability and/or medical conditions.

4.10 Summary and key messages

The Outer Hebrides contains just over 14,000 dwellings, although possibly 13% of these dwellings are not occupied on a permanent basis. Over 3 out of 4 dwellings are in the owner occupied sector and the social sector is small accounting for some 18% of the occupied stock.

The Outer Hebrides housing market is distinctive. The reliance on self-build means there is a very little speculative new housing construction for sale on the open market. Consumers also generally expect that ‘a home is for life’, with the result that resale rates in the housing market are low and demand for smaller homes is very limited, especially in the Rural HMA. There are also high levels of second and holiday homes in much of the Rural HMA.

The constrained annual supply of new and existing properties for sale on the open market, even before the economic downturn, made it challenging for younger households, even dual earners, to enter the housing market unless their family had available land. In the absence of a significant private rental market that caters for younger and single person households, young adults tend often continue to live with their family until an opportunity to enter the housing market at a price they are willing and able to pay arises. This is reflected in the higher proportion of large adult households noted in chapter 3.

Levels of house building in the private and social sectors increased considerably in the years prior to 2009. Some of the ‘apparent’ growth in private housing construction may reflect under- reporting of completions in earlier years. Nonetheless, it is evident that much of the increase has been in response to the demand from households moving to the Outer Hebrides plus the pent up demand from households that secured funding from the Croft House Grant Scheme (CHGS) that built up following the closure of its predecessor, the Crofters Building Grant and Loan Scheme (CBGLS), in 2004/5.

The numbers of households living in poor quality and hard to heat homes remains the largest source of unmet housing need throughout the Outer Hebrides. Problems of disrepair in the private sector remain high relative to Scotland as a whole. Of particular concern are the very

high levels of fuel poverty, which is now a major problem for families as well as older households.

Affordability issues have become significant in recent years. This reflects a combination of housing market conditions in the form of rising land and resale house prices, the lack of smaller 1-2 bedroom properties available for purchase, the continuation low earnings in many sectors of the local economy and the limited opportunities to rent form a social or private landlord.

Since the onset of the UK wide economic recession and the slump in the housing market, housing demand has significantly reduced. As a result house prices, housing transactions and housing construction levels have all fallen back. Falling house prices will have improved affordability ratios for prospective buyers. Set against this however, tighter lending criteria, falling employment levels and, as noted in section 3, rising unemployment have encouraged younger households to postpone buying. The fall in first time buyers has had a cascading impact on demand across the market. At present there remain few signs that either average prices or entry-level house prices have stabilised.

Little is known about the operation of the private rented sector in the Outer Hebrides and the factors that motivate local private landlords. The general perception is that most landlords are not market orientated and generally prefer to let out properties to family members and people they know. Given the limited resources available to support the strategy process in the current economic climate, we believe that rather than commission research, more needs to be done to establish a dialogue with private landlords to explore:

• The potential to improve access to the sector for those in current housing need and/or those that have deferred buying until market and lending conditions improve.

• The potential requirement to improve management and maintenance standards in the privately rented market and how this might be progressed.

Contrary to some expectations, the level of expressed need for social housing as measured by the numbers of households on the HHP waiting list has fallen back in the past 2 years. In large part this reflects the fact that the high level of social rented completions from 2004 to 2010 maintained a reasonable flow of lettings, which has reduced the backlog of unmet need that had built up in the years prior to 2008. However, there remains a high risk that homeless application numbers will start to rise again as the welfare reform agenda is gradually implemented.

More immediately, there is growing concern about the number of homeless people living in temporary accommodation for an extended period of time. In light of the severity of public spending cuts outlined in chapter 3, it will be important for the LHS 2011-16 to look at possible measures to prevent homelessness occurring.

There is also growing recognition that service delivery gaps can result in adults with complex mental health and/or substance abuse needs becoming homeless. The same is true for vulnerable young adults that have not been through the care system. This suggests there is a need to investigate how to achieve greater collaboration between housing, health and social work agencies at the strategic and operational level in order to prevent and resolve homelessness for those with complex needs.

5. THE FUTURE HOUSING MARKET

5.1 Introduction

The preceding sections explored recent housing system trends and the factors that have shaped these trends. This section considers possible future economic, demographic and policy developments and their potential influence on the future operation of housing market.

5.2 Economic outlook

UK and Scotland wide outlook

The UK was one of the last major economies to pull out of the global economic recession at the end of 2009. Since then, the recovery of the UK and Scottish economies has been somewhat faltering. Andrew Gouldie (2011), the Chief Economic Adviser for the Scottish Government, observed that the Scottish economy continued to recover during the first three quarters of 2010 and there had been some upturn in productivity and employment. He also observed, however, that this growth had been driven by the strong performance in the construction sector and that recovery has been much less pronounced in other sectors of the economy.

The stronger growth of the construction sector was partly the result of the UK Government and Scottish Government stimulus measures that are now being withdrawn or reduced. This, and the fall in total GVA at the end of 2010, was amongst the mix of factors that influenced most economists to revise their forecasts for the Scottish economy downwards. As table 5.1 shows, independent forecasts predict only a modest growth in Scottish economy, with GDP expected to grow by around 1.7% in 2011 and 1.9% in 2012.

Table 5.1: Scottish economic outlook: GDP growth (%) Source date 2011 2012 Experian Nov-10 1.9 1.9 Cambridge Econometrics Mar-11 1.7 1.5 Fraser of Allander Feb-11 1.0 1.6 Ernst and Young Item Club* Nov-10 2.2 2.4 Average for Scotland NA 1.7 1.9 OBR UK forecast NA 1.7 2.5 Source: Spice Economic Indicators Briefing (May 2011) and Office Budget Responsibility (March 2011) Note: In June 2011 after this chapter was drafted, the Ernst and Young Item Club revised their forecasts downwards to 1.6% for 2011 and 1.9 for 2012.

The Office of Budget Responsibility (OBR) has also recently adjusted their central forecast for the growth of the UK economy for 2011 down from 2.1% to 1.7%, albeit they expect the UK economy to grow more sharply during 2012. In the medium term, figure 5.1 shows that the OBR (2011) expects to see economic growth increase to 2.8% per year by 2015. However, as the probability bands surrounding their central estimate highlight, there is much uncertainty around their central forecast.

Figure 5.1: GDP growth fan chart for the UK

Source: OBR (2011) Note: The solid black line shows the OBR median forecast, with the successive pairs of lighter shaded areas around it representing 10 per cent probability bands.

Few long-range forecasts are produced for Scotland but table 5.2 summarises the Ernst and Young Item Club revised forecasts to 2015 which were issued in June 2011. Their downward revision in GVA growth for Scotland relative to their January 2011 forecast highlights that the pace of economic recovery in Scotland also remains uncertain.

Table 5.2: Alternative forecasts for Scottish Economic Growth 2011 2012 2013 2014 2015 ITEM Club (January 2011): GVA growth (%) 2.2 2.4 3.1 3.0 2.2 ITEM Club (June 2011): GVA growth (%) 1.7 1.9 2.1 2.3 2.1 Labour force as % working age population 85.4 85.5 85.6 85.5 85.5 Employment total (000’s) 2,643 2,644 2,662 2,674 2,687 Public services employment (000s) 755 743 726 712 703 Source: Ernst & Young Scottish ITEM Economic Forecasts for 2011 – June 2011 unless stated January 2011

On the positive side, a weak pound relative to the dollar and euro has helped exports whilst the Libor rate22 has fallen back to levels last seen before the global credit crunch. Unemployment rises have also been less than many feared, although this has been in part due to individuals leaving the labour force altogether. Nonetheless, there remain several risks to the economic recovery at the UK and Scotland level over the longer term.

22 The London Inter-Bank Offered Rate is the rate at which international banks lend to each other and thus thrust each other. The sterling 3-month LIBOR rate (0.826% in June 2011) influences the interest rates lenders set for mortgages and other loans and the total amount they will lend.

Risks and uncertainties

Inflationary pressures

The world economy appears to be relatively stable in spite of events in Japan, the Middle East and the EU sovereign debt crisis but rising global energy and other commodity prices are contributing to UK inflationary pressures. In May 2011 The Retail Prices Index (RPI) inflation - which includes mortgage interest payments - was 5.2% whilst the consumer price inflation (CPI) was 4.5%. It is widely anticipated that CPI inflation will continue to overshoot the Bank of England's 2% target for the rest of 2011, which it has done for 34 of the past 40 months.

The Bank of England Monetary Policy Committee recently voted to maintain the bank rate at 0.5%. However, rising inflation and continuing growth in the numbers of people leaving the labour market means that a rise in interest rates to combat inflation is still a likely prospect. This could further dampen consumer spending and lead to some rise in repossessions. If this situation were to arise, this could reduce economic growth prospects for the period to 2015 and add to the fiscal pressures faced by the UK Government.

Fiscal policy

Another area of uncertainty is whether the UK, and more especially the Scottish economy, can cope with the austerity measures the UK Government has embarked on. In its Comprehensive Spending Review (CSR) in October 2010, the UK Government confirmed that in the 4 years from 2011/12 to 2014/15 public spending would be reduced by some £80 billion.

The Scottish Government deferred its share of the 2010/11 cut, estimated at £332 million, until 2011/12. As a result it now has to implement this reduction alongside reductions in the Scottish budget announced in the CSR. Audit Scotland (2011) report that this will necessitate an overall real reduction of £3.3 billion or some 11%.

Whether the UK Government plans to reduce public expenditure more deeply and quickly than many other OECD governments proves to be ‘too much too soon’ and results in a dip in productivity and output remains to be seen. That said, there is growing unease that the spending cuts might have a disproportionate impact on Scotland because:

• Scotland has a relatively high reliance on public sector employment and public expenditure. This includes higher rates of welfare benefit dependency, which means a high proportion of households are vulnerable to welfare reform.

• There are unanswered questions regarding the ability and capacity of the private sector to expand sufficiently to compensate for the loss of public sector jobs.

• There are mismatches between the spatial location and skills of jobs in the public and private sectors (Fraser of Allander, 2011).

• Scotland’s export base is weaker than that for the UK as a whole (Ernst and Young, 2011).

The reduction in Scottish Government capital spending has been particularly marked. It involves a reduction of over 36% over the four years. This reflects the ‘Barnett consequentials’ of the UK

Government decision to impose steep cuts on capital expenditure on new affordable housing and on schools in England.

For 2011/12, the Scottish Government’s Housing Investment Programme will be around £268 million but most of this funding is committed to ongoing projects. The main new affordable housing supply programme will be the Innovation and Investment Fund, which has a budget of £50 million, which is discussed later in this chapter. The scale of these capital expenditure cuts and the revised approach to funding new affordable housing provision may have far-reaching and long-term implications for the dynamics of the housing system and the provision of affordable housing supply into the next decade (CHMA, 2011).

Scotland Bill

Building on the Commission on Scottish Devolution (i.e. the Calman Commission) report, the Scotland Bill is being progressed through the Westminster Parliament. If enacted, the Bill would see income tax rates in Scotland reduced by 10 pence in the pound, and the block grant to Holyrood reduced accordingly from 2016 onwards. This will require the Scottish Parliament to set tax levels each year to balance the Scottish Budget in the expectation this will strengthen the link between fiscal responsibility and spending powers. Control of redistributive policies and macroeconomic management will however continue to rest with the UK Government.

There is controversy surrounding the Bill and views differ on whether or not Scotland will suffer financially if the Bill is passed in its present form. In part this is because many questions remain to be answered such as exactly how the block grant will be reduced and how the policy of ‘no detriment’ will work in practice.

Welfare reforms

The Comprehensive Spending Review (CSR) also re-affirmed measures to reduce housing benefit and other welfare benefit expenditure by some £18 billion over the 4 years, which will primarily affect families and other households of working age that claims benefits or tax credits.

As noted in chapter 4, some Housing Benefit reforms are now being rolled out. From 2013 onwards, these changes will be accompanied by the introduction of a Universal Credit. This Credit will be payable to people in and out of work, and will replace Income Support, income- based Jobseeker’s Allowance, income-related Employment and Support Allowance, Housing Benefit, Child Tax Credit and Working Tax Credit. The main features of this new welfare benefit are that:

• Credit will be withdrawn at a constant rate of 65 pence for each pound of net earnings above a claimant’s assessed applicable amount, although some groups will retain an earnings disregard before this taper applies.

• A new conditionality and sanctions regime will apply to claimants that DWP expect to move into or towards work. Non-compliance with the requirements and responsibilities set out in the ‘contract’ will result in sanctions that could ultimately result in a reduction in Credit for up to 3 years. In the case of couples, conditionality will apply to each partner.

• There will be an upper limit to the Credit most applicants can receive23, which will include assistance with housing related costs and, where applicable, child benefit. This will be around £500 for couples and households with children and £350 for single persons.

• The housing support element of the Credit will rise in line with the CPI inflation (rather than changes in rent levels) as will all other state benefits from 2013/14.

• Under-occupation criteria will be taken into account in assessing the amount of Credit payable, although the extension of this rule to disabled persons living in adapted housing is to be reviewed.

• The means tested rule that no benefit is payable if capital exceeds £16,000 will be extended to in-work families and lone parents.

• Both partners in a couple will have to have reached retirement age in order for a couple to claim Pension Credit.

• Responsibility for Social Fund Crisis Loans and Community Care Grants will transfer to the Scottish Government.

Although there was initial support for the principles of the Universal Credit, there is now much disquiet about the lack of detail about how the Credit will operate. Welfare organisations and housing groups have been particularly concerned about the lack of detail about how housing costs (including rent and council tax benefit) will be calculated and the lack of consideration given to the link between housing costs and local housing market conditions. It is now likely that much of the detail of the proposed changes will be set out in secondary legislation.

Outer Hebrides economic outlook

The most recent long-range economic forecasts for the Outer Hebrides were those prepared by Oxford Economics and SLIMS (2009), which suggest that:

• The Outer Hebrides would grow at a more modest rate than the Scottish economy. Over the decade to 2019 it was suggested that the average annual growth GVA growth for the Outer Hebrides would be some 0.5% below the Scotland wide rate.

• There would be an upturn in employment from 2012 but the Outer Hebrides was unlikely to see a return to the employment levels of 2007 until 2018 at the earliest. This simulation did not take account of the current scale of contraction in public sector employment.

• Claimant count based unemployment could remain stable at around 3.8% from 2013 onwards. We presume this anticipated fall in unemployment ahead of a significant increase in employment was based on the assumption that net-migration would decline as would economic activity rates. Evidence presented in chapter 3 supports both assumptions.

23 Working families, war widows and some in receipt of disability related benefits will be exempt from this limit.

These headline indicators should be treated with caution. Economic simulation models are subject to margins of error and such errors increase as the population base for a geographical area declines. Moreover, these forecasts were based on trends prior to 2008/9 and do not reflect the volatility of macro-economic conditions since then.

More specifically, the forecasts do not factor in the implications of the CSR public expenditure cuts. According to Atterton (2011), the Outer Hebrides is one of the three Scottish local authorities most exposed to public expenditure cuts over the next 4 years. More immediately, the CnES budget for 2011/12 is some 4.1% lower than its budget for 2010/11. The scale of this reduction is higher than the 2.6% average for all Scotland’s local authorities.

The headline indicators are also based on ‘policy-neutral’ forecasts. They make no provision for the policy ambitions of the Outer Hebrides Community Planning Partnership (OHCPP) to increase inward investment, improve the competitiveness of local businesses and secure population growth. The OHCPP see an increase in net inward migration as central to increasing the numbers of younger households required to counterbalance population aging and to maximise local economic potential. These aspirations will need planning policy, housing strategies and economic strategies operating in harmony to:

• Bring new economic life to the Outer Hebrides by fostering innovation, creativity and local entrepreneurialism in the commercial economy and the social economy in order to offset the downward effect of public expenditure cuts on local consumer spending and public sector procurement, on which many existing private firms rely. Without such intervention, the private sector, which is dominated by small firms with a limited export base, may struggle to ‘pick up the slack’ resulting from the loss of public sector employment.

• Limit the adverse impact of high and rising energy prices relative to the mainland on the competitiveness of local firms. Energy prices are largely determined by global prices but oil prices are also heavily shaped by taxation polices. The UK Government’s derogation request to the European Commission for a rural fuel duty rebate of £0.05 per litre pilot scheme, if accepted, may offer some benefit to the Outer Hebrides.

• Find new ways to deliver services such as education, health and transport, which the Rural Services Network (2010) has suggested can cost up to 90% more to run in rural areas than in urban areas due to having to serve a scattered, sparse population.

The Christie Commission on the future delivery of public services which was published after this report was substantially drafted may offer some insight into how public services may be more cost effectively delivered.

5.3 Demographic projections

Population projections

The NRS 2008 based population projections were published in 2010 and suggest population decline will be less severe that projected previously. Figure 5.2 shows that differences between the 2006-based and 2008-based projections are slight. On the other hand, both projections are much higher than the 2004-based projections. The latest projections suggest 25,274 people

may be living in the Outer Hebrides by 2031, which is over 4,000 more than 2004 based projections suggested.

Figure 5.2: Alternative NRS population projections, 2011/31

Source: NRS (2011) Population projections – 2004, 2006 & 2008 based plus low and high migration variant 2008 based

This difference is the result of changes to fertility, mortality and most significantly migration assumptions. The 2008-based projections assume modest net inward migration, which may increase to +100 per year from 2013/14 onwards. By contrast the 2004-based projections assumed an annual average net outward migration of -50 persons.

Figure 5.2 also shows the low and high migration variant NRS 2008 based population projections. These illustrate what might happen if net-inward migration was to increase to 150 each year or remained unchanged at around to 50 each year from 2013/14 onwards. The migration variant projections are ‘speculative’, but highlight two important issues:

• The Outer Hebrides population is projected to continue to decline primarily because of natural population change - that is more deaths than births, in spite of a net inward migration. If net-migration is set to zero, NRS projections suggest that the Outer Hebrides population would be some 1,000 smaller at just over 24,239 by 2033.

• To achieve population stability in population numbers or a very modest 1-2% growth in population numbers to 26,670 by 2033, net migration rates similar or higher than

experienced in the middle of the last decade would have to be sustained from 2014 onwards24.

Inward migration to Scotland and Outer Hebrides in the period to 2008, as discussed in chapter 3, was closely related to employment growth, rising public spending and high rates of inward migration from Europe and the rest of the UK. The severity of the economic downturn, and the high degree of uncertainty regarding the economic outlook, suggests that net migration rates will probably be lower than the net-migration assumptions embedded in the NRS principal 2008- based projections until the economy fully recovers, which may not be until 2020 or beyond.

Projected changes in the age profile of the population

Table 5.3 shows projected population change for the Outer Hebrides by age group from 2011/33. It suggests that:

• Population decline in the period to 2020 will be concentrated in the 35-44 year age group. This is broadly in line with Scotland wide trends. There will also be a small dip in the population aged 16-34 years, in the main due to the continuation of the trend for those in their late teens to move from the Outer Hebrides to Glasgow or one of Scotland’s other cities and towns with a university.

• There will be a sharp rise in the number of older people in both absolute and proportionate terms, especially after 2020. By 2033, over 33% of the population of Outer Hebrides may be aged 65+ years and almost 12% could be aged 80+ years. These proportions are higher than projected for Scotland as a whole, which are 25% and 8% respectively.

Table 5.3: NRS principal population projections by sex and single year of age Change Change Age band 2011 2020 2033 2011-2020 2011-2033 years No No No No % No % 0-15 years 4,416 4,061 3,735 -355 -8.0% -681 -15.4% 16-34 years 4,500 4,345 3,735 -155 -3.4% -765 -17.0% 35-44 years 3,493 2,697 2,732 -796 -22.8% -761 -21.8% 45-64 years 7,857 7,793 6,562 -64 -0.8% -1,295 -16.5% 65-79 years 4,181 4,860 5,459 679 16.2% 1,278 30.6% 80+ years 1,542 1,963 2,913 421 27.3% 1,371 88.9% Total 25,989 25,719 25,136 -270 -1.0% -853 -3.3% Source: NRS (2010) Population projections 2008 based

• The proportion of the population aged 18-64 could fall from 59% in 2011 to 55% by 2020 and to 50% by 2033. For Scotland as whole, the proportion of the population aged 18-64 is projected to fall from 64% to 58% over the same period.

24 If net migration rates were to continue at 150+ per annum this would undoubtedly feed through into fertility rates. A slight upturn in the birth rate would more or less offset the fall in indigenous population but it is not clear if this higher birth rate would be sufficient to attain the 30,000 population threshold that Hall Aitken (2007) suggested was required to attain a sustainable gender and age balance by 2031.

We would caution that the projected age profile is influenced by migration assumptions, which NRS acknowledge are inherently uncertain. Whether the aging of the Outer Hebrides increases at the pace suggested by the latest projections will depend on future migration rates and the fertility rates of women aged 16-44 years that move to the Outer Hebrides.

Projected household numbers

From the point of view of understanding future housing need and demand patterns, household formation rates and household structure are of greater significance than population change. Table 5.4 therefore compares NRS 2004-based, 2006-based and 2008-based principal household projections alongside the NRS 2008-based low and high variant household projections. It shows that

Table 5.4: Outer Hebrides household NRS projections, 2011-2031 2008 based 2008 high 2008 low Year 2004 based 2006 based principal variant variant 2011 11,650 11,990 12,030 12,066 12,018 2020 11,620 12,690 12,750 12,972 12,542 2031 NA 13,250 13,340 13,884 12,844 -30 700 720 906 524 change 2011-20 -0.26% 5.84% 5.99% 7.51% 4.36% NA 1,260 1,310 1,818 826 change 2011-31 NA 10.51% 10.89% 15.07% 6.87% Source: NRS household projections 2004 2006 and 2008 based projections released in May 2010

• The 2008-based principal projection suggests household numbers will climb by almost 11% to 13,340 by 2031. This is lower than the projected rate of growth of 16% for Scotland.

• The number of households in the Outer Hebrides is projected to increase by 720 to 12,750 by 2020. As with the population projections, this is much the same as the 2006-based projections suggested.

• By contrast, the 2008-based projections suggest there will be 750 more households by 2020 than the 2004-based projections (-30) suggested. This change in the direction of household growth is largely a result of the different migration assumptions embedded in the population projections noted earlier but there has also been some increase in household formation rates.

The low and high variant-based projections use the same assumptions about indigenous population growth and headship rates but assume varied levels of net in-migration for the Outer Hebrides. The higher variant projection suggests that if annual net migration increased to 150, there could be 222 more households living in the Outer Hebrides by 2020 than the principal projections suggest. By 2031 there could be an additional 500 households. The lower variant projection suggests that the numbers of households could be some 200 lower by 2020 and some 480 lower by 2031 than the principal projections suggest.

Changing household structure

NRS anticipate that the size of the average household in the Outer Hebrides will decline more sharply than elsewhere in Scotland. Between 2011 and 2031 the average size of a household in Outer Hebrides is projected to fall from 2.14 to 1.86. By contrast, the average size of a household in Scotland is projected to fall from 2.15 to 1.94. This reflects the continuing trend towards smaller older households.

Table 5.5: Outer Hebrides household projections by household type, 2008-2031 Net Change Net Change 2011 2020 2033 2011-2020 2011-2033 No No No No % No % Single person under 65 2,440 2,630 2,700 190 7.8% 260 10.7% Older single person 65+ 2,070 2,580 3,370 510 24.6% 1,300 62.8% 2+ adults under 65 3,000 3,080 2,820 80 2.7% -180 -6.0% 2+ adults 65+ 1,930 2,280 2,700 350 18.1% 770 39.9% Family 2,010 1,520 1,120 -490 -24.4% -890 -44.3% Lone parent 570 620 710 50 8.8% 140 24.6% Sub-total 12,020 12,710 13,420 690 5.7% 1,400 11.6% Total NRS LA wide count 12,030 12,750 13,400 720 6.0% 1,370 11.4% Source: NRS household projections 2008 based projections; Figures for sub-groups are rounded to nearest 10 by NRS and do not aggregate to total numbers for the Outer Hebrides – therefore the NRS published figure and well as the summed total are reported above

NRS household projections by household type and age of household representative, which are summarised in table 5.5 and figure 5.3, show that in terms of the Outer Hebrides:

• Household growth will be concentrated in all types of household represented by someone aged 65 years or above. Between 2011/33 the number of older households could increase by some 53% from 4,000 to 6,070. Most of this growth will occur after 2020.

• There will be, as discussed further in chapter 7, a very sharp rise in older single person households aged 80 years or above from 2020 onwards.

• The numbers of households containing children (families and lone parents) is projected to decline sharply, consistent with Scotland wide trends. Nonetheless, we would caution that the rate of decline in households with children will partly depend on the fertility rates of in migrant women, which may differ from those of the existing population.

• There will be a corresponding decline in the number of all types of household represented by someone aged 35-64 from 6,680 in 2011 to 5,920 in 2033. Thus the proportion of householders in this age range could fall from 56% to 44%.

Figure 5.3: NRS 2008 principal household projections by type and age, 2011-2033

Source: NRS (2009) Household projections – 2008 based principal projection

• The number of all types of households represented by someone aged 16-34 years will increase by some 10% in the decade to 2020 and then remain broadly static at around 1,500 until the end of the decade. Thereafter numbers may begin to fall back between 2030 and 2033.

• The increase in households represented by someone aged 16-34 years in the coming decade will be driven by important changes in the composition of households in this age group. Whilst the numbers of couples in this age range will change little, there will be an increase in the numbers of single person households and a fall in households that contain dependent children.

Potential implications of demographic trends for housing

The demographic trends discussed above have some important implications for housing:

• Although the present adverse economic circumstances have probably weakened the ability of some individuals to form households, the underlying pressure remains. Even assuming a downward shift in net migration over the next two decades, the increase in household numbers arising from the indigenous population will necessitate a requirement to expand the stock of housing.

• The growth in the number of single person and lone parent households less than 35 years suggests there may be some increase in potential demand for smaller properties (i.e. 1-3 bedrooms) but it is difficult to be certain how many households will want smaller dwellings.

• The increase in the number of older households, and in particular the rapid growth in the number of single person households aged 80+ years after 2020, will have implications for the housing support and care packages required to enable older households to live independently and comfortably in their own homes.

On balance we judge that the NRS 2008 based principal household projections could be considered to represent a positive long-term economic scenario. This is primarily because of the upward adjustment in net inward migration from 2013/14 onwards. As such, it provides a generous basis for assessing future housing requirements over the long term and assumes that the OHCPP plans to strengthen the local economy and to sustain a more balanced population meet with some success.

Likewise, the lower variant projections appears to offer a plausible simulation of what could occur if economic recovery is reasonable but net inward migration rates remain modest.

By contrast the household growth implied by the high variant projection in the period to 2020 does not appear to be a plausible scenario as the outlook for the local economy suggests that the rates of employment growth required to sustain high rates of net-inward migration are very unlikely to happen for some time.

We return to the issue of future net additions to the housing stock over the long term at the end of this chapter but first we consider the outlook for the housing system over the next 3-5 years.

5.4 Short to medium term outlook for the housing market

A broad based housing market recovery across Scotland and more especially the Outer Hebrides is still some distance away. At present it is very uncertain when consumer confidence in the housing market will return to the levels seen in the decade to 2005.

In early 2011 there was little evidence that house prices in the Outer Hebrides had began to recover. The general impression is that a sustained rise in real house prices will only occur once employment rates amongst the working age population begin to recover, wages rise and credit constraints have eased. The continuation of weak labour market conditions, ongoing lending restrictions, public expenditure cuts and the freeze on public pay suggest the local housing market look likely to remain subdued to 2015 at the earliest.

Over the period to 2015 the most likely scenario is that consumer confidence in the housing market will remain low and that house prices across the Outer Hebrides will remain broadly static as will current household income to entry-level price ratios.

Whatever shape the economic recovery will take over the next 5 years, as noted in chapter 3, it is apparent that adults under 25 years with low to modest skills have been hardest hit. The very limited supply of shared private tenancies in the Outer Hebrides and the restriction of Housing Benefit to the single room rate for those aged under 35 years means that this group of younger adults already have few housing options outside of the social rented sector. A discernable

increase in the numbers of working households moving to the private rented sector (at least until credit constraints ease) without a commensurate increase in the supply of private lettings could further constrain the housing options for those most disadvantaged in the labour market.

There is therefore a potential risk that a slow recovery of the housing and labour market could lead to some increase in the waiting and homeless list for social housing. It may also lead to some further increase other forms of housing stress such as overcrowding and fuel poverty. However, the lack of evidence about the functioning of the private rental market and the expectations of new and recently formed households makes it difficult to appraise this risk.

As the evidence presented in section 4 highlighted, the challenges of improving the quality and thermal efficiency of the private housing stock and reducing rates of fuel poverty remain formidable. Looking forward over the next 5 years, the prospect of a significant improvement in the quality and thermal efficiency of the private housing stock is not high. Owners of private properties in the Outer Hebrides often have limited income and capital resources as well as limited credit capacity. For those living on a croft there is the additional challenge that the property must be ‘de-crofted” before lenders will consider a loan application. Rising food, energy and other basic commodity prices are likely to exacerbate this underlying problem.

At the UK and Scotland level, the speculative new build development model through which most new dwellings are delivered remains volatile to wider economic conditions. There are signs that rates of house building have picked up in parts of the UK. However, the continued uncertainty regarding when real house price growth might return means it is not possible to predict when private sector construction rates will return to levels seen during the “noughties”.

In terms of the Outer Hebrides, the Housing Land Audit published in August 2001 notes that the numbers of

Shift towards shared equity and intermediate rent

Housing developers working throughout most of mainland UK appear to be have adopted a low risk strategy to the decline in demand by concentrating on housing developments marketed at and purchased by existing homeowners. Some large housebuilders such as Barratt however, have developed shared equity products to respond to first-time buyer demand.

In May 2011 the Financial Times reported that 28,000 first time buyers had purchased a shared equity unit. It also reported that such schemes were worth some £835 million, with over £650 million coming from housebuilders' own brand products and the balance from Government sponsored schemes such as LIFT shared equity in Scotland and HomeBuy Direct in England. These and other reported figures suggest that perhaps 10% of all new build sales in Britain 2010 involved shared equity products.

As noted earlier, the Scottish Government capital expenditure for new affordable housing has been cut back very sharply. Of the £50 million Innovation and Investment Fund, £20 million has been earmarked for new RSL development. It is hoped that this will be used to fund social rent but the benchmark unit grant level has been reduced to £40,000 and the grant will only be paid on project completion. A further £20 million has been assigned to support council house building, with the grant level set at £30,000 per unit. The remaining £10 million has been set aside for an affordable housing tenure fund that will be open to all providers.

The Scottish Government has also announced £16 million investment to expand shared equity and support infrastructure investment. Some £10 million will be used to establish a ‘Infrastructure Loan Fund' £3 million will support ‘Open Market Shared Equity’ and £3 million will assist developers provide ‘New Supply Shared Equity’. However, funding for 'shared ownership' and RHOGs (Rural Home Ownership Grants) have both been withdrawn.

An ambition of the Scottish Government is to see an average 6,000 new affordable homes constructed over each of the next 5 years and beyond. In light of the limited budget available, it is expected that much of this target will be delivered through the National Housing Trust (NHT).

This initiative is being developed by the Scottish Government in conjunction with some local authorities and the Scottish Future Trust and is intended to deliver new homes for mid-market rent (around 80% of private rents) for working households on moderate earnings that cannot enter home ownership. It involves a council and a developer setting up and becoming members of a Special Purpose Vehicle (SPV) that owns and manages the homes. Typically, a council will lend between 65% and 70% of the development cost to the SPV to allow it to purchase the completed homes from the developer, with the balance provided by the private developer. The intention is that the SPV will rent out the dwellings for 5 to 10 years after which time they will be sold and the loans redeemed.

Although market rental and equity shared based tenures can make an important contribution to improving liquidity and boosting supply, there are limits to this approach. Locally, one major barrier is the fact there are no large-scale private housebuilders operating in the Outer Hebrides. More generally:

• Land Registry figures for England confirm that the average price of a new-shared equity property is well in excess of entry-level prices. This suggests shared equity has been targeted at the more affluent end of the first time buyer market. It also suggests housebuilders have preferred to assist ‘selected’ purchasers rather than cut prices.

• There are limits to the level of equity housebuilders can commit to because of its impact on their balance sheets.

• It is difficult to put together a viable NHT business plan in areas where LHA rates are modest25.

The Outer Hebrides falls within one of the 13 of 18 Broad market areas that cover Scotland where the 2 bedroom LHA weekly rate is less than £110 per week. Furthermore, as the annual LHA uplift is to be governed by the CPI and not changes in actual rent levels, the difficulties of developing a viable business plan look set to increase. It is therefore likely that the NHT model will require further development if it is to prove an effective and sustainable mechanism for the Outer Hebrides and many other areas of Scotland.

25 In March 2011 the Scottish Future Trust advised Dumfries and Galloway Council that it could not permit rents to be set at 100% of the LHA because this would constitute a breach of procurement regulations and as a result a viable NHT business plan was not possible.

The Scottish Government is currently investigating the potential to devise a variant of the NHT model that would involve housing associations. In the absence of details it is too earlier to assess the potential viability of such a model in the Outer Hebrides context. However, the viability of any such model would partly depend on the rate at which RSL can borrow money. In this context it is important to note that there are signs that lenders are looking more closely at the financial viability of RSLs and are differentiating between the lending rates charged to individual housing associations to a greater extent than before 2008.

5.5 Long term outlook for the housing market

Total future housing requirement

Although the LHS process must respond to the unfolding housing market dynamics outlined above, strategic planning must consider the question of how many homes may be required in the long term. Making long-run projections of the potential total requirement for housing requires assumptions about the following elements:

• The probable requirement for additional units to accommodate net household growth.

• The probable requirement for new units to replace existing units lost from the current effective stock of housing, mainly because of demolitions.

• The probable increase or decrease in second homes and/or empty homes, including existing homes converted into commercial holiday lettings.

• An allowance for vacant units to accommodate the normal turnover and repair

• An allowance for under-supply or the current housing stock that have resulted from a build up in backlog of unmet requirement for housing.

These assumptions are typically based on extrapolating past trends plus judgments about how the future may deviate from historical trends because of possible economic, demographic and social developments.

Central projection

The NRS principal projection, as reported in table 5.3, suggests there could be 13,420 households living in the Outer Hebrides by 2033. As discussed earlier, the NRS projections can be assumed to provide a positive long-term economic growth scenario and thus allows for a generous increase in the net additional requirement for housing.

In addition, the central long-range projection of estimate is derived from the following trend based assumptions:

• 5.8% of the stock will be vacant to allow for household movement and repairs or long term empty properties; this assumption assumes there will be some fall in the proportion of the total housing stock lying empty for long periods of 12+ months. .

• 7% of the housing stock will be used for second homes or converted into commercial holiday lettings.

• A potential requirement for some 200 additional dwellings to contribute towards the backlog of concealed households and others without permanent accommodation26

• In line with historic trends (see page 53) we have assumed that less than 20 units will be lost to the total housing stock each year because of demolitions and /or conversions between 2011 to the start of 2033. Over the 22-year period we have therefore assumed there will be 430 existing units lost to the housing stock, mainly because of demolition. This equates to 3% of the existing housing stock of 14,292 in 2010.

The resulting central estimate of the numbers of new housing that may be required is summarised in table 5.6. It suggests that some 1,580 additional new housing units across all tenures may be required over the 22-year period to the start of 2033. This is equivalent to some 72 units each year.

Table 5.6: Estimate of Outer Hebrides net future housing stock requirement by 2033 (base 2011) Total over the 22 year period Annual average Total households (by 2033) 13,420 NA Backlog allowance 200 9 Vacant 830 NA Second homes 1,000 NA Conversions and demolitions 430 19.5 Sum all above : New stock requirement 15,880 722 From which subtract: Existing total stock of housing (2010 based) 14,300 NA Equals: Equal additional units required 1,580 72 Source: NRS 2008 based household projections and assumptions set out in main report Note: All total numbers rounded up to nearest 10. This rounding is intended to ease the reader’s comprehension of the results and to highlight that the model is a projection of future housing requirements and is not intended to provide a precise calculation of exact figures.

The figures presented in table 5.6 provide a general guide to potential future net additional dwelling requirements and do not take account of potential mismatches between supply and demand at a highly localised level.

26 This is not identical to the count of the total backlog of 404 in current housing need detailed in chapter 6 (see table 6.4). Some of those in current need occupy private sector dwellings that will be suitable for others. A move to a more suitable dwelling would free up a unit for other households. Moreover, the projected annual flow of households in future need is less than the projected flow of social lettings. Consequently, some current need will be resolved through future social lettings. Thus the backlog allowance built into the net stock model is a sub-set of all those in current need.

Alternative net stock projections

Table 5.6 confirms that net household growth is easily the largest of all the components required to model the overall future potential housing requirement from 2011 to the start of 2033. However, as noted earlier, the NRS principal household projections may not provide a wholly reliable guide to the future aggregate requirement for housing.

Over the short to medium term, economic and labour conditions can influence the timing of an individual’s decision to form (or dissolve) a household. On the other hand, over a 10 or 20-year period these timing adjustments generally have minimal impact on the underlying pressure for housing. In other words, over the long term, economic conditions tend to have little impact on the underlying trend in rates of household formation amongst the resident population.

More significantly, variations in employment and earning opportunities over time and space have a strong influence on migration flows, which in turn influence the total population from which households form. Migration flows can therefore have a big impact on the aggregate requirement for housing over the short, medium and long term.

In light of the high degree of uncertainty regarding future migration and household growth we re- ran this net-stock model using the NRS high variant and low variant household projections. The resulting figures are shown in table 5.7.

Table 5.7: Alternative net housing requirement projections for the Outer Hebrides Net additional units required 2011-2020 2021-2033 2011-to start of 2033 total Annual 5 year average average Central estimate: NRS principal projection 870 710 1,580 72 359 NRS high migration variant 1,140 1,050 2,190 100 498 NRS low migration variant 710 320 1,030 47 234 Potential split of central estimate between the two housing market areas Stornoway HMA 550 450 1,000 45 227 Rural HMA 320 260 580 26 132 Source: NRS 2008 based household projections plus assumptions detailed in the report

If all other stock flows are held constant, the high variant suggests that up to 2,190 additional units could be necessary in the period to 2033. At the other spectrum the low variant suggests that perhaps only some 1,030 additional units may be required. As noted earlier, the high migration variant household projection does not appear to offer a plausible simulation of future household trends, at least in the period to 2020. It is therefore likely that the number of additional dwellings required in the period to 2020 is likely to fall somewhere in the range from 710 to 870.

Possible spatial distribution

An important consideration is the possible spatial distribution of the future net additions to the housing stock. Evidence indicates that population and household growth over the past decade has been greatest in the Stornoway HMA. It also indicates a continuing trend for younger adults and the very old to relocate here from elsewhere in the Outer Hebrides. Given the importance of

Stornoway as the main local employment and service hub in the Outer Hebrides it seems appropriate to assume that these trends will continue in the absence of further policy intervention.

Based on the assumption that the proportion of households living in the Stornoway HMA will increase by some 3% to 46% over the next 22 years, the figures reported in table 5.7 indicate that some 550 additional units may be required in the Stornoway HMA by 2020. Over the same period 320 additional units may be required in the Rural HMA. The lower Rural HMA figure reflects the fact the there is more scope to occupy or replace empty dwellings in the Rural HMA.

Long-Term Housing Demand

In interpreting the long range net stock projections it is important to keep in mind that the requirement for new housing does not necessarily translate into nor equal the amount of new construction that might actually occur over this period. The continued reluctance of financial institutions to provide mortgages to those looking to build, including crofters that have secured CHGS grant, alongside cutbacks in public finance has lead to growing unease about a return to a prolonged trough of persistently low levels of private completions.

Chapter 6 projects affordable housing need from 2011 to 2020. In terms of housing demand, a number of factors preclude attempts to model future demand for the Outer Hebrides.

• Relationships between economic growth and housing markets are complex and the long- term impacts of future economic conditions on housing markets cannot be predicted with any certainty. For small predominately-rural housing markets such as the Outer Hebrides, such predictions are subject to even higher levels of uncertainty.

• Evidence required to model future consumer behaviour and tenure choices in response to changing housing and labour market conditions is not available. Nationally and locally, little is known about household dissolutions or the numbers of existing households that move each year and the numbers of housing released and re-occupied through these processes broken down by tenure. There is also a lack of timely economic forecasts for the Outer Hebrides.

• Evidence on the tenure and type profile of households in different age bands required to project future tenure rates is also lacking. However, other things being equal, the growth in single earner households aged 16-34 years relative to two adult households suggests that fewer newly forming households will have the financial capacity to purchase dwellings, particularly larger dwellings that dominate the Outer Hebrides market.

• As highlighted earlier, private completions largely consist of self-build units commissioned by existing resident households or (to a much lesser extent) existing households relocating to Outer Hebrides, including returnees. The Comhairle also advise that cost of a self-build dwelling (including land acquisition) is generally in excess of double the entry-level house price threshold of £70,000. It is therefore not appropriate to assume that there is a linear relationship between the number of newly forming households that have sufficient income to access the housing market and the numbers of private new build starts or sales.

In light of the above factors, the steering group agreed that the only credible option was to assume that future housing demand would equal the difference between the projected net stock requirement for housing and the projected estimate of net housing need.

To take account of the limitations of this approach, the housing need model presented in chapter 6 was re-run using alternative assumptions regarding the relationship between house prices and incomes to test their impact on the overall balance between affordable need and effective demand.

5.6 Summary and key messages

The ongoing uncertainty about how the economy may perform over the short to medium term makes it difficult to predict with any precision how long the housing market slump will last.

Whilst house prices have fallen back, continuing restrictions on the availability of mortgage finance means there will be little improvement in housing affordability in the immediate future. Looking further ahead, the most plausible scenario is that there will be no real house price growth for several years. Over time, this should improve housing affordability for households in secure employment as earnings and incomes begin to rise in real terms again.

NRS project that if social and economic conditions seen in the decade to 2008 hold over the long term, the population of the Outer Hebrides will decline at a much slower rate than seen in the 1990s. Whether this projection will hold will largely depend on the pace of economic recovery and the extent to which the assumed rates on net inward migration materialise.

NRS also project that the numbers of households will increase by 1,370 to 13,400 between 2011 and 2033 due to a combination of population aging and the continuing trend to form smaller households. NRS project there will be a sharp rise in the numbers of older single person households and older couples alongside a more modest rise in working age single person and lone parent households over the next 20 years.

Long range net stock projections suggest that anywhere from 1,030 to 1,580 additional units may be required by in the 22 years to 2033. These projections are heavily influenced by future household growth and migration patterns which, for the time being, remain highly uncertain. It will therefore be important to review these figures regularly.

The net stock projection cannot be translated directly into housing supply targets for the Local Development Plan and LHS 2011-2016 because they do not take into account issues of financial viability, land supply, infrastructure constraints or environmental capacity.

An important policy analysis task for the Comhairle will therefore be to review this central estimate (and the suggested probable range) in conjunction with evidence from the ongoing CnES Housing Land Audit and any possible future policy measures to support new housing construction as part of a package of measures to support fragile rural communities.

CnES first ever Outer Hebrides Housing Land Audit was produced in 2010. It provided a comprehensive description of sites considered suitable for housing development. These sites are mostly concentrated in and around the Stornoway HMA. A similar pattern can be observed in the Updated Housing Land Audit published in Autumn 2011. This is consistent with the fact

that most development in the Rural HMA has historically comprised of single dwellings built on ‘windfall’ sites. It is difficult to envisage any radical departure from this long-standing pattern of development in the period to 2015 and perhaps beyond.

The Housing Land Audit for 2011 provides an effective 5-year land supply for 641 new houses to 2016. This consists of a proposed LDP capacity of 282 units and a projected windfall of small sites to support a further 359 units. This provision is well in excess of the total requirement suggested by the alternative long-range net stock projections presented in table 5.7. This suggests that provision is being made for a generous supply of housing land.

Large-scale market orientated or speculative development is not a feature of the local housing market. Nonetheless, an upturn in market conditions and increased consumer confidence and investment in the local housing market will be necessary before a sustained increase in new private sector construction will become evident. There is also much uncertainty about future rates of completions on the affordable sector following cuts backs in public funding to support new affordable housing supply. The risk of continued under-supply in the market and affordable sectors of the local housing system for some years suggests that CnES and its partners will need to work closely and look afresh at ways to boost the supply of housing with fewer resources and how best to target the limited resources to help rebalance the housing system.

It is important to stress that whilst the net stock model provides a useful insight into the total number of units that may be required over the next 10-20 years it offers few insights into the proportions of this net addition that is likely to be required to meet effective housing demand or address affordable housing need.

Historically, there has been a strong preference for owner occupation in the Outer Hebrides. Looking forward it is likely that the preference for owner occupation will remain high amongst working age households in secure employment.

On the other hand, FSA mortgage regulation reform proposals are likely to impose stricter upper limits on the amount of money first time buyers will be able to borrow. The projected growth in single person and lone parent households aged 16-34 years plus UK Government plans to reduce the value of tax credits is likely to have a downward impact on the net household income of some prospective first time buyers. The combination of these three developments suggests there may be some long-term upward trend in the numbers of households in employment that lack the financial capacity to purchase, maintain or heat larger dwellings.

Likewise, the absence of any return to sustained economic growth and the continuation of high rates of unemployment amongst those under the age of 25 years points to a possible upward drift in the numbers of younger households unable to access the housing market. The extent to which this might lead to a sustained increase in the pool of households looking to enter the social rented sector is difficult to discern. It will partly depend on the future migration and household formation decisions of young adults and the future development of the private rental market, neither of which are well understood.

The increase in the number of older households and in particular the growth in the number of householders aged 80+ will have some influence on housing demand. However, the more significant influence is likely to be on the requirement for integrated delivery of health, care and

housing support packages to assist older households to live independently and comfortably in their own homes.

We examine alternative scenarios of the changing balance between possible future need and demand amongst newly forming households at the end of chapter 6. However, the above comments highlight that it remains extremely difficult to predict what the lasting impacts of the economic recession and its aftermath for the inter-relationship between housing need and demand will be.

There is no clear or simple linear relationship between household size and the size of dwellings consumers want. That said, some increase in the provision of smaller dwellings containing 1-3 bedrooms in the private sector may be warranted. There is long-standing belief that households in the Outer Hebrides purchase a home for life. Consequently comparatively few smaller units outside the social rented sector have been built. However, the 2006 housing needs survey found that up to 10% of older homeowners planned to move home but some were prevented from doing so because of the lack of suitable alternative or affordable housing options. The growing number of single person homeowners in their 50s, 60s and 70s suggests that there may be some slight upward trend in the numbers of older households over the next decade that may wish to move to a smaller dwelling that is easier to manage and less expensive to run.

The poor quality and low thermal standards of much of the private sector housing stock has been a cause for concern in the Outer Hebrides for many years. The combination of falling prices and lowering incomes increases the risk that the physical condition of private sector dwellings may deteriorate in the coming years.

6. ESTIMATE OF NET ANNUAL HOUSING NEED

6.1 Introduction

This section sets out our central estimate of net annual housing need for the Outer Hebrides and the proportion of those in future housing need that may be in a financial position to pursue some form of intermediate tenure. This updated estimate is compared with previous estimates prepared by Bramley et al (2003, 2004 and 2006) and Newhaven Research (2007 and 2009). Finally, this chapter considers possible alternative scenarios in terms of the future scale of net annual housing need. These scenarios are based on alternative assumptions about the future direction of economic, housing market and demographic trends.

Table 6.1: Summary Description of the Scottish Government Approach Component Summary description The number of existing and concealed households living in the Outer Hebrides assessed to be in need and require a move to affordable housing at a point in time. Estimate of current

housing need This estimate should be exclusive of existing social tenants that already

occupy affordable housing as well as other households for whom an in-situ need is judged a more appropriate solution. The estimate should also discount households that are assessed to be able to afford market priced housing. (converted into) The estimate of current need divided by the number of years it is assumed it will take to clear this backlog. The Scottish Government suggest using the Backlog reduction (a) assumption that it will require 10 years to clear the backlog. Plus Newly forming The numbers of new households that will form each year and have insufficient households in need income to access open market housing without assistance. (b) Plus The annual number of existing households that own or rent a private dwelling Existing households that may experience a change of circumstances and can therefore no longer that fall into need (c) remain in the open market sector Equals The average annual number of existing and newly forming households that Annual number of require some form of affordable housing over the next 10 years (a+b+c) households in need The numbers of affordable housing available for occupation each year. Minus Annual supply of This has been defined as the projected numbers of permanent non-transfer lettings RSL relets plus the number of social rented units that have secured funding and will be completed between 2011-12 and 2012-13. Equals net annual The potential shortfall (or surplus) in affordable housing provision required housing need each year to meet need Source: Derived from Scottish Government (2008) Housing Need and Demand Guidance – chapter 6

6.2 Summary description of the model for assessing net annual housing need

The framework adopted to produce the estimate of net annual housing need is consistent with the approach suggested by the Scottish Government (2008) summarised in table 6.1. It involves

adding current and future housing need and then subtracting the projected affordable housing supply to arrive at an estimate of the net annual housing need.

The Scottish Government approach seeks to estimate the potential shortfall (or surplus) of affordable dwellings. It assumes that existing social renters in need will be able to secure suitable alternative housing within the sector27. It also allows for the possibility that some existing households in need in private housing may prefer an in-situ solution. From a policy perspective it is therefore essential that the net annual estimate of housing need is interpreted alongside evidence of other forms of housing need discussed elsewhere in this report.

The term ‘affordable supply’ refers to the projected numbers of relets in the existing stock of social housing (exclusive of transfer lets) plus the numbers of first lets arising from the completion of affordable housing currently under construction. The Scottish Government suggest that turnover in the intermediate housing stock may also be an important source of affordable housing in some areas. However, as noted in chapter 4, there is currently no market for low cost homeownership stock in the Outer Hebrides. Excluding turnover in this sector of the market therefore has no impact on the central estimate of net annual housing need.

All housing need assessments are sensitive to assumptions that are applied. The assumptions applied are made clear in the following paragraphs and have been informed by discussions with the LHS Officer Working Group. They also build on wider discussions and feedback in respect of the assumptions and findings used to construct the 2007 and 2009 based estimates of housing need, including discussions with elected members. Where a range of alternative inputs and assumptions are possible, we have generally applied the more conservative input assumptions to produce the central estimate of net annual housing need.

An anonymised version of the HHP housing register has been used as the main source of data for updating the estimate of current numbers of household in need. This is because:

• No other single secondary data source collects information for the range of suggested indicators of current (backlog) housing need.

• The use of a single dataset means it is possible to use computing procedures to construct a composite housing need indicator that ensures that each applicant assessed to be in need is only counted once, irrespective of whether they have 2 or more needs. This therefore eliminates the risk of double counting.

• Other existing data sources do not necessarily provide timely, highly robust or comprehensive numbers for the Outer Hebrides. In particular the achieved samples for the Scottish Household Survey and the Scottish House Condition Survey are too small to produce valid results for the Stornoway HMA and the Rural HMA.

27 The transfer of an existing social rented tenant creates a vacancy for another household in need. Consequently, internal transfers have no effect on the estimate of net annual housing need. In other words, to ensure the model is internally consistent, social renters are discounted from the count of households in need on the ‘demand’ side of the equation and transfer lettings are discounted from the supply side of the equation.

The Scottish Government (2008) promote the use of housing register evidence but stress the need to ensure the data is robust. Prior to analysing this dataset therefore, HHP supplied data was audited. A more detailed discussion of the steps taken to ensure the data was suitable for analysis is set out in appendix 2 but essentially, in order to ensure the underlying integrity of that housing register data:

• All 837 cancelled applications were identified and excluded from the analysis. The comparatively high number of cancelled applications is indicative of the fact that HHP routinely cancel applications if an applicant fails to renew their application in response to the annual review. This is consistent with good practice.

• All but 24 applications received from households living elsewhere in the UK or abroad have been excluded. This is because these applications are not part of the existing household population of the area. An exception was made for those applicants assumed to be returning to the Outer Hebrides after a period of study or employment who had stated that their reason for seeking rehousing was because of social/care needs, family related reasons (i.e. getting married) or to take up employment.

This decision to discount most applicants from outwith Outer Hebrides is consistent with other housing register based estimates of current housing need as well as survey-derived estimates that, by definition, only look at the needs of resident households.

Table 6.2 summarises the numbers of applicants on the housing register used to inform the analysis of housing need. Existing social renters do not form part of the final count of current housing need (or backlog need). However, they have been retained in the dataset to permit us to ‘triangulate’ housing register based estimates with comparable estimates from other sources of evidence. In other words, we have cross-checked that the incidence of each ‘backlog need’ indicator derived from the housing register are of a similar order of magnitude as reported by other data sources and do not conflict with the numbers available from other sources.

Table 6.2: Valid housing register applicants used to assess current housing need HNDA valid Outer Hebrides Applied from elsewhere Total Transfer 191 0 191 Waiting 566 24 590 Total 757 24 781 Source: HHP Housing Register

6.3 The incidence of current housing need

Current housing need refers to number of households at a specific point in time that are living in unsuitable housing and cannot secure more suitable property in the housing market. Consistent with the new guidance and discussions with the steering group, the following indicators of current need were used to populate the model:

• Homeless households, including those living in temporary or insecure accommodation plus those threatened with repossession or eviction.

• Concealed households, which includes couples, families and lone parents that share accommodation with another household.

• Overcrowded households, which includes all households awarded points for overcrowding or do not meet the locally defined bedroom standard.

• Households living in poor condition properties. This includes households that live in properties that are below the tolerable standard, lack basic amenities or fail the serious disrepair component of the Scottish Housing Quality Standard (SHQS).

• Households with mobility impairment or other medical needs living in housing unsuitable for the specific requirements.

• Households requiring a move for ‘social care’ or ‘employment related’ reasons.

The Scottish Government suggest that another possible indicator may be ‘harassment from others living in the vicinity’. Consistent with the 2006 and 2009-based estimate of current housing need, no provision has been made for this indicator. Local policy is to use non-bricks and mortar actions to deal with harassment and antisocial behaviour. In practice, few cases of serious harassment are resolved through moving the ‘victim’ to another dwelling. Moreover, those who are assisted to move rarely appear on the housing register and already live in the social rented sector. As such, they would therefore be stripped out of the final count of current housing need.

The Scottish Government also suggest that concealed household could include single person households that are involuntarily sharing their accommodation with another household. This measure tends to count only single person households aged 35 years or above that share their home with another household in order to minimise double counting with newly forming households falling into need. This age threshold has been in use for some time but has now been adopted by the most recent Housing Benefit policy reforms Although HHP recently began to input applicant age into their database, comprehensive data on the age of applicants is not yet available. It has therefore not been possible to make an allowance for involuntary sharers.

It should be possible to quantify this indicator within a couple of years. In the interim it is judged that the absence of this indicator is likely to have only a small dampening effect on the count of current need. This is because there tends to be considerable overlap between this indicator and the homeless indicator.

Table 6.3 shows the incidence of each of the 6 indicators used to estimate current housing need. The table also summarises the range of alternative estimates derived from other sources of data. Appendix 2 provides further details regarding the calculation of the count of backlog need and comparisons between the housing register based estimates for each indicator with estimates derived from other data sources.

Comparisons with estimates derived from other data sources outlined in table 6.3 suggest that the HHP housing register produces estimates within the range of available estimates other than for disrepair and the mobility/medical related housing need. In both instances the register-based estimates are much lower than other data sources suggest.

Table 6.3: Alternative estimates of the prevalence of current housing need indicators housing register estimate Outer Stornoway Rural range of Current need indicator Hebrides HMA HMA estimates Homeless households and/or or insecure 366 254 112 122-600 accommodation Concealed households 44 30 14 40-80 Overcrowded households 120 88 32 100- 500 Households living in a poor condition 18 8 10 200-1,000 property Households with mobility impairment or 64 40 24 100-900 other medical needs Households requiring a move for ‘social ’ or 13 5 8 NA employment related reasons Notes: numbers rounded to the nearest 10 Sources: HHP 2011 register dataset, range of estimates – SHCS 2007/9, SHS, 2005/8, local housing needs survey, 2006 and Census 2001

In the case of the Outer Hebrides, the large majority of households that live in property that is in a poor state of repair or is unsuitable for their medical and social care needs are older households. In the main these are older homeowners that rarely apply for social rented housing. It has long been recognised by housing, care and health care professionals working across the Outer Hebrides that this group of households generally prefer an in-situ solution and few are prepared to move to alternative accommodation.

Findings from the 2006 in-depth qualitative telephone survey that Craigforth conducted with 40 older people plus findings from the 2006 Local Housing Needs Survey, indicate that older households share this view. Older people that participated in both exercises expressed a strong desire for independence, autonomy and self-sufficiency. Nowhere was this clearer than in relation to the issue of what might trigger a house move. Some older people could conceive of no circumstance that would induce them to move. Moreover, the onset of very serious health problems which prevented someone from being able to take care of themselves was the main and often only factor that older people felt would trigger a move.

As the Scottish Government guidance recommends that households that would benefit from an in-situ solution should be discounted, the under–reporting of the incidence of these two indicators is not judged not to have a significant impact on the count of current housing need.

On the other hand, as the 2006 local housing needs study reported, a high number of households in the Outer Hebrides have an in-situ need and this number is likely to increase as the existing resident population continues to age. A key challenge for the LHS 2011-2016 and other local strategies will be how to respond to the needs of older households in an era of falling public resources. This housing needs and demands of older households are therefore discussed further in chapter 7.

6.4 Moving from the incidence of current need to a count of current need

Some households may have more than one need. For example, some households may be living in a property that is smaller than they require and is in poor physical condition. A composite indicator was therefore created to ensure that each applicant with a recognised need was counted only once28. The numbers of households in current housing need were assigned to the Stornoway HMA and the Rural HMA in accordance with the first choice area preference of applicants assessed to be in current housing need.

The resulting outputs are shown in table 6.4 which indicates that 476 households have been assessed to be in current need, of which 325 are seeking to be rehoused in the Stornoway HMA and 151 are seeking to be rehoused in the Rural HMA.

Table 6.4: Estimated numbers of households in current (backlog) housing need, 2011 Outer Stornoway Rural HMA Hebrides HMA Count of current need after adjusting for 476 325 151 double counting Count of current need after discounting social 404 270 134 renters Converted into annual flow (divide by 10) 40 27 13 Sources: HHP 2011 register dataset

The Scottish Government’s approach assumes social renters will have their needs met through transfers or in-situ solutions within the social rented sector. It is therefore necessary to remove social renters from the calculation of current need. In the case of the Outer Hebrides, and as shown in table 6.4, this reduces the current housing need estimate to from 476 to 404.

Scottish Government guidance also suggests discounting existing households living in private sector housing where an in-situ solution may be appropriate but leaves considerable discretion regarding what is meant by an in-situ solution. Consistent with the 2006 and 2009 based housing needs estimates, the housing register was interrogated to identify the numbers of waiting list (as opposed to transfer) applicants that had been assessed to:

• Have a medical/care need but no other need

• Live in property in poor physical condition but had no other need.

As discussed in appendix 2, less than a handful of applicants fell into either category. It was therefore decided that it was unnecessary to apply an in-situ filter. Likewise in the absence of evidence to the contrary (see appendix 2), it was decided to assume that no household assessed to be in need could afford market priced housing.

28 Essentially a filter was applied to the SPSS housing register file to ensure that any applicant with 2 or more needs was only counted once. For further details please refer to appendix 2.

Consistent with Scottish Government Guidance, a 10% quota has been applied to convert the backlog count into an annual flow. This assumes that the backlog need could only be reasonably eliminated over a 10-year period, not least because it can take anything up to 3 to 5 years to plan, secure finding and construct affordable housing. Again table 6.4 shows the impact of applying this quota.

6.5 Emerging (future) need

In order to appraise newly arising need, it was agreed to focus on the numbers of newly forming households likely to be in need and existing households falling into need29.

Numbers of newly forming households in housing need

Calculating the number of new households unable to afford to buy in the market involves:

• Estimating the number of newly forming households.

• Estimating the gross annual income levels of new households.

• Estimating the proportions that cannot afford market- priced housing

Gross Household Formation Rates

New households exert a strong influence on the balance between housing need and demand. Nationally, new households account for a fifth of households that move in any single year. Calculating the numbers of new households likely to form each year is therefore perhaps one of the most important numbers to consider when looking at future housing need and demand.

In particular, the numbers of new households likely to form over the next 10 years is a key input into the Scottish Government approach to the assessment of net annual housing need.

At present NRS subsume household formation and dissolution as well as in and out migration into their net household projections. To overcome this limitation, the 2006 and 2009 housing need estimates were based on applying a gross household formation rate to the latest set of NRS household projections. This is more or less the approach applied by Bramley (2006) in respect of his national housing affordability model.

Table 6.5 summarises a variety of GHF rates available from other studies undertaken since 2000. Following a review of these estimates, it was decided to use a GHF rate of 1.86%. This is in the lower half of the range of estimates available for the Outer Hebrides. On the other hand, it is significantly below available Scotland wide rates. The decision to set a reasonably

29 The Scottish Government Guidance no longer requires separate estimates to be made for inward migrant households (which are embedded into the household count) or the ex-institutional population moving into the community.

conservative rate, albeit one that is marginally higher than adopted in 2009, was informed by the fact that:

Table 6.5: Alternative estimates of gross household formation rate(GHF) Source Geography Date Estimate Scottish Household Survey Scotland 2000-2004/5 2.14 - 2.35* British Household Panel Survey Britain 2004 2.16 - 2.6 Bramley 2006 Rural England 2005 1.76- 2.00 Bramley 2005 Outer Hebrides 2004 2.00 NRS provisional outputs 2009 Outer Hebrides 2009 0.9, 1.4 and 2.3** Newhaven Research 2007 Outer Hebrides 2006 1.76-1.94 Note: * Rate increasing over time ** Table 6 NRS Working paper submitted to CHMA in September 2009 (these are all experimental outputs only)

• NRS 2008 based household projections indicate that the numbers of households in the 16- 34 age group will increase by 7.3% over the next ten years, which is higher than the rate of growth (2.1%) assumed for the 2006 based projections. Nonetheless much of the projected increase in household numbers in the Outer Hebrides will be because of increased household formation amongst the older population.

• Whilst NRS projections suggest households represented by those aged 16-34 years that in the Outer Hebrides are still slightly more likely to comprise of 2 or persons relative to households in the age band at the Scotland wide level, this difference is diminishing over time.

• The continuing trend, as noted in section 3, for adults to move to the mainland in their late teens in order to pursue education and employment opportunities.

Table 6.6 summarises the annual numbers of new households that are projected to emerge once the GHF rate of 1.86% is applied to the NRS principal household projections. It also summarises the average number of new households projected to form each year for the 10-year period from 2011/20 inclusive.

Table 6.6: Outer Hebrides alternative gross household formation estimates, 2009-2022

2011 2015 2020 annual average NRS 2008 household projection 12,030 12,340 12,750 NA Outer Hebrides: GHF rate 1.86% 224 230 237 230 Stornoway HMA: GHF rate 1.86% 117 120 124 120 Rural HMA: GHF rate 1.86% 107 110 113 110 Source: Assumed GHF rate applied to 2008 based NRS household projections

Our central estimate is based on the assumption that the annual numbers of newly forming households would slowly rise from 208 in 2009 to 220 by 2018. This equates to an average of

214 in each year of the 10-year period as a whole. The impact of increasing the GHF rate to 2% would be to increase the average annual number of newly emerging households to 243. The impact of decreasing the GHF rate to 1.4% would be to reduce this number to 170.

NRS population estimates suggest that a higher proportion of those aged 16-34 years live in the Stornoway HMA than the population as a whole and that this proportion slowly but steadily increased from 2001 to 2009. Newhaven (2007) also reported that over half of new households formed in the 5 years to 2006 set up home in the Stornoway HMA. In keeping with these findings, the figures in table 6.6 are based on the assumption that 52% of new households would seek housing in the Stornoway HMA and 48% in the Rural HMA.

Estimating the gross annual income levels of new households

The Scottish Government suggests that affordability tests should be based on gross household income. It would be preferable to have data on the incomes of those between 16 and 34 years of age. As such data does not exist, CACI Paycheck, which is the only source of gross household incomes available at local level across Scotland, has been used.

This data source models the gross income distribution of all households. However as discussed in chapter 3, the net income distribution for all households in the Outer Hebrides and the income distribution for households aged 16-34, and more particularly those aged 24-34 years, are reasonably similar.

CACI PayCheck estimates the propensity for households to fall into income bands of £5,000 (£0-£5,000, etc). For those bandings which straddled an affordability threshold it was assumed that the numbers of households in that specific income band were evenly distributed across the £5,000. This assumption was then used to assign a proportionate share of households in the ‘threshold’ income band to below and above the price threshold.

Affordability threshold

The Scottish Government requires that the calculation of the proportion of newly forming households unable to secure access to the housing market should be based on gross incomes measured against entry-level priced housing. The guidance also indicates that lower quartile house prices provide a reasonable approximation of entry-level house prices.

Building on the analysis of house prices in section 4, we have adopted the lower quartile resale price for 2009 as representative of the price threshold prospective first time buyers are likely to face. Looking across the Outer Hebrides, an entry-level price threshold of £88,250 was set for the Stornoway HMA. The comparable threshold for the Rural HMA was significantly lower at £61,500. These figures are shown in table 6.7.

The Scottish Government also suggest setting an affordability threshold in relation to private rents as well as entry level house prices, if it is evident that the cost of renting privately is significantly lower than the cost of house purchase.

The central estimate of net annual housing need for the Outer Hebrides is based solely on the entry-level prices, as there is little evidence to suggest that private renting is significantly more accessible. More specifically:

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Table 6.7 : Numbers of new households unable to afford market priced housing Outer Hebrides SHMA RHMA Annual average number new households 230 120 110 Entry level purchase price Entry house purchase price £70,000 £88,250 £61,500 Mortgage required if assume 17% deposit payment £58,100 £73,248 £51,045 Annual cost of mortgage for entry price housing or private rent at LHA limit Annual cost of rent 3 bedroom dwelling at LHA limit £6,600 £6,600 £6,600 Annual cost for a 25 year 100% repayment mortgage with an £4,721 £5,951 £4,147 interest charge of 4.5% Annual cost for a 25 year repayment mortgage with an interest £3,918 £4,940 £3,443 charge of 4.5% and deposit 17% Gross income required to access open market Gross income: 2.9 multiplier and 100% mortgage £24,138 £30,431 £21,207 Gross income: 3.5 multiplier and 100% mortgage £20,000 £25,214 £17,571 Gross income: 3.5 multiplier and 17% deposit £16,600 £20,928 £14,584 Gross income: 2.9 multiplier and 17% mortgage £20,034 £25,258 £17,602 Gross income: rent not to exceed 25% gross income £26,400 £26,400 £26,400 Affordability test 1: entry level purchase: 100% mortgage & 2.9 multiplier (central estimate) Number unable to purchase 117 69 50 Proportion of new households unable to buy 50.1% 57.76% 45.19% Affordability test 2 entry level purchase: 100% mortgage & 3.5 multiplier Number unable to purchase 98 57 39 Proportion of new households unable to buy 42.40% 47.69% 35.55% Affordability test 3: entry level purchase: assumed 17% deposit and 2.9 mortgage multiplier Number unable to purchase 99 57 39 Proportion of new households unable to buy 43.00% 47.77% 35.64% Affordability test 4: entry level purchase: Assumed 17% deposit & 3.5 mortgage multiplier Number unable to purchase 75 46 30 Proportion of new households unable to buy 32.50% 38.10% 27.50% Affordability test 5: rent 3 bedroom dwelling with a rent set at the LHA limit Number unable to afford annual rent for 3 bedroom (LHA rate) 123 60 63 Proportion unable to afford rent 53.56% 50.01% 57.30% Sources: CACI PayCheck, Sasines & LHA rates April to June 2011 Notes The difference between the numbers of new households that fall below affordability tests 1,2 and 4 may be lower than suggested because the numbers are heavily influenced by apportionment of households in the £20-£25K income band Outer Hebrides affordability test numbers are based on LA wide price threshold of £70,000. It is not the sum of the two HMA figures. However, the LA based estimate and the sum of the two HMA estimates are within +/- 5 of each other. Adopting the HMA price threshold has a much smaller impact on the numbers of new households assessed to be in need than might be anticipated.

• Upwards of 40% of private lettings comprise of tied accommodation and other forms of restricted lettings which are not open to everyone seeking to rent privately. Any affordability test would therefore only be valid if it also considered whether there would be sufficient vacancies to accommodate those judged able to afford to rent privately. As discussed in chapter 4, data constraints means such a test is not possible.

• As noted in chapter 4, around 9 out of 10 private rented properties comprise of 3 or more bedrooms. As table 6.7 shows, the LHA limit for a 3-bedroom property is equivalent to an

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annual rent of £6,600. This is higher than the mortgage cost for an entry level priced property.

• Scottish Government guidance suggests the private rents should be considered affordable if these ‘’would constitute no more than 25% of gross household income’. This measure suggests that a household would require a gross income of £26,400. This is in excess of the gross income households would require to purchase entry level priced housing at the Outer Hebrides wide level.

Consistent with the 2009 study, the affordability test used to prepare the central estimate assumes a household can borrow 2.9 times their income and can secure a 100 per cent mortgage. In terms of the purchasing power of new households, this assumes they require a gross annual income of at least £30,431 to purchase in the Stornoway HMA and a gross annual income of £21,207 to purchase in the Rural HMA.

The decision to adopt the Scottish Government suggested dual income threshold of 2.9 times gross income as opposed to the single income threshold of 3.5 times gross income was influenced by the fact that:

• Around 2 out of 3 households represented by someone less than 35 years old at present contain 2 or more adults.

• The CACI income data, as discussed in section 3, appears to under-estimate the proportion of low-income households in the Outer Hebrides.

• Overall, we estimate that 50% of new households that form each year throughout the Outer Hebrides cannot afford to buy market priced housing.

Finally, the figures reported in table 6.7 in respect of the Outer Hebrides are based on an entry price threshold of £70,000, which is the lower quartile resale price for the whole of the Western Isles. It is therefore not the sum of the two housing market level outputs.

Summing the two HMA based estimates generates a number that is within +/- 5 of the Outer Hebrides figure. This indicates that in spite of the substantial difference between the Stornoway HMA and Rural HMA entry-level price, the overall impact of adopting two thresholds in preference to the use of a single uniform price threshold throughout the Outer Hebrides has only a marginal impact on the assessed level of newly arising need.

Existing households falling into need

Over time, some existing households may fall into need even though they have suitable accommodation today. For example, a member of a household may develop a medical condition that requires a house move.

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HHP housing register and lettings data suggests that possibly 50 owner-occupiers, private renters and crofters fall into need each year.30 This figure is slightly higher than the Bramley (2006) estimate for the Outer Hebrides. This indicates that 30 households move from owning to social renting each year. However, this is because the current estimate has made some allowance for households over the age of 35 years to move from the private rented sector to the social rented sector.

On the other hand, the figure is lower than the 2006 study, which reported that 60 to 65 existing owners or private renters fall into need each year. This was derived from information gathered from respondents who had moved house in the past 5 years, other than households that recently formed or moved into the Outer Hebrides. It is also lower than the housing register derived figure for 2009, reflecting the fall in the size of the housing list in the last 1-2 years, which was discussed in section 431.

Summary of emerging (future) need

Table 6.8 provides a summary of the annual emerging (or future) need estimates by housing market area. The figures for newly forming households in need are based on the distinctive entry-level price thresholds for the Stornoway HMA and the Rural HMA. The figure reported for the Outer Hebrides is the sum of these two figures.

Table 6.8: Consolidated central estimate of annual average future (emerging) need, 2011-2020 Outer Hebrides Stornoway RHMA (HMA summed) HMA New households unable to buy (multiplier of 2.9) based 119 69 50 on HMA price threshold Existing households in private housing falling into need 50 30 20 Total 169 99 70

6.6 Supply of Affordable Housing

In terms of modelling future supply, we first projected changes to the social rented stock base and then applied recent relet rates to the projected stock base. The assumptions used to project stock and relets are summarised in table 6.9 whilst the projections are set out in table 6.10.

In terms of new affordable supply resulting from newly constructed affordable housing or other forms of stock acquisition by social landlords, the Scottish Government guidance recommends that local authorities should take account of the numbers of units “expected to be provided at the point of the assessment”.

30 Estimates of existing households falling into need were based on the numbers of applicants that joined the HHP register in the 12 months to June 2009 but adjusted ( where data permitted) to take account of changes in the flow of existing households moving onto the housing register and/or being allocated a dwelling in the period to April 2011. 31 This indicator, in our opinion, is less robust than those for current need and that further enhancements to the data collected regarding the tenure and age of applicants and those allocated a home would be beneficial.

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Table 6.9: Key assumptions for projecting stock estimates Key assumptions: Outer Stornoway (HHP and Trust HA combined unless stated Rural HMA Hebrides HMA otherwise) Social rented self contained dwellings intended for 2,147 1,178 969 permanent occupation, 2011 0.86% 0.8% 0.9% RTB rate (HHP) (18 sales pa) (9 sales pa) ( 9 sales pa) RTB rate (Trust) 0 0 NA Number of new social rented units that are scheduled 66 56 10 to be constructed and let for first time in 2011-2013 Demolitions 0 0 0 HHP operational voids & non effective stock 1.7% 1.5% 2.0% Trust HA operational voids & non effective stock 2% 2% NA HHP non transfer relet rate 7.9% 7.6% 8.3% Trust HA non transfer relet rate 11% 11% NA Note: The HHP non-transfer rate is based on the proportion of SST tenancies lettings to waiting and homeless applicants in respect of self contained permanent dwellings. The figure is excludes newly constructed that were being let for the first time. Consequently the relet rate is lower than reported through the APSR.

Our central estimate of new housing supply is for 66 units, as reported in table 6.9. This assumption is policy neutral and only includes ‘committed supply’ by which we mean units currently on site or for which funding has already been agreed. We do not consider it appropriate to include all developments outlined in the Strategic Housing Investment Plan (SHIP) because:

Table 6.10: Projected annual social housing relet supply for the Outer Hebrides from 2011-2020 Total self Non transfer lettings plus first lets Year contained social rented stock at Outer Hebrides Stornoway Rural HMA year start HMA 2011 2,147 185 107 78 2012 2,154 202 114 88 2013 2,153 184 106 78 2014 2,135 169 92 77 2015 2,117 168 91 77 2016 2,099 166 90 76 2017 2,081 165 90 75 2018 2,064 163 89 74 2019 2,046 162 88 74 2020 2,029 161 88 73 Annual average to 2020 NA 173 96 77

• The specific purpose of this HNDA is to inform the local partnership discussions regarding the new build ambitions that should be set out in the SHIP. In other words, one of the main aims of the central estimate of net annual housing need is to permit the Comhairle and its partners to assess whether there is likely to be a requirement for further new affordable housing provision to address housing need.

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• The SHIP document produced in 2010-11, which was the latest available at the time this report was prepared, was produced prior to the launch of the Scottish Government’s Housing Innovation and Investment Fund. Under these new funding arrangements, it is not possible to predict with any certainty which, if any, of the developments included in the SHIP that have not already secured funding will do so in future.

6.7 Central estimate of net annual housing need

Table 6.11 brings all the evidence together for the Outer Hebrides as a whole. It is based on the assumption that no additional affordable units beyond the 66 units already on site, or scheduled to go on site shortly, are therefore likely to be occupied in the period prior to March 2013. As stated above, this is an appropriate starting point as it allows the Comhairle and its partners to obtain a clear picture of how much additional affordable housing supply is required.

Table 6.11: Central trend based net annual housing need estimate Outer Stornoway Rural Derivation Hebrides HMA HMA Annual current need (backlog) allowance 40 27 13 Table 6.4 Plus annual number new households unable 119 69 50 Table 6.8 to buy Plus annual number of existing households in 50 30 20 Table 6.8 private housing that fall into need Total annual flow of households in need 209 126 83 NA Minus annual affordable housing supply 173 96 77 Table 6.10 Overall shortfall 36 30 6 NA

The table indicates that:

• If the backlog of current need is addressed over 10 years, there is a potential undersupply of 36 affordable lettings per annum for the Outer Hebrides as a whole.

• The undersupply of affordable housing is greatest in the Stornoway HMA area. The central estimate indicates there is a potential annual undersupply of 30 affordable lettings in the Stornoway HMA compared to an annual undersupply of 6 units in the rest of the Outer Hebrides.

Over the 10-year period to 2020 the projected annual flow of future need (99) will exceed annual supply (96) by around 3 units. This suggests that if current trends continue, and there are no further additions to the stock of affordable housing, the backlog of need in the Stornoway HMA may begin to rise again, albeit at a lower rate than witnessed recently.

Outwith the Stornoway HMA there may be sufficient supply (77) to address newly arising need (70) and thus further reduce the backlog of need. However, as stressed on several occasions throughout this report, the findings for the Rural HMA are uncertain and should be considered illustrative because:

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• The distance involved is very considerable, such that vacancies in Rural Lewis and Harris will not help address the housing needs of those in Barra and South Uist and vice versa.

• There is considerable fluctuation in the number of HHP relets in this sub-area from one year to another.

• Waiting list numbers tend to increase or decrease in localities situated in the Rural HMA according to whether new affordable provision is being constructed and local households feel there is some value in applying for social housing.

Overall we judge that there is very probably some mismatch between the location of need and the location of supply across the Rural HMA that the projection based model cannot allow for.

More generally, this trend based estimate of net annual housing need assumes recent trends will continue with no major changes, surprises or discontinuities. As recent events have shown however, the future does not always continue in the same way as the past. We have therefore subjected this Outer Hebrides wide central estimate of net annual housing need to a variety of sensitivity tests. The findings from these sensitivity tests are detailed below but first we compare the central assessment of net annual housing need with other estimates produced in the past.

6.8 Comparisons with Other Housing Needs Assessments

A national study of affordable housing needs in Scotland in 2001 that measured housing need at local authority level was published in 2003 (Bramley et al 2003). Two subsequent update reports have been published that provide housing needs estimates for 2003 and 2005 respectively. The findings from all three studies and the previous two local studies are summarised in table 6.12.

Table 6.12: Alternative estimates of annual housing need Bramley Bramley Bramley Newhaven Newhaven Newhaven Study 2001 2003 2005 2006* 2009 2011 New households in need 105 105 110 119 117 119 Net migration -5 -5 5 20 0 0 Existing households falling 25 30 30 65 60 50 into need Backlog quota 50 80 60 56 71 40 Total annual need 175 210 205 260 248 209 Supply 185 180 125* 202 175 173 Shortfall in social rented -10 30 80 58 73 36 supply Sources: Bramley et al 2003,2004 and 2006 plus Newhaven 2007 Notes: 1. the Newhaven 2006 figures are not directly comparable with the 2009 & 2011 outputs because the former was calculated inclusive of social renters and transfer applicants on the need side of the equation and lettings to transfer applicants on the supply side of the equation 2. The model used by Bramley has evolved over time and the three studies have used different data sources and assumptions.

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With the exception of the 2009 and 2011 studies, the findings from these different studies are not directly comparable because of differences in the methods, assumptions and data sources. Nonetheless a number of observations can be made. As the table shows:

• The annual flow of newly forming households identified to be in need reported in all 6 studies has been similar. However, there has been some increase. This is consistent with household growth and the buoyancy of the housing market in the period prior to 2009 which heightened affordability related difficulties for those in low paid and seasonal employment.

• The annual quota for the backlog of households in current need began to increase after 2001, albeit that it has now begun to fall pack. The 2006 backlog quota exclusive of social renters was 41. This suggests that the backlog has fallen back to levels seen in 2006.

Comparisons between the 2009 and 2011 studies indicate that the most substantial change has been the sharp fall in the annual backlog quota of households in current need.

Data limitations and changes in the management of the housing register make it difficult to draw firm conclusions. However, there does not appear to have been a substantial reduction in the number of new applicants registering for social housing in recent years. Instead we believe that the sharp increase in the construction of new social rented stock in the 2005/10 period, reported in chapter 4, enabled the Comhairle, HHP and TIG to make a sustained inroad to reducing the backlog of housing need.

On a technical matter, it is important to note that the Newhaven based estimates of the annual flow of existing households falling into need are higher than those by Bramley. This is because the Newhaven estimates include an allowance for private renters plus owners whereas the Bramley estimates only allow for existing owners falling into need.

Likewise, the Bramley estimate of affordable supply in 2005 was very low because it made no provision for affordable housing under construction and over estimated the proportion of transfer lettings. As the affordable supply figures reported in the Newhaven Studies are based on detailed local supply data, these are judged the more robust.

6.9 Sensitivity Tests

To assess the sensitivity of the central estimate of net annual housing need to changes in the most significant assumptions built into the model we examined the possible impact of a number of an upward or downward adjustment to key inputs. These are listed in table 6.13. Each sensitivity test was applied at the Outer Hebrides wide level in keeping with our perception that the Rural HMA figures must be considered as illustrative only.

Holding all other assumptions constant, we calculate that:

• A 10% increase in house prices would increase the proportion of newly forming households that would be unable to buy by 5% whereas a 10% fall in prices would lead to a 3% fall in the proportion unable to buy. These percentage changes are reasonably similar to Bramley’s (2006) ready reckoner estimates. The overall impact would be that a

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10% increase in prices would increase the estimate of net annual housing need to 48 whilst a 10% fall in prices would reduce this estimate by to 2132.

Table 6.13: Sensitivity tests: summary of impact of changing individual assumptions Estimate of net annual need Central estimate 36 10% higher prices and no other change 48 10% lower prices and no other change 21 20% higher prices and no other change 59 20% lower prices and no other change 10 HHP lettings gradually increase by 1% of the period to 2020 and no other change 42 HHP letting gradually decline by 1% by 2020 and no other change 25 Apply GHF rate of 2% and no other change 45 Apply GHF reduced rate of 1.7% and no other change 25 Apply NRS 2008 based high variant household projections and no other change 38 Apply NRS 2008 based low migration projections and no other change 34

• A 20% increase in house prices would increase the estimate of net annual housing need to 59 whereas a 20% decline in house prices would reduce this estimate to 10 and thus virtually eliminate unmet housing need. However, further falls in house prices of this order of magnitude seem unlikely.

• The upward and downward adjustment to the GHF rate has a much larger impact on the net estimate of annual need than the use of the alterative NRS household projections. Employing a 2% GHF rate would increase the estimate of net annual housing need to 45, which is only slightly less than the impact of increasing prises by 10%. The adoption of a conservative GHF of 1.7% would reduce housing need to 25. The scale of these changes points to a requirement to keep this assumption under review. That said, long-term prospects for the economy suggest that a major upturn in the gross rate of household formation is unlikely.

• A gradual increase in HHP relets by 1% would make a noteworthy contribution in terms of reducing the scale of housing need. This suggests that one possible policy option that may merit some consideration would be the feasibility of assisting long-standing HHP tenants who are willing and able to move to the private sector.

• A decline in HHP relets by 1% would lead to a further increase in the scale of housing need and place greater pressure on the social rented sector. In light of the restricted and informal nature of much of the private rented sector this would add to the pressures the Comhairle now face in securing permanent accommodation for households at risk of homelessness.

32 The comparatively sharper fall is likely to reflect the limits of the CACI PayCheck data and the requirement to assume that the incomes of households in a given income band are evenly distributed.

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6.10 Probable range of the estimate of net annual housing need

To minimise the risk of over reliance on single point projections, we ran alternative simulations of what might happen in the decade ahead in order to generate an upper and lower estimate of net annual housing need. These alternative simulations are summarised in table 6.14.

Table 6.14: Alternative estimates of net annual future housing need to 2020 Outer Hebrides Upper estimate Backlog 40 new forming households in need 125 other emerging need 50 Total need 215 Average lettings 160 Annual shortfall 55 Central estimate Backlog 40 new forming households in need 119 other emerging need 50 Total need 209 Average lettings 173 Annual shortfall 36 Lower estimate Backlog 40 new forming households in need 110 other emerging need 50 Total need 197 Average lettings 180 Annual shortfall 20

It is stressed that the upper and lower estimate of net annual housing need are not forecasts. Instead the intention is to show possible alternative outcomes in terms of the estimate of net annual housing need. This is to assist policy makers to consider how confident it is possible to be in thinking through the policy implications of the central estimate of net annual housing need.

For the upper and lower estimates the annual quota for the backlog of current need has been held constant. The numbers of existing households falling into need has also been held constant. The range of estimates has therefore been generated through the application of alternative assumptions in respect of newly arising need and affordable housing supply.

The upper estimate assumes that a somewhat jobless economic recovery alongside the welfare reform programme would lead to some further deterioration in affordability ratios for new households. It also assumes that these broader economic trends would add to the financial hardship facing poorer families and thus increase the numbers of younger adults compelled to form a new household sooner rather later. Some of this increase in household formation however, is anticipated to be offset by an increase in the proportions of adolescents and others that move away to pursue employment opportunities elsewhere. It also assumes that there will be some fall in social lettings because fewer tenants will be able to exit the sector.

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The lower estimate assumes that the housing market will see house prices relative to local incomes remain little changed prior to 2015 but there will be some fall in household formation due to an increase in young adults deciding to defer household formation or to move away to pursue employment opportunities elsewhere. From 2015 as the pace of economic recovery begins to quicken, it is assumed there will be some growth in the turnover in the social rented sector, as more tenants feel able to pursue alternative housing options as confidence returns to the market. It also assumes there will be a return to the underlying rate of household formation as working adults in their twenties and thirties finding they can now access the housing market as credit constraints ease back.

6.11 Future housing need and the net stock requirement

For reasons discussed in chapter 5, it is not possible to robustly predict the net numbers of households that will require market housing and that the only credible approach is to assume the difference between the projected net stock requirement and net need will provide some insight into the net demand for market housing.

Table 5.7 indicates that our central net stock projection suggests that by 2020 some 870 additional dwellings might be required. This equates to an annual net flow of 87 additions to the existing stock of housing. Looking at the alternative annual estimates of housing need presented in table 6.14:

• The central estimate suggests that of the 870 new dwellings that might be required, up to 360 units (36 times 10) may be required to meet affordable housing need and the remaining 510 would be required to address housing demand.

• The upper estimate suggests that of the 870 new dwellings, up to 550 units may be required to address affordable need and some 320 to address demand.

• The lower estimate suggests that of the 870 new dwellings, up to 200 units may be required to address affordable need and some 670 to address demand.

The above estimates suggest that the housing market could be required to deliver anywhere between 320 and 670 dwellings over the 10 year period. This wide range highlights that the balance between need and demand is very sensitive to the assumptions made regarding the future relationship between household incomes and resale house prices and thus the potential for new households to access the housing market.

Looking at the projected annual flow of 230 new households likely to form each year, the central estimate of net annual need suggests that some 111 households33 could afford to access market housing. This figure is significantly higher than the average annual projected net stock requirement of 87 dwellings in the period to 2020. This highlights that the opportunities for new or recently formed households to enter the housing market are strongly influenced by the flow of

33 This figure equals 230 newly forming households minus 119 new households unable to buy as reported in table 6.11 above).

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vacancies within the second-hand market. This includes, but is not restricted to, vacancies due to households leaving the Outer Hebrides and vacancies due to household dissolution as older people die or move to institution care.

Whether future vacancies will offer a suitable housing solution for new households in terms of price, location, quality and size is exceptionally difficult to discern. However, in terms of the Rural HMA there is a widespread perception amongst local experts that households that have the financial means to buy but cannot find what they require on the second hand market have few, if any options, unless they have the financial capacity to undertake self-build.

This indicates that the turnover in the second-hand market warrants close monitoring. The fact that the Comhairle now collate local evidence on housing transactions and sales from local estate agents is a positive step in this direction. However, detailed monitoring of local demand and supply mismatches will only be fully possible if a cost-effective means of assessing community needs and demands at small area level can be found and put in place.

6.12 Low cost intermediate housing interventions

The Scottish Government asks local authorities to consider whether some form of intermediate tenure such as new build shared equity may provide a possible housing option for addressing some need. The guidance therefore suggests that local authorities should seek to estimate what proportion of those unable to meet their needs in the market could afford to meet their needs using ‘intermediate housing’ market products. At the outset, it should be noted that:

• The following analysis is restricted solely to the potential financial capacity of newly forming households to access some form of intermediate tenure. Research confirms most households that enter some form of intermediate housing are under 35 years and previously lived in the local area, often with family or friends.

• In terms of addressing affordable housing need, the potential numbers of newly forming households that might benefit from some form of intermediate tenure are highly sensitive to prices relative to incomes and the ebbs and flows of the housing market.

• Any policy decisions regarding the future expansion of the supply of intermediate housing would need to consider whether these options are likely to be attractive to consumers that could afford the purchase price and whether these consumers would be able to secure mortgage finance.

The Scottish Government (2008) HNDA guidance implies the cost to the consumer of accessing an intermediate tenure option will be lower than the cost of purchasing or renting at the lower end of the housing market. This is not necessarily the case in the Outer Hebrides. The price paid by consumers for a 70% share in recently constructed or planned shared equity developments in the Outer Hebrides has generally ranged from £75,000 to £100,000. Moreover, most of these developments have occurred within the Stornoway HMA.

With this in mind, table 6.15 estimates of the numbers and proportions of newly forming households each year that might have sufficient income to purchase a shared equity or some other form of intermediate ownership or rented housing product. These estimates assume that:

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• The total development price, including land acquisition, for a typical shared equity product is £130,000 and that prospective purchasers would be looking to purchase a 60%, 70% or 80% equity stake.

• Some 230 new households would form each year and these households could afford to purchase a shared equity product up to 2.9 times their gross annual household income.

Table 6.15 : Numbers of new households unable to afford market priced housing Annual average number new households 230 Affordability test 1: 60% equity share of £130,000 unit (£78,000) Proportion of all new households able to buy 46% Proportion of ALL new households NOT able to buy 54% Annual average number of new households THAT COULD PURCHASE 105 Affordability test 1: 70% equity share of £130,000 unit (£91,000) Proportion of all new households able to buy 34% Proportion of ALL new households NOT able to buy 66% Annual average number of new households THAT COULD PURCHASE 78 Affordability test 3: 80% equity share of £130,000 (£104,000) Proportion of all new households able to buy 30% Proportion of ALL new households NOT able to buy 70% Annual average number of new households THAT COULD PURCHASE 69 All new households able to buy property in range from £78,000 to £104,000 Proportion of all new households able to buy within price range 16% Annual average number of new households THAT COULD PURCHASE 37 All new households able to buy property in range from £70,000 to £104,000 Proportion of all new households able to buy within price range 19.9% Annual average number of new households THAT COULD PURCHASE 46 Note: This calculation is based on 100% mortgage & 2.9 multiplier and other assumptions that were used to produce the central estimate of the numbers of newly forming households in need adopted in table 6.7

The findings reported in table 6.15 suggest that that the majority of newly forming households do not appear to be in a financial position to purchase a shared equity product. This unaffordability increases as the minimum equity stake increases. More specifically:

• If the equity share price could be set at £78,000, then perhaps 46% of newly forming households, or 105 per annum, could potentially purchase a property. However 54% of newly forming households would not be able to buy, which is higher than the proportion of new households unable to buy on the open market reported in table 6.7 (50.1%), which is based on a resale entry-level price threshold of £70,000.

• If the equity share price is increased to £91,000 and £104,000, the proportion of newly forming households able to access a shared equity option would fall to 34% and 30% respectively. This is equivalent to 78 and 69 new households annually respectively.

The above findings confirm that the under current housing market conditions shared equity products cannot be offered to consumers at below market entry prices, and there is no reason to assume this will change anytime soon. In short, in the absence of a radical change in housing market conditions, intermediate housing products do not offer a means of addressing affordable housing need in the Outer Hebrides.

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On the other hand, a possible reason to promote shared equity products and other forms of intermediate tenure may be to help re-balance the housing market, especially as new housing is of a higher quality and thermal efficiency the most existing stock. Intermediate tenure products may therefore provide a vehicle to assist households with the financial means to buy but who cannot do so because of the lack of turnover in the second-hand market and the high cost of self-build. As table 6.15 shows, we estimate that:

• Some 16% of newly forming households, which is equivalent to some 37 households per annum, could afford to purchase an intermediate product priced between £78,000 and £104,000.

• Some 19.9% of newly forming households, which is equivalent to some 46 households per annum, could afford to purchase an intermediate product priced between the resale entry level price threshold of £70,000 and £104,000.

Over the longer term as the original purchasers move on, shared equity products may also widen the choices available to older homeowners looking to downsize to smaller and easier to manage homes.

However, it is reiterated that any policy decision to deploy shared equity or other intermediate tenure products as a means of responding to local demand and supply mismatches would require to be informed by market research to investigate the extent the to which householders have both the financial means and the desire to access intermediate products.

6.13 Summary and key messages

The housing needs analysis indicates that there is a backlog of 404 households in current need. If this backlog is addressed over 10 years then there is a potential undersupply of 36 affordable lettings per annum to address this backlog and simultaneously respond to emerging need.

This latest estimate is significantly lower than the 2009 estimate, which was based on projections derived from trends in the period to 2008. There are several probable reasons why the estimate of net annual need has declined but two stand out.

One important factor has been the decline in the costs of house purchase relative to earnings and incomes. As discussed in chapter 5, tighter lending criteria has constrained demand and increased the housing pressures facing younger households seeking to buy. Whist the unfolding housing market dynamics have important policy implications, planning of future housing provision requires housing requirements to be assessed over a long period. The easing of affordability pressures means that the long-range projection of the numbers of newly forming households in need has eased back. The net effect therefore is that there has been minimal change in the projected annual flow of newly arising need in spite of the fact that the projected growth in number of households aged less than 35 years in the coming decade is higher than NRS previously projected.

The second, vital factor has been the sharp increase in the numbers of affordable housing constructed in the 7 years to 2010. The impacts of the development programme were modest in the early period owing to time lags involved in building up supply. However, the impacts of this programme can now be clearly seen. In particular, the Outer Hebrides has not experienced a

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sharp decline in lettings within the social rented sector that has occurred in other parts of Scotland. This is important because it has been the decline in vacancies and turnover in the existing stock of social rented housing that has been the main factor that has driven up the backlog of current households in need in the most pressured areas of Scotland.

The net annual housing need estimate is a projection not a forecast. Like all projections it is trend based and assumes recent trends will continue but as recent events have shown the future does not always continue in the same way as the past. We have therefore produced alternative estimates based on changing the assumptions built into the projections. These estimates suggest that there may be an annual undersupply of anywhere from 20 to 55 lettings. In other words, the annual estimate may credibly lie within this lower and upper range.

It is important to appreciate that the Scottish Government approach adopted in this chapter involves estimating the potential shortfall (or surplus) of affordable housing. This is not the same thing as the number of new affordable housing required. Other options, such as making more effective use of the existing stock, and preventing households from becoming homeless can play an important role in meeting housing need.

It is also important to appreciate that the estimate of net annual housing need is not a comprehensive statement of need. It provides few insights into existing households that have an in-situ need. Although such households are discounted from the model these needs still exist.

The 2006 Newhaven Research study reported that perhaps 2,000 existing households had a housing need that warranted an in-situ solution. The majority of these households were older and /or disabled households that were occupying accommodation that was of poor quality and /or unsuitable for their needs. The next chapter therefore looks at the evidence regarding the wider range of housing needs that exist amongst different sections of the wider community.

Comparisons between the projected net estimate of affordable housing need and the net stock requirements indicate that some 510 new homes may be required to meet the net growth in housing demand in the period to 2020. However, depending on the future trajectory of the relationship between house prices and incomes, this figure could range from 320 to 670 dwellings.

It will therefore be important for the Comhairle to continue to improve its capacity to monitor the relative prices of different sizes/types of resale properties at the small area level compared with local affordability thresholds. This should have regard to potential role, if any, intermediate housing might play in helping to address any identified mismatches between supply and demand at the local area level.

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7. HOUSING REQUIREMENTS OF SPECIFIC HOUSEHOLD GROUPS

7.1 Introduction

This chapter looks at specific groups of households and how their needs may differ from those of the general population. This includes households that may require housing support in order to live independently in the community. It also includes groups of households that may experience discrimination in the housing system, whether or not the discrimination is intentional34.

7.2 The potential housing requirements of older households

Changing number and composition of older households

As noted earlier, there are some 5,620 older persons and some 4,000 households represented by someone aged 65+ years living in the Outer Hebrides. Although evidence is limited to the 2006 housing needs survey, the spatial distribution of older householders is very similar to the spatial distribution of the older population outlined in table 3.4. As table 7.1 shows, the numbers of older person households could increase by 860 to 6,050 by 2020 and increase by a further 1,210 to 6,070 by 2033.

Table 7.1: Projected number and composition of older households 2011-2033 Year change 2011-20 change 2020-33 2011 2020 2033 No % No % Single male 65-79 years 560 750 950 190 34% 200 27% Single male 80+ years 120 160 230 40 33% 70 44% Single female 65-79 years 790 850 860 60 8% 10 1% Single female 80+ years 600 820 1,330 220 37% 510 62% 2+ households 65-79 years 1,550 1,810 2,050 260 17% 240 13% 2+ households 80+ years 380 470 650 90 24% 180 38% All older households 4,000 4,860 6,070 860 22% 1,210 25% Source: NRS 2008 based household projections

Over half (52%) of all older households currently comprise of a single person living alone. The proportions of the older household population that comprise of single person households do not vary greatly between the Stornoway HMA and the Rural HMA. Within the Rural HMA there appears to be a higher concentration of older single person households in South Uist and Barra (58%).

Both Scotland and the Outer Hebrides demonstrate a gender imbalance amongst older people that becomes more pronounced as age progresses. This reflects the high longevity of women relative to men. Consequently, as age increases, so does the likelihood of widowhood and the likelihood of living alone. Table 7.1 shows that:

34 Scottish Government guidance lists families as a possible example of households that may have specific needs. Families have a higher risk of overcrowding (see section 4) but otherwise no other specific housing issues were identified. Thus households with children are not discussed further in this section.

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• In the period to 2020, NRS expects there will be considerable convergence in the survival rate of single men and women into younger old age (65-79 years).By 2033 there could be considerably more single men (950) than the single women (860) in this age band.

• Although the number of couples and single men surviving into very old age (80+ years) will continue to increase, NRS project a much sharper rise in women living into very old age, especially after 2020. Over the next two decades therefore, the majority of the very old household population will continue to be single women living alone.

Although the increase in men living into old age is consistent with increasing survival rates, the high proportion expected to live alone as opposed to forming part of a couple seems unusually high. NRS project that by 2020 over 15% of older households in the Outer Hebrides will be single male households aged 65-79 years, which is some 5% higher than the Scotland wide average. NRS advises, because of problems of measurement, the anticipated growth in numbers of older men living alone should be treated with caution.

Tenure and income

Table 7.2 shows that owner-occupation is the dominant tenure for older households throughout the Outer Hebrides. The large majority of older owners own their homes outright and this proportion is much the same across the Outer Hebrides. The few older owners with a mortgage generally have someone in employment within the household.

Table 7.2: Estimated tenure of older households living in the Outer Hebrides, 2006 Owner occupied Social rented Private rented No % No % No % Stornoway HMA 710 69 260 25 60 6 Rural HMA 2,470 82 310 10 220 7 Rural Lewis and Harris 1,590 87 140 8 90 5 Uists and Barra 880 75 170 14 130 11 Outer Hebrides (weighted total) 3,180 79 570 14 280 7 Source: Housing need survey, 2006 (base: 542 older householders) Note: HNA 2006 survey results for North Uist & Benbecula and South Uist & Barra are subject to a high margin of error and are therefore not reported.

Gross income estimates derived from the 2006 housing needs survey are summarised in table 7.3. These findings are not very robust because only 52% of older households answered the various income and benefit questions but they suggest:

• The incomes of older households are low with median incomes ranging from £8,000 for older people living alone to £14,000 for older couples. The low income of older households is borne out by DWP figures that indicate some 2,350 people are in receipt of pension (guarantee and/or savings) credits, including 1,930 that are in receipt of the guaranteed element. This suggests that upwards of half of all older households are in receipt of pension credits.

• Older households that own their home tend to have somewhat higher incomes than those that rent from a social or private landlord. Over half of all older owners reported a sum in excess of £10,400 compared to a fifth of older renters. The tendency for older

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homeowners to have comparatively higher incomes is largely explained by the fact that around 9 out of 10 older couple households live in the owner occupied sector.

Table 7.3: Gross annual income of older households (%) Owners Social /private renters All older households Under £10,399 48 75 60 £10,400 - £15,599 30 17 20 £15,600+ 22 8 20 Total 100 100 100 Sample base: housing need and demand survey, 2006 (sample 282 out of 542 older householders that participated in survey) Note: Numbers of respondents too small to subdivide social and private renting

Housing circumstances

Higher numbers of older households live in good quality homes than a decade or two ago. Nonetheless, as noted in section 4, older households, and in particular those in the private sector, continue to be at most risk of living in property in a poor physical condition or lacking adequate heating and thermal efficiency measures.

Although the figures may have changed somewhat over time, the 2006 housing needs survey suggests that:

• Some 1,300 older households have a current housing need, most frequently related to the poor quality of their home or because a member of the household has some form of disability and required some form of adaptation or assistance to live independently in comfort. This is equivalent to 11% of all households and 33% of all older households.

• There are some differences in the proportion of older households in current housing need across the Outer Hebrides. Around 28% of older households in the Stornoway HMA have a current need rising to 36% in the Rural HMA.

• Older households generally state a preference for an in-situ solution and in most cases (but not all) the provision of repairs or relatively inexpensive adaptations was judged a more cost effective option.

Potential levels of disability amongst older people

A key consideration in terms of planning for older people is to estimate and project the numbers of older households that may find it necessary to look at their housing options because of failing health, the onset of disability, or concerns about isolation and safety.

Neither the Community Care Housing Needs Assessment (DTZ Pieda, 2005) nor local administrative systems provide evidence on the incidence of older people with disabilities such as physical disabilities, sensory impairments, learning disabilities and mental health problems such as dementia. The following paragraphs therefore examine the numbers and potential distribution of need amongst the older population implied by the numbers claiming disability related state benefits and alternative disability related prevalence rates.

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Receipt of Attendance Allowance

Attendance Allowance (AA) is payable to people aged 65+ years that have a physical, sensory or mental disability and have been assessed to have personal care needs (including supervision needs). In 2010 some 1,325 older people were in receipt of AA, of which 790 were entitled to the higher rate of attendance allowance (60%). The latter is payable for those that require high levels of personal care day and night.

Table 7.4 indicates that the proportion of the Outer Hebrides older population (24%) in receipt of AA is higher than the comparable Scotland wide rate (19%). Likewise, a higher proportion of the local population (14%) are on the high AA rate relative to the Scotland wide rate (12%). This was not always the case in the past. This suggests that CnES efforts to ensure pensioners maximise their benefit entitlement has lead to a discernable increase in the numbers and proportions of pensioner households in receipt of this benefit.

Table 7.4: Attendance Allowance by age of recipient, Quarter 4 2010

Age Age 65-79 Age 80+ years All High Rate years AA claimant No % No % No % Stornoway HMA 215 13.7 350 47.1 565 24.4 15.1 Rural HMA 290 11.6 470 57.7 760 23.0 13.3 Rural Lewis and Harris 180 11.4 340 62.7 520 24.5 14.1 North Uist and Benbecula 35 8.3 70 51.5 105 18.8 10.7 South Uist and Barra 65 13.5 65 47.4 130 21.0 11.3 Outer Hebrides 505 12.4 820 52.6 1,325 23.6 14.1 Scotland 62,000 9.5 106,020 46.2 168,020 19.1 11.6 Source: DWP statistics and Scottish Neighbourhood Statistics (June 2011) Figures do not always sum because of DWP rounding process

The proportions of the older population claiming AA do not vary greatly across the Outer Hebrides. The differences in table 7.4 can largely be accounted for by variations in the age profile of the older population and numbers of older people that live alone across the sub-areas.

The proportion of older people in receipt of AA increases with age. Over 12% of the Outer Hebrides population aged 65-79 years receive this benefit compared to 53% of the population aged 80+ years. Likewise, twice as many women receive this benefit compared to men, but this is largely because women live longer than men.

Disability Living Allowance (DLA) can only be claimed by people up to the age of 65 years, but once awarded, people can continue to this benefit beyond the age of 65. Adding together the numbers of older people claiming AA or DLA increases the benefit based estimate of older people with disabilities to around 1,500. This suggests that up to 27% of the older population of the Outer Hebrides has a modest to severe disability.

Prevalence rates

Prevalence based estimates and projections of housing support needs must be used with caution. Although the adoption of this approach is made necessary by the absence of

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comprehensive and up to date local data, the incidence of disability amongst the older population of the Outer Hebrides may differ from nationally derived prevalence rates. That said because the prevalence of disability amongst older people does display strong age patterns, prevalence rates provide a useful picture of possible future changes in the numbers of older people with some form of disability that can help inform the planning of future service provision.

To estimate the numbers of older people with a disability we made use of the Scottish Office 1997 community care housing need prevalence rates35. The resulting figures for the Outer Hebrides were triangulated against disability prevalence rates set out in the Joint Improvement Team (2007) commissioning services toolkit and, where possible, other sources of evidence.

Table 7.5 summarises the numbers that were generated by applying the Scottish Office prevalence rates to the GROS 2008 based population projections for the population aged 65 years or older. Numbers reported for the Stornoway HMA and the Rural HMA should be considered illustrative because prevalence rates are rarely robust for smaller populations. That said, the AA claimant figures suggest there is much less local variation in the prevalence of disability amongst the older population than might be assumed.

Table 7.5: Projected numbers older people, with medium to high housing related need and prevalence of dementia, 2011-2033 Change Change 2011 2020 2033 2011-20 2011-2033 Stornoway HMA Low need 379 452 555 73 103 Medium need 316 376 462 61 85 High need 158 188 231 30 43 Dementia 47 56 69 9 13 Rural HMA Low need 542 646 793 104 147 Medium need 451 538 660 87 122 High need 226 269 330 43 61 Dementia 67 80 99 13 18 Outer Hebrides Low need 921 1,099 1,348 177 279 Medium need 767 914 1,122 147 208 High need 383 457 561 74 104 Dementia 114 136 167 22 31 Source: Scottish Office Prevalence Rate Guidelines and GROS principal 2008-based household projections Note: GRO population projections were split between the Stornoway HMA and Rural HMA on the basis of the spatial distribution of the population in each age band. For example, if 10% of the Outer Hebrides population aged 65 to 74 years lived in Area X it was assumed that 10% of this age group would still live in this area by 2020 etc.

35 The 1997 prevalence rates are set out in the LHSA Good Practice Guide (O’Sullivan et al, 2004) and provide a useful indication of the potential severity of disability. However, the rates were never formally adopted. This was primarily because of the rejection of the assumption there was a simple and direct read across from dependency level and the specific form of housing solution required.

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Table 7.5 also reports on the Scottish Office prevalence rates for older people likely to experience dementia. This group of older people are effectively a sub-set of the medium and more especially the high need groups of older people. This suggests the high needs rates provide a broad indication of the numbers of older people that might require housing support to be provided in conjunction with personal care and in some instances nursing care.

The 1997 Scottish Office prevalence rates suggest that:

• Somewhere in the region of 2,071 older people may require housing support, including 921 with low needs, 767 with medium needs and 383 with high needs.

• Of the 1,150 older people estimated to have medium to high needs, some 144 are likely to have moderate to severe levels of dementia.

The JIT prevalence rates suggest that the numbers of older people with a moderate to severe disability may be rather higher at 1,300, of which some 270 may have dementia and 27 may have a learning difficulty. Prevalence rates from various English studies in the main produce numbers in or around the range suggested by the Scottish Office and JIT prevalence ranges.

There is some overlap between older people with dementia and those with a learning disability. This reflects the fact that dementia occurs at a higher rate among older people with learning disabilities than amongst the general older population. However, it is not possible to establish the extent of overlap.

Looking ahead to 2020, the Scottish Office and JIT prevalence rates suggest that anywhere from 1,371 to 1,500 older people may have medium to high needs. Assuming the spatial distribution of older households remains unchanged, the majority of older people in need of housing support will continue to be spread throughout the Rural HMA. JIT prevalence rates suggest this sub-group could include up to 320 older people with moderate to severe dementia and 30 adults with a severe or profound learning difficulty.

The individual findings reported above must be treated with caution but the 2006 housing needs study, the alterative prevalence rates and AA figures paint a reasonably similar picture in terms of the numbers of older people with a disability that may necessitate some form of housing support. On balance the JIT based estimates, which are based on more detailed age specific rates, appear to provide a better guide to the incidence of dementia amongst the very old.

Looking at the available evidence in the round, we judge that:

• Somewhere in the region of 1,250 and 1,350 older people may have some form of disability that requires modest to intensive levels of housing care and support. This equates to 5% of the total population.

• Between 300 and 400 older people may have high needs that could require intensive housing support, most likely to be delivered alongside personal care and/or nursing support. This equates to 1.5% of the population of the Outer Hebrides.

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• By 2020 up to 6% of the population of the Outer Hebrides may be older people with some form of disability that requires modest to intensive levels of housing related care and support. By 2033 this proportion could rise to almost 8%.

‘Shifting the Balance of Care’ aims to assist older households and other vulnerable people to live in their own home or a community setting. Over the past decade there has been a fall in residential ‘specialist’ provision for older people. At the start of the decade there was a fall in the numbers of places in care homes. More recently, CnES has been decommissioning most of its Care Units which generally low level supported accommodation. Some HHP sheltered housing has also been re-assigned to provide general needs or retirement housing where receipt of support is not an integral component of the tenancy. There are now fewer than 200 specialist housing units specifically for frail older people, all of which are in the social rented sector.

These developments have been driven by a fall in consumer demand for these products. Older households in the main do not want to leave their home where they have raised their families and enjoy living. The decline in specialist housing provision for older households is not necessarily problematic because there has been a long tradition of enabling older adults to live in their own homes.

Over the past 3 years an average of 500 older people have been helped to live independently through access to various home care services and/or the Faire Careline Service such that:

• Around 88 per 1,000 older people receive some form of home care service in the Outer Hebrides compared to 63 per 1,000 older people nationally.

• Around 31 per 1,000 older people receive 10 or more hours support and care per week in the Outer Hebrides compared to 18 per 1,000 older people nationally.

In line with national trends around 2 out of 3 older people in receipt of home care are women. CnES also continue to support a large adaptations programme and the local Care and Repair Service for older people and working age people with disabilities.

7.3 Specific housing needs of individuals aged 16-64 years with disabilities

Disability is not always a consequence of ageing. Some people may be born with a disability whilst others acquire a disability either by an accident or disease. However, it can be difficult to measure because definitions of disability vary. The following paragraphs therefore draw on Disability Living Allowance claimant numbers as well as prevalence rates.

Disability Living Allowance (DLA)

Disability Living Allowance (DLA) is intended to contribute towards the extra cost associated with living with a disability. The allowance has two components. The first is a care component for people who need help with personal care and the second is a mobility component for people who have walking difficulties. The number of people claiming DLA aged 16 to 64 years can provide a useful insight into the prevalence of disability.

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Table 7.6 summarises the number of working age people in receipt of DLA. The table shows that 4.5% of working age people in the Outer Hebrides claim DLA benefit, which is equivalent to 720 individuals. This percentage is below the national average of 5.5%. The majority of DLA claims are for a physical disability or health condition.

Table 7.6: Attendance Allowance by age of recipient, Quarter 4 2010 DLA claimants % of population aged aged 16-64 years 16-64 years Stornoway HMA 340 4.7 Rural HMA 380 4.3 Rural Lewis and Harris 225 4.3 North Uist and Benbecula 65 3.8 South Uist and Barra 80 4.4 Outer Hebrides 720 4.5 Scotland 187,730 5.5 Source: DWP (2011) and NRS (2011) small area population estimates

The number of DLA claimants is not a count of all those aged 16-64 years with a disability. People with disabilities that believe they do not require assistance with personal care or mobility tend not to apply for DLA. Other people may have a claim turned down because their disability is not considered severe enough. These may be some of the reasons behind the comparative low rate of DLA take up in North Uist and Barra.

People with physical difficulties aged 16-64 years

Scottish Office prevalence rates (see table 7.7) indicate there may be some 794 people of working age with a physical disability (which includes a sensory disability) living in the Outer Hebrides. This equates to some 5% of the working age population. Consistent with the NRS projected decline in the numbers of people in late middle age, the numbers reported in table 7.7 suggest that the individuals aged 16-64 years with a physical disability may decline but this trend is uncertain.

The prevalence rates suggest that up to 9 out of 10 working age people with a physical disability may require low to modest housing support. This might include assistance with adaptations, advice on securing effective aids or on the use of assistive technology. At the other end of the spectrum, up to 89 individuals (the high needs category) may have a severe disability that necessitates extensive home modifications. Some of this latter group will have complex multiple disabilities.

The DTZ Pieda (2005) review of community care housing needs concluded that the main service gaps for adults with disabilities was the lack of specialist professionals for certain kinds of sensory disability and not a lack of suitable housing and housing support. This appears to remain the case:

• The numbers of units in the social rented sector built to wheelchair standards has increased from 7 to 38 since 2001. The rate of social sector wheelchair accessible units per 1,000 households (1.5) is now above the Scotland wide figure (1.2).

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• Over the past 3 years grant approvals for disabled adaptations for people of all ages have averaged around 190. This suggests that 7.2 per 1,000 people receive a disabled grant to improve the suitability of their home each year compared to 1.1 per 1,000 people nationally. The provision of a dedicated budget that occupational therapists can use to secure the provision of small adaptations has helped to improve the responsiveness of this housing support service.

Table 7.7: Projected numbers working age adults (16-64 years) with some form of disability, 2011-2033 Change Change 2011 2020 2033 2011-2020 2021-2033 Prevalence projections-people with learning disabilities SHMA Overall number 141 132 116 -9 -16 Medium needs 71 66 58 -5 -8 High needs 28 26 23 -2 -3 RHMA Overall number 171 160 141 -11 -20 Medium needs 86 81 71 -6 -10 High needs 34 32 28 -2 -4 Outer Hebrides Overall number 312 292 257 -20 -36 Medium needs 157 147 129 -10 -18 High needs 62 58 51 -4 -7 Prevalence projections-people with physical disabilities SHMA Overall number 358 335 294 -23 -41 Medium needs 109 102 90 -7 -12 High needs 40 37 33 -3 -5 RHMA Overall number 436 408 358 -28 -50 Medium needs 133 125 109 -9 -15 High needs 49 46 40 -3 -6 Outer Hebrides Overall number 794 743 653 -51 -90 Medium needs 243 227 199 -16 -28 High needs 89 83 73 -6 -10 Prevalence projections-people with mental health problem SHMA Overall number 786 736 646 -50 -90 Medium needs 122 114 100 -8 -14 High needs 36 33 29 -2 -4 RHMA Overall number 957 896 787 -61 -109 Medium needs 148 138 122 -9 -17 High needs 44 41 36 -3 -5 Outer Hebrides Overall number 1,744 1,632 1,433 -112 -199 Medium needs 269 252 221 -17 -31 High needs 79 74 65 -5 -9 Source: Scottish Office Prevalence Rate Guidelines and NRS principal 2008-based household projections Note: the prevalence rates used to compile this table are subject to the same strengths and limitations as those discussed in respect of older people

• Although little is known about the suitability of the private housing stock for wheelchair users or others that have substantial mobility problems, findings from the SHCS suggest that proportion of households that have a self-defined long-term illness or disability and

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state their home would benefit from adaptations (12%) is lower than for Scotland as a whole (16%).

• On average 34 individuals between 16-64 years with a physical disability have been in receipt of home care over the past 3 years. In addition, a small number of individuals with physical disabilities, most of whom have multiple complex needs, have been accommodated in specialist units elsewhere in Scotland. Mainland councils also tend to rely on ‘out of area’ placements for people with very complex needs that require very specialist packages of care and nursing support.

People with learning difficulties

The precise number of adults with learning disabilities that live in the Outer Hebrides is unknown. Scottish Office prevalence rates (see table 7.7) suggest that there may be some 312 adults’ aged 16-64 years with a learning difficulty. Other prevalence rates suggest the figures may be anywhere from 300 and 360. Again, the suggested decline in the numbers of adults with a learning difficulty may fall back over the next two decades should be treated with caution.

The latest eSAY statistics36 indicate that 166 individuals with a learning difficulty are known to CnES, of which 111 are aged 21-64 years. The age breakdown for the other individuals is not published in order to maintain confidentiality. These figures suggest that perhaps 35% to 47% of adults with learning disabilities aged 16-64 years may be known to the Comhairle.

Scottish Office prevalence rates suggest that amongst the 16-64 year old population with a learning difficulty:

• Around 30% of have a very mild learning disability and are generally able to live in the community with minimal support.

• Around half have a moderate learning disability (i.e. medium need) and may require more sustained support to live independently in their own home.

• Around 20% have severe or profound learning disabilities that require intensive support, often accompanied by specialist care and nursing support and specialist equipment.

Compared against these benchmarks, eSAY statistics indicate that over 3 out of 5 adults with learning difficulties live with a family carer. A similar proportion lives in mainstream housing. This supports local knowledge that most adults with learning difficulties continue to live in the family home with support from their parents of other relatives.

Around 10% live in supported accommodation and 20% live in a registered care home, but these figures appear to include older people with learning difficulties and some individuals with complex needs that have been placed in accommodation on the mainland. Few are in further education or employment.

36 eSAY statistics were introduced subsequent to the “The Same as You Review’ in 2000 and are prepared by the Scottish Government Scottish Consortium for Learning Disability

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Although we have no local information on the housing support needs of adults with mild to moderate learning disabilities, national research suggests that these could be significant. A recent follow-up of the National Child Development Study cohort of people in their 30s, found those with mild to moderate learning disabilities were far more likely to have literacy and numeracy problems and to experience psychological distress.

A source of concern is the need to plan for the provision of housing to meet the future housing needs of adults with learning difficulties who are living with parents or other relative carers that are becoming older. One option that is being pursued is the development of a ‘‘core and cluster’’ model to replace the Ardseileach Care Home in Stornoway. This is currently the only residential care provision in the Western Isles for adults with learning disabilities, autism or other complex care needs.

People affected by mental health problems and/or substance misuse

Mental health problems are a major cause of disability and the Scottish Office prevalence rates suggest that at any one time some 1,744 people of working age may have a mental health problem. It is believed the mental health prevalence rate includes individuals with a substance misuse problem.

Family relationships are frequently affected by relative’s mental ill health, and parental depression, if undiagnosed and untreated, can lead to poor emotional health and well being outcomes for children. At the Scotland wide level, mental ill health amongst the working age population is also one of the most common reason for sickness absence, accounting for 40% of all days off sick and almost a similar percent of incapacity benefit claimants.

The majority of people with a mental health problem are usually able to remain in their own home with sufficient care and support from family, friends and professional health services. For others, more extensive formal support and assistance is often necessary. Scottish Office prevalence rates suggest that perhaps 348 individuals in the Outer Hebrides may have medium to high need where the provision of a stable housing environment is a key ingredient to promoting recovery from mental illness.

In the absence of a stable housing environment, people with mental health issues are vulnerable to becoming homeless, as reflected in national and local homeless statistics. Moreover, service providers often find it difficult to engage with and give support individuals with mental health related problems that become homeless.

In 2005 the DTZ Pieda community care housing needs review concluded there was a lack of supported housing and a lack of housing support for people with mental health problems, and substance abuse problems. This remains the case. There is no emergency accommodation other than hospital for clients suffering a crisis and the temporary accommodation managed by the CnES homeless service is generally considered inappropriate for housing those in need of intensive care and support.

There is also very little supported accommodation. At present CrossReach Service provide 5 ‘medium stay move on’ supported tenancies in Stornoway, which involves properties leased from HHP. The project caters for adults with mental health issues as well as adults with learning difficulties. The project is funded through a mix of local authority funding (formerly Supporting

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People funds) and housing benefit. There is a perceived need for an expansion of this form of medium stay supported accommodation but this would require to be accompanied by improved arrangements in respect of move on accommodation. The fact that mental health services in Lewis and Harris are focused on Stornoway increases the demand for ‘move on’ permanent housing in the Stornoway HMA, where competition for social housing is highest.

The LHS consultation exercise also confirmed there is a perception that there are insufficient resettlement and support services to assist adults with mental health and other complex needs to settle and maintain their tenancies, which adds to the risks of them becoming homeless.

7.4 Households from an ethnic minority background

Traditionally the Outer Hebrides has been a less socially diverse community than mainland Scotland. According to the Census, in 2001 just 0.6% of the population (less than 170 individuals) were from an ethnic minority background compared to 2% for Scotland as a whole. Moreover, just 60 households were represented by someone with an ethnic minority background. Most of these individuals were from Pakistani, Chinese, Indian, and mixed ethnic backgrounds.

ONS population estimates by nationality or place of birth are not available for the Outer Hebrides37. The 2006 housing needs and demand survey also produced just a handful of responses from people from an ethnic minority background. Consequently, there is no statistical evidence about the housing circumstances and potential outstanding housing requirements of this small but diverse population. Until the 2011 Census become available, reasonably accurate data regarding the numbers and housing circumstances of households from an ethnic minority community will remain limited.

The Housing Services Team is represented on the Diversity and Equality Steering Group (DESG), which is a partnership involving public bodies, voluntary groups and community groups, which was set up to combat decimation and promote equality. One part of its remit is to enhance links with the local ethnic minority population.

At the time of the 2001 Census, 83% of the population identified themselves as belonging to one denomination or another of the Christian religion, while over 11% belonged to none and over 4% did not answer. Just 1% answered they identified themselves with a non-Christian faith.

Discussions with the Diversity and Equality Steering Group indicate there has been some increase in number of individuals from a BME background but numbers remain low. These discussions also indicated there were no specific housing issues of common concern to households from different ethnic or religious groups. DTZ Pieda (2005) questioned whether the needs of adults from ethnic minorities were adequately reflected in the planning and delivery of community care. DTZ Pieda observed that service providers did not always provide culturally specific counselling, meals and food preparation or tailored legal and financial advice.

37 ONS local estimates are derived from the Annual Population Survey and Labour Force Survey but ONS judge the figures for Eilean Siar to be unreliable.

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We therefore recognise there is a need to remain vigilant to the potential for discrimination, intentional or otherwise, in respect of ethnicity and religion in terms of the quality of service delivery and a need to improve our administrative systems to support this.

Accession to re-migration

During the last decade, in-migration from Central and Eastern Europe (CEE), which was noted in section 3, has broadened the range of ethnic groupings living in the Outer Hebrides. In 2007/8 CnES estimated that over 300 individuals from Poland and other CEE countries were working in the Outer Hebrides. The majority were believed to be working in food processing, hospitality and construction.

The Office for National Statistics (ONS) international migration statistics indicate that the slowdown in individuals moving from one of the EU Accession countries to the UK since 2007 has been accompanied by a sharp upturn in the numbers of people returning to Poland and other EU counties. The Diversity and Equality Steering Group suggest that many overseas migrants have also moved away from the Outer Hebrides since 2007/8 and the economic downturn, although some families have chosen to remain in an area.

Qualitative evidence collected through different sources, including the Hall Aitken (2007) migration study suggest that migrants from the CEE initially encountered difficulties finding accommodation. As a result, employers often found it necessary to negotiate directly with private landlords to secure accommodation for their employees. These problems appear to have diminished and migrants generally appear to be satisfied with their housing. That said language barriers and associated difficulties securing access to information and advice remained an issue for some. Likewise, the lack of private lettings in the summer months (when properties are often let out as holiday lettings) has proved an issue for migrants and local residents alike.

Gypsy/travellers

The Scottish Government uses the term “gypsy/traveller” to refer to a small but distinctive ethnic and cultural minority within the Scottish population that consider travelling as an integral aspect of their cultural and ethnic identity. Scottish Government statistics indicate that there are no individuals from a gypsy/traveller community living on a site or site encampment in the Outer Hebrides. The CnES is also aware of a few individuals from a gypsy/traveller background that live in ordinary housing. However, LHS officers report that these individuals no longer identify themselves as a Gypsy/Traveller.

Occupational travellers

The term “occupational traveller” is used to refer to travelling show people and new (age) travellers. Although some occupational travellers occasionally visit the Outer Hebrides in the summer months none maintain ‘winter quarters’ in the area or wish to settle permanently in the Outer Hebrides.

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7.5 Gender and Sexual Orientation

The proportion of females (51%) and males (49%) in the Outer Hebrides has remained little changed in the period from 1981. This gender balance is similar to the Scotland wide profile and reflects that the fact that, as noted in chapter 3, women have a higher life expectancy. However, the Outer Hebrides also has a lower proportion of females in the 18 to 24 year age group (42%) relative to the equivalent Scotland wide age group (49%). As discussed in chapter 3, this reflects the fact that a higher proportion of young women migrate to the mainland to pursue higher education and (to a lesser) extent employment.

NRS projections suggest that a maximum of 18% of women of working age (between 16 and 64 years) live in single person or lone parent households. A similar percentage of men of working age live in single person households. Thus the large majority of working age women and men live in family and/or couple households and have access to the same type and quality of housing.

In common with Scotland as whole, single men are the most vulnerable to homelessness. In 2010-2011 single men accounted for some 40% of all applications or 81 applicants, followed by single women (28% or 56 applicants) and female lone parents (16% or 32 applicants). For working age single men and women alike the risk of homelessness appears to be associated with having to leave their previous home under duress combined with the limited availability of readily accessible private renting, especially for those reliant on means tested benefits (as discussed in section 4). However, single men also appear to have a higher risk of homelessness because of mental health and substance abuse problems, suggesting that improvements in relation to housing support and care provision for those with such problems would have a positive impact on men vulnerable to homelessness.

For lone parents (whether never married, divorced or separated) their disadvantage in terms of access to housing tends to reflect the lower earning power and thus lower capacity to borrow finance for home ownership, with the result that many rent from HHP. However, lone parents that are victims of domestic abuse are at high risk of becoming homeless.

Looking at the older population, older male and female single pensioner households tend to be more disadvantaged in the quality of their housing than couple pensioner households, particularly in respect of fuel poverty. However older female single pensioner households seem to experience greater problems associated with disability and poor health but this appears to be linked to longer life expectancy.

In common with other areas of Scotland there is little ‘hard evidence’ on the numbers and housing circumstances of the lesbian, gay bisexual or transgender community. In part this is because many of the individuals prefer not to identify themselves and in part because organisations remain hesitant to ask what some consider intrusive questions.

Prevalence rates outlined in a recent joint publication suggest some 5% of the Outer Hebrides adult population may be members of the LGBT community, which would equate to around 1,000 to 1,100 adults. The numbers of individuals from the LGBT that rent their home from a social landlord or apply for social housing is not known but it is believed that the majority of the LGBT community live in private housing.

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Individuals of the LGBT community living in rural areas can face barriers to accessing services and getting their voice heard. The Diversity and Equality Steering Group has therefore supported the formation of a self-managed group run by local LGBT people. This group provides a focus for consultation on policy and service delivery, including strategic housing issues. Feedback during the LHS consultation process suggests there are no specific housing issues facing individuals from the LGBT community.

On the other hand, there may be issues that affect less visible members of the LGBT community. A recent review of the housing needs of LGBT people in Scotland (Scottish Housing Regulator and Stonewall, 2009) highlighted that young adults from the LGBT community experience higher levels of homelessness than the population aged 15-20 years. Likewise, LGBT individuals experience higher levels of mental illness than the general population.

Age Concern and other organisations also report that older households from the LGBT community can experience barriers to accessing housing support and specialist housing provision. Older members of the LGBT community are often hesitant to approach agencies because of concerns about having to be open about their sexual or gender identify and/or concerns about discrimination from staff coming into their homes. Worries about discrimination and harassment from residents and staff can also make many reluctant to move to specialist housing provision. Research in other parts of the UK suggest it is often difficult for older people from the LGBT community to find a place in extra care housing or sheltered housing developments where they are not compelled to go ‘back in the closet’.

The above points highlight the need to remain vigilant in ensuring the planning and delivery of services are sensitive to the needs of those from all sections of the community

7.6 Summary and key messages

With an ageing population and increasing numbers of older people living alone, especially those in their 80s and beyond, there will be an increasing demand for home care for older people. The projected increase in older households likely to have some form of disability or infirmity also points to a continued growth in the requirement for aids and adaptations, housing support and other services to enable them to remain comfortably within their own homes.

Public expenditure constraints alongside the continuing growth in the numbers of older households will add to the pressure on housing support, care and health services for older people. Although further expansion of the use of assisted technology to enable people to stay in their own homes may be one way forward, it will be vital for local partners to come together to find new ways of delivering services and delivering improved outcomes for older people with less resources. Future strategies for the provision of housing and care services to older people will also need to take greater account of the needs of older couples, one or both of whom may require intensive care and support.

Although hard evidence is limited, the findings presented in this section of the report support local perceptions that there shortfalls in the provision of housing support and supported housing for households with specific needs and in particular adults with learning difficulties and mental health problems. Just 10% of adults with learning disabilities known to CnES have their own tenancies, which is considerably lower than the Scottish average of 33%.

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Prevalence rates are subject to considerable margins of error and an important aspect of developing the HNDA in the longer-term will be to improve locally administrative evidence to support more robust and fine-grained analysis of households with specific needs.

National and local evidence regarding whether households from different equalities face specific barriers in securing access to housing and housing services also remains under-developed. The same is true for other areas of policy. One way forward would be to improve administrative systems and ensure that more comprehensive information is collected and routinely analysed on the age, gender, sexual orientation, religion and ethnic background of individuals seeking social housing or using housing related services.

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8. CONCLUSIONS

8.1 Introduction

Each section of the report concludes with a summary of the main conclusions and emerging key issues. These conclusions are not repeated below. Instead we highlight the main strategic themes that should form the foundation of the LHS.

8.2 Ensuring an adequate supply of housing

This report points to a continued requirement for new housing, in the main due to the projected growth in households. Trend based projections derived from net stock modelling suggest that 1,580 additional housing units may be required by 2033 although this figure could range from 1,030 to 2,190 (see table 5.7) depending on future migration patterns.

Whilst future rates of migration are near impossible to accurately predict, the outlook for the local economy suggests that the levels of employment growth required to sustain high rates of net-inward migration are unlikely to re-emerge before 2020. It is therefore judged that future net requirement for housing is likely to fall somewhere inside the range of 1,030 to 1,580 dwellings in the period to 2033.

Over the 10-year period from 2011 to 2020 inclusive the central estimate presented in table 5.7 indicates that an additional 870 units may be required across the Outer Hebrides by 2020.

For reasons discussed in chapter 5, it is not possible to robustly project or forecast housing demand. In order to provide some insight into the net additional number of affordable and private sector units required by 2020 it was therefore assumed that future housing demand would equal the difference between the projected net stock requirement for housing and the projected estimate of net housing need.

The central estimate of net annual housing need suggests up to a maximum of 360 additional units (see table 6.11) may be required, which is equivalent to 41% of the projected net additional supply of 870 units. This implies that some 570 additions to the private housing stock will be required by 2020. However, as discussed in chapter 6, this central estimate is extremely sensitive to assumptions made regarding future trends in respect of the relationship between house prices and household incomes and thus requires careful monitoring.

In terms of the potential location of the net additional supply required to 2020 the central net stock requirement and net need presented in tables 5.7 and 6.11 suggest that of the 870 net additional dwellings required in the period to 2020:

• Some 550 dwellings could be required in the Stornoway HMA, comprised of at least 220 private sector additions and up to 300 additional affordable units. This is equivalent to an annual flow of 55 additional dwellings, of which a minimum of 22 would be private sector completions and up to a maximum of 30 would be affordable completions. .

• Some 320 dwellings may be required in the Rural HMA in the 10 years to 2020, including a minimum of 60 affordable units to address identifiable housing need.

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In interpreting the policy implications of these projections it will be important to keep in mind:

• The housing supply target is ultimately a policy matter and not a technical matter. The Development Plan and thus the housing supply target will need to take account of the strategic ambition of the OHCPP to stabilise the population and help to sustain fragile rural areas. As such, it will be important to decide whether the volume and spatial distribution of the additional units to be aimed for should be guided by where such investment is likely to have a long-term economic and social benefit and not just where there is a potential shortfall in housing.

• We have now entered a long period of public expenditure constraints. The LHS will need to set clear and realistic affordable housing supply priorities that take account of the resources that are likely to be available over the next 3-5 years and the fact that there are other ways to address housing need other than construct affordable units, including measures to seek to prevent homelessness.

Although the greatest potential shortfall in affordable housing provision is in the Stornoway HMA, there may be highly localised mismatches between housing supply and housing need in the Rural HMA that have yet to be evidenced. The OHCPP programme of community audits offers the potential to build up a consistent picture of the relative severity of housing related problems across the Rural HMA over time. This evidence may help inform future policy regarding the role for housing in supporting the sustainability of settlements in the Rural HMA.

Potentially, the private rented sector may be able to play a somewhat bigger role in meeting housing need and demand but this would require a number of barriers to be addressed. One barrier is the continuing lack of evidence about the functioning of the private rented sector throughout the Outer Hebrides. This makes it difficult to consider what policy measures might make it easier for those that have deferred house purchase to secure a private let. Another and potentially bigger barrier is the very limited supply of smaller 1-2 bedroom private rental properties. This together with the lack of shared accommodation in the private rented sector is likely to limit the opportunities for lower income households, especially single person households under the age of 35 years that are reliant on housing benefit, to access the sector.

The Development Plan and the LHS 2011-2016 will need to consider the mix of dwellings that might be required as well as the volume, tenure and location of new housing. Households in the Outer Hebrides often look to purchase a home for life. This assumption may be less applicable in the future. The projected increase in the number of younger and older single person households as well as younger lone parents suggests there may be an upward trend in the numbers of households the lack the financial capacity to purchase, maintain or heat larger dwellings. For some of these households buying a smaller property may be a more attractive option than renting. This suggests the provision of smaller dwellings containing 1-3 bedrooms in the private sector warrants further policy consideration.

Finally, policy decisions must always take account of the inevitable uncertainty associated with all projections, but this is especially important now because of the continuing uncertainty surrounding the future scale and speed of the recovery of the labour and housing market. It will therefore be vital to keep the estimate of net annual housing need under review and to update it on a regular basis.

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8.3 Ensuring households live in good quality warm housing

The houses that exist today will make up the biggest proportion of the housing stock for the next 10 to 20 years. The existing stock base of the Outer Hebrides is its greatest housing asset. However, it is also one of the greatest challenges in terms of improving the housing outcomes for residents and in terms of achieving the major reductions in carbon emissions. The economic costs associated with climate change have been highlighted by the Scottish Government and HM Treasury as one of the major strategic issues facing the UK. Housing measures which reduce these costs should therefore be an important element of future housing strategy.

In light of the decline in the backlog of current housing need and the fall in the overall level of projected shortfall in new affordable supply, and the challenges presented by climate change, it may be appropriate to place greater strategic emphasis on improving the quality and energy efficiency of the existing stock of housing.

The challenges of improving the quality and thermal efficiency of the private housing stock and reducing rates of fuel poverty across all tenures remain formidable. The slow progress in establishing the National Lending Advisory Lending Unit has made it more difficult to secure effective implementation of the “Scheme of Assistance”. The root of the problem however, is that the existing stock of private housing is owned by individuals with varying levels of income, capital assets and credit capacity to improve their dwellings and implement energy efficiency measures.

It is clear that a more strategic and joined up approach is required in terms of tackling BTS housing, especially where the housing is occupied by older households and other households that contains someone with a disability that have extensive care needs. Unless resources that are leveraged in from other sources are effectively marshalled, it will remain difficult to target an effective programme of practical support, education, information, grant aid and loan finance to deal with these formidable problems.

An important strand for any future strategic approach for improving the quality of the existing housing stock will be to work with the private landlords, community landowners and local township committees to increase awareness of and support for action of climate change.

A strategy for tackling BTS and make more effective use of the existing housing stock may wish to look at the options to bring empty units back into use for permanent housing. In terms of contributing to the wider climate change agenda, some of these options may have to be measures that would permit the replacement of properties that are expensive to renovate and very hard to heat. Replacement may also have some benefit in terms of minimising the level of investment required to deal with infrastructure constraints.

8.4 Improving housing outcomes for those with specific needs

Addressing the implications of an aging population remains the most important long-term issue for the Outer Hebrides. Improving the quality and thermal efficiency of the existing housing stock and pursuing a more concerted approach to alleviating fuel poverty will contribute towards the OHCPP ambitions to improve the physical and mental health and wellbeing of older households and other sections of the community.

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Although there is no pressing requirement for the development of specialist housing provision for older people, there is a pressing requirement to better align housing with health and social care priorities in order to improve the housing outcomes for older people in a climate of diminishing resources and increasing demand. Evidence suggests that there is a requirement to expand the housing options available for adults with learning difficulties. There is also insufficient resettlement and support to assist adults with mental health and other complex needs, which add to the risks of them becoming homeless. Again collaborative working around these supply issues would help to enhance outcomes.

There are also sections of the community that may experience discrimination in the housing system because of age, gender, sexual orientation, religion, belief or ethnic background. Available evidence, albeit limited, did not identify any specific housing concerns. However, given the limited nature of available evidence, it will be important to remain vigilant against potential discrimination. Although CnES race equality and other equality procedures are in place, the introduction of the Equalities 2010 Act suggests it would be timely to review policies to ensure they cover all relevant ‘protected characteristics’ such as sexual orientation.

The prospect that current mortgage difficulties may persist for some time and the limited supply of rented housing points to a need for continued investment in housing options and advice services as well as a need to increase the focus on preventative services for those at risk of homelessness, including the younger unemployed. This may be challenging to achieve given the competing priorities for the limited resources available.

8.5 Future Monitoring

The Scottish Government (2008) HNDA guidance recommends that partnerships should undertake a full and comprehensive update of their housing needs and demand assessment at least every 5 years in order that any necessary revisions to need and demand estimates can be fed into the Development Plan and LHS process. In the intervening period, arrangements must be put in place to monitor the housing system.

Consistent with Scottish Government advice, a range of housing indicators will be reported through the annual Outer Hebrides LHS Update. Prior to publication the information will be discussed with the LHS officers groups and other networks such as the Diversity and Equality Steering Group.

There are competing pressures on staff time, including the need to implement the LHS and to report on subsequent progress and outcomes. To maximise efficiency, the HNDA monitoring process will focus on indicators that are judged essential and can be updated using existing sources of data. The intention will therefore be to make use of the best evidence available, including analysis already undertaken by our key partners to monitor:

• Trends in the volume of future net dwelling requirements through reviewing household growth using NRS population and household estimates and projections (including migration flows) and new dwelling supply (approvals and completions, split by tenure and if possible if intended to replace an existing unit).

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• Trends in the labour market as evidenced by changes in levels of economic activity amongst the working age population and claimant count based unemployment (resident based).

• Housing market performance in terms of median house price movements, house sales turnover and the number of empty properties (including second homes)

• The affordability of the housing market in terms of lower quartile resale house price to lower quartile household income ratios

• The capacity of the social rented sector to respond to need as shown by social rented pressure ratios (number of applicants per let) inclusive and exclusive of transfer applicants.

• The quality of the housing stock through monitoring the numbers and proportion of private and social housing with an NHER rating of 5+ ( or SAP rating of 50-60) and the number of BTS properties.

In addition to these indicators, the LHS outcome monitoring process will continue to review and report on:

• The numbers of households living in the Outer Hebrides estimated to be in fuel poverty and the impact of measures put in place to tackle fuel poverty

• The number and proportion of social rented housing that has attained the SHQS and measures being taken to deal with units which are difficult or extremely costly to bring up to the SHQS

• Number of homeless applications, the percent assessed in priority need and the number of homeless living in temporary accommodation and the impact of measures to prevent homelessness, including repeat homelessness.

Gaps in the evidence base in relation to the housing needs of specific household groups will be addressed through furthering links with health and social care partners, the Diversity and Equality Steering Group and its network of equalities groups, and will include facilitating focus groups with members of the extended network of partner agencies.

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APPENDIX 1: REFERENCES

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Affordable Rural Housing Commission: Final Report, 2006

Aberdeen University (2005) The Outer Hebrides Regional Accounts 2003 Final Report, Aberdeen

Anderson, B, Ruhs, M, Rogaly, B, & Spencer, S (2006) ‘Fair Enough? Central and Eastern European Migrant in Low-Wage Employment in the UK’ Centre on Migration, Policy and Society, University of Oxford

Atterton J (2011) The Implications of Changing Public Sector Budgets for Rural Scotland http://www.sac.ac.uk/mainrep/pdfs/publicsectorbudgets.pdf

Bank of England. (2011) Monetary Policy Committee Decisions, http://www.bankofengland.co.uk/monetarypolicy/decisions/decisions11.htm

Bramley, G (2003) Local Housing Need and Affordability Model for Scotland, Research Report 21, Communities Scotland, Edinburgh

Bramley, G (2004) Local Housing Need and Affordability Model – Update, Research Report 34, Communities Scotland, Edinburgh

Bramley, G., Karley, N., and Watkins, D (2006) Local Housing Need and Affordability Model – Update (2005 based), Research Report 72, Communities Scotland, Edinburgh

Bramley, G., Morgan, J., and Littlewood, M (2007) Initial evaluation of the Open Market Homestake Pilot, Research Report Number 87, Communities Scotland, Edinburgh

Bramley, G (2006) Local Housing Need and Affordability Model for Scotland Update (2005 based), Communities Scotland

Burnside, R (2010) UK Comprehensive Spending Review: Impact on Scottish Budget, SPICE Information Paper 10/67, October http://www.scottish.parliament.uk/business/research/briefings-10/SB10-67.pdf

CACI (2010) Paycheck data (supplied to Council by the Centre For Housing Market Analysis

Centre for Housing Market Analysis (2011) Scottish Housing Market Review, May 2011

Centre for Housing Market Analysis (2011) The Scottish Housing System: Selected Economic and Social Trends

Communities Scotland (2003a) Scottish House Condition Survey 2002: Local Authority Report Communities Scotland, Edinburgh

CML (2009) Scottish mortgage market begins to stabilise in second quarter, press release August

De Lima, P, Jentsch, B, Whelton, R (2005) ‘Migrant Workers in the Highlands and Islands’ Highlands and Islands Enterprise, Inverness

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Department of Communities and Local Government. (2011) House Price Index – March 2011 http://www.communities.gov.uk/publications/corporate/statistics/hpi032011

Department of Transport, Local Government and the Regions (2000) Local Housing Needs Assessment: A Guide to Good Practice. HMSO, London

DTZ Pieda Consulting, (2003a) Housing Market Areas in Scotland: definition and review, Volume 1: Main Report, Communities Scotland

DTZ Pieda Consulting, (2003b) Housing Market Areas in Scotland: definition and review, Volume 2: Case Studies, Communities Scotland

DTZ Pieda Consulting, (2003c) Housing Market Areas in Scotland: definition and review, Volume 3: Guidance on Market Area Definition, Communities Scotland

DWP (2009) Households Below Average Income

DWP (2011) National Insurance Number registrations

DWP (2011) Key ‘out of work’ benefit claimants - working age client group

The Energy Advisory Service (2006) The Outer Hebrides Fuel Poverty Assessment and Monitoring Project Report 2005 – 2006

Ernst & Young (2011) Ernst & Young Scottish ITEM Club 2011- Summer Update

Financial Services Authority (2009) Mortgage Market Review

Fraser of Allander (2009) Economic Commentary, June 2009, Vol 33 No 1

Gibb, K, Maclennan, D, Nygaard, C and McLaren, J (2004) Outer Hebrides Local Housing Strategy: Analysing the Local Housing System. Report to Comhairle Nan Eilean Siar, Department of Urban Studies: University of Glasgow

Gibb, K, and Nygaard, C (2005) Outer Hebrides LHSA Update: House Price Analysis & Private Sector Socio-Economic Survey Department of Urban Studies: University of Glasgow

Gouldie A (2011) State of the Economy Presentation http://www.scotland.gov.uk/Resource/Doc/273916/0114268.pdf

GROS (2007) Scotland’s Census 2001 Statistics on Moving Households and Moving Groups

GROS (2009) Population Projections Working Group (Ppwg) Accuracy of the Sub-National Population Projections for Scotland http://www.gro-scotland.gov.uk/files1/stats/ppwg06-09-accuracy-sub-national- pop-proj-scotland.pdf

GROS (2010) Orkney, Shetland and Eilean Siar Migration Report http://www.gro- scotland.gov.uk/files2/stats/migration/orkney-Shetland-Eilean_Siar-migration-report_2010.pdf

Goudie, A State of the Economy Presentation Office of the Chief Economic Adviser, August 2009 http://www.scotland.gov.uk/Topics/Economy/state-economy

Hall Aitken et al (2007) Outer Hebrides Migration Study Final Report http://www.cne- siar.gov.uk/factfile/population/documents/OHMSStudy.pdf

Highlands and Islands Enterprise (2007) Innse Gall (Outer Hebrides) Economic Update

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HM Treasury. (2011) Forecasts for the UK Economy: A Comparison of Independent Forecasts April 2011 http://www.hm-treasury.gov.uk/d/201104forecomp.pdf

International Monetary Fund. (2011) World Economic Outlook April 2011 http://www.imf.org/external/pubs/ft/weo/2011/01/index.htm

Jagger C, Matthews R, Spiers N, Brayne C, Comas-Herrera A, Robinson T, Lindesay J, Croft P (2006). Compression or Expansion of Disability? Forecasting future disability levels under changing patterns of diseases. Wanless Social Care Review Research Report

John Martin Partnership (2006) Private Sector House Condition Survey

Macpherson Research (2005) Outer Hebrides Property Market Study, Outer Hebrides Enterprise: Stornoway

Musingarimi, P (2008) Housing Issues Affecting Older Gay, Lesbian and Bisexual People in the UK - A Policy Brief, International Longevity Centre - UK www.ilcuk.org.uk

National Policy institute (2008) Monitoring Poverty and Social Exclusion in Scotland 2008, JRF

National Records of Scotland (2010) Population Mid Year Estimates

National Records of Scotland (2010) In, out and net migration between NHS Health Boards and the Rest of Scotland plus in, out and net migration between NHS Health Boards and the Rest of UK

National Records of Scotland (2011) - Small area occupied stock (via Scottish Neighbourhood Statistics)

Newhaven Research (2007) Outer Hebrides Housing Needs and Market Study, CnES

Newhaven Research (2008) The Potential Role Of Extra Care Housing In The Spectrum Of Housing Provision For Older People In The Outer Hebrides

Newhaven Research (2009) Castles in the Air? Housing Policy and the UK Love Affair with Owner Occupation, CIOH unpublished/forthcoming

ODS Consulting (2008) Options for the Future of the Care Home Service Summary Report to Meeting of Joint Services and Policy and Resources Committee 2.09.08

OBR (2011) Office For Budget Responsibility: Economic And Fiscal Outlook http://budgetresponsibility.independent.gov.uk/wordpress/docs/economic_and_fiscal_outlook_23032011. pdf

O’Sullivan, A., Young, G., Maclennan, D., Gibb, K., McLaren, J., Britain, A., Dowie, A., and Thornton, C., (2004) Local Housing System Analysis Good Practice Guide, Edinburgh, Communities Scotland

Oxford Economics and SLIMS (2008) Scottish Enterprise – Forecast Overview

Oxford Economics and SLIMS (2009) Economic Review for Scottish Enterprise, Data Matrix

Oxford Economics (2009) UK Economy Lengthy period of austerity in prospect 9 October

Price Waterhouse Coopers (2009) UK Economic Outlook

Pudney, S 2009) Disability Benefits for Older People: How Does the UK Attendance Allowance System Really Work? University of Essex

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Rosengard, A., Jackson, A., Jones N and Laing I (2008) A Study Of Youth Homelessness In Comhairle Nan Eilean Siar

Raab, G., MacDonald, C. & Macintyre, C. (2004) Comparison of income data between surveys of Scottish households. Research commissioned by Communities Scotland.

Registers of Scotland (2011) Registers of Scotland House Price Statistical Report January to March 2011 - An Official Statistics Publication, Edinburgh

Rural Services Network (RSN) (2010) The Rural Review of Public Services, A Report by the Rural Services Network http://www.rsnonline.org.uk/images/files/ruralreviewofpublicservices2010.pdf

Satsangi, M et al (2006) Evaluation of the Communities Scotland Rural Home Ownership Grant Mechanism

Savills Research (2009) Spotlight on Scottish Residential Property Market, August 2009

Scottish Government (2008a) Firm Foundations: The Future of Housing in Scotland - An Analysis of Responses Scottish Government: Edinburgh

Scottish Government (2008b) Housing Need and Demand Assessment Guidance, Scottish Government: Edinburgh

Scottish Government (2008d) Local Housing Strategy Guidance, Scottish Government: Edinburgh

Scottish Government (2008c) Guidance on Preparing Strategic Housing Investment Plans, Scottish Government: Edinburgh

Scottish Government (2008e) Scottish Planning Policy SPP3: Planning for Housing, Planning Directorate, Edinburgh

Scottish Government, (2008f) Scottish Household Survey Scottish Government, Edinburgh

Scottish Government (2009a) Scottish House Condition Survey 2004-7 derived dataset and local authority summary output table

Scottish Government (2009b) Gross Domestic Product For Scotland For The 2nd Quarter Of 2009, October 2010

Scottish Government (2009c) An overview report summarising the key findings from the review of the private rented sector, including policy responses.

Scottish Government (2010) Scottish House Condition Survey Derived Dataset 2007-9

Scottish Government. (2011a) Main GDP findings for 2010 Quarter 4 - http://www.scotland.gov.uk/Topics/Statistics/Browse/Economy/GDP/Findings

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APPENDIX 2: HHP HOUSING REGISTER DATA AND ASSESSING NEED

Introduction

This appendix outlines the steps that were taken to ensure the figures derived from the housing needs register to inform the estimate of net annual housing need can be used with reasonable confidence.

Background

In 2006 the Comhairle commissioned a study that drew on existing sources data plus a survey that achieved returns from 2,275 households across Outer Hebrides in order to explore trends and prospects for the housing system across the Outer Hebrides. An important dimension of this study was to produce an annual estimate of housing need. Details of the 2006 survey can be found in appendix 2.

In 2009 the local housing system analysis was updated. Due to the high cost of conducting a further survey, the Comhairle decided to utilise evidence from the Hebridean Housing Partnership (HHP) housing register to update the annual estimate of net housing need. Subsequent to stock transfer, the HHP register is in effect a common housing register for the Outer Hebrides.

The approach adopted in 2009 and in this report (see chapter 6) has strived to be consistent with the Scottish Government Guidance on Assessing Housing Need and Demand (2008) which is predicated on the use of robust secondary data.

There is ongoing debate regarding the use of secondary data to assess the net annual estimate of housing need. Much of this debate centres on the robustness of data held on the housing register as a measure of the housing need. The robustness of the data partly depends on the ease with which housing register data can be downloaded and edited into a format suitable for analysis, including the exclusion of invalid applications from the analysis. For example:

• Housing registers can contain applications from households that may no longer require accommodation because they have been rehoused or because their circumstances have changed since the application was made.

• Some applicants may wish to move to a different property type or location and are seeking to achieve their aspirations as opposed to resolve unmet needs.

• Some applicants may register because they wish to be considered for housing at some point in the future, but are not in immediate pressing housing need.

• Some applicants live outwith the area and therefore do not form part of the current resident population in housing need.

The robustness of the data also depends on the extent to which the housing register dataset contains sufficient data to provide a reasonable approximation of each indicator of housing need

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suggested in the Scottish Government Guidance and whether the resulting numbers are of a similar order of magnitude as the counts obtained from other sources of data.

Processing, cleaning and editing of housing register data prior to analysis

During April and May 2011 HHP provided 8 separate files that contained different data extracts from the housing register at the start of April 2011. It was possible to link this data using the Application ID to create a single merged excel file.

The file containing ‘housing needs points’ which was provided by HHP at the end of May 2011 contained multiple records for the large majority of applicants38. A considerable amount of data processing was necessary to covert this data into a single comprehensive record of the points allocated to each applicant for each separate points category.

After cleaning the data to remove duplicate cases and correct some items of data the merged dataset contained 2,499 unique applicant records.

The merged file contains variables that document information in respect of each applicant’s current location, date of application, and the needs categories for which points have been allocated. HHP also provided data relating to the household composition and age band of applicants but this data is not comprehensive and it has only been collected for the past year or so. The merged file also contains a number of variables that have been derived from the original data supplied by HHP. This includes a number of spatial markers (see below).

Steps taken to exclude non- valid applications

Application type

A number of steps were undertaken to identify valid live applications from households seeking rehousing at the start of April 2011 and non-valid cases to be excluded from the analysis of current housing need. Of the 2,499 cases:

• 783 applications coded as authorised by HHP were identified as valid cases for the assessment of current need. All these cases have been fully appraised by HHP allocation staff.

• 99 applications coded as registered by HHP were identified as valid cases. These are cases where the application is still in the process of being assessed by HHP staff. The comprehensiveness of data for applicants that fall within this sub-group is variable due to the fact that some items of data are only entered onto the system once an application is authorised.

• 37 applications that had been coded by HHP as ‘offered’ (10), ‘suspended’ (23) and or ‘deferred’ (4) were identified and coded as valid cases. Almost all suspended and deferred applications had been ‘put on hold’ for housing management reasons such as current or

38 There were anywhere from 1 to 7 records per applicant.

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past rent arrears. There are arguments for including and excluding suspended and deferred cases but on balance it was decided to retain such cases because it was NOT apparent that their housing need had been resolved at point in time the data was downloaded. For similar reasons the 10 ‘offered’ cases were retained.

• 837 applications that had been cancelled by HHP were excluded. The comparatively high number of cancelled applications is indicative of the fact that HHP now routinely cancel applications if an applicant fails to renew their application in response to the annual review.

• 743 applications coded as completed and thus rehoused by HHP prior to the April 2011 were excluded.

The resulting initial number of valid and non-valid cases are summarised in table A1.1 below. It shows that of the 2,499 applications there are a maximum of 919 valid applications, including 191 transfer applicants.

Table A2.1 Valid applicants before strip out of non Outer Hebrides residents Waiting Transfer All applicants Status Authorised 614 169 783 Offered 8 2 10 Registered 90 9 99 Suspended 13 10 23 Deferred 3 1 4 Completed 612 131 743 Cancelled 670 166 837 All valid cases 728 191 919 ALL CASES 2,010 489 2,499

Spatial markers

In order to ensure the dataset was suitable for analysis, it was necessary to clean up and resolve missing postcode data and stated area preference data. On completion of this task, the available data was used to apply a number of origin and destination based spatial markers. In terms of origin of the applicant (i.e. current address applied from) this included local authority (Outer Hebrides or other), Stornoway HMA, and where possible the settlement and locality within the Outer Hebrides.

In terms of preferred destination, data supplied by HHP was used to assign each applicant (data permitting) to the Stornoway HMA/Rest of Outer Hebrides and to one of the following 4 sub- areas:

• Stornoway HMA • Rest of Rural Lewis and Harris • North Uists & Benbecula • South Uist and Barra

Of the 919 potentially valid cases, 162 applications were from individuals or households living outside the Outer Hebrides. Closer investigation of these 162 records indicated that the large

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majority had few if any points other than time on list points. Moreover, most applications contained no information about the applicant’s reason for seeking to be rehoused in the Outer Hebrides.

There were however 24 cases where the applicant had been allocated points and where the applicant had stated that their reason for seeking rehousing was because of social/ care needs, family related reasons or to take up employment. These cases tended to be working age applicants, most likely individuals or households returning to the Outer Hebrides after a period of study or employment in Glasgow, Inverness or elsewhere in Scotland. Virtually all had applied within the last couple of years.

In light of the Outer Hebrides strategic priority to secure population growth and assist individuals return to the area, CNeS decided to retain this sub-set of 24 complex applications but exclude the remaining 138 applications from those living outside the Outer Hebrides. This reduced the total number of valid cases to 781.

Date of Application

There is always a risk that the re-registration process may not guarantee that data relating to the housing circumstances (and thus needs based points) of applicants remains up to date.

Of the 781 applications identified as a valid application, 5% had originally applied prior to 2006. These 40 cases, which included 21 transfer applications, accounted for less than 1 in 7 of all pre 2006 applications recorded in the data provided by HHP.

It is understood that the data relating to these 40 applications was reviewed prior to being entered onto the HHP housing register from 2008 onwards. This is borne out by the fact that most of these 40 records contain household composition details. CNeS therefore decided that these applications should be retained for analysis.

Total valid applications

Table A1.1 shows the numbers of live applications after the invalid completed cancelled and external applications are discounted. It confirms that of the 781 applications identified as valid, 191 applications (24%) are transfer applicants.

Table A 2.2 : Valid applicants AFTER strip out applicants living outside Outer Hebrides HNDA valid Outer Hebrides Outside WI Total Transfer 191 0 191 Waiting 566 24 590 Total 757 24 781

Ability to measure the Scottish Government indicators of backlog need

One possible approach to quantifying the incidence of backlog need is to establish the total number of valid applicants that have been awarded points (or in the cases of homeless recorded as such) in respect of each current (or backlog) housing need indicator suggested in the Scottish Government guidance.

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The following paragraphs therefore explore the numbers generated from the analysis of the 781 valid cases and how they compare with estimates derived from other existing sources of data for the Outer Hebrides as a whole.

Homeless households, including those at risk of homelessness

The Scottish Government suggests that this category of need should include:

• Those recorded as statutory homeless at a specific point in time

• Those living in temporary accommodation such as hostel or B&B

• Those experiencing insecurity of tenure and are under notice, real threat of notice, or lease coming to an end or mortgage arrears.

• Homeless and living in temporary accommodation

The HHP housing register suggests that the number of valid applicants that were homelessness and/or living in temporary accommodation stood at 130 at the start of April 2011. This figure included 111 households defined as statutory homeless and in priority need.

In addition some 340 applicants had been awarded insecurity of tenure points which are awarded to applicants HHP assess to have insecure occupancy rights, or live in caravans and other non-permanent housing structures, or share accommodation with other households or are under threat of eviction or repossession because of financial hardship.

The large majority of the 340 applicants awarded insecurity of tenure points appear to be established as opposed to be potential households that occupy their own separate or shared accommodation. This is in contrast to some areas of Scotland where many applicants awarded insecurity of tenure points are young adults living in their parental home.

There is considerable overlap between those allocated insecurity of tenure points and those awarded points for homelessness indicator, including 111 applicants awarded 300 statutory homeless points.

Once these homeless measures are combined such that each applicant is counted only once, it is estimated that in Spring 2011 there were 366 HHP applicants assessed to be homeless or at risk of homelessness.

As expected, the number of statutory homeless applicants (110) is below the annual figure reported by the Scottish Government statistics which indicate that in 2009/10 some 158 households were assessed by CNeS as being homeless or potentially homeless, including 121 priority homeless. This difference reflects the fact that the housing register provides a snapshot at a specific point in time whilst the published homeless figures account the flow of homeless applicants over the course of a year.

A more appropriate comparison is the numbers of applications received in a quarter plus the numbers living in temporary accommodation. The latest available Scottish Government figures published in spring 2011 indicate that at September 2010:

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• 56 applications were assessed by CNeS to be homeless in the 3 months to September 2010, which included 49 assessed to be in priority need.

• A further 66 homeless applicants were living in temporary accommodation. The numbers of homeless households living in temporary accommodation has remained little changed since 2008, although the precise figure has fluctuated by +/- 6 from quarter to quarter.

This gives a combined figure of 122 but this figure excludes those experiencing insecurity of tenure.

It was not possible to find comparable robust and up to date evidence from national surveys in respect of insecurity of tenure. However, analysis of the 2006 survey suggests anywhere from 200 to 600 households in the Outer Hebrides may be homeless or live in insecure housing.

Scottish Government statistics indicate that the numbers of applications accepted as homeless by CNeS have fallen back since 2008/9, reflecting the fall in the numbers applying as homeless. Keeping this in mind, and taking into account of the sampling error associated with the 2006 survey it has been judged that the HHP housing register provides a reasonable estimate of ‘homeless’ households, including those at risk of homeless (366) at a specific point in time.

Concealed households

The measurement of concealed households is no simple matter. First the term ‘concealed household’ can refer to one or more of the following three population sub-groups:

• A ‘concealed family’ (ONS 2004), which refers to a couple or lone parent subsumed into a larger household. An example of a concealed family would be adults with one or more dependent children living with the children’s grandparents.

• A ‘potential household’ which is the ONS term for single adults subsumed into a larger household. An example would be an adult that continues to live in their parents’ home.

• A ‘sharing household’, which is the term used to define unrelated adults sharing a kitchen, bathroom or WC with another household but not sharing meals. This sub-group often includes adults living in HMO accommodation.

A second challenge is trying to work out whether households that could be defined as a concealed household according to one or more of the definitions outlined above are in current housing need.

A third issue is that the HHP housing register does not collect and store data in a manner that makes it possible to produce a specific count for concealed, potential or sharing households that complies with the ONS statistical definitions. This problem is not unique to HHP’s housing register.

On balance it was judged that:

• Potential households should be excluded from the count of concealed households. Aside from the fact that such households cannot be readily identified, a recent GROS (2009)

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report highlights that headship rates increase rapidly between the ages 16-30 and then plateau between ages 35 and 60, before increasing again. In short, most new households that will form over the next 10 years will come from the population currently aged between 16 and 34 years. Consequently, counting potential households under the age of 35 would lead to considerable double counting across backlog need and newly arising need.

• Sharing households should be excluded from the count of concealed households. Younger households that share their accommodation with another household do not necessarily require separate accommodation and are often content to share, at least for a period. Furthermore, Housing Benefit regulations assume that a single room in a shared flat is sufficient for a single person less than 35 years. Although this age threshold is a matter of controversy, the HHP data does not allow us to differentiate between ‘sharing households under 35 years and those aged 35 years or above.

It should also be noted that the applicants that we identified as likely to be involuntary sharing households have tended to be assigned insecurity of tenure points and therefore already included in the count of homelessness reported above.

Likewise, potential households that have been assessed as homeless or at risk of homelessness will be included in the count of homelessness above.

In terms of concealed families, a fully comprehensive estimate from the HHP register is hindered by some data gaps. Drawing on available information on reasons for applying and household composition, we estimate that a minimum of 44 concealed families are seeking affordable housing.

There are few alternative statistics on concealed households but:

• Findings from the 2006 study, which included a follow-up telephone survey of all possible concealed and potential households identified through the housing needs survey, suggest that between 40 and 80 concealed families were seeking rehousing.

• The Census 2001 reports there were 72 concealed families in 2001, but the data gives no indication of whether this was through choice or otherwise.

Given the lack of robust and timely alternatives, it is believed that the HHP register based estimate of concealed households provides the only available estimate available at this present point in time. On the other hand, this estimate is not considered particularly robust and it will be important to look to review this indicator once the 2011 Census data becomes available.

Overcrowding

HHP have awarded overcrowding points to 120 applicants for having fewer rooms than required according to the HHP’s allocation policy which assumes that a double bedroom is sufficient for:

• A couple living together • 2 persons of the same sex under the age of 10 • 2 persons of opposite sex until the elder is 7.

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• As expected, most of these households appear to be households with one or more dependent children.

The SHS and SHCS measure of overcrowding are both based on the number of households that have fewer rooms than required according to the ONS bedroom standard39 used in most Government surveys. It is reasonably similar to the HHP allocation policy bedroom standard but adopts more stringent age criteria, reflecting the fact that the Government bedroom standard was defined in the 1960s.

Using the ONS bedroom standard as a benchmark, the 2006 household study estimated that 1.7% of households had fewer rooms than required, although the true figure could range from 1% to 4%. This is consistent with the published figures from the Scottish Household Survey (2%) for 2005/6.

Table A 2.3: Alternative measures of overcrowding Outer Hebrides Scotland (%) Housing register 2011 120 NA Housing register 2011 - as % all households 1% NA 1.7% Outer Hebrides housing needs survey, 2006 NA Range 1-4% 1% 4% SHCS 2003-6: % households below the bedroom standard Range 1-5% Range 3-4% 2% 2.% SHS 2005-6: % households below the bedroom standard Range <1-3% Range 2-3%

Table A1.3 summarises the range of alternative estimates. Applying the lowest and highest percentage range figures to the most recent NRS household estimates suggest that the number of households living in overcrowded circumstances could range from 100 to 500. The HHP register-based estimate is at the lower end of the range of available estimates of the proportion of households living in overcrowded conditions. The most likely reason for this is that households that own their own home and experience overcrowding generally do not apply for social housing.

Overall it is judged that the overcrowding estimates generated from the housing register provide a reasonable, if potentially conservative approximation40.

39 The ONS bedroom standard is calculated for each household in accordance with its age/sex/marital status composition and the relationship of the members to one another. A separate bedroom is required for each married or cohabiting couple, for any other person aged 21 or over, for each pair of adolescents aged 10 - 20 of the same sex, and for each pair of children under 10. Any unpaired person aged 10 - 20 is paired, if possible with a child under 10 of the same sex, or, if that is not possible, he or she is counted as requiring a separate bedroom, as is any unpaired child under 10. 40 The Scottish Government suggest discounting household living in overcrowded conditions if this is due to the presence of a concealed household. In this instance, double counting would only arise if the main household and the concealed household had separately applied for accommodation. We believe the risk of negligible but do not have access to the personnel information necessary to investigate this matter.

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Households currently living in dwellings in poor condition

HHP award points to applicants living in accommodation assessed to be Below the Tolerable Standard (BTS), lack standards amenities and/or is in a poor or serious state of repair.

Currently only 18 applicants have points associated with living in poor quality housing, which is much lower than the SHCS 2007/9 estimate that some 500 households in the Outer Hebrides live in poor quality housing. As reported in chapter 4, the SHCS 200/9 estimates is equivalent to some 5% of the households but the true percent could lie anywhere in the range from 2% to 8% of households. This suggests the true figure may lie between 200 and 1,000.

It has long been recognised that waiting lists do not provide a reliable measure of the extent of serious disrepair.

In the case of the Outer Hebrides, the vast majority of poor condition dwellings are in the private sector. Moreover most occupants of poor condition and hard to heat properties are older homeowners that are widely understood to prefer an in-situ solution and are unwilling to move home. In other words, in-situ assistance with repairs, maintenance and energy efficiency measures have proved to be a more appropriate policy option than the provision of alternative affordable housing for this sub-group of the population.

The lack of up to date evidence regarding the precise numbers of households living in poor condition property is problematic from a wider policy perspective.

However, this lack of evidence does not invalidate or appear to distort the estimate of net annual housing need derived from the HHP housing register. This is because the Scottish Government guidance recommends that households that would benefit from an in-situ solution should be discounted from the count of the numbers of households in current need (i.e. backlog need).

Medical and social related requirements

Scottish Government (2008) recommends estimating the numbers of households with support needs but offer no further explanation of how this term should be defined. Following discussion with Comhairle officials, this indicator has been defined to include a number of component measures, including:

• 64 applicants (including 42 transfer applicants) that have been awarded medical points. Applicants awarded medical points have in the main been assessed to have medium, high or urgent levels of need to move house as opposed to low or intermediate needs.

• 6 applicants have social care or special circumstances points. Applicants are awarded social points based on recommendations from the Comhairle’s Social Work department. Applicants can also be granted special circumstances points for needs not recognised by other points categories.

• 7 applicants have ‘travel to work’ points which are based on verification from an employer that a move is necessary to overcome travel to work difficulties.

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Once the above individual measures are combined such that each applicant is counted only once, it is estimated that some 76 HHP applicants have been assessed as having social or care related needs. As expected, there is minimal overlap between these measures.

It has not been possible to find comparable evidence of medical or social care requirements against which the above housing register derived estimates can be triangulated.

Although not comparable, data from the SHS 2007/9 suggests that around 16% of households in the Outer Hebrides (compared to 12% for Scotland) contain someone who needs regular help or care because they are sick, disabled or elderly. Virtually all these households are older homeowners. However, it is possible that a significant proportion of these households are already in receipt of care and it cannot be assumed that all these households have a specific housing need.

Findings from the SHCS 2007/9 suggest that perhaps 4% of households require some form of adaptation to their dwelling. This is below the Scottish average of 6% but this difference may simply be due to sampling error. Once sampling error is allowed for, anywhere from 100 to 900 may require some form of adaptation (1% to 7%).

Further work in this area may be possible once the Census 2011 findings are released from 2013 onwards alongside improvements in Comhairle records.

Moving from the incidence of current need to a count of current need

Total number of households living in unsuitable housing

Some households may have more than one need. For example, some households may be living in a property that is smaller than they require and is in poor physical condition. The SPSS “if condition function” was used to produce a sequential logic equation such that valid applicants could only be selected and counted once.

Effectively this equation works like a filter. First it asks is the valid application has been classed as homeless. If the answer is yes, the applicants are counted in current need and filtered out from further stages of the equation. Second, the equation asks whether the any of the remaining valid applications are classed as a concealed household. Again, if the answer is yes, the applicants are counted in current need and filtered out from further stages of the equation. This process is then repeated for overcrowding and all the other current need indicators.

Table A 2.4 : Topline estimate of current housing need by applicant type before allowing for In-situ need or income waiting/ homeless social renter Total households living in unsuitable 404 72 476 housing Stornoway HMA 270* 55 325* Rest of Outer Hebrides 134 17 151 Notes: *Includes 3 cases where not possible to assign area preference

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Table A 2.4 provides our estimate of the total number of existing households and concealed households living in unsuitable housing.

It indicates that there are 476 households living in unsuitable housing that are seeking a move to or within the social rented sector. This group of households consists of 404 waiting/housing list applicants and a further 72 applicants seeking a transfer within the social rented sector. This figure of 476 applicants in need is some 45% lower than in 2009.

• The reason for this sharp decline is not immediately obvious but it may reflect a combination of factors such as:

• The historically high level of affordable housing completions that have been completed in the 5 years to 2010/11 inclusive has had the desired effect in reducing the scale of backlog need. The fact that almost 9 out of 10 applicants assessed to be living in unsuitable housing have been on the HHP housing register for less than 2 years (as assessed by looking at time on list points) supports this.

• The upturn in out-migration since the economic recession began to impact on the labour market is likely to have led to some reduction in the numbers seeking rehousing.

• More rigorous procedures by HHP in respect of the annual review of applications may have contributed to some decline in the number of applications remaining on the housing list following a change in housing circumstances.

• There is a local perception that applications outwith the Stornoway HMA tend to ebb and flow in relation to new build provision, in the sense that more applicants apply for rehousing when new development is planned or under construction and then numbers tend to fall back once the new development has been let. The number of applicants who allow their application to be cancelled only to re-apply some time later would tend to lend support to this view.

It is also important to stress that the time taken between registration and authorisation of applications means that there is some under-count of the numbers of households in need, especially outside the Stornoway HMA. The merged file contains 70 valid registered cases that had not been assigned any needs points in the file issued towards the end of May 2011. Around 3 out of 5 of these cases had applied before March 2011.

Discounting social renters

The Scottish Government’s approach assumes social renters will have their needs met through transfers or in-situ solutions within the social rented sector. It is therefore necessary to remove social renters from the calculation of current need. In the case of the Outer Hebrides this reduces the current housing need estimate to 404.

Requirement for in-situ solutions

Scottish Government guidance also recommends discounting existing households living in private sector housing for whom an in-situ solution would be appropriate. However the guidance allows considerable local discretion regarding what is meant by an in-situ definition. In 2006 and

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2009 it was agreed that a household should be judged to have a need that could be cost- effectively met in-situ if they were:

• An existing owner-occupier that had been awarded intermediate medical points and have no other need.

• An existing owner-occupier that had been awarded points because their present home has some disrepair and the applicant has no other need.

As noted above, only 8 applicants have points for disrepair. All 8 cases appeared to be private renters (including tied accommodation) or had additional needs such as social care related needs that would necessitate moving house. It was therefore concluded that none of these 8 applicants would have their housing needs resolved through an in-situ solution.

There were just 22 waiting list applicants’ (as opposed to transfer applicants) assigned medical points. Of these applicants all but 2 had points for other categories of need. Following discussion with Comhairle officers it was concluded that in-situ discount for medical need should be set to zero.

Assessing affordability of those on the housing register

The Scottish Government guidance recommends discounting households that have sufficient resources to improve their own living arrangements, although it is acknowledged that income data is not always accessible and in particular that income data in respect of homeless households is difficult to find.

As the HHP housing register includes some households living in private housing, it is possible that a small proportion could afford to buy. However, there is no reliable data on the gross annual incomes of applicants. SCORE data for the Outer Hebrides was not provided as part of the Datapack circulated by CHMA due to the lack of statistically valid data.

Evidence from the SHS indicates that the household incomes of new social tenants at the Scotland wide level are low. Around a third of new tenants have a net annual of income of between £10,000 and £15,000, a further third have an income of under £10,000. Only 1 in 10 new tenants had a net income of over £20,000. However these figures must be treated with much caution because they are based on small numbers. Likewise the SHCS findings for 2007/9 indicate that the net median income for social renters was £10,700.

SHS evidence indicates that the incomes of single person, single pensioner and lone parent households are concentrated in the lower end of the income distribution. Collectively these three household types account for the majority of waiting list applicants living in unsuitable housing. Figures published in by the Scottish Government (2010) through its review of Local Authority level proxy poverty data indicate that in 2007/8:

• 29% of single adults in Outer Hebrides had an income of less than £10,000 compared to 23% of single adults in Scotland.

• 24% of lone parents in Outer Hebrides had an income of less than £10,000 compared to just 4% of lone parents in Scotland.

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• 67% of single pensioners had an income of less than £10,000 compared to 55% of single pensioners in Scotland.

In the absence of evidence to the contrary, and taking into account the factors noted below, it was judged that the most appropriate solution would be to assume that zero percent of applicants can afford to buy on the open market. These factors were:

• The backlog need count is below the numbers estimated by Bramley in respect of 2001 2003 and 2005 (see below)

• The current housing market conditions, especially continuing credit constraints, that make it difficult to access mortgage finance

• The limited availability of private rented sector tenancies

To inform future updates to the housing need and demand assessment the Comhairle and HHP should explore what steps should be taken to improve the underlying evidence base. We appreciate this can be problematic as social landlords are not permitted to consider household income in the allocation of housing but more comprehensive SCORE returns would improve the underlying evidence base.

Converting current housing need estimate into a 10 year reduction quota

The estimate of current housing need enumerates the total number of households in need at a point in time. It is necessary to convert this ‘stock’ into a ‘flow’ measure. The proportion of those in current housing need that can be assisted in any given year is a policy decision. However, for the purposes of assessing need, the Scottish Government suggest current housing need should be assumed to be cleared within 10 years. Table A 2.5 summarises the calculation of current housing need and the resulting annual flow.

Table A 2.5 : Current housing need Outer Hebrides Stornoway HMA Rural HMA All households in need 476 325 151 Households in current need after 404 270 134 discounting social renters etc Current housing needs annual flow (10%) 40 27 13

A national study of affordable housing needs in Scotland in 2001 measuring housing need at local authority level was published in 2003 (Bramley et al 2003). This study has been followed by two update reports which provide housing needs estimates for 2003 and 2005 respectively. The findings from all three studies and the previous Newhaven Research Study are summarised in table A 2.6. In reviewing the available alternative estimates of the annual quota for current (or backlog) need it is important to note:

• The annual flow of current households in need and unable to purchase a suitable property in the period since 2001 has tended to ebb and flow over time but has remained at around 0.3% and 0.4% of the household population.

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• The backlog quota applied by Bramley is known to involve an element of double counting and therefore tend to produce higher estimates than housing register-based estimates in other local authority areas in Scotland.

• The Newhaven 2006 figures quoted in the published report and repeated in the table above are not directly comparable with the other estimates. This is because in 2006 the estimate was calculated inclusive of social renters in housing need (and transfer lettings on the supply side of the equation). We therefore re-ran the analysis excusive of social renters. This 2006 survey based of net current need fell to 396, which is equivalent to an annual backlog quota of 40, which is the same as suggested by the HHP register for 2011.

Table A 2.6: Alternative estimates of annual quota for current (backlog) need Bramley Bramley Bramley Newhaven Newhaven Newhaven Study 2001 2003 2005 2006* 2009 2011 Backlog quota 50 80 60 56 71 40 Source Bramley 2003,2004 and 2006 and Newhaven 2007&2009

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APPENDIX 3: OUTER HEBRIDES DIVERSITY and EQUALITY STRATEGY GROUP

Remit

The Diversity and Equality Steering Group (DESG) has been set up as a partnership of all Public Bodies, voluntary groups and community groups who have shared interests in Equality and Diversity which may be affected by the legislation.

Membership

The following organisations and functions are currently represented on the group:-

Improvement Forum (Independent Consultant with links to LGBT groups)

Lewis Access Panel

Harris Access Panel

MS Society

Crossreach (Supported Living project)

Scottish Health Council

Northern Constabulary

Third Sector Hebrides

Lews Castle College

NHS Western Isles Chaplaincy

NHS Western Isles PFPI staff

NHS Western Isles Dietetics service

NHS Western Isles Therapeutic services

NHS Western Isles Learning Disabilities Collaborative

Comhairle nan Eilean Siar –Equalities Staff

Comhairle nan Eilean Siar –Housing Strategy

Comhairle nan Eilean Siar –Organisational Development

Comhairle nan Eilean Siar – Community Partnerships

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