West London Housing Partnership response to Homes for London - the Draft London Housing Strategy Consultation

February 2014

This response is submitted on behalf of the West London Housing Partnership as an officer level response from the boroughs of Brent, Ealing, Harrow, Hillingdon, Hounslow and Kensington & Chelsea. It is intended to complement individual borough responses and concentrates on issues that are of concern to the WLHP boroughs as a group.

Housing London’s growing population Much is made in the strategy of the 1930s building boom when between 50,000 and 80,000 houses were built per year1. We now need to match this to resolve London’s current crisis.

Back in the 1930s there was massive public and private sector investment in housing and massive building of infrastructure – most of West London’s Metroland grew up in this period. London’s (and the UK’s) recovery from the depression was led by this building boom. New council houses were let to the skilled and semi- skilled working classes, but for poorer households in unskilled, insecure jobs, private renting was the only option – much of it in appalling condition. By 1939, despite a massive house building programme, London, with a population greater than it is even today, still had huge problems with overcrowding, slums and appalling housing conditions for the working and workless poor. Then and now, building more houses is only part of the solution to London’s housing problems.

Employment and growth The strategy points out the rapid net growth in London’s population is due to a fall in outward migration rather than an increase in inward migration. This in turn is likely to be linked to fewer employment opportunities outside London, perhaps illustrated by London’s increasing share of the UK’s GVA and by the recent Centre for Cities report which identified a ‘brain drain’ to London from other UK cities. One solution to London’s housing problem is to work with other UK cities to encourage growth in those cities.

Nevertheless, there is today a more or less universal consensus that London in particular needs more housing.

1 http://www.quandl.com/NBER/A02073

Working in Partnership: London Borough of Brent; London borough of Ealing; London Borough of Hammersmith & Fulham; London Borough of Harrow; London Borough of Hillingdon; London Borough of Hounslow: Royal Borough of Kensington and Chelsea Policies:

Increasing the supply of new homes

P1. The GLA will work with partners to deliver 420,000 homes over ten years. This will comprise:  220,000 for open market sale  50,000 for purpose-built long-term private rent  150,000 affordable homes to rent or buy

London is now growing again at the fastest ever rate. We need radical solutions to meet this growing demand. The re-emergence of London Boroughs as large developers following the HRA reforms will play a crucial role in responding to this challenge. Local Authorities have the planning powers, access to cheap borrowing and capital grants, and increasingly the political will to enter the arena as developers. Many councils are seeking to build all tenures to cross subsidise social rented housing.

P2. Developers will be encouraged to provide private rented homes on schemes with more than one phase, to deliver at least 5,000 homes per annum across London. These homes will be covenanted for long-term private rented usage for at least fifteen years

There is a good deal of support for encouraging the development of long term private rented accommodation. The development of a secure long term private rented sector should form a key plank of the London Housing market. Private renting should become a tenure of choice: longer term tenancies are part of this process.

P3. In the 2015-18 investment period, the GLA will seek to deliver 15,000 affordable homes per annum. This will comprise:  forty per cent for low cost home ownership  sixty per cent for Affordable Rent  half at a “capped” rent  half at a “discounted” rent, of which 36 per cent will be family-sized. These will be targeted at low income working households.

The split between shared ownership and homes for rent is consistent with existing policy. However, the split between capped and discounted rent is complex and difficult to explain to customers. Landlords need to be able to decide how best to manage the different rent levels.

Capped and discounted rents: Discounted rent may not be affordable to those in low paid , insecure or irregular ‘zero hours contract’ employment, particularly if they lose their job and become subject to the benefit cap. This is a very likely scenario for many people in insecure low paid jobs, and a worry for landlords concerned about their rental income. It is noted that the funding prospectus states that the framework agreements to be signed by boroughs are to include ‘confirmation that only

- 2 - households unaffected by the benefit cap will be nominated to discounted rent homes.’ Although we understand that there may be some flexibility around this, it needs to be made clear that Local Authorities can give no guarantees that nominated households will never be affected by the benefits cap. It is naïve in the extreme for the GLA to assume that this is possible.

Larger homes: The 36 per cent target for larger homes was originally for all affordable rented housing. The proposal to restrict the target just for higher discounted rented units effectively removes the requirement to build larger homes at the capped rent rate. This hits the most vulnerable families in social housing who are already subject to severe overcrowding. The family sized target needs to span all affordable housing in order to alleviate the current gridlock of families unable to move.

Local Authorities require the flexibility to use their nominations entitlements to meet priority needs, and to determine the affordability of rented housing and the size of units to be provided, taking account of local affordability and need issues. LAs have already done this with regard to the guidelines for rent levels provided in Tenancy Strategies to satisfy local affordability conditions.

P4. The number of First Steps homes delivered in the capital will be doubled by 2020, and doubled again by 2025, helping 250,000 Londoners.

Clarification is needed on how these targets will dovetail with the London Plan 60:40 ratio of affordable rented to shared ownership units. The target for affordable homes (both rented and shared ownership) that will be built by 2025 remains 150,000 as stated in Policy 1.

It is important to be clear about what this proposal is – i.e. changing the balance of the affordable units between rented and shared ownership - so that a proper discussion about its merits can take place. Implying that more people will be helped or more units built is disingenuous.

Improving design

P6. New homes should be built to Lifetime Homes standards, with at least ten per cent wheelchair accessible.

Wheelchair accessible properties should be built across the range of tenures and unit sizes.

Policies: Improving existing homes and estates

P10. No more than one per cent of homes in London should remain empty for more than six months.

- 3 - Greater detail on monitoring proposals for empty homes in the private rented and owner occupied sectors would be welcome. The current system of using council tax records is grossly inaccurate and no longer fit for purpose.

Parts of the West London sub region are highly attractive to international buyers and are sometimes marketed exclusively overseas. There is a risk that a large percentage of these properties will remain empty for most, if not all, of the year. This is a matter of growing concern and we would welcome proposals from the GLA on how best to ensure that the new owners either occupy or rent out these homes.

Supporting working Londoners

P12. The GLA will agree to port equity loans for households that fall within the income thresholds for First Steps.

Supported – but will providers cope with the admin involved?

P13. Intermediate homes funded by GLA programmes should be made available to all Londoners meeting the First Steps eligibility criteria, and should not be restricted by occupational definitions.

We agree that eligibility criteria should not be restricted by occupational definition. There is no longer a national key worker definition and most boroughs now prioritise according to their local conditions. Currently, ‘local conditions’ are given priority over ‘other eligible buyers’ and boroughs would like to maintain this in order to give ‘first refusal’ to their local working residents.

P14. Affordable housing providers will be encouraged to offer tenants the right to part- buy their home and the GLA will fund housing associations to do so.

We appreciate tenants’ aspirations to become home owners but would like to see this balanced with a 100 per cent ‘like for like’ replacement rate. Some LAs have seen a huge increase in RTB since the maximum discount was increased and are unable to afford replacement on a like for like basis. Properties being only ‘partly bought’ will also be taken out of the social rented pool and not replaced unless the GLA’s funding proposal will sufficiently enable providers to replace on a like for like basis in the borough in which the part-buy takes place. We would like to see the funding proposal details.

Full responsibility for the cost of repairs falls upon the homeowner even if they only own the smaller percentage. An apportionment of repair costs should be considered.

Supporting home ownership

P19. The Mayor will explore with the development and finance industry the potential options for an extension of Help to Buy to support development finance.

- 4 - Supporting this supply-side initiative in principle, we are aware that Help to Buy may be a contributing factor to inflating house prices and therefore urge that research into the potential effects are part of the option appraisal, as higher property prices will impact on the delivery of affordable housing targets. Given that supporting development finance would involve investing public funds, we would approach this with caution given the return would be dependent on the long term stability/growth of the London housing market.

Recognising the importance of the private rented sector

P20. The London Rental Standard will be implemented, with a target to accredit 100,000 landlords and agents by 2016.

This is supported.

P21. The GLA will work with boroughs to optimise enforcement action against rogue landlords and to understand the operation of the housing health and safety rating system.

Boroughs and the GLA need to do this within an overall strategy on the role and development of the private rented sector: they need to promote private renting as a long term tenure of choice for working Londoners but also recognise that poorer households are increasingly being excluded from access to decent housing and driven into the worst of the private rented sector. Boroughs are reporting an increase in the numbers of families living in non-self-contained private HMOs. The scourge of poor housing, (and related poor health) is not caused by rogue landlords: rogue landlords, like dry rot, will emerge and flourish if conditions are right. Ultimately it’s a waste of money to treat the dry rot if you don’t make the building weatherproof. If there is a market for poor housing because people have no choice but to rent it, then there will be landlords who will supply it.

P22. The GLA will explore how longer tenancies can be promoted, within the framework of the assured shorthold tenancy regime.

This is supported.

P24. Major employers in the capital will be encouraged to invest in subsidised housing products to reduce the costs of renting for their employees.

Whilst we support the idea of encouraging employers to invest in their own subsidised housing products, we would caution against the large scale development of ‘tied’ accommodation. People need housing that is secure regardless of who their employer is. Any restriction to employment mobility would be undesirable.

Rethinking affordable housing allocations

- 5 - P25. Local authorities and other affordable housing providers should give greater priority to working households for lettings.

Most allocation policies award additional priority for working households but not overriding priority. An accurate idea of demand from this group may help shape policy in this area.

Working single people and childless couples do not get priority for housing. This means that filling all the one bed units built under the affordable housing model is problematic for housing associations in particular (Local Authorities are increasingly nominating single parents with just one child due to the pressure on temporary accommodation).

Certainly some housing associations would welcome a scheme that gave working single people priority for affordable rented one bedroom units (previously known as intermediate rented accommodation). Intermediate rented accommodation can help create sustainable communities as it can mitigate against concentrations of overcrowded and highly vulnerable households.

Facilitating mobility

P27. For Affordable Rented homes funded through GLA programmes, five to ten per cent will be let on a pan-London basis and ten per cent will be retained for nominations by the registered provider. This will replace the current system of sub-regional nominations.

The agreement to participate in this arrangement is tied to the framework agreements that boroughs are expected to sign in March, before the details of any pan-London system for new build is agreed. Boroughs will want to see the detail of the proposals before signing up to it.

Equalisation It should be noted that the purpose of the existing sub regional nominations scheme was not to meet mobility needs but rather to help meet the housing needs of boroughs with high housing demand. If the purpose of the new system is to help areas with high demand then there should, in theory, be no equalisation process (as this would negate the purpose). The problem will be that some boroughs may not support the system if there is no equalisation process.

Exclusions The existing sub regional nominations schemes have a number of exclusions:  supported housing  LA new build, or schemes where the borough has put in the land  regen schemes – include net gain only We would suggest that these are also excluded from the new scheme.

5-10% to Pan-London

- 6 - The mayor wants a proportion of each and every development, however small, to be put into the pan-London scheme. In the past West London has calculated noms owed on a whole programme basis (as this was administratively easier). The administrative burden of giving up 5 or 10% of units on every single new scheme could be considerable and may result in increased void times.

10% to the developing RP Registered providers will be able to retain ten per cent of new build lettings to assist their housing management functions. Currently most West London boroughs get 100% of first lets on new build. RPs generally get 25% of relets (50% in some cases).

In short, Local Authorities would not be in favour of any agreements that may reduce their ability to access affordable housing for their residents, particularly given the desirability of the sub region, which may lead to an imbalance with more people wanting to move here.

P28. The Mayor will explore the expansion of the Housing Moves and Seaside & Country Homes schemes for under-occupiers and those in employment.

We note that reducing the age limit for SCH is currently under consideration and would support this.

The GLA should expand Housing Moves to allow existing tenants to advertise their own properties for mutual exchange on the system. If it caught on, this would massively increase the number of properties available to tenants.

Towards a London rental policy

P29. Private sector landlords should consider the use of longer tenancies, tied in with greater certainty over rents, where this is viable.

We support this aspiration and are interested to hear the GLA’s plans in this respect.

Meeting a range of housing needs

P34. The level of severe overcrowding in affordable rented housing should be halved by 2016.

West London boroughs support this aspiration and would like to see more details. Many Local Authorities in West London now restrict priority on their waiting lists to households that are severely overcrowded (ie lacking 2 bedrooms against the bedroom standard) in an effort to reduce severe overcrowding.

It should be flagged up however that if we fail to deal with overcrowding, severe overcrowding may increase in the longer term. The 50% reduction in the target to build more 3 bed homes will also exacerbate the problem in the longer term.

- 7 - P35. The Mayor will work with boroughs and other partners to ensure no one new to the streets sleeps rough for a second night and no-one lives on the streets of London.

It is noted that the detail in respect of homelessness is very limited in this strategy.

P36. Boroughs should continue to make appropriate use of mechanisms such as NOTIFY and the pan-London inter-borough accommodation agreement when placing homeless households in out of borough accommodation.

Placements by other departments should also be recorded under the IBAA. Ensuring the system works satisfactorily for the potential increase in out of London placements will be necessary.

Financing housing delivery

P37. The GLA will lobby government for changes to housing finance arrangements in the capital. This will include:  the relaxation of local authority borrowing rules for housing purposes  the devolution of the full suite of property taxes to London Government  exploratory work on how SDLT can be made more equitable and efficient

We support these proposals and in particular agree with the relaxation of the debt cap as some Authorities are close to or have reached their limit.

P38. The GLA will make greater use of equity investment or loan guarantees in future spending rounds, where it is able to recover and reinvest its original investment.

A range of options to get schemes brought forward and moving is welcome.

P39. The GLA will work with partners to explore the concept of the London Housing Bank model and will publish a discussion paper in 2014.

We look forward to seeing more detail on this.

Bringing land forward for development

P42. The GLA will work with boroughs to review estate regeneration appraisals to bring forward development. This could include creating a long-term investment portfolio.

This is a very good idea.

P43. The Mayor will prioritise efforts and investment to bring London’s major Opportunity Areas forward for development. Within this, up to ten Housing Zones could be identified.

This idea has great potential and is fully supported.

- 8 - P46. The GLA will act as a conduit for all public sector land in London, and will encourage public land holders to use the structures the GLA has in place, such as the LDP and its public land register, to bring forward landholdings.

LAs and the GLA should be looking to purchase publicly owned land at current use value from other public bodies, and develop it for mixed tenure residential use, using the increased value to cross subsidise affordable housing.

P48. The potential to manage the release of surplus industrial land around transport nodes for higher density housing will be explored, taking into account London Plan policies.

Consideration should be given by Local Authorities and the GLA, to capturing the change of use value in such land for investment in affordable housing.

Increasing development capacity

P49. The GLA will encourage institutional investment in London’s PRS, including through its own landholdings.

Institutional investors are now increasingly interested in the PRS in London as the yields are now more attractive compared to other areas. Any encouragement through use of the GLA’s own landholdings should be linked to encouraging larger units, longer term tenancies and reasonable rents that are affordable to middle income families.

P50. A programme to encourage and support small and medium-sized builders to enter the London market will be developed, including for custom and self-build.

We fully support this idea.

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