FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
A DISCUSSION DOCUMENT FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
A DISCUSSION DOCUMENT
The Scottish Government, Edinburgh 2007 © Crown copyright 2007
ISBN: 978-0-7559-5538-1
The Scottish Government St Andrew’s House Edinburgh EH1 3DG
Produced for the Scottish Government by RR Donnelley B53082 10/07
Published by the Scottish Government, October 2007
Further copies are available from Blackwell’s Bookshop 53 South Bridge Edinburgh EH1 1YS
The text pages of this document are printed on recycled paper and are 100% recyclable CONTENTS
Foreword by Nicola Sturgeon, MSP, Deputy First Minister and Cabinet Secretary for Health and Wellbeing 2
Executive Summary 4
Introduction: Scotland’s Housing 6
1. The Challenge of Housing Supply 8
2. Our Priorities for Action on Housing Supply 12
3. Assistance for First-Time Buyers 20
4. The Private Rented Sector 26
5. Social Housing – More Than Just an Aspiration? 34
6. Our Proposals for Stimulating Innovation and Choice in Social Housing 42
7.Tenants – Protecting and Promoting Interests 52
Annex A – Summary of Questions 58
Annex B – The Scottish Government Consultation Process 60 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
FOREWORD Our wellbeing, as individuals and families and as a society, depends heavily on our ability to find a decent house that we can afford in a place where we want to live.
Far too many people in Scotland are unable to satisfy this basic aspiration. For some, this means being unable to become home owners. For others, it means living in houses that do not meet their needs, or in neighbourhoods that do not allow them to take advantage of opportunities in life – for work, education, leisure – that most of us take for granted. And for others again, it means failing to find any satisfactory form of settled accommodation.
2 FOREWORD
This state of affairs is at odds with our vision We also want to reverse years of decline that of a country where sustainable growth offers local authorities have suffered as social opportunities for everyone to flourish. Indeed, landlords. We believe that they have a vital role to it puts that growth at risk by obstructing labour play in working alongside registered social mobility. It is at odds too with the commitment landlords to meet demand for social housing. To that we have made as a country to tackle support them in the development of this role, we homelessness. As Scotland’s Government, we are propose offering incentives to them to build new determined to end it by creating a housing system council houses. And we propose safeguarding all that meets communities’ needs for good quality, new social housing by ending the right to buy for energy efficient houses that people can afford. new properties built by local authorities and registered social landlords. In this discussion document, we describe our vision of a housing system that delivers more Our proposals are ambitious and radical. They houses: which meets higher environmental need to be if they are to achieve the improvements standards; offers more choice of housing that is in supply, quality and choice of Scotland’s affordable; contributes to the creation of housing that we want to see. I hope that they will sustainable mixed communities, and achieves stimulate a debate about housing and how it better value for public expenditure. should be contributing to the prosperous and sustainable future that Scotland deserves. At the heart of the document is our belief that we must and can improve the supply of all types of new housing. For some time past, we have built 25,000 houses a year – significantly less than has been required to moderate growth in house prices. By the middle of the next decade, we want to see NICOLA STURGEON, MSP that number increase to 35,000 houses a year. Deputy First Minister and Cabinet Secretary for Health and Wellbeing Most of this housing will be for owner-occupation; some of it low cost home ownership that we will support. But, many people need or prefer to rent and the housing system must provide a choice of accommodation that meets their needs.
Improving supply and choice across all tenures will not be easy. It will place demands on developers, private landlords and registered social landlords. Above all, it will require local authorities, as the statutory planning authorities, to deliver the land supply necessary to support more house building. We want to encourage them to discharge this duty by co-operating at a regional level to meet the need for housing across the country as effectively as possible.
3 EXECUTIVE SUMMARY
Our vision for the future of housing in Scotland > Launching a Scottish Sustainable has four elements: Communities Initiative to encourage the development of new, sustainable communities > An increased supply of housing across all of varying sizes that may be much expanded, tenures, all of which is delivered on the basis or new, stand-alone settlements that are of higher environmental and design standards. sympathetic to Scotland’s landscape and > More choice of housing that those on lower environment. incomes can afford. > Establishing a Low-cost Initiative for First > Housing developments that contribute to the Time Buyers (LIFT) to broaden the range of creation of sustainable, mixed communities. financial products and other forms of assistance available to help people achieve > Social housing that provides better value for and sustain home ownership. public expenditure. > Setting an agenda for the private rented We propose to realise that vision by: sector that encourages the sector to flourish and play a full role in meeting housing need in > Challenging Scotland’s local authorities, urban and rural areas through the provision of developers and builders to increase the rate of good quality accommodation for private rent. new housing supply in Scotland to at least 35,000 a year by the middle of the next > Improving the choice available to homeless decade; and encouraging local authorities to people through measures that encourage discharge their role in meeting that challenge private landlords to offer accommodation by co-operating at a regional level to set and suitable for those presenting as homeless. meet realistic housing supply targets through their local housing strategies.
4 GOVERNMENT SUMMARY
> Heralding a new, positive role for local These proposals are intended to secure major authorities as social landlords by offering improvements in the supply and quality of new them incentives to build new council houses. housing in Scotland, enabling people across the country to meet their housing needs and > Safeguarding the future of all new social aspirations. Their scope and variety highlight the housing – whether built by local authorities or scale of the housing challenge facing us as a housing associations – by ending the Right to country. We will need help from the full range of Buy for new social housing properties (except housing stakeholders if we are to turn them into in tightly defined circumstances). sound policies that will enable us to meet the > Improving the supply of new housing challenge. We hope that home owners, tenants, association houses by awarding subsidies to those in housing need – and the bodies associations on a strategic and competitive representing these groups – along with landlords basis. and developers will take the opportunity to shape Scotland’s housing policy by responding > Improving the choice and supply of affordable to this document. homes, and the contribution they can make to creating mixed communities, through the We are particularly concerned that the policies introduction of incentives to build houses for we develop in light of responses from stakeholders mid-market rent and of measures to enable and the public are relevant to the needs of all local authorities and housing associations to sections of Scottish society. We are determined adjust the mix of their stock. to drive forward the integration of equality into > Monitoring local authorities’ and housing all our policies and spending plans, and to associations’ progress in complying with the support the mainstreaming of the culture of Scottish Housing Quality Standard; and being equality into all aspects of the service planning prepared to consider support for local and delivery of other organisations. We would authorities that choose to retain their stock therefore welcome comments and advice on the and create Arms Length Management potential impacts for particular groups of the Organisations to achieve compliance proposals in this document to ensure that our with the Standard. housing policies evolve in a way which will contribute to the creation of an open, just and > Modernising the regulation of social housing inclusive Scotland. through the creation of a new regulatory function that is focussed on protecting and promoting the interests of current and future tenants, that reduces the burden of regulation and inspection on local authorities and housing associations, and that exercises its powers independently of Ministers.
5 INTRODUCTION
SCOTLAND’S HOUSING occupiers, a far smaller share than the social rented sector. By 2005, however, owner The pattern of tenure of Scotland’s housing stock occupation was the tenure of 67% of the housing has changed markedly over the last 30 years. stock. Although this pattern of change is seen across most of Europe, the change has been most The last quarter of a century has seen a dramatic in Scotland, where the level of owner- transformation in tenure. In 1982, as chart 1 occupation has risen by 31% since 1982. shows, only a minority of households were owner
CHART 1: TENURE CHANGE WITHIN SCOTLAND'S HOUSING STOCK, 1982-2005
100% 90%
STOCK 80%
ING 70%
OUS 60% 50% AL H 40% TOT 30% OF 20% 10% SHARE 0% 1982 1984 1986 1988 1990 1992 1994 1996 1998 20002002 2004 YEAR Owner Occupied Private Rented Housing Associations / RSLs Local Authority
Source: Scottish Government, Communities Analytical Services, Housing Statistics
6 Our research on housing aspirations suggests They also include the agenda set by the Housing that these changes are mirrored by a change in (Scotland) Act 2006, the introduction of the cultural attitudes, with ownership identified as Scottish Housing Quality Standard (SHQS) and the preferred tenure by 86% of respondents.1 related measures to tackle the chronic disrepair Our housing policies must recognise and adapt in Scotland’s housing stock. We will take forward to these changes and the aspirations that they and build on these reforms, particularly in relation have engendered. That means developing policies to the energy efficiency of the housing stock and that support home ownership where it is the need for disability adaptations to enable reasonable. But, it also means ensuring that people to live independently in their own homes. those for whom ownership is not practicable or attractive have access to a good choice of houses However, the focus in this paper is on increasing for rent in the social and private rented sectors. the supply of good quality housing at prices which people can afford. Our proposals signal a Achieving a good mix in the housing options major shift in housing policy from the agenda of available is important in providing choices for recent years. They place a new emphasis on people. And energy efficient, high quality housing increasing overall housing supply, to achieve a is vital for creating sustainable places that promote fairer system of housing, and on driving up health and wellbeing in Scotland and that make environmental standards, to meet the challenges Scotland a more attractive place in which to work of climate change and sustainable development. and invest. It also forms a key part of our global and local contribution on climate change. While ensuring the long-term financial sustainability of the housing association Our first challenge, however, is to improve supply movement, our proposals aim to strengthen the as a whole by addressing its failure to increase role of local authorities both through the sufficiently in response to rising house prices. strategic management of housing in their areas For that reason, this discussion document begins and through a renaissance of council-house with a summary of housing market developments building. And they signal a new, positive attitude and an analysis of the importance of increasing to the private rented sector. housing supply as a means of improving affordability in the medium term. This sets the The agenda set out here is a challenging one, context for the proposals which follow for for government – local and national – in setting increasing overall housing supply and supporting the context for change, and for house-builders, first-time buyers, for fostering the development housing associations, private landlords and the of the private rented sector and reinvigorating many other players in the housing system. social rented housing. Success cannot be delivered by central government alone, but through these proposals The paper does not seek to address every aspect we will lay the foundations upon which Scottish of housing policy. The first eight years of housing can grow and flourish. devolution have seen many valuable reforms directed at the quality of housing – in the way it is managed, in the rights of tenants and owners and in the physical condition of the stock. These include the Scottish homelessness legislation which has been rightly applauded for its vision and ambition and a range of measures to address fuel poverty.
1 Clegg, S. et al, Housing Aspirations, Scottish Government Social Research, 2007.
7 CHAPTER ONE: THE CHALLENGE OF HOUSING SUPPLY
An adequate supply of decent housing at prices These phenomena are common to many people can afford is essential for the health and countries. People are living longer and in smaller well-being of individuals and communities. It is households. But what is conspicuous about also a key foundation for the sustainable Scotland and other parts of the UK is the failure economic growth necessary to deliver a of the market to respond to increased demand.2 wealthier, fairer society. Recent sustained house price increases have not been met with any significant increase in the In Scotland, despite national rates of building far overall supply of new housing. ahead of those in England, the housing system is under severe pressure in many areas. The demand In June this year, we published our Scottish for houses to buy, driven by demographic, Housing Market Review. The review highlighted economic and financial factors, has increased, the unprecedented growth in Scottish house driving up house price inflation and excluding prices since 2002 (see chart 2). It identified many households from the market. Unmet possible causes of this and set out the demand for home ownership has aggravated consequences for existing and aspiring pressures on social housing in some areas. Scottish homeowners.
2 Swank, J., Kanes, J., and Tieman, A., ‘The housing ladder, taxation and borrowing constraints’, Netherlands Central Bank, 2002.
8 CHART 2: HOUSE PRICES, SCOTLAND AND UK, 1982-2007
250
200
150
100 5 PRICES (£000s)
200 50
0 2 4 6 8 0 2 4 6 2 4 7 Q2 198 198 198 199 199 199 198 1998 200 199 200 2000 2006 YEAR 200 UK Scotland Trendline (Scotland 1969 - 2002)
Source: Scottish Government analysis of DCLG live tables 590, 592 and HM Treasury GDP deflators.
In the 1970s, 1980s and 1990s, Scottish house Changes in what might be termed “the geography prices were much more stable than in the rest of of affordability” across Scotland are illustrated in the UK. However, from 2002, Scottish real prices chart 3. Whilst the increase in real price is most began to diverge from their historical trend and, pronounced in Edinburgh, all parts of Scotland, by 2006, average Scottish house prices were 31% including rural areas, have experienced real price above the trend. growth well above earnings growth. National average house price to income ratios rose by 23% between 2002 and 2006.
9 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
CHART 3: HOUSING AFFORDABILITY – HOUSE PRICE-TO-INCOME RATIO
House Price to Income Ratio 2002 No Income Data <= 2 2.01 - 2.49 2.50 - 2.99 3 - 3.49 3.50 - 3.99 >= 4
House Price to Income Ratio 2006 No Income Data <= 2 2.01 - 2.49 2.50 - 2.99 3 - 3.49 3.50 - 3.99 > = 4
Source: Registers of Scotland and ONS Annual Survey of Hours and Earnings (ASHE) data.
10 CHAPTER ONE
While house price growth has now begun to Over the long term, however, increasing the moderate, the relatively high level of house capacity of the housing market to supply more prices means that individuals and families now houses across all tenures, particularly in market face greater obstacles in achieving their aspiration hot spots, is the most effective way to sustain of home ownership. As affordability in the market improved affordability. Yet increases in house- sector has worsened, pressure has increased on building cannot be achieved by government alone. an already stretched and unreformed social The wider financial climate and local market housing sector. conditions can have a significant impact on the ability or willingness of developers to commit to The result is that, in some areas, the aims of building in a particular area. addressing need, mixing communities and offering choice are increasingly difficult to meet However, a housing system that is more through housing allocations policies.3 There is responsive to demand would dampen house price also a wider cost for society and the economy. inflation and reduce housing market volatility, so Excessive house prices distort tenure choices, improving affordability and overall financial and limit labour mobility, reduce Scotland’s economic stability. competitiveness and skew wealth towards the top of the housing ladder. Scotland would be The planning system has struggled to respond to wealthier and fairer if these market inefficiencies demand, failing to enable an acceleration in could be addressed. housing supply. While the implementation of the Planning etc (Scotland) Act 2006 will help There are no quick solutions to these problems. improve the responsiveness of housing supply in Measures to help first-time buyers have a role, as the longer term, there is a pressing need for described in chapter 3. And we must ensure that measures in the short term to increase the we make best use of the existing stock, including supply of housing land and accelerate the through measures to bring empty properties back delivery of new homes. into use as described in chapter 4. There is also a clear need for better integration of housing and related strategies at the local level, not least to ensure that actions within housing strategies contribute to meeting the health and social care needs of an ageing population.
3 Britain, A. et al, Tensions between Allocations Policy and Practice, Scottish Government Social Research, 2007.
11 CHAPTER TWO: OUR PRIORITIES FOR ACTION ON HOUSING SUPPLY
As a Government we will set a national political local and regional housing strategy, planning context which is strongly supportive of house and delivery framework. building. As part of this we propose to set a national aspirational goal for a significant BOOSTING HOUSING SUPPLY expansion in housing supply. Chart 4 shows that the house-building rate in Scotland has been relatively steady at around Increased housing supply must be delivered on 25,000 a year for the whole of this decade, with the basis of higher environmental and design no significant response to increased demand. standards that create sustainable homes in House prices were 72% higher in 2006 than in places where people wish to live and work. While 2002, but the level of new build increased by new house building which promotes sustainable only 2% over the same period. communities will usually be within and around existing settlements, Scotland’s pressing housing We believe that the rate of new house-building supply needs are such that it is also time to can, and must, increase if Scotland’s housing encourage much expanded or new, stand-alone needs are to be met. We are alreadytakingaction settlements in the right locations. toimprovetheresponsiveness of housing supply to house price growth. This includes action to Since action will be needed at all levels of unblock developments in the pipeline through the government to deliver these aspirations, we will Housing Supply Task Force and other initiatives establish a new relationship with local government described in this chapter. and other partners. We will also look to local authorities to work closely with their neighbouring authorities and their partners to establish regional targets for housing supply and to develop the
12 CHART 4: NEW HOUSE BUILDING IN SCOTLAND SINCE 1965
50000 45000 40000 35000
NS 30000 25000 PLETIO
COM 20000 15000 10000 5000 0 1965 1970 1975 1980 1985 1990 1995 20002005 Public Sector & Housing Association Private Sector Total
Source: Scottish Government, Communities Analytical Services, Housing Statistics
Step change improvements will take longer to housing estates which do not contribute to achieve. In the Scottish Housing Market Review meeting our aim of sustainable mixed we presented our initial analysis demonstrating communities. We will expect plans for urban the improvements in affordability in the medium expansion in development plans to form part of term that could be generated by increasing the long-term settlement strategies rather than supply of new housing. We are now commissioning approaching housing land release on a field by an economic model of the housing market that field basis. Proposals for the release of land will allow us to strengthen our forecasts of currently designated as green belt can be future affordability. considered as part of that wider approach, the aim of which is to provide clarity and certainty On the basis of our current analysis, we believe about the long term direction and scale of that increasing the rate of new supply to at least growth. Confidence in green belts can only be 35,000 per year by the middle of the next decade sustained against the background of a long-term is both achievable and necessary if we are to settlement strategy. reverse declining affordability. At 10,000 more houses per year, that would raise house-building The location of new housing development is critical, in Scotland to levels not seen since the mid as is layout and design. We do not intend to repeat 1970s and put the per-capita rate of building far the mistakes of the past with large, single-tenure ahead of that for which the UK Government is housing estates, poorly connected to jobs and aiming in England. services or dependent on the private car for those connections and designed in a way that What is most critical, of course, is not just the does not foster a sense of identity or community. stated ambition at national level, but that enough houses are built of the right type and in the right Good design is about more than just architecture places. Therefore we will support local authorities and the aesthetics of individual buildings. Some to co-operate regionally in the setting of realistic of our finest conservation areas are not necessarily housing targets through their local housing strategies. defined by great individual buildings but by the spaces they enclose. The recent report by The We also recognise the need to avoid unmanaged, Prince’s Foundation provides a clear indication of unplanned growth and to avoid the creation of the characteristics to which we should aspire to
13 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
in order to create sustainable places.4 These The Prince’s Foundation highlights the impact include the integration rather than separation of that the urban fabric and layout of places can land use to provide opportunities for a range of have on environmental, social and economic work and lifestyle choices; mixed tenure and sustainability – the three elements of what is house types; and walkable neighbourhoods with termed ‘sustainable urbanism’. That research well integrated and well managed open space. has suggested that ‘sustainable urbanism’ can enhance development value and may The starting point for this approach is an even potentially enhance land value.5 understanding of context and place. We want to see the conservation areas of tomorrow, places Scotland already leads the UK in the energy and of enduring quality which should reflect local accessibility standards set by building regulations traditions in their design and layout while and in the planning policy that asks for low and embracing the challenges of higher energy zero carbon equipment in new developments. It is efficiency. We believe that investing in quality also evident from chart 5 that carbon emissions will bring long term social, economic and from the Scottish housing stock are reducing. We environmental benefits – in short, sustainable need to go further to meet the challenge of climate and successful settlements. change. Housing must play a major role in achieving our ambitious targets for reducing carbon QUESTIONS dioxideemissions,giventhathousingisasignificant user of energy and producer of emissions. 1. Do you agree that aiming to increase the rate of new housing supply in Scotland to at least The Minister for Transport, Infrastructure and 35,000 a year by the middle of the next decade Climate Change has appointed energy specialists, is a sensible and realistic ambition, and that designers, developers and others to form an this will help set a necessary political context Expert Panel to advise Ministers on a Low Carbon for acceleration in housing supply? Building Standards Strategy for Scotland. One aim of that strategy is to move construction of new 2. Do you agree that, to give practical effect buildings, including housing, towards the to the ambition, local authorities should rigorous energy performance levels imposed in co-operate regionally in setting realistic Scandinavia, thereby allowing householders to housing targets for housing market areas, reduce their energy use and carbon dioxide and in enabling the delivery of these targets? emissions, as well as their fuel bills. If so, what arrangements should be put in place to support and provide incentives for Another objective is to provide a route map to the such co-operation between relevant local goal of zero-carbon buildings. Such a route map authorities? will show the future direction and stages for progressive enhancements to the energy standards HIGHER ENVIRONMENTAL STANDARDS in Scottish building regulations. This will offer the house building industry a degree of certainty Our proposals for a significant expansion of that can support effective business and housing supply will, of course, be subject to investment planning as progress is made a comprehensive strategic environmental towards zero-carbon homes. assessment. It is vital they are delivered on the basis of much higher environmental and design Other new measures and incentives will standards than we have seen in the past. We will contribute to increase the focus of housing be building the housing and communities of the funders, providers and consumers on the energy future – and we owe it to future generations to efficiency of new housing. From 2008, Energy make sure these are sustainable. Performance Certificates, which will provide
4 The Prince’s Foundation, Valuing Sustainable Urbanism: A report measuring and valuing new approaches to residentially-led mixed use growth, 2007. 5 The Prince’s Foundation, Valuing Sustainable Urbanism: A report measuring and valuing new approaches to residentially-led mixed use growth, 2007.
14 CHAPTER TWO
CHART 5: AVERAGE CARBON DIOXIDE EMISSIONS PER HOUSEHOLD
12 S
ION 10 r)
EMISS 8 yea DE es/
OXI 6 DI (tonn
BON 4 CAR 2
0 All tenures Owner occupied Local Authority Housing Associations/ Private rented RSLs 1996 2002 2004/05
Source: Scottish House Condition Survey important information on the carbon and energy STRENGTHENING THE HOUSING AND emission characteristics of every new home on PLANNING DELIVERY FRAMEWORK the market, will be provided to all homebuyers. For the longer term, high quality strategic Our planning policies will help to create planning for housing is crucial at all levels – sustainable communities by promoting more national, regional and local. We will take action to environmentally sustainable transport, recycling further the integration of land-use planning and previously developed land, better siting and housing strategy through a strengthened design of new buildings, and by the continued national policy framework, including: development of renewable energy. > new guidance for local authorities on the strategic assessment of housing need and In order to deliver low or zero carbon homes, it markets to inform both Local Housing will be necessary to increase the provision of Strategies (LHS) and development plans; micro-generation, alongside much better energy efficiency standards. Following consultation, our > further guidance setting out how local planning policies now require that all developments authorities should play a greater strategic role on larger sites incorporate zero and low-carbon in shaping the housing system in their areas equipment, contributing to carbon dioxide through their LHS in a way that is consistent emission reductions over and above those with the move to a single outcome agreement achieved through building regulations. between national and local government; > the National Planning Framework, to be put in HOMES FOR LIFE place next year, which will set the national While action to tackle climate change is key, spatial perspective for housing in the future; sustainability also requires homes that can > the revision by 2008 of Scottish Planning accommodate the needs of an ageing and Policy 3 (SPP3) which will strengthen national diverse population. The new Scottish building planning policy for housing to ensure the regulations include requirements that will make provision of sufficient land for housing and to homes more accessible and cheaper to adapt in support the creation of quality residential the future. environments; and
15 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
> the outcome of a current review of planning need and market assessments. We will issue new agreements and their operation in facilitating guidance to local authorities to assist them to housing development. undertake such assessments in order to build a stronger and more strategic evidence base. It is clear that if we are to make a step change in housing supply, it must be based on effective Working at this strategic level should enable local strategic planning. This means that housing and government to take a broader view of the options planning policies will need to be grounded in a for meeting housing need and to specify robust and credible understanding of housing requirements for the mix of affordable housing – markets. They must also be effectively linked to including social housing, housing for mid-market the delivery of housing through planning of land rent and low cost home ownership – that is supply, practical land assembly and investment. needed to create sustainable communities and support economic growth. The introduction of LHS following the Housing (Scotland) Act 2001, has been a lever for economic In some cases, development of a strategic and social change, with an important shift of focus approach to housing will necessitate working onto the working of housing markets. Moving corporately within a single local authority and forward, it will be important to ensure that the with partners to develop a robust understanding quantification in the LHS of overall housing of need in an area and to identify a strategic requirements and, within that, of affordable housing approach to addressing housing supply and need, is reflected both in land-use development need. In most cases, however, it will mean plans and in the planning of affordable housing working in partnership with two or more local investment. The introduction this year of authorities to devise a strategic solution to need Strategic Housing Investment Plans, as part of across a wider area. This builds on current the LHS, will sharpen the focus in this regard. thinking and best practice in Scotland.8
It is important to develop this approach still further. We will consider the need for expert support for When people look for housing, particularly in the local authorities in strategic planning for housing. private sector,they do not all confine their searches This could take the form of a specialist national to the immediate locality. House prices and rents function to bring a long-term perspective on the may be more affordable in a neighbouring area. operation of regional housing markets in Scotland, to influence both market and non-market sectors For social housing, recent research suggests that through the provision of strategic information on cross-boundary Choice-Based Letting schemes trends and requirements, and to provide advice in England have successfully increased the to support local government in the drive to opportunities for, and the incidence of, moves improve the functioning of housing markets. across traditional administrative boundaries.6 Except in some large rural local authority areas, QUESTION the assessment of housing need – and the 3. Is there a role for a specialist national means of meeting it – should therefore take function to provide expert support for local account of wider housing market areas and not authorities in strategic planning for housing? just of the position within a particular local What expertise do you think this function authority boundary.7 would require? The key element in this approach will still be the LHS, but a much stronger emphasis needs to be placed on collaboration across local authority boundaries to produce robust and credible housing
6 Pawson, H. et al, Monitoring the Longer-Term Impact of Choice-Based Lettings, Department of Communities and Local Government, UK Government, 2006. 7 O’Sullivan, T. et al, Local Housing System Analysis Good Practice Guide, Communities Scotland, 2004, defined housing market areas as ‘the geographical area within which most people both live and work and where most people moving home (without changing job) will have sought a house’. 8 Newhaven Research, Local Housing Strategies: Two Steps Forward?, Chartered Institute of Housing in Scotland, 2005, found that there was a developing 16 consensus about the need for cross-boundary liaison and co-operation between local authorities. CHAPTER TWO
ACCELERATING LAND SUPPLY measures, and to support accelerated land supply balanced by improved design and Scottish Planning Policy 3: Planning for Housing environmental protection. (SPP3) is under review with the aim of facilitating new land supply for development and making The Task Force has begun its work and will best use of existing allocations, especially in examine what is preventing the building of more areas facing housing pressures. The review will homes in a number of areas across Scotland. In consider ways in which the link between the addition, it will examine a number of themes – assessment of housing demand and need and including surplus public sector land, community the planning and management processes can be engagement and infrastructure constraints – to strengthened and broadened. ensure that action is taken where this can remove blockages that are preventing more There is a need for a more consistent approach to homes being built where they are needed. assessments of housing requirements based on a clear process and an improved methodology. The new guidance on undertaking strategic ENHANCING THE GOVERNMENT’S STRATEGIC housing market assessments should help local CAPACITY government develop this consistency. There is We have announced to Parliament our plans to also currently insufficient integration between follow through on our commitment to abolish local housing strategies and development plans. Communities Scotland. We intend to bring The review will seek to address this, as well as directly into central Government many of the links with the community planning process. Agency’s functions where they will be directly accountable to Ministers. This will enhance our The review will also provide greater clarity about strategic capacity to drive through many of the the link between identified housing requirements housing reforms outlined in this paper. and the release of land to meet them. In areas where there are particular pressures on housing We will ensure that through the integration of supply, there is a need to encourage the quicker these functions into Government, we add value to release of land for housing and the more effective the support we are providing to the housing useofexistinghousinglandallocations.Importantly, sector. But we are clear that success in the review will consider how a presumption could implementing the improvements to the housing be introduced that will enable planningpermission system set out in this paper will require effective to be granted for developments in advance of land joint working with, and respect for, the roles of being designated in a development plan in other key partners, whether local authorities, the circumstances where a demonstrable shortfall social housing sector, developers or lenders. of housing exists. Abolishing Communities Scotland will provide those partners with a single Governmental player UNBLOCKING DEVELOPMENTS IN THE that is committed to maintaining and developing PIPELINE close partnership working. We have established the Housing Supply Task We have also confirmed to Parliament that Force with the specific purpose of tackling the following the abolition of Communities Scotland impediments that are hampering the supply of all we will maintain a separate housing regulatory types of housing, including both market and function. Our proposals for modernising the affordable housing, in the short term as well as regulatory function are outlined at chapter 7. considering measures for the longer term. It is chaired by the Minister for Communities and We are planning to implement these changes to Sport and is intended to drive change and Communities Scotland by Spring 2008. innovation in housing delivery, to ensure coherence in planning and housing policy
17 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
QUESTION NEW SETTLEMENTS 4. Even when land has planning permission For sustainability and economic reasons, new there are still blockages that prevent new house-building should be within and around housing being built. What additional existing towns, cities and villages wherever arrangements would, or could, accelerate possible, making best use of brownfield sites and development on land with planning existing infrastructure and thus minimising the permissions to help ensure that future need for commuting. But Scotland’s housing housing supply targets are met? supply needs are such that expanded or new, stand-alone settlements may well be a part HOUSING IN RURAL SCOTLAND of the solution in some areas. One issue which has already been identified by the Where new settlements are part of the solution, Task Force as an early priority for consideration they provide an opportunity to effect a step change is the importance to the strength of our rural in the quality and environmental standards of economy of appropriate, affordable housing and new communities, both within and outwith the particular housing difficulties facing many of existing settlements. Housing can be developed our rural communities. for a range of tenures with decentralised heat and power and high energy efficiency standards Rural Scotland has not been immune from the and located so as to make optimum use of public increased house prices seen elsewhere in transport and provide opportunities for walking Scotland. In remote areas, these price increases and cycling. Design and build should reflect the can have a magnified effect due to sparse supply best architectural and design traditions of in those locations. Lack of housing that is Scottish towns and villages. affordable may prevent local people from staying in their home communities and reduce the ability We invite views on the role of a Scottish Sustainable of local business to attract new employees. This Communities Initiative to encourage local can and does affect the growth, development authorities and their partners to bring forward and cohesion of rural communities. proposals for such communities in their responses to the consultative draft of the National Planning As well as examining the hurdles that are Framework. Proposals should serve as exemplars preventing housing developments in rural Scotland of 21st-century low-impact development and through the Task Force process, we also want to reflecttheprinciplessetoutinourpolicystatement, engage further with those responsible for the .10 The criteria we will use in delivery of housing in rural areas; whether they Designing Places selecting the successful proposals include: are in the public or private sector. We feel that more can and needs to be done to assist delivery, > their contribution to meeting regional housing to encourage innovation and to address the and economic needs; obstacles that currently exist. There are lessons > high environmental and design standards; to be learned from the good practice that is being promoted elsewhere; not least by the Prince of > commitment to building a sense of Wales’s Affordable Rural Housing Initiative which community and environmental wellbeing; is active in its pursuit of balanced, sustainable > provision for walking and cycling and rural communities.9 Over the last three years, the effective use of public transport and Prince’s Foundation Initiative has identified many information technology infrastructure; illustrative examples where the private sector has played an important role in the delivery of > innovative use of renewable and clean energy affordable rural housing, and it has used these technologies; and examples to raise awareness and motivate > effective reuse of brownfield land. others to get involved in similar ways.
9 HRH The Prince of Wales’s Affordable Rural Housing Initiative, An Interim Report and Next Steps, Business in the Community, 2006. 10 Scottish Executive, Designing Places: A Policy Statement for Scotland, 2001.
18 CHAPTER TWO
Further details will be set out in a document Local government has a key role to play in this accompanying the consultative draft of the context. We will work with local authorities to National Planning Framework. secure solutions that are in the interest of both local communities and national needs. The QUESTION Disposal of Land by Local Authorities Regulations that we have been consulting upon revise the 5. We have proposed that much expanded or consent regime that applies to the disposal of new, stand-alone settlements may be a valid land at less than market value. This will allow solution. How should we best encourage the councils to make such disposals where these will development of new, sustainable contribute to the wellbeing of the area, or will communities that are sympathetic to offer significant community benefits. Scotland’s landscape and environment? Alongside the role for local authorities, we believe PUBLIC SECTOR LAND that there could be a role for central government The Housing Supply Task Force has identified in the acquisition and assembly of land for surplus public sector land as another priority for development, as a pro-active response to the early examination to assess whether this problems of housing supply – for example to potential resource is being used as effectively for support delivery of new development under the housing development as it could be. We have Scottish Sustainable Communities Initiative. initiated a review of the Scottish Government’s estate which will examine the potential there. The purpose of such a role would be to deliver The next stage will be to examine the scope for developments with a more balanced mix of further releases of surplus land held by local housing in pressured markets, through master- government and other public agencies. planning, control of the pace of development on sites, cross-subsidy of affordable homes from private housing, and better use of available surplus public sector land. We see the development of such a national land role as one of the tools in a range of approaches designed to produce more houses, more quickly.
19 CHAPTER THREE: ASSISTANCE FOR FIRST-TIME BUYERS
First-time buyers have suffered more than In response to higher house prices, first-time average from recent house price increases. buyers now have to stretch themselves further. Historically, prices at the bottom of the housing According to the Council of Mortgage Lenders market have not moved in line with the overall (CML), first-time buyers borrowed an average of housing market but, in the recent house price 3.11 times their household income in Scotland in boom, lower quartile house prices have risen 2006. Although less than the UK average of 3.21, sharply across Scotland pricing many aspiring this compares with an average of only 1.98 in owners out of the market.11 Scotland during the 1990s.
As chart 6 shows, nearly 50,000 first-time The size of deposit required is often an even buyers entered the Scottish market in 2002, bigger hurdle. As chart 7 shows, first-time buyer accounting for almost 40% of all new mortgages deposit size as a proportion of household income issued. But this number fell dramatically as has risen from 12% in 2000 to 35% in 2006 (an house prices rose, with new entrants falling to average of £2,500 to £9,000).12 Recent market 32,000 in 2004, and the market share falling to turbulence is likely to restrict mortgage lenders’ 28%. First-time buyer activity is only now willingness to lend without substantial deposits. beginning to recover, albeit increasingly All these changes have affected the profile of the characterised by higher-income households. ‘typical’ Scottish first-time buyer. Many people who would traditionally have bought a home have found themselves priced out of the market. The average income supporting house purchase rose from £19,491 in 2000 to £29,808 in 2006.
11 Scottish Government, Scottish Housing Market Review, Evidence and Analysis: An Economic Discussion Paper, 2007. 12 Scottish Government, Scottish Housing Market Review, Evidence and Analysis: An Economic Discussion Paper, 2007.
20 CHART 6: HOME MOVERS AND FIRST-TIME BUYERS SINCE 1982
100 90 80 70 60 50 40 NUMBER (000s) 30 20 10 - 4 6 2 6 4 0 2 8 4 2 198 198 198 198 199 199 199 199 1998 2000 200 200 2006 YEAR
Home Movers First-Time Buyers
Source: CML. 1993 - 2005: Survey of Mortgage Lenders. 2005 - 2007: Regulated Mortgage Survey
CHART 7: FIRST-TIME BUYERS – DEPOSIT SIZE AS A PROPORTION OF ANNUAL HOUSEHOLD INCOME, 1993-2007
50% 45% 40%
(%) 35% 30% AGE 25%
CENT 20% 15% PEER 10% 5% 0% 1993 1994 1995 1996 1997 1998 199920002001 2002 2003 2004 2005 2006 2007 Q1 YEAR Scotland UK
Source: CML. 1993 - 2005: Survey of Mortgage Lenders. 2005 - 2007: Regulated Mortgage Survey (Figures are median deposit size as a proportion of median annual household income)
The CML reports that buyers are depending for First-time buyer households are of many their deposits much more on financial assistance different compositions. More individuals, as well from parents and grandparents. Recent survey as families, are aspiring to home ownership. Our evidence suggests that over half of UK first-time research on aspirations found that 86% said they buyers would ask their parents for help with would ideally prefer to own, and that affordability financing a deposit, and that parents who was a key constraint.15 provide assistance are giving an average of £17,677.13 There is growing evidence that increasing house prices are exacerbating wealth inequalities and spatial disparities.14
13 Alliance & Leicester, ‘£17,677 To Cut the Parental Purse Strings’, 2006. http://www.alliance-leicester-group.co.uk/upload/pdf/PR0208062.pdf 14 Dorling, D. et al, Poverty Wealth and Place in Britain, 1968-2005, Joseph Rowntree Foundation/The Policy Press, 2007. 15 Clegg, S. et al, Housing Aspirations, Scottish Government Social Research, 2007. 21 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
While the difficulties faced by first-time buyers > work to establish the Housing Support Fund, arise in both urban and rural areas, affordability as a key means of financing the expansion of varies widely across the country with local labour LIFT, particularly through levering in private and housing markets exhibiting first-timer buyer finance to expand shared equity provision for trends which are distinct from the national first-time buyers, and other means of providing averages. Recent local authority level data support to first-time buyers which would be shows that smaller properties are particularly attractive to private sector investors; expensive relative to lower quartile incomes in > work with mortgage lenders and investors – the Lothians and Highland. as part of the Government’s engagement with the market on the Housing Support Fund – to We are committed to helping households to meet create innovative and viable financial their home ownership aspirations. The action that products to help deliver affordable home we are taking on housing supply will help many ownership. This will include assessment of: in the medium to long term. It is right that we provide more immediate help for first-time – ways to lower ownership access and buyers on modest incomes who have been priced mortgage costs for first time buyers; out of local markets and for those currently renting – our proposal to make a £2000 grant from a local authority or housing association, or available to first-time buyers; and on housing waiting lists, who wish to pursue home ownership. – the potential of the emerging market in “green mortgages” (where lenders offer, DIRECT SUPPORT FOR HOME OWNERSHIP for example, a discount on their standard variable rate if the home is energy efficient). To tackle this issue, we have already announced our intention to provide additional support for Through this discussion document, we are seeking first-time buyers through implementing our views to inform both the development of LIFT and manifesto commitment to create a Scottish the identification of further realistic ideas and Housing Support Fund. We plan to build on this by opportunities for Government and private lenders establishing a Low-cost Initiative for First Time and investors to create more innovative products Buyers (LIFT) to broaden the range of products and services to assist people in purchasing their available to assist people to achieve and sustain first home. home ownership. We will work with housing providers and private sector investors and Currently, the majority of Government-subsidised lenders to develop the initiative to include grant, homes for low-cost ownership is delivered through shared equity and mortgage related products the provision of housing on a shared equity and services. basis. This enables people to purchase a shared equity home in partnership with a Registered The new approach we will take through LIFT Social Landlord, using a government grant which involves: is recycled when the house is sold or the owner > the provision of targeted assistance for increases their stake in their home. different categories of first-time buyers, using both existing and new low-cost home ownership support measures; > enabling over 1,800 households this year to achieve their home ownership ambitions through a range of low-cost home ownership programmes;
22 CHAPTER THREE
The scheme comprises both “new supply” shared QUESTIONS equity, which adds to the overall supply of 6. How should different types of assistance housing stock, and an “open market” version within LIFT be targeted? which helps people to buy existing properties on the open market. The new supply scheme is the 7. How could the Government stimulate more dominant form and is currently available across innovative mortgage and related products and Scotland in both urban and rural areas. The open services to assist people in purchasing their market version is currently being piloted in the first home? Lothian region. There are positive indications that 8. Should the Government provide direct cash the private sector is particularly interested in the grants to first-time buyers? potential of shared equity as a specific vehicle around which to structure private investment into the Housing Support Fund. THE SINGLE SURVEY The introduction of the Single Survey to the house As part of LIFT, we will take forward the testing of buying and selling process in late 2008 will open market shared equity in a further six local further support our ambitions to help households authority areas which are facing particular meet their home ownership aspirations. The pressures (Aberdeen, Aberdeenshire, Moray, Single Survey will mean that sellers of houses Highland, Stirling and Perth and Kinross). This will have a duty to provide a detailed survey of will test further the demand for the scheme and the property to buyers on request. It will provide the practicalities of its operation in different house buyers with more information about the areas and will inform the Government’s condition of the property, together with an discussions with private investors over new energy report, information on accessibility private funding. We will target the expanded pilot aspects of the property and a valuation. more efficiently than was the case previously and promote it more actively to those in the The survey will save buyers money as well. social rented sector and on lower incomes. It will be provided by the seller, so buyers will not run the risk of repeated expenditure of hundreds Uptake of the scheme by those in the social of pounds on surveys or valuation reports on rented sector with home ownership aspirations properties where their offer is unsuccessful. will provide the added benefit of freeing up social This change in approach will be of particular rented homes for those on waiting lists. We will benefit to first-time buyers, who typically will also look closely at the pilot’s application in rural save at least £200-£300 on the cost of buying areas, and especially at its operation alongside the their first home. Rural Home Ownership Grant, a grant mechanism that assists individuals in rural and remote areas to procure their own home. Testing the pilot in areas like the Highlands and Aberdeenshire will give us a better insight into the most appropriate ways of helping first-time buyers in rural and remote communities in future.
23 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
EXPANDING THE RANGE OF AFFORDABLE QUESTION HOUSING TO BUY 9. How can the private house-building sector Current Planning Advice makes clear that play a bigger role in providing, without public “affordable housing” can take a number of forms, subsidy, increased provision of affordable not just publicly subsidised housing for social starter homes? rent and various types of low-cost home ownership. This recognises that there is a place for unsubsidised affordable housing, usually in the form of entry level housing for sale, where it can be clearly demonstrated that these homes will meet the needs of, and be affordable to, groups of households identified through a housing needs assessment.
Experience suggests that this particular category is infrequently factored into the planning of developments and there is scope for local authorities to give much greater consideration to this option in their negotiations over affordable housing contributions. The key, however, is the provision of homes that are genuinely affordable. Many homes that are described as “entry level housing” or “starter homes” are priced outwith the realistic purchasing power of most first-time buyers. There is clearly a healthy pool of potential purchasers in this segment of the market and we invite local authorities and the house-building industry to consider how more can be done to meet the aspirations of people who find themselves in this position.
24 CHAPTER THREE
25 CHAPTER FOUR: THE PRIVATE RENTED SECTOR
CONTEXT The flexibility of the sector is particularly important and means that it remains an The private rented sector already plays a vital attractive option for some, particularly younger role within the housing market. We want to people. As chart 9 illustrates, young professionals ensure that we set the right agenda to allow the form the highest proportion of private renters – sector to flourish and to play an even greater role 16-34 year olds account for almost 55% of the in meeting local housing need, providing good sector – suggesting that the choice, location and quality accommodation in urban and rural flexibility offered by the sector remain important communities. factors in deciding where to live for this group. As chart 8 shows, private renting plays a fuller The sector also provides easy access housing for role in the overall housing market in many other young and mobile people, including students and European states. Although the sector in Scotland migrant workers, as well as accommodation has reduced in size over much of the last century, linked to employment. In rural areas in particular, currently housing about 8% of Scottish households, the sector may also be a traditional long-term it does make an important contribution to housing option. meeting housing need.
26 CHART 8: EUROPEAN COMPARISON OF THE SIZE OF THE PRIVATE RENTED SECTOR
50% 45% STOCK 40% ING 35% OUS 30% AL H 25% TOT
OF 20%
GE 15%
NTA 10% 5% RCE PE 0% y k d d ds in ly nce ece den way lan man gium mar lan Spa Ita Fra Gre Swe Nor Fin Ireland Ger Bel Den Englan her Scotland Net
Source: 2001 - 2004 data drawn from national statistical offices and the OECD
CHART 9: THE POPULARITY OF THE PRIVATE RENTED SECTOR COMPARED TO OTHER TENURES ACCORDING TO AGE OF HOUSEHOLD
35%
30% K
TOC 25%
20% N OF S H TENURE
TIO 15% EAC POR
IN 10% PRO 5%
0% 16-24 25-34 35-44 45-59 60-74 75+ AGE GROUP (households)
Owner occupied Social rented Private rented
Source: Scottish Household Survey 2003 and 2004
We want to ensure that in Scotland the private The Scottish Parliament has passed several rented sector is contributing fully to meeting pieces of legislation in recent years – National housing need. The changing demographics of the Landlord Registration Scheme, Repairing housing market mean that the sector needs to be Standard, Right to Adapt for disabled tenants sufficiently flexible to cater for changing demand and new provisions for the licensing of Houses in from different types of tenants.16 Our vision is of Multiple Occupation – aimed at increasing a modern, vibrant private rented sector, able to standards and improving the reputation of the meet local housing need through the provision of private rented sector as a good option for tenants. good quality accommodation.
16 Rhodes, D., The Modern Private Rented Sector, Chartered Institute of Housing, Joseph Rowntree Foundation, 2006.
27 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
We do not intend to undo the work of the previous We need to understand local private rented two Parliaments, but we do want to make sure markets better and how they can relieve wider that we strike the right balance whereby our housing pressures and we need to do more to policies both safeguard the interests of tenants include the private rented sector as a delivery and recognise the potential of the sector, setting partner in our approach to housing at a national the right conditions to enable the private rented and local level. We want to work with landlords sector to contribute more fully to meeting local and letting agents and with local authorities to housing need. ensure that, where we can, we set the right conditions to enable this to happen. Part of this is about ensuring that recent improvements in the sector continue. We want INCREASING CHOICE FOR HOMELESS PEOPLE to ensure that tenants benefit from increased A more professional sector, coupled with standards in both the physical condition and increasing demand for private rented management of accommodation in the sector. accommodation from a range of different types This is particularly true for those tenants who of tenants, should serve to encourage further may be more vulnerable to exploitation – tenants growth in the sector over the next few years. The on benefits, particularly lone parents in receipt of sector is particularly responsive to demand and benefits who are disproportionately represented the relatively high turnover in accommodation in the Private Rented Sector, and migrant workers.17 (compared to owner-occupation or social renting) provides a steady supply of properties. In some We know that the great majority of landlords cases these may be properties that were already operate to good standards and we want previously empty and have been brought back to work closely with the sector to continue to into use by a private landlord. We need to do encourage a more professional approach and more to utilise this flexibility in the sector to help improve the sector’s reputation. That is why we deliver local housing solutions. recently announced that we will be encouraging landlords to follow best practice by providing Since devolution, local authorities have worked start-up funding for a National Voluntary much more closely with private landlords. As part , which we expect Landlord Accreditation Scheme of their functions under the Housing (Scotland) to launch in 2008.18 Act 2001, local authorities are now engaging with the sector and taking a more strategic view of the This scheme will make sure that those who work private rented sector’s role in meeting housing hard to look after their properties and their tenants need locally. We want to see this strategic planning can promote themselves as good landlords. The more comprehensively developed across Scotland, scheme will be developed working in partnership particularly through Local Housing Strategies. with landlords’ and letting agents’ associations, as well as local authorities, to ensure that the Some local authorities are now using the sector scheme is industry-led and attracts as many to house people presenting as homeless, as a landlords as possible. viable alternative to bed and breakfast and other forms of temporary accommodation. The private We also want to enable the sector to play a much rented sector has much to offer its tenants in greater role in meeting local housing need and this terms of flexibility, choice of location and, in means that we need to know much more about most cases, good quality housing and we want to the sector. Landlord registration will give us some see more homeless households being offered the information but we want to foster much closer benefits of private rented accommodation, where working between local authorities and the sector. that is appropriate.
17 Scottish Household Survey data, 2003-2006. 18 http://www.scotland.gov.uk/News/Releases/2007/08/26155555
28 CHAPTER FOUR
This does not mean that all homeless households While there have been concerns with this should be accommodated in the private rented approach in the past, primarily related to sector. But it is sensible to explore this option for security of tenure and the poor reputation of a tenants who may be more suited to private few landlords letting to tenants on benefits, we rented accommodation and would benefit from believe that the recent and ongoing improvement the flexibility and choice provided by the sector. in the sector means that it now offers good options for many homeless people. Satisfaction levels with the private rented sector are particularly high among younger people, with We want to encourage responsible landlords to 84% of 16-24 year olds and 96% of 25-34 year work with their public sector partners to olds stating that they are very satisfied or contribute more fully to providing local housing satisfied with their private rented accommodation.19 solutions. The consultation on the Regulations This suggests that mobility, choice and location will consider the balance required to achieve are seen as important factors in choosing a greater flexibility, whilst at the same time private rented home. safeguarding positive outcomes for homeless people. For instance, the consultation will We also know that younger people, particularly consider appropriate security of tenure, cost younger men, predominate in homeless to the individual and measures to prevent presentations and finding solutions for these repeat homelessness. households is likely to be an increasing priority for local authorities as they work towards the Overcoming the concerns many private landlords 2012 homelessness target and are required to have traditionally held about letting to tenants on treat all homeless households equally.20 It is housing benefit will also need to be considered important that homeless households are offered as part of this approach. Local authorities have a housing solutions that are appropriate and key role to play in building effective relationships suitable to their needs and the private rented with landlords to better understand the local sector has a role to play in this, particularly for rented market. younger people. Most local authorities have now developed close In addition, changing demographics and the links with the sector, for example through Landlord growth in single person households means that we Forums. This has had a significant impact, not need a different profile of housing stock to meet just because local authorities now have a much housing needs more broadly. The private rented greater awareness of the number and type of sector is also well placed to provide this, with private rented properties in their area, but also properties covering a range of sizes and types. because local authorities can now work with private landlords to help ensure they are providing the Greater use of the private rented sector to right types of housing to meet local demand, re-house homeless households would also help whether this comes from students, migrant to remove pressure from social housing stock, workers, young professionals, people presenting which will allow social landlords to meet a wider as homeless or others. Building this trust and range of housing need. We will consult shortly on working in partnership with the sector should amending the existing Homeless Person Interim help to encourage private landlords to consider Accommodation (Scotland) Regulations 2002 to housing people nominated by the authority. allow local authorities more flexibility in discharging their homelessness duties, with a view to enabling wider use of the private rented sector where this will meet the needs of homeless households.
19 Scottish House Condition Survey data, 2003-2004. 20 The Scottish Government, Operation of the Homeless Persons Legislation in Scotland: National and Local Authority Analyses 2005-06, A Scottish Government National Statistics Publication, 2006.
29 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
A number of authorities are going even further More generally, and following a number of and pushing ahead with innovative approaches legislative and other changes in the sector since to working in partnership with landlords and devolution, now is a good time to take stock of letting agents. For example, the City of Edinburgh the impact of these changes. We have said that Council’s Letwise service provides free training we want to ensure that we have the right balance events and a magazine for landlords, as well as of policies and legislative protection to allow the organising an “Edinburgh Landlord Day” to give sector to flourish and play a full role in Scotland’s landlords the opportunity to learn more about the housing market, by providing sufficient practical and legal aspects of managing property safeguards for tenants whilst, at the same time, and tenancies.21 avoiding excessive regulation which could put people off remaining as private landlords. We believe this is the starting point for finding a successful way ahead and would encourage all We have also said we need to understand much local authorities to start considering what more about the sector. Therefore our review will approaches are both suitable and feasible for include a comprehensive study of the sector. We their areas. want to hear from landlords and tenants about their experiences, concerns and aspirations for QUESTION the sector and will be exploring these issues through tenants and landlords surveys. These 10. What issues do you consider should be taken surveys will examine the views and needs of a into account when considering the increased diverse range of tenants to understand whether use of private sector lets to house low-income different issues impact upon different groups of and homeless households? people, including migrant workers, tenants on benefits, students, single parents and long term REVIEW OF THE PRIVATE RENTED SECTOR renters, particularly in rural communities. We plan to carry out a review of the private rented sector. The main objective of the review We will also look at the economics of the sector, will be to ensure that the private rented sector including institutional investment, to consider can deliver the right types of housing in the right the size and types of landlords currently renting places to help meet housing need and reduce the property and their motivations for doing so. While pressure on the social rented sector. To support many factors, such as interest rates and house the consultation on amending the Interim prices, influence private landlords’ decisions on Accommodation Regulations, the review will look whether to purchase or renovate properties for in particular at the role of the sector in housing rent, we want to find out more about the impact low-income families and individuals on benefits, of a variety of factors on landlords’ decisions to including those presenting as homeless. rent property to particular types of tenant. We will use this evidence base to inform our future We want to listen to landlords to understand thinking about the sector. better the concerns they may have about letting to tenants on benefits and work towards We also want to look at ways of increasing solutions to address these. The review will also engagement between local authorities and the consider, in this context, how to ensure sufficient sector to understand better local private rented security of tenure for homeless people to avoid markets and availability of property to let, build the possibility of repeat homelessness. links with landlords and facilitate the provision of advice and support. We want to see much more strategic engagement with landlords in order to enable the sector to contribute more fully to meeting housing need.
21 http://www.edinburgh.gov.uk/internet/housing/private_tenants_and_home_owners/CEC_letwise
30 CHAPTER FOUR
QUESTIONS QUESTION 11. How should we ensure an appropriate balance 13. What other options should we consider for between safeguarding tenants’ rights and increasing the supply of private rented encouraging the private rented sector to housing for low income and homeless achieve its full potential in Scotland’s overall households? housing market? Encouraging landlords to rent to tenants on 12. Do you think there is sufficient engagement housing benefit between the public sector and private There may also be potential in some areas for landlords? If not, what else should national greater use of existing initiatives like Rent and local government be doing? Deposit Guarantee Schemes (RDGS) to help low-income tenants to access the private MEETING HOUSING NEED rented sector.23 The following sets out some broad areas we will be considering further. Under these schemes, the local authority, or the organisation contracted to run the scheme, Private Sector Leasing Schemes essentially acts as guarantor for tenants who There are a number of different types of Private cannot afford to pay a deposit to a landlord. The Sector Leasing schemes in operation in Scotland scheme generally works closely with the landlord and in England. These schemes generally to ensure that the landlord follows good practice encourage landlords to make their properties in managing the property and the tenancy and available to local authorities for a certain number can help to resolve any disputes which arise of years by offering guaranteed rental income between the tenant and the landlord during or and putting in place either a managing agent or at the end of the tenancy. local authority staff to take responsibility for dealing with the management of the tenancy and For young people, the Flatmates scheme run by resolving any problems. Edinburgh Cyrenians in West Lothian helps those under 25 who face single room rent restrictions The largest such scheme in Scotland is the by creating and supporting sustainable flat share Edinburgh Private Sector Leasing Scheme, run between single individuals who would not by Orchard and Shipman, which aims to provide normally have been able to access suitable 1500 properties across the city for homeless properties in the private rented sector.24 households.22 The Cyrenians scheme builds on the RDGS model, Private sector leasing schemes can play a part in offering an intensive assessment, reference allowing local authorities more flexibility in gathering and matching phase prior to tenancy responding to the needs of homeless households. commencement, followed by a tailored package However, there are some issues relating to the of support available when the tenancy sustainability of the accommodation which we commences. would want to explore further, particularly to ensure that the schemes do not act as a barrier to employment.
22 Private Sector Leasing – Performance Report, Report to Executive of Edinburgh City Council, 9 January 2007,available from Edinburgh City Council published committee papers. 23 Rugg, J., Deposit Guarantee Schemes in Scotland, Scottish Government Social Research, 2003. 24 Hutton, A., “Cyrenians Flatmates”, available at: http://scotland.shelter.org.uk/policy/policy-8611.cfm. 31 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
Other issues which we will wish to discuss with We will explore opportunities to promote greater stakeholders to consider their viability, include use of schemes which offer incentives to bring considering an accreditation scheme for empty properties in disrepair back into use. tenants, which would give landlords more These include use of Rural Empty Properties confidence in agreeing to rent property to Grants, under which Government provides tenants on benefits by showing that they funding to contribute to the costs of renovating understood their responsibilities and were rural properties on condition that the property is reliable. rented out at affordable rents to local people who are employed, or have an offer of employment in This may be particularly relevant as many landlords the area.25 We want to examine the scheme’s are concerned about the UK Government’s plans effectiveness in helping meet wider housing for housing benefit to be paid directly to most need and to see whether there is scope to tenants in the private rented sector when Local streamline grant appraisal procedures. Housing Allowance (LHA) is introduced across the UK from April 2008. However, more work will Similarly, a scheme along the lines of the existing need to be done on any accreditation proposals RSL Lead Tenancy scheme could also offer to ensure that this approach would be sufficient potential for bringing empty properties into use to encourage large numbers of landlords to in some areas where there is a lack of social consider letting to tenants on housing benefit. rented properties.26 The aim of the scheme would be to provide grants to contribute to the costs of QUESTION the refurbishment of empty properties which are privately owned, but would then be leased to an 14. How could more private landlords be RSL to accommodate homeless households. encouraged to let to tenants on benefits and homeless households? We also want to examine how we can help local authorities enhance their strategic thinking and Bringing empty properties in disrepair back planning in relation to assessing the number of into use empty properties in their area and whether more Making best use of the existing housing stock, action is required to address the issue of empty including empty stock, is an essential element properties at a local level. Revised LHS guidance of sustainable development. Available statistics is due to be issued to assist local authorities with give us an indication of the total number of the production of their next LHS due in 2009 and empty dwellings in Scotland, across the social will include specific advice about empty homes. and private housing sectors. However, there can be a variety of reasons why a property may be We are keen to hear about other proposals for empty, including whether the property is used as joint working between landlords and the public a second home, whether the property is derelict, sector to bring empty properties back into use. awaiting demolition, awaiting conversion or The Newcastle Private Renting Project provides improvement or whether the property is for sale advice and support to landlords in areas with or rent. We need to develop our analysis to high numbers of empty homes in order to understand better how we identify empty persuade them to renovate and rent out their properties which may be appropriate for reuse. properties. Highland Council advertises a leasing scheme whereby private landlords can lease empty properties to the Council. The Council also buys empty properties from other public sector bodies. These properties are then made available to local people at affordable rents.
25 Communities Scotland, Rural Empty Property Grants: Procedure Note for Grant Providers and Applicants, 2004. Available at http://www.communitiesscotland.gov.uk. 26 Rugg, J., and Rhodes, D., Lead Tenancy Schemes in Scotland, Scottish Government Social Research, 2004. 32 CHAPTER FOUR
Argyll and Bute Council is examining ways in QUESTION which second homes and other empty properties 15. What other schemes or incentives might help in a state of disrepair can be brought back into us to recycle empty properties more use as housing for rent. The Cairngorms National effectively? Park Authority has teamed up with the Scottish Rural Property and Business Association to promote wider use of Rural Empty Property Grants in the area. These are some examples and we are interested in finding out what other schemes or incentives might help us to recycle empty properties more effectively.
33 CHAPTER FIVE: SOCIAL HOUSING – MORE THAN JUST AN ASPIRATION?
Does social housing have a future? We believe Alongside these changes, Parliament has decided that it does. For many it is the only means of that leaving many people homeless is no longer making a good quality home a reality; for others something that we are prepared to accept. it will play a vital role at particular times in their lives, whether providing a first home before The result of these changes has been a growing moving on to owner occupation, or providing tendency for tenants in social housing to be more a safety net at a time of personal crisis. vulnerable and less representative of society as a whole than has been the case in the past.28 Our investment in social housing is one of the most significant aspects of housing policy. It At the same time, some social landlords have will continue to be very important and it will found it difficult to deliver the standards of command the great majority of the resources service that their tenants might reasonably hope that we devote to housing. But it must change. to receive. Underlying these developments, the costs incurred by social landlords in building new As we noted in chapter 1, demographic, economic homes and managing their existing ones have and financial factors have driven large changes risen inexorably above inflation in recent years.29 in Scotland’s housing market and in housing aspirations across society. In November 2006, Taken together, these things suggest that if the Chartered Institute of Housing Scotland Scotland wants to make sure that affordable published research on the impact of these changes housing for social rent is available in sufficient in the nature of demand for social housing. This quantities to meet demand, and at a sufficient highlighted the effect of underlying economic quality to provide individuals with good quality trends on the tenant base of social housing.27 homes in attractive and sustainable mixed communities, then we need to think hard about
27 Newhaven Research, The Future for Social Renting in Scotland? Chartered Institute of Housing in Scotland, 2006. 28 Scottish Executive, The Right to Buy in Scotland: Pulling Together the Evidence, 2006. 29 Communities Scotland, Housing Bulletins and Annual Performance & Statistical Returns, 2001/2-2005/6. 34 the desirability of simply allowing the trend towards The decline in social housing has been a more marginalised tenant base to continue. accompanied by substantial changes in the profile of its tenants and of those wishing to In this chapter, we set out some of the main become tenants. In 1981, the profile of social dimensions of the challenges that we must landlords’ tenants matched quite closely the tackle if we are to re-invigorate social housing. profile of households in society generally in In chapter 6 we set out our proposals for terms of their size, composition and social and stimulating innovation and choice in social economic characteristics.31 housing, and the way in which we hope to forge a new kind of partnership with social landlords – As charts 10 and 11 illustrate, this is no longer both local authorities and housing associations. the case. Households in social housing are now far more likely to consist of single pensioners, LONG-TERM CHANGES IN THE NATURE OF single parents, and other single adults. Tenants DEMAND FOR SOCIAL HOUSING of social landlords are less likely to be in employment than those in households generally, As owner occupation has grown in popularity, with over half of tenants of working age without social housing as a whole has declined as a work. They are more likely to be retired or proportion of the total housing stock – from over unemployed or permanently sick than other 30 50% in 1981 to its current level of around 25%. households. Consequently, almost three-quarters In fact, as chart 1 in the Introduction illustrates, have incomes below £15,000 a year and two-thirds the decline in the sector generally is the result of are dependent to some extent on housing benefit. a large reduction in the number of local authority houses, which has taken place at the same time as the number of households renting from RSLs has grown gradually.
CHART 10: ECONOMIC ACTIVITY – SOCIAL HOUSING TENANTS DIVERGING FROM THE MAINSTREAM
ALL HOUSING, 1981 ALL HOUSING, 2005
PROPORTION OF HOUSEHOLDS WHERE THE HEAD OF HOUSEHOLD WAS:
In employment Retired Permanently sick SOCIAL HOUSING, 1981 SOCIAL HOUSING, 2005 Unemployed Other activity
Source: 1981 Census, 2004-2005 Scottish Household Survey
30 Scottish Executive, Housing Trends in Scotland: Quarter ending 30 June, 2006. 31 General Register Officer for Scotland, 1981 Census.
35 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
CHART 11: HOUSEHOLD TYPE – BY TENURE
OWNER OCCUPIED PRIVATE RENTED
HOUSEHOLD TYPES Single adult All adult Single parent Families with children Pensioner couple Single pensioner SOCIAL RENTED SOCIAL RENTED (LOCAL AUTHORITY) (HOUSING ASSOCIATION)
Source: Scottish Household Survey 2005 and 2006
In effect, the last 25 years have seen the role of The result – in the eyes of many at least – is social landlords change from that of meeting that social housing has become stigmatised.35 general housing needs to being increasingly It is viewed by many as being too closely the providers of homes for the most vulnerable associated with unpopular and unsatisfactory in society. neighbourhoods. Chart 12 illustrates the extent to which this perception is shared by tenants of This trend appears likely to continue, with owner social housing. In every age group social renters occupation remaining the tenure of choice for the are much less likely to be very satisfied with their majority.32 It is even cited as the tenure of neighbourhood than owner-occupiers and preference among the majority of tenants in tenants of private landlords are with theirs. social housing in the 25-39 age group.33 In truth, the widespread perception of stigma The fact that so many younger tenants would oversimplifies an altogether more complex prefer to move into owner occupation may be picture. It tends to overlook the extent to which explained partly in terms of perceptions that many recent social housing developments have owner occupation has other, financial, benefits been part of mixed developments that have over social housing. Even so, it cannot be seen helped to reinvigorate areas as mixed as an endorsement of social housing from those communities; and it fails to represent the who have experience of it, or as an indication that position in much of rural Scotland, where social social housing can be viewed as a choice that housing is recognised as playing a positive role would be attractive to the generality of future in sustaining fragile communities. households.34
32 Clegg, S. et al, Housing Aspirations, Scottish Government Social Research, 2007.Six in ten social renters said their ideal tenure was owner-occupation. 33 Scottish House Conditions Survey data, 2004-05. 34 Clegg, S. et al, Housing Aspirations, Scottish Government Social Research, 2007.This research suggests only 1 in 10 households would ideally prefer to rent. It also showed the widespread perceived financial benefits of owner-occupation. 36 35 Scottish Executive, The Right to Buy in Scotland: Pulling Together the Evidence, 2006. CHAPTER FIVE
CHART 12: % HOUSEHOLDS “VERY SATISFIED” WITH THEIR NEIGHBOURHOOD
80% 70% 60% S
E OF 50% OLD 40% SEH
CEN TAG 30% HOU
PER 20% 10% 0% <25 25-29 30-44 45-64 65-74 75+ AGE GROUP Owner occupied Social rented Private rented
Source: Scottish Household Survey 2005 and 2006
CHART 13: DISPERSION OF SOCIAL RENTED SECTOR ACCORDING TO AREA DEPRIVATION
30%
25% K 20% TOC SOCIAL 15% OF 10% RENTED S
SHARE 5% 0% 12345678910 NEIGHBOURHOODS BY LEVEL OF DEPRIVATION (1 = most deprived; 10 = least deprived)
Source: 2001 Census, Scottish neighbourhood Statistics
Nevertheless, it has sufficient basis in fact for some time.36 They have been demonstrated all of us to be worried about the impact that in projects in areas such as Crown Street in concentrations of social housing have on Glasgow’s Gorbals and Ardler in Dundee, where particular neighbourhoods and the people regeneration was delivered through the creation who live there. The most deprived 15% of of mixed communities. Providing for a mixture neighbourhoods are characterised by high of tenures and household sizes is the key to concentrations of social housing and more enabling aspiring and successful individuals to generally, as chart 13 illustrates, there appears move up but not out of their communities. to be a strong correlation between concentrations of social housing and deprivation. We wish to build on the success of high quality mixed tenure developments and to look at ways The benefits of avoiding concentrations of of increasing variety and choice in housing and deprivation and social housing by creating tenure. We wish to encourage approaches that communities with a mixture of tenures and a enable people of different ages, lifestyles and mixture of households have been recognised for incomes to meet their needs in neighbourhoods
36 Holmes, C., Mixed Communities: Success and Sustainability, Joseph Rowntree Foundation, 2007.
37 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
that are safe, attractive and sustainable. performance in the way that customers can do Increasingly, social landlords, working with where a genuine market in services exists. partners, or through specialist subsidiaries, are Very often – where local demand for affordable contributing to these outcomes by building a mix housing exceeds supply – they do not have a of tenures. We want to ensure that our funding choice and as a result, poor performance can and regulatory regimes support and encourage persist. This is unfair to tenants served by poorly this behaviour. performing landlords: they are effectively trapped.
VARIATIONS IN THE PERFORMANCE OF Moreover, it carries the risk, over time, that SOCIAL LANDLORDS poorly managed stock will blight neighbourhoods and exacerbate the effect of deprivation. For as In many respects, social housing’s poor reputation long as landlord performance remains so hugely is unjustified. Many social landlords provide high variable, and the basic ability of landlords to quality housing and deliver high standards of modernise their stock in accordance with basic service to their tenants. Some have track records contemporary standards remains in doubt, of building new stock that is attractive and popular neighbourhoods with high concentrations of with tenants and that has done much to improve social housing – and in the most deprived areas, the quality and appearance of the neighbourhoods social housing accounts on average for 68% of where it is found. Despite a fair few and notable the total stock – are likely to remain difficult to successes, however, there is an enormous integrate into wider society and become variety in levels of performance. neighbourhoods of choice.37
The physical fabric of Scotland’s social housing RISING COSTS has, on average, never been higher. Significant investment has been made by many social Changes in the types of people living in social landlords to achieve the Scottish Housing Quality housing, and the pressure to raise physical and Standard. Others, however, have found themselves other standards, have been seen by some as for a variety of reasons, unable to overcome the leading inevitably to higher costs. What is much weight of historical circumstance in order to renew more rarely illustrated, however, is the enormous the fabric of their homes to a level that meets the extent to which social landlords’ management and reasonable aspirations of today’s tenants. maintenance costs have risen in recent years.
Taken as a whole, Regulation and Inspection It is difficult to compare the costs of local reports suggest that social landlords’ authorities and housing associations directly. performance is variable. Of 58 landlords Their accounting classifications, their stock, their inspected since 2001 a third were judged to be tenants, and their financial arrangements all providing only fair or poor housing management vary to some extent from social landlord to social services and a half fair or poor maintenance landlord. It is, however, instructive to look at the services. These findings tend to undermine the trends evident for local authorities and housing reputation of social landlords generally, confirming associations. Chart 14 illustrates how the running in the minds of some the idea of a low quality costs of local authorities and registered social service that would be unattractive to those with landlords have increased above inflation in the any choice in the matter. past five years.
Some might argue that poor performance might Whatever the factors contributing to these rising matter less if tenants were able to move with costs, it seems evident that the costs of ease from poorer to better performing landlords. managing existing homes are rising rapidly In practice, however, the tenants of poor to an extent that is not sustainable for tenants, performing landlords cannot respond to poor landlords or the Government.
37 Scottish Executive, Social Focus on Deprived Areas, 2005.
38 CHAPTER FIVE
CHART 14: REAL TERMS TOTAL RUNNING COSTS PER UNIT – LOCAL AUTHORITY AND REGISTERED SOCIAL LANDLORD – IN SCOTLAND
1,550 1,500 1,450
UNIT 1,400 ER 1,350 £ P 1,300 1,250 1,200 1,150 2001/02 2002/03 2003/04 2004/05 2005/06 YEAR Local authorities Registered social landlords
Sources: Housing Bulletins and Annual Performance and Statistical Returns (Communities Scotland) The problem, however, is not confined simply to industry and in the price of land. But whatever existing social housing. It is endemic in attempts the cause, continuing to increase the amount of to build new social housing too. subsidy per house is unsustainable. It is also incompatible with our commitment to getting INCREASING DEPENDENCE ON SUBSIDY FOR better value for all public expenditure. NEW HOMES Above all, the more steeply costs rise, the more The increasing cost of providing social housing difficult it becomes to increase the number of has fed directly into increasing levels of subsidy new houses we can build for social rent and other paid by government. Social rents are affordable forms of affordable housing. If we are to meet the for those on low incomes because our practice need for affordable housing without placing an over many decades has been to use public unreasonable burden on public expenditure, we expenditure to subsidise new social housing. need to change radically the means by which Government subsidises, and social landlords Originally this meant subsidising local authorities build, new affordable housing. to build council housing. More recently the policy has been to subsidise RSLs to build new stock. As chart 15 illustrates, social housing in England The present subsidy – Housing Association Grant – where land and construction costs are often (HAG) – meets an average of 67% of the cost to higher – relies on substantially lower levels of RSLs of each new house they build. Over the subsidy than Scottish social housing. While we three years 2005-08, most of the Government’s recognise that circumstances in Scotland are £1.2 billion expenditure on affordable housing different in some respects, maintaining such a will be spent on HAG subsidies. large difference will undermine our ability to meet demand for social housing. Even taking While the proportion of building costs per house account of the impact of lower rents in Scotland, covered by HAG has remained broadly constant, subsidies here are higher than in England. the amount of HAG per house has risen – from £52,000 in 2002-03, to £79,000 in 2006-07,an increase of 35% in real terms over four years. Part of these increases can probably be attributed to inflation in the construction
39 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
CHART 15: COMPARISON OF THE TOTAL COSTS OF NEW HOMES FOR RENT, AND GRANT PER UNIT, PROVIDED IN ENGLAND AND SCOTLAND
140 120 100 80
£'000 60 40 20 0 TOTAL COST GRANT Scotland England England (excl London & SE)
Sources: Housing Corporation and Communities Scotland Continued substantial real terms increases in CONCLUSIONS management and maintenance costs, and the We believe that social housing has a positive rising cost of building new homes for social rent, future. The steep rise in house prices that has are an unsustainable combination. They put taken place in recent years means that social pressure on rents and on landlords’ finances as housing, far from being an anachronism, is often one, the other, or a combination of the two bears the affordable and secure alternative to owner- the strain of the higher costs. occupation. But if we are to escape from the seemingly inexorable trends of the past 20 years, For government, rising costs bring pressures for the future will depend upon a significant break increasing subsidy, intensifying pressure on with the past. public expenditure. In a tight fiscal environment their effect is to inhibit the provision of sufficient Along with social landlords and bodies working new social housing at a time when it is necessary on behalf of those in housing need, we recognise to meet substantial demand. Something must that the present demand for housing requires be done. there to be an increase in social housing stock that is affordable to those on lower incomes. Estimates of the extent of this need vary, but no one doubts that we must improve the supply of new affordable houses, including social rented houses.
40 CHAPTER FIVE
Parliament has set an ambitious statutory However, these developments do not alter the fact homelessness target. We are committed to that social housing needs to change fundamentally. achieving that outcome by 2012. But like many others we recognise that doing so will require us If we manage that change successfully, tenants, to be innovative. current and future, can look forward to affordable rents, good service, and as much choice as Some of our policy measures described in earlier possible. And taxpayers can be assured that the chapters will help to improve the supply of subsidies they provide are achieving as much as affordable social housing. For example, the they possibly can. challenge of building more houses, of all types, will be made easier by the work that the Housing In chapter 6, we outline our proposals for changes Supply Task Force has in hand. Improvements in that will improve the supply, quality and choice of the availability of private rented accommodation social housing. may help too, particularly where it is accompanied by future possible measures to improve the choices available to people who are homeless.
41 CHAPTER SIX: OUR PROPOSALS FOR STIMULATING INNOVATION AND CHOICE IN SOCIAL HOUSING
In this chapter, we set out our proposals for > Ending the right to buy for new social improving the supply, quality and choice of social housing: Whilst we recognise the popularity of housing. The proposals on improving supply the Right to Buy, the current pressure upon relate mainly to the RSLs, as they will continue Government and social housing providers to to be responsible for providing most of the new improve supply means that the early loss of supply. We begin however by setting out ideas for new properties may tend to work against encouraging local authorities to contribute to the achieving the full benefit of the proposals that supply of new social housing. we put forward elsewhere in this paper. Therefore we propose ending the Right to Buy SUPPORTING LOCAL AUTHORITIES AS SOCIAL for new social housing properties, whether LANDLORDS built by local authorities or RSLs (except for, for example, those tenants forced to move as Some local authorities are already building new a result of demolition or refurbishment council houses by using their ability to borrow programmes, whose rights could be protected). under the prudential borrowing regime. If this practice were spread to all local authorities in > Providing incentives for new council house areas of need that have borrowing capacity, it building: We propose that Government should could deliver between 500 and 600 houses a offer incentives for local authorities that are year over the next 10 years. prepared to undertake new council housing. We envisage these incentives taking the form We propose two initiatives to support those of subsidies that will be awarded on a authorities that wish to use their borrowing competitive basis to those authorities that capacity in this way: can demonstrate the most effective and efficient use of their borrowing capacity to meet need for social housing in their areas.
42 These initiatives would give local authorities As we discussed in chapter 2, improving supply is clear incentives to contribute their resources to not just about enabling more houses to be built. improve the supply of new social housing. They It means building enough houses of the right would mark a break with previous housing type in the right place. Achieving that outcome policies, by making clear our commitment to a for RSL housing requires us to allocate our continuing and growing role for local authorities subsidy to RSLs (Housing Association Grant as social landlords and our determination to (HAG)) strategically to meet need at Housing safeguard new social housing as a public asset Market Area level. for the future. Our current approach to awarding HAG is Ending the Right to Buy would also benefit RSLs, straightforward. Any RSL seeking to build new as many, like local authorities, currently face the houses for social rent can apply to Government risk of losing any new stock that they build. It for HAG to make up the difference between the would give them an important measure of cost to them of building each house and the certainty at a time when we will be looking to amount of borrowing they can support from the them to adapt to changing circumstances. rental income that the house will generate once operating expenses have been deducted. QUESTIONS There is an annual HAG budget and targets for 16. Do you agree that we should exempt new build the number of new social houses that this should social housing from the Right to Buy? support. HAG applications are considered against 17. Do you agree that we should subsidise local a number of criteria, including the applicant’s authorities in areas of need to use their performance as a service provider and developer prudential borrowing capacity to build new and in the community. council houses? The strength of this process is that it allows IMPROVING THE SUPPLY OF RSL HOUSING relatively large numbers of RSLs to develop new social housing in response to local need. Its Our proposals for supporting new council housing weakness is that it does not enable us to form a are intended to add to the overall supply of social strategic view on where to direct subsidy to meet housing. RSLs will continue to build the great need most effectively within housing market majority of that housing. As we made clear in areas. We propose to replace it with a new chapter 5, they need to do so much more efficiently approach that allocates subsidy to a few larger than at present. scale, longer-term programmes.
In our view, securing greater efficiency from Under this new approach we would channel all RSLs requires us to adopt a fundamentally subsidy to one developer for them to take the different approach to the way in which we lead in meeting the need for RSL housing across subsidise new RSL housing. The approach that a housing market area, or other large area, over a we outline below would combine a more strategic period of several years. In addition to meeting means of identifying and meeting need with a need more effectively, this would enable a few competitive process for allocating the subsidy lead developers to secure procurement to meet the need. efficiencies through their ability to offer contractors significant levels of work over a number of years.
43 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
A key objective of this approach is to allow all monopolies. Tocounter this, we propose introducing types of RSLs to continue acquiring stock where a competitive regime under which a number of that is consistent with strategic need for new developers would bid for each block of subsidy. stock. However, rather than do so at their own hand, the lead developer would be expected to This provides an opportunity for us to involve develop stock on their behalf as part of a larger local authorities in decisions on the allocation of strategic programme. public funds to meet the need for social and other affordable housing in their areas. We propose To improve the value that we get for public working with one or more councils to specify the expenditure, we would require the lead developer number and mix of affordable housing required in to identify the greatest amount of resources, total across particular housing market areas over including money and land, that they and the a period. This assessment would form the basis RSLs for whom they were developing, could of an invitation to tender for work. The invitation contribute to the programme and to develop would guarantee quality by setting minimum proposals for using them as efficiently and specifications to be met. Prospective developers effectively as possible. would bid to meet the specification for the least possible subsidy. In effect, the business of developing social housing would become a separate role in which This approach would enable us to satisfy a relatively small number of developers would ourselves that we were getting value for money acquire the specialist skills in design, by testing the price at which developers would procurement, funding and land acquisition undertake to achieve specified outcomes. It necessary to deliver large programmes. would place the onus on the lead developer to bring together partners among RSLs, private A key skill for the developer would be the ability financiers and any other parties capable of using to meet the needs of particular areas and of the their financial resources to minimise the amount RSLs operating there. These needs will differ of subsidy required to meet or exceed the across the country from large scale urban specification. developments that contribute to regeneration projects, to delivering large numbers of small It will take some time to introduce a competitive developments to meet need in more rural areas. regime – and we would not expect it to be in operation before April 2009. In the meantime, we In the first instance, we would expect these believe that the increase in demand for social developers to be RSLs. But over time, it might housing and our duty to secure value for public make sense to encourage others, such a private expenditure require us to make immediate sector house builders or other large contractors progress in reducing the cost of subsidy per to become developers. house. Therefore we will consult separately in the coming weeks on detailed proposals for getting Later in the year we will be consulting on a better value from the current arrangements with procurement strategy that describes in detail effect from early in financial year April 2008-09. how we propose to manage the approach outlined above. QUESTIONS 18. Do you agree that we should introduce Encouraging the creation of lead developers large-scale competitions for subsidy? to deliver strategic building programmes is intended to get the right houses in the right 19. If not, how would you ensure that public places as efficiently as possible. By itself subsidy is used to build as many good quality however, it runs the risk of a few lead developers RSL houses as possible? becoming entrenched as substantial regional
44 CHAPTER SIX
GREATER FREEDOMS FOR REGISTERED ENCOURAGING MORE HOUSING FOR SOCIAL LANDLORDS TO DEVELOP MID-MARKET RENT DIFFERENT KINDS OF STOCK AND TO A number of RSLs, through specialist affiliates or RE-ORGANISE THEIR STOCK IN ACCORDANCE subsidiaries, already offer houses for mid-market WITH DEMAND rent (i.e. at levels between full market and Given the range of need and demand among normal social rents). These houses are often households – and households’ differing means of built alongside, or as part of, new private meeting these needs – genuine choice requires development – and generally in urban areas. there to be a variety of opportunities for renting They are popular with people on incomes that are and owner occupation. These opportunities need not quite enough to afford owner occupation, or to include a range of renting and ownership who need or want to rent for a limited period and options between conventional social renting at can afford to pay more than a social rent, for one end of the spectrum and outright ownership example those entering the teaching or nursing at the other. professions, who expect to be able to buy a house later in their careers. In chapter 4 we indicated our intention to consult shortly on enabling local authorities more flexibility The rental income from properties for mid-market in accessing the private rented sector to provide rent does not cover the full cost to RSLs of suitable accommodation for homeless households. developing them. At present, as the Government Such flexibility should help to increase the choice does not subsidise RSLs to build such properties, available to those presenting as homeless. RSLs finance the shortfall through separate funding deals with local authorities to provide Within social housing, demand comes mainly housing for key workers, or with private developers from those who cannot buy or rent in the market as a means of meeting the developer’s obligation without some form of financial assistance or to provide affordable housing as part of a new subsidy. It does not follow, however, that these development. Consequently, the supply of such households all require the same type or degree properties tends to be limited and does not meet of assistance. the full extent of demand for them.
For some, social housing will be the means of Increasing the supply of such properties would meeting their long-term housing need. For many have benefits. It would be a response to market others it will not. Their aspirations or circumstances demand for more variety in affordable housing. It will mean they expect more choice, or see social would enable social landlords to broaden their housing as a temporary solution to their housing tenant base, helping to dispel the sense of needs. One thing is certain, demand is likely to stigma attaching to social housing and counter become more complex and variegated in future – the tendency towards deprivation becoming and it is therefore right for government to reflect concentrated in social housing. This in turn would this in its approach. help to create more mixed communities.
We want to encourage social landlords to respond In view of these benefits, we propose that to this more variegated demand for affordable registered social landlords should in future be housing, for example by attracting people who eligible to receive a subsidy for houses they build otherwise would choose the private rented sector for mid-market rent. To encourage better or struggle to afford owner occupation. Adopting integration of social housing and the wider this course will help landlords to counter the housing system, we propose that the subsidy trend towards a narrow, more vulnerable tenant should be available only where housing for base and will also help with the creation of mid-market rent is included as part of new mixed communities. developments for social rent.
45 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
We would require that the housing, most probably It would be a condition of all conversions and sales built and managed by registered social landlords that proceeds arising from them, whether income through their subsidiaries, would be constructed through higher rents or capital receipts, should and maintained to the standards required of be used to fund new affordable housing, or meet social landlords. Arrangements for subsidy would the cost of improving existing social housing. be set out in a contract between the social landlord and the Government. The circumstances in which this flexibility might be used may well be limited, for example by the We see merit in seeking to combine the award of extent and nature of demand for different forms subsidy for mid market rents with that for the of affordable housing and by the type and proposed competition for mainstream HAG. This condition of the stock. We hope, however, that it would allow us to run competitions for a mixture will at least encourage landlords to consider the of affordable housing in given areas. We would scope that they have to adjust the mix of their welcome views on whether we should explore stock in particular areas. Where such scope this possibility further. exists, the proceeds arising from higher rents or sales would be available to contribute towards QUESTIONS the costs to the landlord of meeting the need for new stock and of improving remaining stock. 20. Do you agree that we should subsidise the development of houses for mid market rent? QUESTION 21. If so, should the subsidy be awarded as part 23. Do you agree that we should encourage of the competitive regime for awarding HAG landlords to look at means of adjusting the that we are proposing? mix of their stock in the interests of achieving 22. If not, how would you increase variety in more sustainable mixed communities? social housing? THE DEVELOPMENT OF AFFORDABLE IMPROVING VARIETY IN EXISTING STOCK HOUSING FOR RENT BY PARTIES OTHER Our proposals on mid-market rents are intended THAN SOCIAL LANDLORDS to encourage social landlords to make their new At present social landlords are either local developments more varied and therefore more authorities or RSLs. Until now it has been the appealing to a wider mix of prospective tenants. policy that RSLs alone are eligible to receive We also wish to encourage the development of Government subsidy to build new houses for more variety in the existing stock of all social social rent. In practice, therefore, anyone seeking landlords, particularly in areas where social a subsidy to build a house for social renting has housing is most concentrated. had to be registered and regulated by Communities Scotland. Therefore, we propose giving landlords the flexibility to respond to local demand by enabling This arrangement has ensured that public funds them to convert existing stock to mid-market provided to support the creation of new social rent and to sell stock on the open market where it housing are used only for that purpose. It is an makes strategic sense for them, addresses need important objective, but there is a risk that in the local housing market and is consistent seeking to secure it through the requirement with the creation of a more mixed community. to be registered may deter some prospective landlords from providing houses for social rent – inhibiting the supply of much needed affordable homes where they cannot otherwise be provided.
46 CHAPTER SIX
Our proposals to provide funding for local Over 480,000 tenants have bought their homes authorities to build council houses are in part a since 1980, allowing them to meet their housing response to that concern. aspirations and helping to create stable mixed- tenure communities.38 However, the Right to Buy If possible, we want to remove other obstacles to can aggravate affordable housing shortages in the provision of new affordable housing and wish areas of housing pressure, which is why the to explore whether, in some circumstances, we operation of the scheme was adjusted by could safeguard public funds in a more light legislation in 2001. handed fashion. The 2001 changes were intended to strike a better For example, it might be possible to make balance between the needs of the community subsidies available on a contractual basis. This and those of individual tenants. The full effects of could be appropriate in specific circumstances, these “modernised” Right to Buy arrangements such as pressured rural housing markets where have still to be seen and understood. We stand private landowners are unwilling to split up by our manifesto commitment to review the estates by selling off small pieces of land for Right to Buy and will do so when the effects of development by RSLs, but are prepared to the modernised arrangements are clearer. develop and manage rented housing themselves on their own land to complement local provision If necessary, we will explore ways to achieve for meeting housing and homelessness needs. greater local flexibility within the scheme, while recognising the rights of existing tenants and The extent and variety of circumstances where ensuring that we achieve value for money for our this approach might be necessary and feasible is investment in new build stock. We will look at the likely to be fairly limited, but in signalling an flexibility that exists within current legislation intention to extend our approach in principle, it around discount rates, where the powers to vary may be possible to create an additional supply discounts have not been utilised previously. of homes which otherwise would not exist. There may be scope for variation for different localities and for particular categories of QUESTIONS properties, such as large family houses, where those are in short supply. 24. Do you think that subsidies for development should be provided to bodies other than In the meantime, the pressured area mechanism registered social landlords? enables local authorities to suspend the Right to 25. What sorts of protections should be offered to Buy for some tenants in areas facing particularly tenants in these circumstances? acute pressures. Several local authorities have already applied successfully for designations under FURTHER CONSIDERATION OF THE these arrangements and it is expected that many RIGHT TO BUY FOR NEW SOCIAL HOUSING more will wish to consider this as an effective means of striking an appropriate balance where We have outlined our proposals for ending the there is pressure on social housing in their area. Right to Buy for new build social housing. In this section, we discuss our plans for reviewing how Right to Buy applies to the existing stock of social housing.
38 Scottish Executive, The Right to Buy in Scotland: Pulling Together the Evidence, 2006
47 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
QUESTION have to transfer their stock to a body that can manage it effectively, or – in the case of RSLs – 26. Do you think that the Scottish Government merge with other landlords. should vary Right to Buy discounts by (a) locality and/or (b) type of property? For local authorities, transferring all or part of their stock to a RSL created for the purpose IMPROVING THE QUALITY OF EXISTING remains a possibility. We have no objection in HOUSING principle to this course and would be prepared to The Scottish Housing Quality Standard (SHQS) is consider proposals for full or partial transfers, the test of whether a house is in decent physical particularly in cases that qualify for the Treasury condition. We believe that the Standard to write-off the debt associated with the stock represents the minimum acceptable level of being transferred. However, we are prepared to quality for Scotland’s social housing. We expect consider such proposals only where they have all social housing to meet, or exceed, the the support of tenants and are based upon a Standard by 2015, unless it is clear that this is business case that demonstrates how the new not practicable or could be achieved only at RSL will acquire the capacity and resources to disproportionate cost. achieve compliance without any additional financial support from us. We are monitoring landlords’ progress towards the gradual achievement of full compliance over We have asked Treasury to consider in what other the next eight years. Our assessment to date of circumstances, besides stock transfer, they landlords’ plans for achieving compliance suggests would be prepared to write off local authority that there is no risk to landlords meeting the housing debt. Meantime, where tenants do not Standard for the vast majority of all social houses support stock transfers, local authorities will in the country. have to identify alternative means of acquiring the capacity and resources to achieve A minority of landlords appear to be at risk of not compliance. This is likely to mean creating a meeting the Standard, at least in respect of some separate organisation that would operate at arms of their properties. The causes of this risk spring length from the local authority to manage stock from a combination of poor stock condition, high that the authority would continue to own. A management and maintenance costs and weak number of Scotland’s local authorities have finances with high levels of debt. created similar organisations to manage other activities, such as leisure services. In cases where it is clear that it is not technically feasible for a property to be brought up to the Each arm’s-length management organisation energy efficiency element of the Standard, or that (ALMO) would be required to achieve specified this could be done only at disproportionate cost, outcomes, including SHQS and measures of we are content for the property to be exempted service and performance, which the local from that element. In all other cases, it is essential authority would set. Its managers would be for tenants that landlords find ways of meeting accountable to the authority for achieving the the Standard. outcomes and would have full autonomy from the local authority in determining how to do so, If landlords conclude that they lack the enabling them to run the ALMO as a separate managerial capacity or financial resources to business with the freedom to act solely in pursuit meet the Standard, they will need to explore of the objectives set for it by the local authority. options for making good these deficiencies. In practice this will mean forming partnerships with Evidence from England and Wales, where ALMOs stronger, better performing landlords to manage manage one-fifth of all social housing, is that their stock. Where that is not feasible, they may with properly set objectives they can achieve
48 CHAPTER SIX
substantial improvements in the quality and BETTER NEIGHBOURHOODS efficiency of housing management and bring Good quality houses of the right type and tenure substantial benefits for tenants. mix and good quality services are essential if we are to create places where people want to live. Whether efficiency improvements in Scotland Focusing on these factors is essential if we are to would be sufficient to achieve the SHQS would improve the perceptions of areas suffering depend, among other things, on the level of debt deprivation and stigma. But the quality and mix that the ALMO had to service, as the Treasury of houses are not the only factors in creating does not write-off the debt associated with stock vibrant, mixed and sustainable communities. The managed by ALMOs. Where debt levels appeared quality and management of the environment and to constrain an ALMO’s ability to deliver the public space are also critical elements. improvements required to achieve SHQS, there could be arguments in favour of the Government There are very many examples of places where giving the ALMO additional financial support. the development of new, affordable homes has been accompanied by a focus on the quality of We are conscious that such support would be at the public spaces, including green spaces, within the expense of other public services and could be neighbourhoods. Examples include Crown Street seen by some as a reward for previous poor in Glasgow and Petersburn, Airdrie, where the financial management. On the other hand, community has developed a new local park to denying ALMOs the possibility of assistance complement the housing redevelopment. under any circumstances would effectively mean tenants having to bear the consequences of their Often, but not always, the lead role in developing landlords’ past poor performance. these initiatives has been the RSL responsible for new housing development. But we recognise that We are not prepared to condemn some tenants to this can sometimes be the part of a development permanently poorer standards than others. that gets missed or gets squeezed out for Therefore, we will consider providing a measure financial reasons. And often the maintenance of of financial support, but only where an ALMO has public space seems to be a bone of contention or improved its performance over a number of years again, the part of proposal that gets diluted in line with a programme agreed between them because it is difficult to fund in the long term. At and us in advance. We believe that this approach the same time, it is one of the factors that many will give managers an incentive to improve tenants and residents say reduces their satisfaction services, while safeguarding public funds. with the neighbourhoods where they live.
QUESTIONS We are keen to encourage social landlords and other 27. Do you agree that ALMOs can provide a neighbourhood stakeholders to work together in satisfactory alternative to stock transfers? devising solutions to the problems of particular neighbourhood needs. So any proposals for 28. Do you think that additional help from tackling this issue need to be in line with the Government to enable landlords to meet the wishes of those living in the area and to be SHQS should be linked to improvements in a developed on the basis of co-operation among landlord’s performance? local stakeholders. 29. If so, what measures do you think would be beneficial? If not, why not? We want to develop new ways of approaching this agenda and through this consultation hope to generate ideas and suggestions. We intend to develop a number of projects around Scotland that focus on the key features of creating mixed,
49 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
sustainable communities. One of these factors IMPROVING ACCESS AND CHOICE IN LETTINGS will be the “quality of place”. We intend to make We believe that Common Housing Registers a small amount of funds available to enable (CHRs) are a crucial tool in simplifying and partners in these projects to develop high quality maximising access to social housing, where local public spaces and proposals for long term authorities and RSLs work in partnership to use a management. In this way we will test out common application form for all their stock. CHRs a range of approaches. cut out the duplication of applicants applying to multiple landlords while promoting access to the We are also looking, with Greenspace Scotland full range of social housing in an area. They allow and the Glasgow and Clyde Valley Green Network, a combined housing list to be maintained, giving at the possibility of introducing guidelines and a more accurate picture of housing demand, standards for the quality assessments of and are often accompanied by the benefits of Greenspace in neighbourhoods. We think that a co-ordinated housing information and advice, range of stakeholders may be well placed to take shared needs assessments and harmonised the lead on this agenda and that this could vary or common allocations policies. from neighbourhood to neighbourhood. It may be that as the main landlord, an RSL is best placed Many areas of Scotland have developed excellent to take on this role, but other stakeholders, such CHRs, and other areas are making good progress as the local authority or local Greenspace Trusts, and expect to launch a CHR in the next year.39 The might be better placed in some situations. good practice behind CHRs has been promoted in Scotland for a number of years and all areas We are concentrating in this consultation on have received funding to help develop a CHR. We physical quality rather than on the extensive want to see that progress maintained and effort agenda of people focussed interventions in renewed across all areas so that there is a CHR in communities experiencing multiple deprivation. every area of Scotland. We will consider whether The substance of that agenda is quite rightly the the time is right to bring into force the provision remit of community planning partnerships and in the Housing (Scotland) Act 2001 to make it regeneration outcome agreements. Linking the mandatory for local authorities to develop and physical agenda about “place” to this “people” maintain a CHR. based agenda is obviously of the utmost importance and through the Government’s five We support the practice of choice based letting strategic objectives, we will work to ensure that for social housing. We recognise that it cannot be such links are made. applied to its intended effect in circumstances where demand significantly outstrips supply. QUESTIONS Even so, it can assist prospective tenants in 30. Do you agree that we need to find new ways of more pressured areas by giving them a realistic focussing on the quality of place/open space understanding of the extent and nature of such and greenspace within deprived choice as exists. This helps them to make neighbourhoods? informed decisions about the options available to them. Evidence suggests that those obtaining 31. Do you have suggestions for approaches that houses in this way tend to be more satisfied with are not resource intensive and that include their allocations and are more likely to maintain stakeholders? their tenancies than are those allocated houses 32. Do you agree that the lead role (and recipient through traditional allocations systems.40 of any resources) to undertake this work should be open to a range of stakeholders?
39 Scottish Housing Best Value Network, Common Housing Registers baseline Study Report, 2007. 40 Pawson, H. et al, Monitoring the Longer Term Impact of Choice Based Lettings Communities and Local Government, Department for Communities and Local Government, UK Government, 2006.
50 CHAPTER SIX
We know that demand for social housing, CONCLUSIONS including responding to the high level of The proposals outlined in this chapter are aimed homeless applications, makes housing at improving the supply, quality and choice of allocations a difficult and pressured area for social housing. They are focussed on the landlords. This is not a new development, and outcomes that social landlords can achieve for it is important for landlords to recognise the tenants, those in housing need, the communities flexibility that they have to develop allocations in which they operate and the value they can policies, in consultation with their tenants, that achieve for public expenditure. They reflect our suit their circumstances. view that a thriving social housing sector that meets the needs of a rapidly changing society Recent research has confirmed that landlords will be a diverse sector with a range of providers, find it difficult to navigate the different statutory including local authority landlords, and a variety requirements and policies in this area.41 We are of RSLs, some large, some specialist and others committed to improving clarity in this area and continuing to build on the strengths of the addressing the issues identified. We will consider community based movement. the research findings and the need for new guidance on allocations that will help landlords Quite deliberately, we have not sought to specify understand the requirements upon them and or describe a template for the future of the make use of flexibility they have. sector. We recognise that social landlords each face their own particular challenges and it is for We recognise that some landlords would like to them to decide how to respond to them in a way see changes to the statutory requirements on that meets the needs of their tenants and allocations and will consider suggestions that communities and that reflects their own would help them to achieve mixed and traditions and values. sustainable communities while meeting the needs of the most vulnerable in society. Our Our concern is to ensure that our expenditure on forthcoming consultation on the regulations social housing supports the supply of as much allowing local authorities more flexibility in good quality housing as possible in the areas discharging their homelessness duties is in that it is needed, and that the existing stock of accordance with this thinking. social housing is managed and maintained efficiently and effectively. It is for social landlords themselves to acquire the skills and expertise to secure these outcomes. Whether they do so at their own hand or in partnership with others is a matter for them to settle.
41 Britain, A., et al, Tensions Between Allocations Policy and Practice, Scottish Government Social Research, 2007.
51 CHAPTER SEVEN: TENANTS – PROTECTING AND PROMOTING INTERESTS
We put the interests of tenants – current and An absence of choice weakens the ability of future – first. Social housing will have no future tenants to shape their future. It also contributes unless we do – because meeting the changing towards the sense that social housing is separate demands and aspirations of tenants is the key to from mainstream housing. For these reasons, we coping with a society that has changed a great want to initiate a debate with tenants’ groups and deal and will go on changing in future. The reforms landlords about the merits of strengthening the that we propose to make to improve the supply of role of tenants, so that they can become more social housing, to widen the choice that is empowered customers of their landlords. available, and to raise the standards that are on offer, will all work in favour of tenants’ interests. We strongly support the work that is going on across Scotland to strengthen the network of Despite these initiatives, however, it remains the Registered Tenants Organisations. In time, the case that demand for social housing will remain network will give tenants a strong regional and strong for as far as we can see ahead. Allocations national voice. policies will continue to be determined by need, rather than individual choice and as a result, social However, an approach that relies only on housing will for the most part continue to be strengthening existing participation structures rationed. Consequently, tenants in social housing will not be enough. Participation does not will not have the choice available to those in the necessarily bring with it power or a wide-range owner occupied and private rented sectors. of choice, particularly over longer-term issues. Recognition of this fact has long underpinned the need for effective regulation of social housing providers.
52 A regulator can protect the interests of tenants A MODERNISED APPROACH TO REGULATION and prospective tenants and compensate for We believe that the purpose of regulation as it is their relatively weak bargaining position vis-à-vis applied to social housing – should be as far as is landlords, particularly in terms of improving practical to protect tenants – current and future efficiency or service quality. Other groups that – from unacceptable or unmanaged risks. The can benefit from regulatory protection are principal risks that we expect social housing homeless people, Gypsies/Travellers and owners regulation to address (working alongside our factored by social landlords. other legislative, policy and funding mechanisms) are: Our decision to abolish Communities Scotland has implications for the regulatory function, as > tenants being poorly served by their landlords does our desire to stimulate innovation and choice and neighbourhoods being unattractive in the provision of social housing. The recently places to live; published Crerar Review also has a bearing on > tenants’ interests – current and future - being how the function is discharged in future. impaired by a landlord’s failing properly to maintain stock which has been significantly In due course, we will set out the way in which part-funded by taxpayers; and the Government will respond to Professor Crerar’s findings as they might shape the wider landscape > social landlords failing in their obligations to for scrutiny. As a starting point, however, it is provide tenants with continuing housing important to recognise that the way in which services, or to fund housing quality regulation works to safeguard and promote the improvements, or to contribute to the interests of tenants and others, is an important development of new supply as a result of poor component of a successful future for social leadership or financial mismanagement. housing. The current regulatory function has helped to As part of the steps we will be taking to abolish raise standards of practice and has led to Communities Scotland, we will put in place intervention where performance is weakest to interim arrangements to ensure that the secure improvements. It has commanded regulatory function which Communities Scotland significant confidence amongst the financial discharged on behalf of Ministers, continues to community and enabled housing associations – operate at arm’s length from Ministers. In the that rely significantly upon private finance to longer term, we will build on the success and provide the huge majority of new affordable strengths of the regulatory function, to make housing in Scotland – to enjoy advantageous more explicit the way in which regulation serves rates on borrowing. This has greatly benefited the interests of tenants – current and future – tenants, landlords, and the taxpayer. We want to and others. We outline below the principles that protect this significant measure of confidence. we propose should underpin the modernised High standards of long-term financial regulation of social housing. sustainability are vital to the provision of new social housing.
53 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
We also believe, however, that reform is needed in strategic direction on standards. So, we the following areas to reflect the changing policy propose that the modernised arrangements context, to strengthen the focus of housing should include a greater separation between regulation on the things that will matter most in standard setting and measurement. Central the future, and to make regulation more effective: government should set out the strategic direction and standards for social housing. Focusing on current and future tenants: In The regulator should hold landlords to account the current Regulatory Code of Practice for on compliance or performance against these Communities Scotland, Ministers have set out standards and, where appropriate, set out a range of objectives for the regulator. We more detailed operational standards and propose that social housing regulation should timescales for required compliance. The be more explicitly focussed on regulating for regulator would provide advice to Ministers the benefit of consumers of housing and in setting standards. related services, with an explicit duty to promote their needs and interests. So, we Reducing regulation and inspection burdens: propose that the modernised arrangements We are committed to reducing the regulatory should give greater prominence to the burdens on social housing providers and regulator’s purpose in promoting and propose that the modernised arrangements protecting the interests of current and future build on changes already being made by tenants and other consumers of housing Communities Scotland in its more risk-based services. This would require the regulator to and proportionate approach, so that build on its current engagement with these regulation operates on the basis of the consumers and their involvement in its following principles: scrutiny processes. > There should be a clear recognition that Greater independence: Crerar suggested a responsibility for meeting standards, number of core principles for regulators. improving performance and achieving value These include independence from Ministers, for money rests with housing providers. In the freedom to make judgements about particular, responsibility rests with governing service delivery and to report on these bodies and elected members through their publicly and the ability to decide on their own own internal scrutiny and performance how to discharge their functions. While management arrangements. Therefore, self Communities Scotland currently acts with assessment by housing providers should, in operational independence and freedom in most circumstances, form the starting point its regulation function, it is still exercising for any decision about the need for further powers on behalf of Scottish Ministers. We scrutiny by the regulator. propose that the modernised arrangements should include the attributes outlined in the > There should be no cyclical programme of Crerar Review. inspections of social landlords, and once the current round of baseline inspections of local Separating standard setting and authority landlords is completed, routine measurement: Within the framework that inspections of this nature should cease. Communities Scotland operated, it set Inspections or investigations will still have performance standards (in partnership with a role to play in improving housing services. the sectors it regulates) and measured But they will be triggered by performance landlords against these standards. But this concerns and be targeted, risk-based and can lead to a lack of transparency and proportionate; or follow particular themes accountability because only Government, with to seek out sector wide improvement or to its accountability to the Scottish Parliament assess the impact of policy changes. for housing policy generally, can set a
54 CHAPTER SEVEN
> There should be lighter touch regulation for on behalf of Scottish Ministers are relatively the better performers. severe and intrusive. We propose to review and modernise these intervention powers to > The regulator should gather consistent, reliable provide a broader range of possible enforcement performance information from housing and intervention measures that can be providers that is used and useful, in a cost escalated and exercised in a more graduated effective way. This should be aimed at making and proportionate way. These “lower level” sound risk assessments (to focus attention interventions could include information on poorer performers), giving key information requests, a right to inspect or investigate, to relevant stakeholders, and helping tenants publicising a failure, an improvement or and others to be better informed about housing enforcement notice, fines or compensation, providers. This information should include and rent capping. These powers could be material on costs and efficiency, as well as exercised in relation to any social landlord. financial viability. > The regulator should play a lead role in terms PROTECTING TENANTS AND PROMOTING of assessments and performance information THEIR INTERESTS: EQUITABLE PROTECTION in relation to all social landlords and this should be relied on by other scrutiny bodies, Our proposals to create an independent to avoid duplicative information requests and regulatory function with the statutory duty to over-regulation. It should also be used to inform promote the interests of existing and future funders when a housing provider is not a tenants is critical in ensuring that tenants are suitable investment partner. well served by their landlords. Take account of the developments in the Building on the approach we have already relationship with local government: We want proposed in this paper, we also propose to review to set our proposals for social housing the more significant intervention powers regulation within broader developments in available to the regulator. Our starting point is performance management and assessment that tenants in social housing should be given frameworks for local government as they similar levels of reassurance and protection develop. In this respect, for example, a whoever happens to be their landlord. The reformed approach needs to recognise that principle of equitable protection is consistent local authorities themselves will be important with our view that the interests of tenants – customers for regulatory activity in exercising current and future – must be to the fore. their strategic place-making, housing and neighbourhood management functions. Our proposals for modernising regulation cannot For this reason they may want to trigger be implemented in full immediately as some regulatory attention on a particular issue or aspects will require primary legislation. We will landlord where there are concerns about its seek an opportunity to introduce legislation to responsiveness to strategic housing or achieve these changes, taking account of community issues. Professor Crerar’s independent review of the More proportionate and targeted intervention: scrutiny landscape in Scotland and containing Intervention should be at the minimum level enough flexibility to ensure that the new necessary to secure the desired outcome or arrangements can respond effectively as improvement and should be proportionate to policy develops over time. the issue being tackled. And organisations should have the opportunity to put things right themselves before the regulator takes action. The current statutory intervention powers that Communities Scotland exercises
55 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
PROTECTING TENANTS AND PROMOTING THEIR INTERESTS: GLASGOW The twin aim of protecting and promoting the interests of tenants and taxpayers is at the heart of our approach to the challenging issues seen in Glasgow. We want to see tenants being given a greater say in the management of the houses and their neighbourhoods, including through second stage transfer where that is what tenants want and where it is sensible and financially achievable. We want to see major and sustainable improvements in the quality of the housing stock; continuously improving services to tenants (and to owners affected by improvement works); and transformational regeneration in the city which includes a high proportion of the most deprived communities in Scotland. And we want to see the funds that are provided by Government being used in a transparent and accountable way to support these objectives.
QUESTIONS 33. Do you agree with the features and principles we have set out here for a modernised regulation framework? 34. How would you like social housing regulation to be organised? (For example, should it be a separate organisation or part of a group of other regulators?)
56 CHAPTER SEVEN
57 ANNEX A: SUMMARY OF QUESTIONS
The deadline for responses to this discussion Question 3: Is there a role for a specialist national document is 25 January 2008. function to provide expert support for local authorities in strategic planning for housing? We will aim to publish a summary of all responses What expertise do you think this function to the consultation by the end of March 2008. would require? Question 4: Even when land has planning We welcome responses to every aspect of the permission there are still blockages that prevent discussion document, but we are particularly new housing being built. What additional interested to hear views on the following arrangements would, or could, accelerate specific areas: development on land with planning permissions to help ensure that future housing supply targets Question 1: Do you agree that aiming to increase are met? the rate of new housing supply in Scotland to at least 35,000 a year by the middle of the next Question 5: We have proposed that much decade is a sensible and realistic ambition, and expanded or new, stand-alone settlements may that this will help set a necessary political be a valid solution. How should we best context for acceleration in housing supply? encourage the development of new, sustainable communities that are sympathetic to Scotland’s Question 2: Do you agree that, to give practical landscape and environment? effect to the ambition, local authorities should co-operate regionally in setting realistic housing Question 6: How should different types of targets for housing market areas, and in enabling assistance within LIFT be targeted? the delivery of these targets? If so, what arrangements should be put in place to support and provide incentives for such co-operation between relevant local authorities?
58 Question 7: How could the Government stimulate Question 20: Do you agree that we should more innovative mortgage and related products subsidise the development of houses for and services to assist people in purchasing their mid-market rent? first home? Question 21: If so, should the subsidy be Question 8: Should the Government provide awarded as part of the competitive regime for direct cash grants to first-time buyers? awarding HAG that we are proposing? Question 9: How can the private house-building Question 22: If not, how would you increase sector play a bigger role in providing, without variety in social housing? public subsidy, increased provision of affordable Question 23: Do you agree that we should starter homes? encourage landlords to look at means of Question 10: What issues do you consider should adjusting the mix of their stock in the interests of be taken into account when considering the achieving more sustainable mixed communities? increased use of private sector lets to house Question 24: Do you think that subsidies for low-income and homeless households? development should be provided to bodies other Question 11: How should we ensure an than registered social landlords? appropriate balance between safeguarding Question 25: What sorts of protections should be tenants’ rights and encouraging the private offered to tenants in these circumstances? rented sector to achieve its full potential in Scotland’s overall housing market? Question 26: Do you think that the Scottish Government should vary Right to Buy discounts Question 12: Do you think there is sufficient by (a) locality and/or (b) type of property? engagement between the public sector and private landlords? If not, what else should Question 27: Do you agree that ALMOs can provide national and local government be doing? a satisfactory alternative to stock transfers? Question 13: What other options should we Question 28: Do you think that additional help consider for increasing the supply of private from Government to enable landlords to meet the rented housing for low income and homeless SHQS should be linked to improvements in a households? landlord’s performance? Question 14: How could more private landlords Question 29: If so, what measures do you think be encouraged to let to tenants on benefits and would be beneficial? If not, why not? homeless households? Question 30: Do you agree that we need to find Question 15: What other schemes or incentives new ways of focussing on the quality of might help us to recycle empty properties more place/open space and greenspace within effectively? deprived neighbourhoods? Question 16: Do you agree that we should exempt Question 31: Do you have suggestions for new build social housing from the Right to Buy? approaches that are not resource intensive and that include stakeholders? Question 17: Do you agree that we should subsidise local authorities in areas of need to use Question 32: Do you agree that the lead role (and their prudential borrowing capacity to build new recipient of any resources) to undertake this council houses? work should be open to a range of stakeholders? Question 18: Do you agree that we should Question 33: Do you agree with the features and introduce large-scale competitions for subsidy? principles we have set out here for a modernised regulation framework? Question 19: If not, how would you ensure that public subsidy is used to build as many good Question 34: How would you like social housing quality RSL houses as possible? regulation to be organised? (For example, should it be a separate organisation or part of a group of other regulators?)
59 ANNEX B: THE SCOTTISH GOVERNMENT CONSULTATION PROCESS
Consultation is an essential and important aspect Consultation exercises may also involve seeking of the Scottish Government’s working methods. views in a number of different ways, such as Given the wide-ranging areas of work of the through public meetings, focus groups or Scottish Government, there are many varied questionnaire exercises. types of consultation. However, in general, Scottish Government consultation exercises aim Should you require this document in an alternative to provide opportunities for all those who wish to format or a translation into a community express their opinions on a proposed area of work language, this is available on request, please to do so in ways which will inform and enhance contact Becky Smith on 0131 244 7753. that work. Copies of all the written responses received to a The Scottish Government encourages consultation consultation exercise (except those where the that is thorough, effective and appropriate to the individual or organisation requested issue under consideration and the nature of the confidentiality) are placed in the Scottish targetaudience.Consultationexercisestakeaccount Government library at Saughton House, of a wide range of factors, and no two exercises Edinburgh (K Spur, Saughton House, Broomhouse are likely to be the same. Typically, Scottish Drive, Edinburgh EH11 3XD, telephone 0131 244 Government consultations involve a written paper 4565). All Scottish Government consultation inviting answers to specific questions or more papers and related publications (e.g. analysis of general views about the material presented. response reports) can be accessed at: Written papers are distributed to organisations http://www.scotland.gov.uk/consultations. and individuals with an interest in the issue, and they are also placed on the Scottish Government website enabling a wider audience to access the paper and submit their responses.
60 The views and suggestions detailed in consultation responses are analysed and used as part of the decision making process, along with a range of other available information and evidence. Depending on the nature of the consultation exercise the responses received may: > indicate the need for policy development or review; > inform the development of a particular policy; > help decisions to be made between alternative policy proposals; and > be used to finalise legislation before it is implemented.
Final decisions on the issues under consideration will also take account of a range of other factors, including other available information and research evidence.
While details of particular circumstances described in a response to a consultation exercise may usefully inform the policy process, consultation exercises cannot address individual concerns and comments, which should be directed to the relevant public body.
61 FIRM FOUNDATIONS: THE FUTURE OF HOUSING IN SCOTLAND
62 © Crown copyright 2007
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RR Donnelley B53082 10/07
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