London Councils’ response to the Mayor’s draft London Housing Strategy London Councils is committed to fighting for more resources for the capital and getting the best possible deal for London’s 33 local authorities. We lobby key stakeholders, develop policy and do all we can to help our boroughs improve the services they deliver. We also run a range of services ourselves, all designed to make life better for Londoners. London Councils’ Members sit on the Homes and Communities Agency London Board overseeing the Homes and Communities Agency’s investment strategy in London and the delivery of some aspects of the Mayor’s Housing Strategy. Summary Following discussion at London Councils’ Executive, Housing Forum and London Councils’ Housing Directors Group the following paper sets out our response to the Mayor’s draft London Housing Strategy. For ease of reference, we have focused our response on three areas: delivery, devolution and design. Our key proposals on each are as follows: Delivery • A short review of the current effectiveness of the Homes and Communities Agency London Board; • The Mayor commits to a review of London borough affordable housing targets as delivery becomes apparent; • That the Greater London Authority works with us to develop a coherent plan of action so as to encourage the growth of institutional investment in London and to make best use of work already being undertaken by the Homes and Communities Agency; • The Greater London Authority works with London Councils to develop a pan-London shared-equity scheme, to sit along side other elements of the Mayor’s First Steps programme; • The Greater London Authority works with London Councils and London boroughs to oversee and manage the rollout of the London Development Agency’s proposed London-wide Housing Company. Devolution • The Greater London Authority works with the Homes and Communities Agency and London boroughs to establish a ‘Devolution Commission’ on housing investment and governance which would explore a potential model for devolution in the capital; • The Greater London Authority works closely with London Councils in developing an approach to the rationalisation of the housing association sector; • The Greater London Authority works with London Councils to develop an appropriate strategy to tackle the likelihood that not all local authorities will be able to meet Government’s target to halve the use of temporary accommodation by 2010. Design • The principles of the Mayor’s Design Guide be adopted generally, but that provision be created for exceptional instances where aspects might be waived for particular developments of a certain scale; • The Greater London Authority commit to working with London boroughs on developing a costed successor standard to the Decent Homes standard. Introduction 1. Housing policy shapes the political and economic contours of the capital like no other public sector intervention: levels of worklessness, educational attainment, quality of life, levels of democratic engagement and business competitiveness are all influenced by people being able to access stable, secure and suitable accommodation, be it through owning their own homes or renting in the private or social sectors. 2. Delivering these homes, however, is proving to be an exceptionally challenging task. Even before the current economic crisis, London struggled to meet the housing needs of Londoners, with nearly 50,000 households still in temporary accommodation and 350,000 households on London borough waiting lists. Similarly, outside the social rented sector, first time buyers have seen themselves increasingly frozen out of the market as the ratio of household incomes to house prices has soared and access to mortgage finance has dried up. 3. London Councils firmly believes that London local government, the boroughs working with the Mayor and the Greater London Authority, have a crucial responsibility to tackle these challenges, to work together to deliver the homes London so desperately needs. Recent developments have also underlined the need to provide people with a genuine choice, with opportunities to access homes that meet a wide variety of needs, across a range of tenures, but without compromising on standards. 4. The Mayor’s draft London Housing Strategy, goes a long way to establishing a coherent, well thought-out vision for delivering housing across London. On the whole, the Strategy is to be welcomed and London Councils is keen to stress its commitment to working with the Greater London Authority for the benefit of London’s communities. 5. As such, we have focused our response on those areas where we feel that the boroughs and London Councils has a particular role to play and where we believe the Mayor’s proposals would benefit from further discussion and engagement. These are: delivery, devolution and design. Within each area we have set out the specific topics we are most concerned with and proposed a way forward. Delivery Arrangements of the Homes and Communities Agency London Board 6. The Homes and Communities Agency London Board, Chaired by the Mayor and attended by three Borough Leaders is the key mechanism for approving the allocation of approximately £3.5 billion of National Affordable Housing Programme resources in London and the driving force behind the effective implementation of many innovative housing market interventions. Since its inception in December 2008, not only has the role of the public sector in delivering more affordable housing proved to be more crucial than ever, but the need for a strong, representative board, one legitimately able to make the case on behalf of London has been underlined. 7. Clearly, there is much to be proud of: London Councils and the Greater London Authority’s joint efforts to secure the return of £268 million of Growth Support Affordable Housing Funds; the co-ordinated response both organisations developed in light of Government’s recent decision to potentially delay decent homes funding to local authority Arms Length Management Organisations yet to achieve two stars. However, with market conditions affecting housing supply over the next year likely to be exceptionally turbulent, we feel that London would benefit from efforts to ensure that the board is best-placed to deal with these challenges. London Councils proposes that the Greater London Authority, working with the Homes and Communities Agency and London boroughs undertakes a short review of the current effectiveness of the Homes and Communities Agency London Board. This review could consideration of: decision-making processes and officer support. Ideally, it should be concluded before the end of 2009. Affordable Housing Targets 8. The Mayor’s decision to step-back from the requirement that 50 per cent of all new housing developments be affordable and instead adopt an overall target for London of 50,000 affordable homes for the period 2008-11 has attracted a range of views, but is cautiously welcomed. London desperately needs more affordable housing and to the extent that the removal of the 50 per cent target potentially encourages greater levels of delivery and a more collegiate relationship between the Mayor and London’s boroughs, we are keen to endorse these arrangements. 9. However, we are concerned at the degree of progress in negotiating these targets and by the possibility that both economic conditions and national policy decisions may place undue pressure on boroughs to achieve targets set within a markedly different context. 10. The recent announcement by the Homes and Communities Agency to lower projections relating to the number of affordable homes to be delivered from National Affordable Housing Programme resources for the period 2008-11, from 44,000 to 37,000 serves as useful illustration in this regard. New homes can only be built if there are sufficient resources to do so. With increased levels of grant required to facilitate delivery through housing associations, it necessarily follows that, all else being equal, for a given level of resources the number of homes which can be delivered decreases. 11. The Government’s review of council housing finance potentially paves the way for local authorities to build directly if they choose, to lever in additional resources from locally raised rental income. It is therefore possible that a recovered housing market, in combination with extra resources from Government will allow London boroughs to make significant progress towards achieving the Mayor’s aim. However, to ensure that this shared goal of meeting London’s affordable housing needs is supported effectively, we believe a degree of ongoing evaluation would be appropriate; to identify where there are barriers and where additional resources and flexibility might be appropriate. London Councils proposes that the Mayor should commit to a review of affordable housing targets, as delivery becomes apparent. The review should be based on a comprehensive appraisal of relevant macro-economic factors and should be underpinned by a robust assessment of borough demand, capacity and engagement. Institutional Investment in the Private Rented Sector 12. With the highest house prices in the country, the highest levels of homelessness and overcrowding, a good quality, viable affordable private rented sector is a fundamental pre-requisite in enabling the London boroughs to address housing need, prevent homelessness and promote choice whilst supporting flexibility in the employment market. 13. In 2009, 20 per cent of London households privately rent their home and whilst the percentage of home owners has shrunk over the past three years, the number of renters has increased by over 22 per cent over the same period. 14. Consequently, due to the strategic importance of the private rented sector to London’s wider ‘housing offer’ and the capital’s economic well-being, London Councils welcomes the Mayors aims to support the sector with the underlying objective of maintaining choice and sectoral flexibility. In particular, we welcome recognition of the need to engage with institutional investors and to explore the role new sources of finance capital might play in helping expand and improve private rented sector provision.