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Kent Housing Group 3rd February 2011 The Implications of the Spending Review and Emerging Policy for Housing Chris Cobbold Director of Housing Practice Group [email protected] The Policy Deluge The Abolition of the RSSs New Homes Bonus Local Standards Framework The Spending Review Local Growth The Policy Deluge Local Decisions – Social Housing LA Financial Settlement Localism Bill Self financing for Council Housing ...etc ...etc The RSS Boomerang July – the RSSs revoked 160,000 homes ditched 300,000 by end of 2011 Revocation ‘unlawful’ Localism Bill published Inter-regnum Planning for Housing without the RSS Local Plans have to be ‘sound’ Sub-Regional Market analysis Key Elements of Analysis Economic Drivers Demographic Drivers Housing Need Land Supply – Capacity Where are you in the LDF process? The New Homes Bonus Average Council Tax Band D = c£1,440 Paid a year in arrears... ...for 6 years Plus £350 for each affordable home New homes and empties The New Homes Bonus – what is it worth? 250 homes pa £1,400 pa £350k in 2012-13 Grows by £350k pa By 2017-18 receive £2.1 m Issues Managing community expectation Expenditure outside CSR Period Impact of a change of government? Borrow against anticipated income? Potential to forward fund infrastructure How much additionality? The Local Standards Framework Building regulations and standards Simplification and standardisation A menu approach Housebuilders and LAs to work together An agreed Local Standards Framework National Planning Policy Framework 2012 The Spending Review – the NAHP CSR 2008-11 CSR 2011-14 No. of Years 3 4 Funding in £bn 9.0 4.5 Funding pa in £bn 3.0 1.125 Dwellings Target 153,176 up to 150,000 Public cost per dwelling £59,000 £30,000 Existing commitments on NAHP - £2.4 bn The Affordable Rent Programme Affordable Rent from 2011 Up to 80% of market rents Shorter term tenancies New development and empties Re-lets can be changed to AR New ‘Flexible Tenancy’ Opportunities and Challenges Stretches NAHP resource Enhanced RP borrowing Impact on scheme viability Social rent Impact on HB budget Different providers Other Features of the Spending Review £2 bn for Decent Homes Reform of the HRA Borrow against rental streams? For repairs, improvements, new building Link to prudential borrowing? New housing on LA land £100 m for Empty Homes 3000 homes £33k per home Other Features of the Spending Review DFGs £720 m Not ring fenced Preventing Homelessness - £357 m £200 m for continuation of Mortgage Rescue Scheme £6.5bn for Supporting People Local Growth: Realising Every Place’s Potential Tax Increment Finance Mixed use regeneration Local Enterprise Partnerships Role in strategic planning ‘Transport, housing and planning’ ‘strategic housing delivery.... ...pooling, aligning funding streams’! Business Increase Bonus Business Rate Retention Reform of Planning Presumption in favour of sustainable development Communities ‘centre stage’ in planning Neighbourhood Plans Right to Build Streamlined Local Development Plans Streamlined National Planning Framework Regional Growth Fund £1.4 bn over 4 years Objectives Stimulate enterprise and private sector jobs Focus on areas over dependent on public sector jobs Includes infrastructure investment... ... ‘to improve housing supply Round 1 bids emphasis on jobs Local Decisions: A fairer future for Social Housing New tenure for Affordable Rent Fixed period Continuation subject to review Broader tenancy options for LAs Existing secure tenants unaffected Flexible Tenancy option for LA relets Time limited, minimum 2 years LAs to prepare Tenancy Strategy New Tenancy Standard Local Decisions: A fairer future for Social Housing Management of waiting lists Foster mobility of social tenants House people in the PRS Regulation of social housing Reform of the HRA Self Financing for Council Housing HRAs to be run as social businesses Move to self financing by April 2012 – – – – step 1 – value the business step 2 – estimate current housing debt step 3a – surplus value paid to the government step 3b – surplus debt paid off by government Rental growth formula specified Controls on HRA borrowing Freedoms to dispose of assets But 75% of RTB receipts to HMT To summarise: Affordable Housing Less money More flexibility Greater scope for innovation New forms of provider Increased local decision making Greater diversity of provision To summarise: Planning Enhanced uncertainty Push LDFs forward Establish new evidence base Work sub-regionally Unlikely to deliver more housing Annual Net Additional Dwellings in England 250,000 Net Additional Homes 200,000 150,000 100,000 50,000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Source: CLG Live Table118 Page 22 Mortgage Availability and Cost – significant constraints continue on mortgage lending Volume of Mortgage Approvals August 2001 – Aug 2010 Value of Mortgage Approvals August 2001 – Aug2010 Page 24 Q4 1996 Q1 1997 Q2 1997 Q3 1997 Q4 1997 Q1 1998 Q2 1998 Q3 1998 Q4 1998 Q1 1999 Q2 1999 Q3 1999 Q4 1999 Q1 2000 Q2 2000 Q3 2000 Q4 2000 Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Current Position: The market remains subdued by historic standards Index of Sales Volumes 4 Quarter moving average: Prime London defined as Kensington & Chelsea, Westminster and Camden Boroughs Index: 100 = 1996 Q4 160 140 120 100 80 60 40 20 0 England and Wales London Inner London Prime London Source: Land Registry Page 25 Conclusion Local Authorities and their partners are going to have to work harder still to get the homes their communities need The Kent ForumHousing Strategy identifies what needs to be done Page 26 Questions and Comments