ao link
Twitter
Facebook
Linked In
Twitter
Facebook
Linked In

You are viewing 1 of your 1 free articles

Wales’ review of affordable housing policy: has spring sprung for the sector?

With a long-awaited report into how to stimulate supply due in the coming weeks, Nathaniel Barker looks at what the Welsh housing sector needs to spark a renaissance.  Illustration by Veronica Grech

Linked InTwitterFacebookeCard
Sharelines

What will the Welsh review of affordable housing have in store? #ukhousing

"There is a need for this review to be ambitious and creative” - is Welsh housing on the brink of a revolution? #ukhousing

Increasing supply vs keeping funding levels in check: Welsh housing's juggling act #ukhousing

Next month may see the beginnings of a new era for affordable housing in Wales.

On 1 May, a Welsh government-commissioned independent panel will issue recommendations from its landmark review of affordable housing supply policy. It follows a full year of meticulous work by the review’s chair, Lynn Pamment, government and public services lead at PwC, and the five other expert panellists.

Boosting supply in a way that ensures value for money is the key focus, alongside other central themes including rent policy, collaboration and delivering zero-carbon homes.

As politicians, officials, housing associations and councils keenly await the review’s publication, we explore the sector’s hopes and expectations.

In many respects, the affordable housing sector in England must look at the Welsh policy environment with envy. Grant rates are relatively more generous west of the River Severn at 58%. There was no four-year rent cut of the type imposed by former chancellor George Osborne in 2015. And in January, the Welsh government officially abolished the controversial Right to Buy.

Less tangibly, but just as significantly, there is much closer liaison between the sector and ministers.

Clare Budden, chief executive of 5,700-home housing association Clwyd Alyn, agrees. “Having spent almost all my career in England, I have to say I feel extremely fortunate to be working in Wales. I don’t feel jealous of much that they have got in England. It does feel as if we have a good opportunity here in Wales to shape and influence policy.”


READ MORE

Conservative leadership runners and riders: what are their views on housing?Conservative leadership runners and riders: what are their views on housing?
Let’s rise to the challenge set by the affordable housing reviewLet’s rise to the challenge set by the affordable housing review
Partnership patron: we speak to Bovis Homes’ Partnerships Housing Division chiefPartnership patron: we speak to Bovis Homes’ Partnerships Housing Division chief
We need a government-led workforce strategy for the housing sectorWe need a government-led workforce strategy for the housing sector
Welsh housing sector ‘disappointed’ with government’s rent policy delayWelsh housing sector ‘disappointed’ with government’s rent policy delay

At the same time, Matt Dicks, director of the Chartered Institute of Housing Cymru, wonders whether ministers believe it is now the sector’s turn “for the value for money discussion” that virtually all areas of UK policy have had to undergo in the past decade. “There is a narrative in the Welsh government at the moment about more bang for buck, scaling up and using money more wisely,” he observes.

Indeed, while unveiling the review last April, then-housing minister and current finance minister Rebecca Evans, said she wanted the review “to ensure we are getting the best value for money in our investments and policy”. Some have interpreted this as a hint that existing levels of funding won’t be around forever.

Clarissa Corbisiero-Peters, deputy chief executive and director of policy at Community Housing Cymru (CHC), agrees that “there is a need for the review to be ambitious and creative” in its recommendations on government funding.

These terms – ambition and creativity – are key to CHC’s current messages as the voice of housing associations in Wales. Not long before the policy review was announced, CHC launched its ‘Housing Horizons’ strategy for the sector, which pledges 75,000 new homes over the next two decades, doubling the current output.

Ministers and the review panellists will want to support this ambition, while being aware that the sector is not currently managing to sustain that level of growth, with new builds dropping 26% to 1,876 homes in 2017/18.

In summary, to meet all its aims the review has the tricky task of finding a way to accelerate affordable housebuilding without placing added pressure on already limited government resources.

For many in the sector, rents are the first thing that spring to mind when asked where Welsh housing policy needs a fresh look.

"We must get that balance between support for development and affordability for tenants in different communities” - Clarissa Corbisiero-Peters, deputy CEO, Community Housing Cymru

The sector is stinging from an unexpectedly reduced settlement to inflation-only for 2019/20, down from Consumer Price Index (CPI) plus 1.5% for the five preceding years. Ms Corbisiero-Peters says certainty of rent setting has been a particularly strong theme in housing associations’ discussions around the review over the past 12 months. “Following this transition year we really need early rent certainty,” she adds. “We are committed to increasing supply to meet need but the current settlement does make it quite difficult to do that.”

Ms Budden feels a longer-term approach to rents is key. “At the moment it’s very difficult to plan long-term. So we’d like a CPI-plus-type commitment but we also want flexibility around rents, so they are set at the right level for the different areas where we work.”

That means the ability to set rents locally, as opposed to a single settlement for the whole of Wales, where housing markets and the gaps between social and private rents vary widely.

Clarissa Corbisiero-Peters, deputy chief executive and director of policy, Community Housing Cymru

“It’s very difficult to set rents at a pan-Wales level,” says Ms Corbisiero-Peters. “Really you need to have that conversation locally, so we would really like to see a move towards local rent setting. We must get that balance between support for development and affordability for tenants in different communities.”

“For me, getting that bit right is one of the most important things in this review,” adds Ian Thomas, chief executive of 10,000-home Trivallis, which has pioneered a new living rents model.

The affordability question is also likely to feature prominently.

Jennie Bibbings, campaigns manager at housing charity Shelter Cymru, is concerned by social landlords’ hunger for rent rises. “After the rent rise that Welsh government signed off last April we had hundreds of calls from people not knowing how they were going to afford the higher rent. It feels wrong on so many levels that social housing is not affordable for people. We can’t pursue the affordable housing target at all costs – if it means current tenants having to subsidise new housing that doesn’t feel right.”

The Welsh government does appear to sympathise with this view; concern about affordability for tenants is widely acknowledged to be the reason for the lower settlement this year. Rents are likely to be the trickiest and most contentious area of the review’s work, and it is understood the panel is likely to extol the importance of a longer-term rent settlement – perhaps of five years – without prescribing a specific deal.

Grant is another area at the forefront of discussions surrounding the review. Currently, grant for affordable housebuilding is distributed to local authorities annually, based on a set formula.

“We are keen to see some movement around grant and the way it’s allocated,” says Ms Corbisiero-Peters. “We’re interested in a programme over a number of years which allows you to flex your development programme to respond to economic shock or the specific needs of a community or part of the country.”

Ms Budden agrees that “some longer-term certainty” on what the government is likely to invest in social and affordable housebuilding is needed. And Andrea Lewis, cabinet member for housing at Swansea Council and housing spokesperson for the Welsh Local Government Association, says town halls echo this sentiment. “From a local authority perspective everything revolves around our business plan and so if we have some security over a three or five-year period we would definitely welcome that,” she adds.

Inside Housing understands the review is likely to tell ministers that reform of the grant system is long overdue, although it is not yet clear what a new regime would look like. CHC has suggested a flexible, banded approach to grants which would see varying levels allocated to schemes depending on the type of tenure and local housing market – in acknowledgment that some developments are viable with less than 58% grant funding. Ms Corbisiero-Peters is clear that a “unique Welsh solution” is needed; house prices are not high enough to support the cross-subsidy model deployed in England. Mr Dicks and Mr Thomas both note that a regional partnerships approach based on city deals has also been discussed.

At a glance: the review of affordable housing supply in Wales

The Welsh government says the review will:

  • Examine the scope for increasing match-funding to build more affordable homes, to maximise the number
    of homes created by the Welsh government’s contribution to social housing
  • Review the arrangements governing partnership working between local authorities and housing associations
  • Consider the implications of moving to deliver zero-carbon homes by 2020, including the role of offsite manufacture and modern methods of construction
  • Review the standards governing affordable housing and advise on whether they require updating
  • Make recommendations regarding
    a sustainable rent policy that will both allow long-term affordability for tenants and make viable existing and new housing developments
  • Advise on how development capacity in councils and stock transfer housing associations can be maximised, especially after the Welsh Housing Quality Standard completes in 2020

Grant is another area at the forefront of discussions surrounding the review. Currently, grant for affordable housebuilding is distributed to local authorities annually, based on a set formula.

“We are keen to see some movement around grant and the way it’s allocated,” says Ms Corbisiero-Peters. “We’re interested in a programme over a number of years which allows you to flex your development programme to respond to economic shock or the specific needs of a community or part of the country.”

Ms Budden agrees that “some longer-term certainty” on what the government is likely to invest in social and affordable housebuilding is needed. And Andrea Lewis, cabinet member for housing at Swansea Council and housing spokesperson for the Welsh Local Government Association, says town halls echo this sentiment. “From a local authority perspective everything revolves around our business plan and so if we have some security over a three or five-year period we would definitely welcome that,” she adds.

Inside Housing understands the review is likely to tell ministers that reform of the grant system is long overdue, although it is not yet clear what a new regime would look like. CHC has suggested a flexible, banded approach to grants which would see varying levels allocated to schemes depending on the type of tenure and local housing market – in acknowledgment that some developments are viable with less than 58% grant funding. Ms Corbisiero-Peters is clear that a “unique Welsh solution” is needed; house prices are not high enough to support the cross-subsidy model deployed in England. Mr Dicks and Mr Thomas both note that a regional partnerships approach based on city deals has also been discussed.

Wales review of affordable housing 3

However, Mr Dicks and Ms Corbisiero-Peters warn against “unintended consequences” of a variable grant system, as the pressure to get a chunk of limited cash leads providers to promise ever more homes per pound. “Could it create a race to the bottom or a bidding war for grant rates?” questions Mr Dicks.

Of course, there will be more to the panel’s recommendations than rents and grant.

Sources surmise there may be an emphasis on local authority building, particularly now the Right to Buy and Housing Revenue Account borrowing cap have been scrapped. Swansea Council’s Ms Lewis is firm that town halls are now “in a very strong position” to deliver new housing. Helping housing associations to leverage private investment more effectively is one obvious way to boost supply without increasing direct government funding, so it may also feature.

Public sector land may also crop up. “There’s all this public sector land in Wales and not a strategic joined-up approach to opening that land up for housing development,” notes Mr Dicks. Recommendations for some form of public land agency would likely be welcomed by housing associations, which are keen to start laying more bricks on old NHS and Ministry of Defence sites, for example.

The review’s remit also alludes to the Welsh government’s zero-carbon agenda alongside modern methods of construction and standards. Ministers have already pumped £90m into this area through the Innovative Housing Fund, and Mr Thomas expects this to be a “big priority” following the panel’s recommendations. However, he warns that retrofitting of older stock to meet these aims comes with a hefty price tag that could pose “a real challenge” for social landlords – a view echoed by Ms Budden.

The panel may also issue pointers on boosting collaboration among the sector. Six North Wales housing associations have agreed to form a development joint venture as part of the region’s growth deal, but in general this is an area where Wales lags behind England.

Indeed, Ms Pamment has previously challenged the sector on why it isn’t already collaborating more, pointing out there’s little currently stopping this type of activity.

Following months of close interaction between the review panel and the sector, it is unlikely there will be any major surprises in next month’s recommendations. And it is important to remember that the review is part of the early stages of a wider process. “I would imagine that a review of this nature would set out a direction of travel and then it’s up to us to work with government to turn that into something that is workable for Wales,” says Ms Corbisiero-Peters.

However, it will be intriguing to see exactly how the review approaches the juggling act ordered by ministers – boosting supply while keeping levels of funding under control without making rents unaffordable.

Clearly, compromises will be required from the sector and Welsh government alike.

Linked InTwitterFacebookeCard
Add New Comment
You must be logged in to comment.