How we can help to fix broken housing market

Living as we do in a part of the world where house prices are many times greater than average wages, the moves in the latest Housing White Paper to recognise the increasingly important role of the rented sector are encouraging. The Department for Communities and Local Government, in releasing the White Paper, named it Fixing our broken housing market.

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How we can help to fix broken housing market

Broken it surely is. Survey after survey makes gloomy reading for young people wanting homes of their own in the South West of England. BNP Paribas Real Estate estimates that by 2020 house prices in the region will be a third higher than in 2016, reaching an average of £291,184. That 33% rise is way above London’s predicted growth rate of 16%. The Halifax Rural Housing Review of 2016 calculates that homes in the countryside typically cost £43,000, or 20%, more than those in urban areas, with buyers attracted by open spaces, a cleaner environment and a better quality of life.

Add to that the relatively lower wages in the countryside and the dream of home ownership is moving increasingly out of reach of many rural residents and workers. This affordability gap is not just an issue for individuals and families, but for the futures of the very communities they want to live in. The statistics used in the White Paper show that, in terms of home ownership, parts of Devon are as unaffordable as large swathes of London. Such situations are, as the paper rightly points out, likely to be damaging to the entire economy: low levels of building mean less work for everyone involved in the construction chain, from architects and builders to the people who make kitchen sinks.

And the more housing costs take out of wages and pensions, the less money people have to spend in the rest of the economy. Further, high rents caused by a shortage of properties mean more Housing Benefit needs to be paid out. Finally, employers may struggle to recruit the best workers if they can’t afford to be mobile and move to where the jobs are.

The White Paper draws attention to the need to release land for development, to build faster and diversify the market whilst also offering solutions and help now.

Much of it focuses on urban areas, and many of the solutions won’t necessarily translate into the countryside with its own specific housing issues. Among the challenges the paper highlights are concerns among communities about the impact of new housing. It says: “People are more likely to support new mansion blocks or mews houses on a derelict strip of land than a new estate in countryside.”

Many of the proposed measures are common to town and country. The pace of development, suggests the White Paper, is too slow. Suggested solutions include ensuring that councils’ development plans are robust and up-to-date and that their planning departments are adequately resourced. Extra funding for these departments could come from higher fees charged to applicants. The plan to recognise affordable rent as a specific affordable designation for planning purposes must also be welcomed in both city and countryside, as should the added clarity over the affordable status of Starter Homes.

Estates Director of Clinton Devon Estates John Varley explains the position of rural estates in this climate: “Rural estates are in a unique position to be able to respond to many societal demands, none more so than the government’s agenda of meeting housing demands whilst also protecting the environment; increasing biodiversity through landscape-scale conservation; managing natural resources through high standards of agriculture and land management practices, all the while contributing positively to society and providing much-needed food, energy and employment, directly and indirectly.  

“Large land owners can be part of a solution in facilitating change and innovation required across the housing industry to meet society’s needs.” 

The paper highlights the need to include local communities in decision making about where development should be located, and the need to support small and medium sized sites in rural communities.

Mr Varley added: “A lack of sustainable development in our rural communities, far from helping to preserve them, is putting them at risk. The population is continuing to grow, and to grow older. This means we need more housing, and a greater mix of properties. If working people cannot afford to live in the countryside they will move away in search of homes and jobs in towns and cities, skewing the balance of the rural population. Without farm workers to manage the countryside it will change beyond recognition. Without people to work in pharmacies, post offices and village shops, they will close. Without children, and without teachers and support staff, village schools will close. The communities which are currently so attractive will rapidly decline, victims of, if not their own success, their own attractiveness.

“The solution is to provide appropriate, sustainable development, brought forward in response to identified need. The longer it takes to get approval for a new development of any size, the more expensive – less affordable – each home becomes, lessening its effectiveness in solving the housing crisis. Decision-making needs to be more straightforward, including the appeals process, so local people and those seeking to provide them with the homes they need can both enjoy more certainty.”

Ross Murray, president of the Country Land and Business Association (CLA) said of the White Paper: “Rural areas need homes too. It is disappointing that ministers have focused so completely on the need to build homes in and around our towns and cities. This leaves big questions about how we will meet the specific housing needs of young and old people in our villages and leaves a question over how the government will deliver on its commitment to delivering growth across all parts of the country.”

He added: “We understand that planning departments are under-resourced, but we can see big downsides of a 40% increase in fees for smaller applicants. It could well be counterproductive, stopping small developments being brought forward. This problem will be compounded by the risk of prohibitive appeal fees. We will urge Government to look closely at the impact of these fee hikes on rural developments.”

Despite the focus of this latest White Paper on towns and cities, the existing National Planning Policy Framework underlines the fact that rural areas have their own housing issues. It says: “It is important to recognise the particular issues facing rural areas in terms of housing supply and affordability, and the role of housing in supporting the broader sustainability of villages and smaller settlements. A thriving rural community in a living, working countryside depends, in part, on retaining local services and community facilities such as schools, local shops, cultural venues, public houses and places of worship. Rural housing is essential to ensure viable use of these local facilities.”

The Rural Services Network has long campaigned on this issue, and says: “Rural communities should be places where people from different age groups and backgrounds can live. Yet house purchase and rental costs are frequently beyond groups such as young adults, families and those on ordinary wages, displacing those with a local connection. Over time this changes the nature of rural communities and risks turning many into retirement or dormitory settlements for the better off. It undermines the future sustainability of rural areas and their economies. It is a concern that is frequently raised by rural communities. Whilst true that major development proposals in rural areas often attract a hostile reaction from those living nearby, who would be most affected, there is typically community support for smaller-scale developments offering affordable homes that will address local needs.”

But while there may be support from communities for such small-scale development, it is recognised by many, including the Local Government Association, that such development is likely to be harder to achieve, because of a range of factors from restrictive development regulations, sensitive design requirements, limited sites, and local opposition. There is clearly no silver bullet to respond to the rural housing crisis, no simple change of policy is going to provide a permanent fix.

In December 2015, Clinton Devon Estates, working alongside architects LHC, family home builders Cavanna Homes and the Cornerstone Housing Association, was hailed by the Royal Institute of Chartered Surveyors (RICS) as a model of how country estates can play their part. Their joint development of new houses on estate land at Greenway Lane, Budleigh Salterton, saw 40 per cent of the total of 48 new homes dedicated as social housing for local people. The project was also recognised at the house building industry’s ‘What House?’ Awards. Given a Gold award, the judges commented that the Budleigh Salterton project contributed to building a ‘budding new community’.

Clinton Devon Estates is continuing this work as it seeks to find pockets of land appropriate for housing, much of which would be designated as affordable for local people. In East Budleigh, for instance, the estate is planning to build five new homes on land near its former offices, three of which would be designated affordable.

The Campaign to Protect Rural England (CPRE) recognises the role of estates in helping to shape sustainable communities. Its November 2016 paper, On Solid Ground: Encouraging landowners to invest in rural affordable housing, says: “There is a pressing need to provide additional rural affordable housing, and rural landowners have a key role to play in helping to meet this need. As providers of a range of services to local rural communities throughout the country, rural landowners will have a strong affinity with the local area, and are often deeply embedded in a range of activities affecting the local population.”

The CPRE report does not necessarily set out its official position on housing delivery, but does help to identify a number of policy solutions, which focuses on two main models of provision. The first model is similar to Greenway Lane, but highlights one major constraint – that of deciding who may be eligible to live in the properties. Many local authorities and housing associations have pooled resources to run choice-based lettings systems across a wide area, based on need. The CPRE suggests this broad approach may be leading to a lack of suitable sites being released, as landowners may want their properties to benefit people with strong local community ties. The CPRE suggests there is a case for a new government policy which would allow landowners a greater say on nomination rights, provided applicants meet statutory criteria.

The second model put forward by the CPRE is, on the face of it, more straightforward with a bigger part to play for landowners who will construct and lease the property directly, as well as take responsibility for all aspects of the property management and maintenance. The CPRE states that this is more likely to be attractive to estate owners or large-scale farmers: “They are also likely to be important employers in the local area, and keen to provide accommodation for their workforce to prevent them from being priced out of the area. With local authorities trying to ensure that affordable housing is provided to all those on waiting lists, it is crucial that a strong case is made to ensure that those with a local connection benefit from the housing provided.”

A major constraint identified in this model by the CRPE is the tax implication. Any expenditure over income is not eligible for income tax relief in the year the loss is incurred. Consequently, any losses made on letting at below market rates cannot be offset against other taxable income and can only be carried forward to set against future rental profits – should any be made. Nor is there any capital gains tax rollover relief for landowners, further discouraging investment in affordable rural housing. The CPRE paper concludes that the motivation for rural landowners is because many desire: “local people to be able to access affordable housing within their communities.”

We are trustees for life of the countryside

– 22nd Baron Clinton, 2002

Handing over something more valuable than we have today,

– Estates ethos

But our power for good or evil in this world’s affairs in a countryside is enormous

– Robert Lipscomb, Steward 1865 – 1892

to set out against the Scots, the King’s enemies and rebels

– Instructions given by Edward 1 to John de Clinton on 8th April 1298, prior to him leading the Royal army to victory at the Battle of Falkirk. As a direct result the Clinton Barony was formed on 22nd July 1299

Do what you can to elevate your profession. It is an honourable one

– Robert Lipscomb, Steward 1865 – 1892