Affordable rural housing: better finance
| In this section |
|---|
 Public
finance Low
cost home ownershipRural
Housing Advisory GroupPerpetuityShared Ownership and Leasehold Enfranchisement consultationFinancial
incentives |
Financial support is vital to the delivery of affordable high quality housing. The prime public source of funding is that invested by the Housing Corporation in new affordable housing development, informed by the Regional Housing Strategies. The private sector also provides contributions to affordable housing through planning obligations on market sites.
The ARHC identified a declining level of local authority resources being used for new affordable homes and levels of Housing Corporation funding for rural areas below their per capita share. It recommended that funding for rural affordable housing should be increased to reflect levels of need. However, recognising the limitations of the public purse it also proposed measures to increase private investment.
The Government invests in housing for those who cannot afford to access accommodation through the market. It is vitally important that such investment is targeted strategically on the basis of proper evidence of need, obtains the best value for money, and supports other investment activity.
Public finance
The Government has invested considerable sums in
new affordable housing in rural areas mainly through the National Affordable
Housing Programme managed on the Government’s behalf by the Housing
Corporation. Investment in 2005/06 provided 2,303 new affordable homes
in villages with fewer than 3,000 inhabitants. Further information on
the Housing Corporation can be found at www.communities.gov.uk/housing/housingsupply/affordablehousing/thehousingcorporation/
We have made it clear that the provision of affordable housing must be based on proper assessments of need following the advice of those in the regions. It is partly for this reason that we moved away from the Housing Corporation having a national target to deliver in small rural communities.
We have increased the effectiveness of investment by ensuring regional housing and planning policies are properly aligned by inviting the Regional Assemblies (who in each region are already the Regional Planning Bodies) to take responsibility for the work of the Regional Housing Boards.
The Government is conscious of the fact that in the absence of economies
of scale affordable homes in small rural settlements can carry a higher
proportional cost than similar homes in towns and cities. In response
it has ensured that the Housing Corporation's assessment does not disadvantage
rural schemes by ensuring that schemes are assessed within the context
of specific localities and against regional priorities.
The Corporation's Grant Index includes Housing Quality Indicator scores,
which operate across a range of domains and a good score in one can compensate
for a poor score in another.
The Housing Corporation tracks the development of schemes and now reports on progress to the Regional Assemblies. In this context, the overall management of the programme provides similar replacement schemes whenever possible. To help ensure that development meets local priorities and there is a future pipeline of development the Housing Corporation regional offices work closely with local authorities and suppliers to build future programme pipelines.
We will:
- determine levels of investment in affordable housing for 2008-11 as part of the 2007 Comprehensive Spending Review. Social housing will be a priority in CSR07.
We have:
- introduced a Code for Sustainable Homes, which has replaced Ecohomes in England, and has removed locational factors, which made clear that the standards expected from private developers seeking funding from the Housing Corporation must be consistent with that expected of Registered Social Landlords.
Low cost home ownership
The Government is keen that as many people who wish to enter, and can sustain, home ownership have the opportunity to do so, including in rural areas.
Rural Housing Advisory Group
In March 2007 Yvette Cooper, Minister for Housing and Planning, asked the Housing Corporation to set up and chair the Rural Housing Advisory Group, which will report annually to Communities and Local Government. The group is chaired by Candy Atherton, member of the Housing Corporation with lead responsibility for rural housing. Members include former members of the Affordable Rural Housing Commission, representatives of rural interest groups, such as the Commission for Rural Communities, and experts in housing delivery.
The group will explore genuinely innovative mechanisms to increase the supply of affordable homes in rural areas; schemes like Community Land Trusts, Land Swap Levies and community bonds, which could help deliver more affordable rural housing with more effective use of the public purse.
The first meeting of the group took place on the 22nd of May and it will meet again in September. The meetings plan to visit innovative schemes throughout the country in order to fully understand the issues that are faced in providing affordable rural housing. The group will also launch a website to bring together good practice and provide information on the work of the group. Read more at: www.housingcorp.gov.uk/server/show/ConWebDoc.11158
Perpetuity
We have ensured that the new HomeBuy scheme is sufficiently flexible to enable affordable housing to be retained in areas other than rural exception sites where it is essential to do so.
Housing associations may ensure that properties remain affordable for
future purchasers through nominations and buy-back arrangements. The Housing
Corporation will prioritise grant funding for buy-back under their
rural programme for all grant funded properties provided in small settlements
of under 3,000 inhabitants.
We have ensured that affordable homes in small rural communities managed by housing associations are retained in perpetuity for those in housing need by exempting them from the Right to Acquire. These are generally small rural settlements where the population is under 3,000 people and where replacing the social housing sold would be difficult.
We have maintained our commitment to the principles of the Right to Buy scheme, which has helped many families to realise their aspirations to own their home, and has helped create stable mixed tenure communities.
Local authorities can ask the Secretary of State under section 157 of the Housing Act 1985 to designate areas as 'rural' so that they can require the owners of homes in the areas in question which were sold under the Right to Buy scheme to resell them only to people who have lived or worked locally for at least three years.
The designation criteria were eased in January 2003 (from excluding settlements with more than 2,000 residents to excluding settlements with more than 3,000 residents). The Government is encouraging local authorities that could not meet the pre-2003 criteria for rural designation to re-apply for designation under the new criteria.
We have commenced a review (as recommended by the Commission) into how rural local authorities are exercising their powers regarding the re-sale of properties bought under the Right to Buy and will publish the results on the Communities and Local Government website.
Shared Ownership and Leasehold Enfranchisement consultation
The consultation on proposed changes to current leasehold enfranchisement rules to simplify and clarify the position in relation to shared ownership closed on 19 October 2007. CLG are currently analysing responses received. The proposals would remove the possibility of shared owners being able to enfranchise (buy their freehold) before they have bought 100 per cent of a property under the terms of their shared ownership lease.
It also proposes a power to restrict staircasing (the purchasing of additional equity shares) on shared ownership properties in certain limited geographical areas in future. This would ensure that particular properties remain affordable and available on shared ownership terms in perpetuity. The use of this power would be limited to areas where this type of housing was particularly difficult to replace – such as in rural areas. Read more at: http://www.communities.gov.uk/publications/housing/sharedownership
Financial incentives
The Government is pleased that the Commission welcomed the introduction of UK-REITs. As stated at Budget 2004, and in subsequent documents, the Government believes that the introduction of UK-REITs will lead, in the long-term, to improved standards of management in the residential property sector, and furthermore the existence of such vehicles should provide a ready market for housing developers, including developers of property for affordable housing.
The Government does not believe that Income tax breaks are a suitable method for addressing the problems of affordable rural housing. Tax breaks in this area would be hard to target, would involve large compliance and administrative costs for policing the exemption for HM Revenue and Customs, and could potentially impose a large cost on the tax paying population.
Where reduced rates of VAT are available under EU VAT law, the Government has introduced these but only where they would have the greatest effect on the regeneration and renewal of the UK housing stock. This reflects the position that reduced rates of VAT are applied only where the tax system offers the most effective and best-targeted support for our objectives.
The Government has already introduced a reduced VAT rate for certain residential conversions (to support creating new homes through better use of the existing housing stock) and for the renovation of housing that has been empty for more than three years. It is not clear that a blanket reduced rate for all refurbishment and renewal for affordable housing would be an efficient or well-targeted use of resources.
We will
- keep the impact of VAT on different types of building work under review.
Page last
modified: 14 December 2007
Page published: 20 September 2006