Sustaining Jobs and Lives

Building homes,

sustaining jobs and lives

Cornwall’s investment plan for housing

2012-2016

Forward

By Councillor Kaczmarek

As Cornwall Councillors we well know the severe difficulties faced by local people in buying or renting their own home. In previous decades, housing in Cornwallwas more affordable and we didn’t need to build the large number of affordable homes seen in other areas. Now we are paying the price. Only 11% of our homes are rented through the Council or housing associations, far fewer than many other areas of the country.

Cornwall has found it difficult to respond to the dramatic house price rises of recent years. Between 1996 and 2008 average house prices quadrupled in Cornwall from £ 53,700 to £ 210,300, far out of the reach of those on average incomes. In parts of Cornwall we now have London house prices and Cornish wages. We are also compared with London for the number of people who have no home. We are second only to Westminster for rough sleeping and recently this has even led to deaths on our local streets.

We know housing need is high – we have 22,000 households registered looking for a home. 6,000 of these are in very high housing need. They are not all without a roof. Some need a wheelchair home, others are over crowded or living in unheated homes in disrepair. Others simply can’t live and work in their own community. Our communities are under strain.

In the face of these challenges, the Council has already achieved a great deal. In 2010-11, we housed 4,000 families in housing need. We have delivered the first 56 council homes for rent, invested in homeless prevention and secured £100 million from Government for new homes.We have upgraded 3 gypsy and traveller sites and secured funding for 30 more pitches to tackle unauthorised sites.

Since 2009 the Council has performed well in delivering new affordable housing, delivering over 2,000 new homes by the end of this year. But we are now seeing an 81% cut in funding from Government for new homes and we have lost over £2 million funding for private sector renewal. The private sector and the planning system cannot make good this funding gap on its own in such an uncertain housing market. Housing is a priority for Cornwall Council and our housing strategy commits us to delivering new housing to rent and buy, tackling empty homes and ensuring vulnerable groups such as older people or the homeless have a warm safe home.

I am therefore very proud to set out this investment plan for housing. It is an ambitious plan. It proposes investing £56 million over the next 4 years which includes attracting £12million from Government, in addition there is the £19 million allocation to the HCA for Cornwall. Wherever possible investment will be made on a self financing basis with an estimated £17million to be recovered. The programme will also direct existing investment to deliver the Council’s ambition - £12 million of funding will come from existing programmes. Ensuring that the Council makes the best use of existing assets, utilises revolving loan funds not grants and levers funding from other programmes means that the total level of investment is highand the programme is affordable – with revenue costs over the next 4 years of only £2million.

Investing now will also give a powerful boost to our economy. Direct investment into repairs and construction is one of the few ways in which we can give a real boost to local businesses which are on their knees. We can tackle much through this investment; building homes sustaining jobs and sustaining lives.
Introduction

Access to a good quality home at an affordable price is a basic human need. Consultation with our local communities and the needs data we collect emphasise the importance of housing and the very real issues faced by many people in Cornwall:

Changes in the wider economy and extreme pressure on national budgets have exacerbated the challenges for local authorities like Cornwall. Housing market instability and cuts to the national affordable housing programme have reduced the overall supply of housing. Declines in mortgage lending have limited prospects and mobility for first time buyers. Decreasing housing benefit payments, increasing unemployment and falls in household income all mean that Cornwall’s communities are less able to afford the homes they need. Housing markets are under severe strain. All our local measures of housing need demonstrate this - 22,728[1] households on the Council’s housing register, increases in homeless presentations[2] and rough sleeping[3], making it difficult to maintain temporary accommodation targets[4].

Strengthening our existing plans

Making housing work in Cornwall is not just about providing new homes of the right size and type. We also need to ensure we make the very best use of all our housing resources with existing homes which are fit for purpose and limiting the waste of empty homes.

The Council has powers and duties to improve the 50% of private sector housing which fails decent homes standard and tackle 3,700[5] long term empty properties. We need to improve quality and better regulate parts of the private rented sector which has a more important role to play than ever before.

The Council, which identifies housing as one of its main priorities, already has a number of plans in place for responding to the housing challenge. The Council’s Housing Strategy approved by the Council in January 2010, provides the framework for our housing ambitions and long term strategic housing priorities to:

• Deliver affordable housing – we will maximise the delivery of affordable homes to address housing need
• Find smarter housing solutions – we will ensure that people have a safe, secure home they can call their own
• Achieve decent homes – we will increase the availability and supply of housing by making better use of our existing housing stock
• Create sustainable communities – we will ensure that housing activities contribute to improving Cornwall’s economic prospects

Responding to a changing national agenda

But there have been fundamental changes in national housing, economic and welfare policy which require us to develop a different response to our housing challenges. In addition, transformational changes in the way the Council plans to deliver and commission services, including the establishment of CornwallHousing Ltd, the Council’s newly established Arms Length Management Organisation, also require us to refresh our housing strategy and related plans. This refresh is due to be completed during 2012. It will scale our ambition, provide a focus on innovation and frame a new relationship between the Council, Cornwall Housing Ltd and our other key partners.

It will also provide the Council’s policy response to changes in national policy including the national planning framework, the localism act and the Government’s national housing strategy.

This investment plan provides an immediate response to some of the Council’s housing needs. The plan also recognises that resources have to be identified and options are also put forward to fund the ambitious short term programme.

The investment proposals will be included in the budget proposals for 2012-13, due to be taken to full Council in February 2012. If the plan is approved through the budget process, it will provide the Council with the resources and ambition for a radical review of the housing strategy.

The right building blocks for transformational change

The plan reflects an ambition to deliver but to do so in a period of constraint by making our investments smart.

This means that a baseline level of funds will maintain existing levels of capital investment, but there will be a greater focus on using small amounts of investment to deliver transformation.

Investment will provide pump priming to allow breathing space so that transformational change can happen. This plan proposes a series of focused and realistic policy options to meet the most pressing housing needs. But most importantly it sets out the ambition and recognises that part of the housing challenge is to build capacity now to enable us to make the step change in delivery and investment we need. This can then be reflected in new ambitious housing strategy for 2012.

A central proposition is for the Council to develop new innovative ways of investing which create value which can be recycled into future schemes, rather than giving grant. Given market conditions, there is an appetite amongst private sector partners to develop these ideas.

There is considerable scope for us to innovate in housing and to raise our game on a level with the best performing larger authorities. In many cases, this will require further debate and making choices, based upon the Council’s appetite for risk and ability to invest.

In many areas such as housing development, there are no shortcuts. To deliver a more ambitious programme, the Council needs to focus on assembling the skills, resources and building blocks now for longer term strategic growth.

Cornwall Council is well placed to understand local housing challenges and support initiatives and policies which can address them. In some cases we have the strength and powers to lead this change. But we always seek to work in partnership with others and enable them to deliver solutions where we can.

Unless we can take more radical steps to address the housing challenges, Cornwall will not succeed economically, our smaller communities will be harder to sustain and local people will see their prospects of finding a decent affordable home diminish. This is why we need a strategy for change.

Summary of proposed actions

Cornwall Council will establish a baseline four year housing investment programme and will

Set a minimum target to deliver 4,000 homeswith 3,000 of them as affordable homes to rent in the next 4 years

This does not meet the totality of Cornwall's needs but in the current economic climate without national investment or market recovery it remains ambitious. This programme requires Homes and Community Agency (HCA) investment but the Council will more than match the HCA investment committed for Cornwall. The Council will also launch its own commissioning programme for housing associations and developers. It will commission homes either from a consortia of local providers or a single strategic partner and develop a Cornish housing standard of development to further reduce costs.

Homes will be delivered in the areas which need them most with a focus on delivery in the 20 key towns where job growth remains essential.

Apart from the HCA programme, the remainder of the rented homes would be delivered by championing innovative approaches to delivery. The Council will invest an initial package of sites on the Government’s buy now pay later model. This will not only deliver affordable homes but will generate capital receipts on a deferred basis.

The short to medium term outputs signal a move towards a more self financing model where the Council uses loan funding and cash flows development in order to recover value later. The Council will

• use the Government’s buy now pay later response and defer land receipts on specific sites which will then be reinvested to acquire additional sites;
• set up a new delivery arrangement with a private sector partner;
• deliver homes in rural villages using cross subsidy on mixed tenure schemes without the need for public subsidy;and
• propose the use of headroom within the Housing Revenue Account to fund a programme of Council house building.

By ensuring that the majority of delivery is of rented homes in key towns we will be better placed to meet those in the highest levels of need on the housing register.

Set a minimum target to deliver 1,000 affordable homes to buy

The Council will progress its own pioneering equity loan model using planning gain from developers to provide assistance for first time buyers, alongside the Government’s deposit scheme and a programme of shared ownership through housing associations.

Set up a new delivery partnership with the private sector and use the value of Council land assets to make the scheme self-financing in the medium term.

This proposes bringing forward two packages of sites which would deliver 1,000 homes for Cornwall in key Cornish towns, including a minimum of 400 affordable homes. The Council could use the Homes and Communities Agency framework and expertise to procure a partner which ensures procurement could be completed as early as late Summer/ Autumn 2012.

The scheme requires the Council to invest land into the scheme and defer receiving payment until the development is complete. Receipts would then be ring fenced and re-invested back into the scheme to buy additional sites. Working capital of up to £5.5million over the 4 year programme would also be needed prior to land receipts being returned.

Seek support for an HRA new build programme to deliver community solutions and social rented homes

The HRA business plan needs approval from the Council and the ALMO board and there will be competing priorities for the use of any headroom in HRA borrowing. However there is scope to support a modest programme of 200 homes over the programme. This would focus on ensuring additional right to buy homes were replaced in local communities, would make use of existing HRA land and infill sites and help remodel poor quality stock, especially for older people. Homes would be built using a new Cornish housing standard developed through the ALMO.

Support local solutions by encouraging Community Land Trusts

Cornwall has delivered half of all land trust homes nationally. An innovative revolving loan fund from the Council has helped achieve this and is already in place. But at only £1 million can only help a few schemes at any one time. Expanding the fund to £4 million would require the Council to cash flow developments but interest is charged to ensure the scheme is revenue neutral to the Council. These bodies can hold affordable housing and other community assets and are likely to become more prominent in the wake of neighbourhood plans and localism. This will deliver up to 200 homes over the programme.

Lobbyingfor Legislative and Regulatory Changes

Cornwall has suffered disproportionately from reductions in the Homes and Communities Agency budget with a drastic programme reduction from £100 million to £19 million. The Council will continue to lobby for the investment needs of rural and dispersed areas. We will seek a dialogue with the HCA to understand how we can secure a better deal for Cornwall with an ambitious investment programme which more than matches HCA investment. Given public resources are so scarce, Cornwall wants a greater say in how funds are allocated locally to meet our needs.

Meeting thehousing needs of older and disabled people

We need to work harder to understand the housing implications of Cornwall’s ageing population. By 2031, one in four people in Cornwall will be aged 65 and over. In many cases older people will remain in their own homes but will we need to ensure that our housing offer is able to respond to demographic challenges.

The current disabled facilities grants(DFG) process is costly and inefficient. We will complete a fundamental review of the current system and develop innovative approaches to investment and service delivery. But transitional funding for disabled facilities grants needs to be maintained during this work. We will invest in the DFG system to ensure it continues to meet demand in the short term whilst we focus on transforming the system. We will bring forward early annual Government allocations and Council funding of £10.2 million and make use of the new allocation of additional funds recently announced by the government.

A high proportion of social rented homes (3,310) are provided for older people and some are not fit for purpose. There is an opportunity for the new ALMO to work with partner housing associations to release less popular housing for other needs groups or remodel and demolish schemes in order to rebuild and replace. This strategy makes provision for an initial prototype scheme for decommissioning sheltered housing.

Cornwall has two extra care housing schemes; more work is needed through the sector reviews and housing needs updates to understand the demand for extra care throughout Cornwall. We will work on developing aCornwallextra care model which works across our dispersed communities.

Accelerate the HRA Asset Management Plan

We will use the HRA self financing head room to bring forward some parts of the 30 year asset management plan. This new asset plan will need to be approved by the Council but could include bringing forward the double glazing programme for the former Caradon area, providing new doors to homes, addressing the problems of poor quality Cornish Units and Mundic properties, and addressing thermal efficiency of our HRA stock.