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Zorana Halpin
 
Zorana Halpin is a Policy Officer at Shelter

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By Zorana Halpin

Jamie: sixteen, and homeless

 

Imagine going to your local council for help because you’ve got nowhere to stay that night.

And now imagine being 16.

And now imagine being told that there is no help for you.

Welcome to Jamie’s story.

 

When Jamie came to us he had already been sleeping in a tent for months.  

At 16, Jamie should never have been left to sleep in a tent.

The government has a responsibility to help young homeless people who are no longer with their families.

Teenagers who become homeless are incredibly vulnerable. It’s hard to imagine closing the door on them.  Often these are teenagers who have no choice but to leave their families. They may have been kicked out because of their sexuality, or faced abuse from someone at home.

No matter who they are, young homeless people should be getting help.

But we know first-hand that young people can end up being passed from pillar to post around local councils.

And, as in Jamie’s case, some get turned away entirely.

There’s mounting evidence that people who are homeless are no longer getting the help they are legally entitled to.

There’s mounting evidence that lots of these people, are young, homeless and like Jamie, end up with nowhere to go.

 

This isn’t a fairy tale – just take a look at the news today.

This should not be happening. The law is clear about how young homeless people should be helped.

In fact, there’s been lots of discussions in court, which we thought would stop a case like Jamie’s happening again.  But we’re still seeing these cases. Now there’s talk of taking other help for young people away too.

 

It’s a difficult truth for us to face, but we’re letting our teenagers down.

Shelter was able to help Jamie. Our expert solicitors got involved, and made sure he was found somewhere to stay.

But there are still more teenagers that need help.

 

Right now, our solicitors are fighting on behalf of other young people who have been turned down for help, which is why we’ve launched an emergency appeal this Christmas. 

Shelter’s here to make sure no one faces homelessness alone.  

Please donate today.

Toby Lloyd
 
I'm Head of Policy at Shelter, and have worked on housing issues in the public, private and third sectors for nine years. I'm a Londoner, a cyclist, father of two young daughters and member of the Hackney Co-housing Project.

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By Toby Lloyd

Starter Homes: an opportunity missed

Yesterday the Prime Minister went to Poole to launch a new starter homes scheme that will deliver 100,000 homes for purchase by first time buyers at 20% below the market value. Beneath this simple consumer-friendly message there is a complex scheme involving several different interventions and changes. In short, it’s half right – and half wrong.

On the positive side, the scheme is a very welcome sign that the government recognises the urgent need to build more homes, and to make them more affordable for families on typical incomes. The idea of offering homes to first time buyers at a discount is also reasonable in principle, as it should prevent speculators and buy to let landlords hoovering up the new supply, while the proposed restrictions on resale will (if designed well) prevent the buyers from simply flipping the homes on at the full market value and pocketing the discount.

The proposals include some bold innovations that Shelter has long called for – particularly around the use of public planning powers to bring additional land forward quickly and cheaply. In this case it is done by extending the principle of “rural exception sites” to industrial land. This technical detail is in fact the heart of what makes the proposals stack up financially – and what enables the government to say that it can be done without cash subsidy.

Paying for it: uplift in land values

By proactively identifying land that would not normally receive planning permission for homes and earmarking it for residential development, planning authorities can create huge amounts of value.

Industrial land roughly triples in value when it receives residential planning permission – creating around £1.5m per hectare overnight – although the exact amount varies widely across the country.  The reason for this is quite simple. Selling homes is a far more profitable use of land (in high housing demand areas) than most industrial or commercial uses.

Industrial to residential planning gain (VOA, 2010)

Area Industrial land value(£/ Ha) Residential land value(£/ Ha) Planning Gain (£/ Ha)
East 740,000 (Cambridge) 2,900,000 2,160,000
East Midlands 500,000 (Nottingham) 1,200,000 700,000
London Outer 2,000,000 (Croydon) 4,037,500 2,037,500
North East 225,000 (Newcastle) 1,300,000 1,075,000
North West 450,000 (Liverpool) 1,500,000 1,050,000
South East 1,000,000 (Oxford) 4,000,000 3,000,000
South West 850,000 (Bristol) 2,200,000 1,350,000
West Midlands 650,000 (Birmingham) 1,200,000 550,000
    Average 1,490,300

In our current broken house building model, this ‘planning gain’ (the increase in value when you get permission to build and sell homes on land) goes to the owner of the land as a windfall profit. This windfall isn’t earned. It simply results from the enormous value of selling homes relative to anything else you can do with a piece of land in area with a housing shortage. Landowners in other similar countries like Germany and Holland don’t benefit from the same enormous pay-outs, but rather share the windfall profit more fairly with the local community in the form of investment in local infrastructure and better quality development.

Clawing some back

At the moment, we claw back some of the windfall profits to landowners by letting local councils impose some taxes on development. So called “section 106” and the Community Infrastructure Levy (CIL) are costs that developers factor in before they buy a piece of land – so they are in effect paid for through a lower uplift in the land value when it gets planning permission for homes.

The drawback of this approach is that the taxes are always up for negotiation by developers and landowners. They argue that these taxes make it harder for schemes to be “viable” as they are a cost. In fact, due to the nature of the land market these taxes are simply reflected in lower land prices. Over the last few years, the ability of councils to negotiate a better deal on behalf of their local community from these taxes has been reduced, as the legislation has been weakened.

But Starter Homes don’t do this

Starter Homes are the perfect opportunity to capture some uplift value for infrastructure or affordable housing, but they don’t do it. Some of the uplift is being used to fund a 20% discount for buyers, but with prices rising at an annual rate of over 10% in England this isn’t much of a cost on development.

Despite having rightly identified a smart way to get more public value out of the land by identifying land proactively, the government is immediately hands most of this back to landowners by scrapping the requirement to provide affordable homes and infrastructure.

This fails to really deliver for ordinary families for a variety of reasons. Firstly, it undermines the ability of local authorities to ensure development is of a high quality and is supported by the services and infrastructure communities need. Secondly it wastes a massive opportunity to increase investment in affordable housing with no cost to the taxpayer.

All that needs to happen to allow some of the uplift to go into affordable housing is for the government to give local councils the usual powers to apply an affordable housing requirement on these sites. It won’t impact on viability at all if done in a clear, upfront and consistent way as it will simply result in lower windfalls for landowners.

What is frustrating is that the policy comes so close to being what we need: a pro-active planning intervention to capture land value and get more homes built for those who need them. A small change can make that happen. We hope the government makes it.

Deborah Garvie
 
I’m a Senior Policy Officer at Shelter, working on the Localism Act and policies for the delivery, letting and management of social housing. I started off in Shelter’s Campaign for Bedsit Rights, publishing research on the appalling living conditions of refugees and successfully campaigning for legislation to license private landlords and protect deposits. My work is informed by the years I worked with tenants as an inner London housing officer.

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By Deborah Garvie

The Christmas story of homeless children

This week, children and parents all over the country are preparing for end-of-term plays and concerts and looking forward to the holidays with family and friends.

But England’s housing crisis means that for a growing number of families, going to watch your child in the school play isn’t the simple matter it once was.  It likely involves a back-and-forth trek on expensive and convoluted public transport, or hanging around for hours after the school drop off to make sure you’re there to watch your child’s performance.  It means standing in the cold waiting for buses, then watching your exhausted and hungry children fall asleep on the long ride back to a strange area where you know no one.

Today’s homelessness figures reveal that more homeless households than ever before are being accommodated by councils out of their home area. On 30 September 2014, 15,260 homeless households were in out-of-area temporary accommodation (TA) – a staggering rise of 123% in three years.

A total of 60,940 homeless households were living in TA, six per cent higher than at the same date in 2013, including 93,000 homeless children – even higher than the 90,000 we predicted.

Behind these statistics, are the stories of the people we work with. Stories like Jasmine, mum to 8 year old Poppy and 3 year old Darcy, who spent last Christmas in a B&B in Hertfordshire an hour’s drive from her children’s school.  Most days she couldn’t afford to travel back home between dropping Poppy at school and Darcy at afternoon nursery ‘so we’d have to hang around until it was time for her to go to preschoolI was thinking if we get housed and it’s not in my area then I’d have to move the kids school. That would have broken my heart because Poppy is very established at her school’.

Stories like Alex, accommodated on the south coast, the 23 mile journey to 4 year old Emma’s school involving a long walk to the train station, two trains, then another walk:  ‘We couldn’t do it. They were such long days. It was minimum two hours each way to take her to school, so she was having 12-13 hour days. One day she burst into tears because one of the girls invited her for afternoon tea and we just couldn’t do it because it took so long getting back home. It was so difficult for her’.

Young people like 16 year old Margaret, studying for four A levels, whose family were initially accommodated 30 miles away from their former home in Bedfordshire.  She had to get up at 5:00am to get to school.  Her mum, who’d worked all her life but was unable to raise the deposit and rent in advance on a new private letting told us: ‘She was in tears last night saying she’s got so much homework but it takes so long to get home from school. No visitors are allowed here which isn’t great for keeping in contact with her friends. We can’t invite them round’.

Stories like the E15 mothers, who – facing eviction from their hostel in East London and the prospect of having to live miles away – took matters into their own hands to campaign to stay living in their home area.

Too many areas are now unaffordable to ordinary working families, and particularly those who need to claim housing benefit to bridge the gap between wages and private rents.  This is pushing people unable to compete in the overheated market to cheaper areas, often many miles from the support of family and friends, or having to ask for state assistance.

In inner London, where housing costs are now at unprecedented levels, the number of private renters claiming housing benefit dropped by over 10,000 claimants between August 2011 and August 2014, suggesting that finding a private rental affordable within benefit limits is increasingly difficult.  In rural areas, where transport options are much more limited, children accommodated in another town can be just as badly affected as those travelling across a city.

We need an end to this by investing for our future in genuinely affordable homes in areas with transport, jobs and well-established communities.  This should include an urgent review of whether housing benefit is providing an adequate safety net for families facing homelessness.

Pete Jefferys
 
I’m a Policy Officer at Shelter and interested in how we can get housing up the political agenda, secure a better deal for private renters and get affordable homes built. Outside of policy, I love exploring new parts of London, sport and going back home to Devon.

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By Pete Jefferys

Let’s all blame planning

We know we don’t build nearly enough new homes in England, but why is that? One commonly made argument is that it is primarily the fault of the state, which controls and limits the use of the most important raw material in house building: land.

This is how the argument often goes. The house building industry would be able to build the homes we need if only there were a true free market in land use. In other words, if we removed or reduced some of the controls of land use by the state (green belts, Local Plans) then the industry would respond efficiently and build more homes. Often the 1930s is pointed to in this argument – the decade when private house-building boomed and many of London’s suburbs were built, doubling London’s geographic footprint.

I don’t agree that blaming planning is the best route to building more homes. What are my arguments?

1. We don’t have a 1930s building industry

I came across this excellent graph from Jamie Ratcliffe at the Greater London Authority (below). It shows that the stock of plots with planning permission has been rising over the last decade, but the industry has not responded with higher levels of home building. In effect, there is lots of developable land in a very high demand area, but that is not translating into more homes.

London: Planning Permissions, Completions

In part, I would argue that this is because the industry is very different to the one that existed in the 1930s. Then a lot of house building was commissioned by local authorities for use as council housing. This can be built at a much faster rate because homes can be almost instantly occupied so long as there’s a waiting list.

Homes for sale can only be built and sold at a rate which maximises the price at which they are sold (i.e. very slowly). This is because the developer has paid for the land on the basis of selling homes at the maximum price. Once locked into the land price, they have no choice but to build slowly if they are to turn a profit.

This is why building collapsed in the wake of the recession. As people were no longer able to borrow massive mortgages, they could no longer buy homes at the prices builders had anticipated when they bought the land. Builders said that this made the sites “unviable” and argued that the answer was to cut back on affordable housing requirements, reducing their costs.

In London, the stock of land with planning permission is also a hugely valuable global commodity. According to a 2012 study, nearly half of all land with residential planning permission in London was owned by non-builders. Land with permission is held and traded as an asset in its own right, it doesn’t necessarily quickly become homes.

It’s simply not true that planning is the sole barrier to building homes. Land ownership and the type of house building industry we have matter too.

2. Planning is political

Of course you might argue that if we had a massive shake up to planning – such as taking away green belts or scrapping local planning committees – then the industry would be forced to adapt.

The huge legacy developers would be swept away as their creditors realised that the land they owned was no longer worth what they paid for it and forced them into insolvency. New developers would emerge based on a high rate of house building at low margins on former green belt land. London’s footprint would double again in under a decade as a new wave of low density suburbs were built.

However, I would argue this is not a plausible scenario for one simple reason: planning is and will always be political. Land is naturally scarce therefore we have a planning system, not the other way around.

The reason no politician will call for greenbelts to be scrapped is that politicians are elected and most people don’t want their local greenbelt to be scrapped. It might sound obvious, but it’s a point that those who blame planning always fail to address. The fundamental problem is convincing people that building homes near our successful cities is something that will benefit them, their family and their community. We need to get people to want new high quality local homes, jobs and services, and to see that the way to get them is through allowing local development. We won’t do that by forcing communities to accept unaffordable tiny flats by liberalising the planning system.

3. Why not just a bit of planning liberalisation then?

There will be some who are now thinking, isn’t the political impossibility of scrapping greenbelts a straw man? Surely we just need a bit more liberalisation to get homes built, not a wholesale change?

Well I’d refer you back to point 1 above. If we just took away green belt designation from some greenbelt land around our big cities, then it would be rapidly bought, owned and controlled by the major developers – and speculators planning to sell on to the major developers. They would then build it out as slowly as required by the land price they paid. Just look at the graph from London! You can increase the amount of land with planning permission, but it won’t necessarily increase house building.

These are the horns of the dilemma: massive planning reform might get more homes built, but it’s politically unrealistic. Medium planning reform is politically realistic but won’t change the nature of the industry and therefore won’t radically increase house building.

So what do we need?

We need to move the debate about building more homes on and face up to the fact that it’s not all the fault of planning. That view fails to address the fundamental problem that planning is political because what local people think matters. It also fails to address the problem that we have a development industry that has grown up around dysfunctional land markets and is dependent on a model of selling slowly to maximise prices.

Instead, we need to look at other models and take inspiration. In Northern Europe they build beautiful and affordable suburbs, which enhance local communities and increase the capacity of local infrastructure and services, not add to the demand for it. And yes, they do this in areas with higher population densities than England.

Germany and Holland’s success is from pro-active planning, not less planning. Private developers and city authorities work together to bring in land at a low cost and get high quality homes built quickly in all tenures. Building more homes can be something that local politicians make their careers arguing for, because they know it will bring additional services, revenues and affordable homes.

Doing this kind of development – including on the least attractive greenbelt land near transport hubs – is a much more attractive model than full-scale deregulation of the greenbelt. The politics is still hard, but I believe possible if done sensitively and clearly for the benefit of the local community.

We can build the homes we need, but only if we move on from the tired old trope that planning is the problem.

 

Adam van Lohuizen
 
Adam is Senior Economic Analyst at Shelter

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By Adam van Lohuizen

Could you cope with over half your take-home pay spent on your mortgage? The Bank of England thinks so.

The Bank of England (BoE) on Monday released its quarterly bulletin, which amongst many other things, looked at the impact of higher interest rates on the household sector.  The main finding reported from the survey was that most households could handle a 2% increase in interest rates.

But what does this actually mean? The BoE says households can handle their mortgage when they don’t need to spend more than 40% of their pre-tax income on paying it off. It used this measure because after this point there is a big jump in households entering arrears on their mortgages. But just because households are able to ‘handle’ rate increases without immediately going into arrears, it doesn’t mean they can afford them.

Forty per cent of pre-tax income equates to a staggering 54% of income after tax for the average household on a single income. So over half of your take-home pay is spent on your mortgage before the BoE thinks you’re at risk.  This is a far higher threshold than one-third of disposable income – the broadly accepted benchmark of affordable housing costs.

Comparing the difference between the household budgets between these two measures demonstrates how big the gap really is. The average income for a household with a mortgage is £43,000 per year according to the survey. For a household with a sole income, an affordable mortgage would leave over £21,000 for spending on living expenses, but the BoE believes that this household can get by on under £15,000 per year, almost a third less to spend on food, utilities, clothing and all other living expenses.

 

No wonder the survey found worry and concern amongst mortgage holders. Almost half of households with mortgages said they were concerned about their mortgage debt, and a quarter of households have already cut spending because of these concerns. There is even some evidence that suggests some households which are more at risk have already cut spending as much as they can, making them even more vulnerable to higher interest rates.

The BoE then tested a scenario in which interest rates go up by 2%, and household incomes increase by 10%, to see how this would affect mortgage holders. It found that the percentage of total households who couldn’t handle their mortgage would increase from 1.3% to 1.8%. This doesn’t sound like much, but this is actually an increase from around one in every 73 households to around one in every 55, or an increase from around 360,000 to 480,000. An additional 120,000 families struggling to make ends meet doesn’t seem so small now.

These impacts will be even more severe if incomes don’t increase by 10% to match the rise in interest rates.  Given it has taken more than six years for average nominal incomes to increase by 10% (a period where real incomes have fallen), there is every chance that the assumed income growth won’t meet the 2% in rate rises expected over the next three years or so.

The findings of the survey focus on the impacts and risks financial stability arising from increases in interest rates, because that’s the job of the BoE: to maintain financial stability.

But the results also tell us much more. They demonstrate the dire state of housing affordability. They show that households are already struggling with their mortgages, and that they will find it even harder when interest rates rise.

When rates eventually do start to go up, it will be vital that everyone – households, banks, advice providers like Shelter, and the government – is properly prepared.

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