The Need for
The Need for Affordable Housing in South Nottinghamshire 2001 – 2011 and 2001 - 2021 Monitoring Report & Update
July 2005
Throughout this report, points arising from, and changes due to, the 2004 and earlier Reviews are shown in blue text. Major points are highlighted in red text.
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CONTENTS List of Appendices
Page no. 3
Summary
4
Diagram of Steps in Future Need Calculation
5
Changes from the Previous Studies (including the Context and Critical Findings)
5
Definitions
6
Methodologies
8
Base Need:
Future Need:
Methodology
9
District Base Needs
9
Single Person Households
10
Older People
10
Methodology
11
New Households in 2011 and 2021
14
Home Ownership Costs
15
Net Income spent on Housing
18
New Households that cannot afford Home Ownership
19
Social Housing Relets available by 2011 and 2021
20
Private Rented Relets available by 2011
23
New Low Cost Home Ownership
26
Total Affordable Homes Needed
27
Proportion of All Planned New Housing which needs to be Affordable
28
Assumptions made for the Model – and their Likely Impacts
29
Apportionment and Future Monitoring
33
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LIST OF APPENDICES App. no. (i) (ii) (iii) (iv)
(v)
(vi) (vii) (viii) (ix)
(x)
(xi)
(xii) (xiii) (xiv) (xv) (xvi)
(xvii) (xviii)
(xix)
Court orders for mortgage repossessions: actions entered “Concealed families” from the 2001 Census Homeless households in temporary accommodation Household projections for the 2004 South Notts Study: Sheet A: Estimates of new households between 2001 and 2011 Sheet B: Estimates of new households between 2001 and 2021 South Notts house prices: Sheet A: Semis and terraced (graph) Sheet B: Deciles by numbers of sales (terraced and semis) Advances to First Time Buyers Mortgage interest rates Payment Protection Insurance as % of mortgage repayment Cost of housing repairs: Sheet A: Household expenditure on repair, maintenance and decoration by tenure Sheet B: Household expenditure on repair, maintenance and decoration Housing cost calculation: Sheet A: 1996 to 2000 Sheet B: 2002 to 2004 Mortgage repayments: Sheet A: Average repayments as % of average gross income for First Time Buyers Sheet B: Average repayments as % of average gross income by income quintile South Nottinghamshire net incomes Social housing stock at 1/4/2001 Right To Buy sales 1996 –2011 Length of residence of household reference person by tenure High income private tenants: Sheet A: Households renting privately by NS-SeC of household reference person Sheet B: NS-SeC definitions National Buy to Let summary Spreadsheets estimating Future Need: Sheet A: Data input with relets including properties designated for older people Sheet B: Data calculations for Sheet A (2004 to 2011) Sheet C: Data calculations for Sheet A (2004 to 2021) - preferred option for 2021 Sheet D: Data input with relets excluding properties designated for older people Sheet E: Data calculations for Sheet D (2004 to 2011) Sheet F: Data calculations for Sheet D (2004 to 2021) Sheet G: Data input with relets excluding 50 % of properties designated for older people (2011 only) Sheet H: Data calculations for Sheet G (2004 to 2011) - preferred option for 2011 Suggested methods of apportionment of Affordable Housing by District: Sheet A: 2001 to 2011 Sheet B: 2001 to 2021
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SUMMARY The South Nottinghamshire Affordable Housing Needs Model was first formulated during 1997/1998, based on 1996 data. It was intended to carry out a monitoring exercise every 2 years to see how well affordable housing needs were being delivered on the projected needs established from 1996. The model was reviewed and updated for the years 1998, 2000, and 2002. Since the model was intended to provide an ‘end state’ prediction for affordable housing needs for the period 1996-2011, the same base need information for 1996 was retained. Review 2004/05 The big differences with this review are that a new base date of 2001 is included and two different end dates for the period, 2011 and 2021, are used. 2021 is the end-date of the Nottinghamshire and Nottingham Joint Structure Plan, which is due to be adopted during 2005. Trends indicate that the relationship between house price increases and income changes can produce large fluctuations in the ability to purchase properties in the owner occupied sector at any one time. However the purpose of the model is to take a longer term view about affordable housing provision. The monitoring process at the end of each two year period is therefore designed to provide important pointers about the ongoing delivery of affordable housing needs. Figures for the percentage of new houses to be affordable at any one time are indicators of the need based on projecting the particular housing situation at that time. Since provision via the new housing market is a relatively slow process it would be unreasonable to expect fluctuations indicated by the model to become ‘requirements’ within the new Local Development Frameworks. The purpose of this report is therefore to highlight changing trends and to provide an ‘alert’ over the need to continue the provision of affordable housing. Previous versions of the study and model have been submitted to the Ashfield, Broxtowe, Gedling and Nottingham City Local Plan Inquiries. They have also been used by Rushcliffe Borough Council in determining Planning Appeals. Comment about the very high levels of need in by the 2004 Review Anyone reading this review will notice that the levels of need between 2004 and 2021 (and to a lesser extent 2004 to 2011) are much higher than is ever likely to be achievable, as all new housing built during the period would need to be “affordable”. This reflects the current high level of house-prices relative to incomes, something which is unlikely to be sustainable in the longer term. Nevertheless, the review has been worthwhile, as it sets the context for future work to be carried out by the Constituent Authorities as work develops on Local Development Frameworks (successors to Local Plans) and Housing Market and Needs Assessments. The context is that the need for affordable housing is very significant and is higher than it was when the original study was produced in 1996.
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The diagrams below provide a summary of the steps in the future need calculation. This is then explored in more detail in section 2.2. Calculation 1, Future Need from 2001 to 2011 (i)
(ii)
All new households at 2011
Number who can afford to buy market housing
minus
(iii)
minus
All social housing relets 2001 to 2011
(iv)
minus
All private rented sector relets 2001 to 2011
(v)
minus
All low cost home ownership built 2001 to 2011
(vii)
=
Number needing affordable housing 2001 to 2011
Calculation 2, Future Need from 2001 to 2021 All new households at 2021 minus
Number who can afford to buy market housing
minus
All social housing relets 2001 to 2021
minus
All private rented sector relets 2001 to 2021
minus
All low cost home ownership built 2001 to 2021
=
Number needing affordable housing 2001 to 2021
Changes from the previous studies include: • Definition of low cost homeownership • Inclusion of older peoples’ needs, and of social rented stock designated for older people • Review of how Base Need calculated (though agreed to stick to original methodology as a result) • New method of calculating house prices for first time buyers • Changes to other house price data inputs • A chart outlining the likely impacts of these assumptions on the model The context includes: • Continuing rise in house prices compared to incomes • Continuing increasing numbers of Right to Buy sales and changes in Right to Buy forecasts • Continuing, if slowing, rise of the private rented sector, • Slowing down of the Buy to Let market. It has been suggested that for the next review a sample survey of the private rented sector is carried out to get an estimate of changes that have occurred since the 2001 Census. • Few low cost homeownership completions Critical findings are: • High Future Need shown to 2011 (26%) and • Very high Future Need shown to 2021 (91%)
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DEFINITIONS The South Nottinghamshire Area For the purposes of this study the following geographical areas are included: Broxtowe Borough Council Gedling Borough Council Hucknall (the part of Ashfield District Council which is in the South Notts. area) Nottingham City Council Rushcliffe Borough Council Together with parts of Newark & Sherwood District the above areas form the South Nottinghamshire sub area of the Structure Plan. That part of Newark and Sherwood District Council that lies within the South Nottinghamshire Planning Sub Area has been excluded from this study because it represents a mainly rural part of the area with limited requirements for new housing. It is unlikely to be significant in generating affordable housing needs within the main conurbation. Review 2004/05 It was agreed to include the same geographical area. Affordable Housing "Dwellings developed specifically for those whose incomes generally deny them the opportunity to purchase or rent houses on the open market". This was agreed in 1997 at a meeting of housing and planning officers of the participating Authorities. Review 2004/05 It was agreed to include within this definition all elements of low cost ownership including shared ownership homes. It was noted that these homes may staircase out of affordable provision if the occupier purchases the remaining shares in the property and later sells on the open market. Social Housing: All rented stock in Local Authority or Housing Association ownership. Concealed Families: Couple and lone parent families who are living as part of another household but whom it is assumed would like their own accommodation. Previously these have been referred to
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as “concealed households”, we are using the changed Office for National Statistics’ terminology. Household Representative: Office for National Statistics’ terminology used for those previously termed “head of household”. Older Households: In the original study, households with a household representative aged 75 years or older were excluded because their affordable housing needs were likely to be met by housing specifically designated for older people Review 2004/05 National and local policy changes mean that older people are now supported, wherever possible, in their existing homes rather than moving to designated supported housing. It has therefore been agreed to incorporate their needs for affordable housing into the study through this review. The review commentary identifies changes to the methodology as a result of now including older people’s housing needs.
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METHODOLOGIES The assessment of need has been separated into two main components: 1.
Base needs for affordable housing at 1.4.2001.
2.
Future needs for affordable housing to be met by 2011 and 2021
In addition, the South Nottinghamshire Black and Minority Ethnic housing needs study1 was completed at the beginning of 2004. The study does not give robust predications of future needs, but so far as possible, the needs of the BME communities identified by this study are included within the base and future needs assessments in this report. The two components are addressed by different methodologies. This report explains how we have estimated the number of affordable dwellings needed between 2001 and 2011 and between 2001 and 2021. Review 2004/05 Note base date is now 2001 and all other Base Need references have been changed to 2001. When the original 1996 – 2011 report was published it was agreed that reviews should take place every two years to monitor progress towards meeting the future needs. Reviews for the years 1998 and 2000 were carried out in 2000, and the review for 2002 was carried out at the beginning of 2003. The present review was started in 2004 The South Nottinghamshire Black and Minority Ethnic housing needs study was completed at the beginning of 2004. Note also the needs of older people are now being taken into account under the above components rather than as a separate component as was the case in the original report and previous reviews.
1
Steele. A 2004 Communities in Focus: a study of the housing and related needs of the Black and Minority Ethnic communities in South Nottinghamshire University of Salford
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1.
BASE NEED
1.1
Methodology For the purposes of the study the following groups of households have been identified as being in need of affordable housing at 01.04.2001: Those in mortgage arrears where court orders for mortgage repossession have had actions entered (see Appendix (i)):
832
The total for the South Nottinghamshire Area has been calculated on a pro rata basis from data from East Midlands mortgage possession statistics, Dept of Constitutional Affairs.
Concealed families (see Appendix (ii):
1640
The data on concealed families does not include estimates of single people living as part of another household who would like their own accommodation, as no source of information about these could be identified. The data is from the Joint Structure Plan projections
Homeless families in temporary accommodation (see Appendix (iii):
579
Note an estimate of 203 is included here for Nottingham City as no data was supplied for the Office of the Deputy Prime Minister (ODPM) P1E returns for the quarter ending 31.04.2001. The data for the other Council areas comes from these P1E returns (for Hucknall, on a pro rata basis for the area of Ashfield). ‘Homeless at home’ households are excluded as there is a likelihood of double counting with concealed families.
TOTAL
3051
Review 2004/05 It should be noted that numbers for rough sleepers have not been included in these base need figures. A count, based on strict ODPM guidelines, of rough sleepers in November 2001, in Nottingham City identified three rough sleepers. A joint snapshot survey in 2004 identified approximately 133 households (largely single people) who reported sleeping rough in the South Nottinghamshire area during the survey fortnight.2 The survey was unable to quantify the numbers that claimed to be ‘long term’ rough sleepers. 1.2
District Base Needs The base need of 3,051 is an estimate of affordable housing need across the study area, rather than on an authority by authority basis. The base needs estimates have intentionally been taken from sources other than Council waiting lists (now known as Housing Registers) as these can be regarded as expressions of housing want rather than need. We have chosen sources that emphasise those groups in greatest need: households without their own homes in 2001. However this
2
Kitney, M 2004 Homeless Watch report: a snapshot survey of homelessness in Nottinghamshire 20th September – 3rd October 2004
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makes it difficult to provide a robust estimate of base need in each district area. Appendix (xix) contains illustrative tables showing base need by District at 2001. 1.3
Single Person Households The base need estimate fails to include single person households in need of affordable housing, although we are aware that there will be significant numbers of such households who have very restricted opportunities to access social rented housing or to purchase a home. The outturn of 3,051, therefore, significantly underestimates the need for affordable housing. The changes in homelessness legislation that came into force in 2002 have recognised the needs of more vulnerable people, often single person households, than were previously given priority. In future reviews we may need to reconsider how the affordable housing needs of single person households are addressed.
1.4
Older People The needs of older people are included within the above figures. Review 2004/05 This inclusion is a change from the original report and previous reviews, though the impact on base needs is believed to be negligible.
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2.
FUTURE NEED
2.1
Methodology. The steps in the model involve:
(i.)
Using the Joint Structure Plan figures of the number of new households being formed between 2001 and 2011, and 2001 and 2021 (to give estimates to 2011 and 2021 separately); Review 2004/05 Note the start date for the period has now moved on from 1996. Estimating…..
(ii.)
The average home ownership costs of a first time buyer;
(iii.)
The number of the new households, from (i.) above that cannot afford these home ownership costs, Assuming…… a) income to house price ratios stay the same as in 2004 b) they spend no more than a specified percentage of their incomes on housing costs;
(iv.)
The number of social housing (Local Authority and Housing Association) relets available by 2011 and to 2021; Review 2004/05 Note these now include lets that might be designated for older people. It is assumed that social landlords will review their practices and redesignate such stock if demand is changing.
(v.)
The number of private rented sector relets available by 2011, and to 2021.
(vi.)
The cumulative figure, from 2001, of low cost home ownership available for purchase Review 2004/05 For the 2004 Review it was agreed to use data from annual HIP returns3. In practice we have used Housing Corporation data . Then assuming that all the relets are available to the new households:
(vii.)
Subtracting the number of social housing and private rented relets available and the number of low cost home ownership dwellings provided since 2001 from the number of households that cannot afford home ownership (see iii above). The residual figure represents….
(viii.) The number of households that cannot be accommodated in existing stock and therefore will need new affordable homes to be provided by 2011and then by 2021. 3
Housing Investment Programme strategy statistical appendix, section N
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The diagrams below provides a summary of the steps in the future need calculation. This is then explored in more detail in section 2.2. Calculation 1, Future Need from 2001 to 2011 (i)
(ii)
All new households at 2011
Number who can afford to buy market housing
minus
(iii)
minus
All social housing relets 2001to 2011
(iv)
minus
All private rented sector relets 2001 to 2011
(v)
minus
All low cost home ownership built 2001 to 2011
(vii)
=
Number needing affordable housing 2001 to 2011
Calculation 2, Future Need from 2001 to 2021 All new households at 2021 minus
Number who can afford to buy market housing
minus
All social housing relets 2001 to 2021
minus
All private rented sector relets 2001 to 2021
minus
All low cost home ownership built 2001 to 2021
=
Number needing affordable housing 2001 to 2021
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2.2
Step by Step Guide to Estimating Future Needs
Section 2.2 provides a step by step guide to the methodology, while Appendix (xviii), sheets A, D and G contains the data input figures using different assumptions and sheets B, C, E, F and H the corresponding data calculations.
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(i)
New Households in 2011 and 2021
Data Input: Total in 2011/2021
To 2011 65,869
To 2021 117,107
Household projections from 2001 - 2011 and 2001 – 2021 have been supplied by the County Council. These use the same methodology and assumptions as the Joint Structure Plan4 Projections, are for the four districts and Hucknall, and have been aggregated to give total figures for the South Nottinghamshire Area. The Joint Structure Plan figures to 2021 have been increased by 1,000 to allow for extra housing in Gedling. The Revised Deposit Gedling Local Plan with Proposed Modifications (January 2005) provides for all of the Joint Structure Plan dwellings to 2021 to be completed by 2011. To allow for some development to take place in Gedling after 2011, a notional 1,000 extra dwellings and households have been added to the Joint Structure Plan figures. The Joint Structure Plan does not provide any housing figures for 2011, so the County Council have supplied special projections controlled to the housing development provided for in the District Local Plans to 2011. These have been used for the 2011 figures. Because it is not possible to identify those households in 2011 and 2021 which are new (i.e. they did not exist in 2001), an assumption has been made that all households with a representative aged under 30 in 2011 and under 40 in 2021 (i.e. people aged under 20 in 2001) are new households. An allowance has also been made for older household representatives: new households forming due to divorce or other household dissolutions. In the absence of any better estimates, half of the households with a representative aged between 30 to 39 in 2011 and 40 to 49 in 2021 have been taken as an allowance for these households. It is recognised that this is an arbitrary allowance, giving a notional estimate of household formation and thus affordable housing need. The projections for 2021 include concealed families (i.e. couple and lone parent families living as part of a wider household), but those for 2011 do not. There is some doubt about the extent to which they should be included, as, due to the definitions, not all concealed families will wish to have their own accommodation. So, to include all of them may overestimate need. Although they have been included in the analysis for 2021 they only form a small part of the need. Leaving them out would not substantially affect the results, as there are only just over 1,640 of them in the age groups taken. The future need for 2011 would probably be about 1,500 higher if they had been included in the projections supplied by the County Council. A breakdown of the projections to show totals by District area and household type are provided at Appendix (iv), Sheet A for 2001 - 2011; Sheet B for 2001 - 2021. The model uses projections consistent with the Joint Structure Plan Deposit Draft (Sept 2004), except for Gedling in 2021.
4
Joint Structure Plan Technical Report – Housing, November 2003
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(ii)
Home Ownership Costs
These have been calculated using the following data inputs: Data Input: a) Mean house price (£) b) Size of loan (%) c) Mortgage Interest rate (%) d) Loan period (years) e) Payment Protection Insurance as % mortgage repayment f) Building insurance (average for terraced/semis) g) Repair allowances per annum
To 2011 £97,000 89.00 % 5.92 % 25 5.03 % £100.01 £563
To 2021 £97,000 89.00 % 5.92 % 25 5.03 % £100.01 £563
a) House price. This figure has been calculated using data from Land Registry quarterly returns between (and including) 1st October 2003 and 30th September 2004 Review 2004/05 A major change with this Review has been to use the frequency distributions of house prices for terrace and semi-detached properties, the types of properties most likely to be purchased by first time buyers (see Appendix (v)). Flats have been excluded because their prices are made unrepresentatively high by luxury developments in Nottingham City and Rushcliffe. These distributions have been converted both into £10,000 bandings and into deciles. For terrace properties the modal banding (i.e. the one with the greatest number of sales) is between £70,001 and £80,000, though the £80,001 to £90,000 banding is of only a very slightly smaller size. For semi detached properties the modal banding is between £90,001 and £100,000. It is assumed that first time buyers will be able to afford more than half of all terraced properties, but less than half of semi detached properties. The 7th decile for terrace properties (i.e. the price below which 70% of all sales take place) is £96,902 and the 4th decile for semi-detached properties (the price below which 40% of sales take place) is £97,083. Using a figure of approximately £97,000 as a house price to expect first time buyers to pay equates closely to the figure that would apply using the methodology of previous reviews5*. The previous methodology would have given a figure of £99,556. Compared with the frequency distribution in the previous paragraph, this figure is in the price banding in which the greatest number of semi detached sales takes place and just above the two price bandings with the most terrace sales.
5
This calculation would take a mean of all terraced house sales and 35% of semi detached sales, centred on 31.03.04. A multiplier of 0.975 would be applied to take account of the fact that first time buyers would most likely purchase at slightly below the mean.
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b) Size of the loan. This has been estimated using data from the Council of Mortgage Lenders. Note a figure of 89% has been used for 2004 as at the time of completing this review the full 2004 data was not available. See Appendix (vi). Review 2004/05 The source of this data has been re-assessed and has been changed to include a median value rather than a mean value to reflect a more realistic situation for most first time buyers who don’t have substantial deposits. The mean figure for the size of mortgage loans is lower as it reflects those first time buyers with substantial savings / inheritance that they are able to put down as a deposit. c) Mortgage Interest rate. Previously a rate had been estimated based on a combination of data contained in the current Housing Finance Review available. For the 2004/05 review a figure based on a ten year average from the fourth quarter of 1994 has been used from Council of Mortgage Lenders data. See Appendix(vii). Review 2004/05 Data was both available from UK Parliamentary Publications and the Council of Mortgage Lenders. Three possible estimates were considered from each of these above two sources: • A figure based on a ten year average from the fourth quarter of 1994; • the maximum rate for a quarter in this period (i.e. the first quarter 1998) and • an average spanning this date from the third quarter 1997 to the third quarter 1998 It was agreed to use the estimates based on the Council of Mortgage Lenders data (which was lower) and from these, the figure based on a ten year average from the fourth quarter of 1994. d) Loan period. This is assumed to be 25 years a) to d) above allow a calculation of mortgage costs. In addition the following costs of home ownership have also been taken into account: e) Payment Protection Insurance as % mortgage repayment. This information comes from the Council of Mortgage Lenders6 The figure for the first half 2004 has been used, which was the most recent available. See Appendix(viii). Although payment protection insurance is optional and buyers may choose to reduce costs by not taking out such insurance, after discussion we decided to include this cost as the study is concerned that home ownership is truly affordable. f)
Building Insurance average for terraced / semis. This information comes from the British Insurance Premium Index 7
6
Table 1, MPPI Policies in force from the Council of Mortgage Lenders. See: http://www.cml.org.uk/cml/home 7 http://www.theaa.com/services/insuranceandfinance/insuranceindex/?page=intro
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A figure for the average insurance premium quoted for terraces and semi detached houses across the Midlands from the October 2004 release has been used as the best available estimate. Actual costs, of course, will vary depending on the location of the property and its type. g) Repair allowances per annum. An estimate was originally determined from a national report on housing conditions8. See Appendix (ix) SHEET A. Review 2004/05 Each review has updated this figure using the Retail Price Index (RPI) for all items9 from: Alternative uprating multipliers were considered. For example using an RPI figure for DIY materials the figure would be £501.10. Alternatively using the RPI figure for repair and maintenance charges the figure would be £765.60. See Appendix (ix) SHEET B.
Using the above data a Housing Cost Calculation for first time buyers in the South Nottinghamshire area has been calculated using tables shown in Appendix (x). From these a figure for average weekly housing costs is arrived at which is estimated to be: 2002* £102.87
2004 £148.12
*Note this, and all subsequent references to the 2002 estimate in this report, refer to what was the 2002(2) estimate in the 2002 Review Report
8
Leather P and Morrison T 1998 The state of UK housing: a factfile of housing conditions; Policy Press 9 http://www.statistics.gov.uk/rpi
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% Net Income spent on housing Data input: % net income
To 2011 27.5 %
To 2021 27.5 %
An estimate of the maximum percentage of income that first time buyers should be advised to spend on home ownership has been based on accepted professional recommended good practice10. Data recording what has been spent in the past is contained in the Housing Finance Review 2004/2005 and also in the Survey of English Housing. See Appendix (xi). Review 2004/05 The description “net income” has now been used instead of “disposable income”, as it is thought to better reflect what is being talked about, i.e. gross household income minus statutory deductions and payments of income tax and national insurance contributions. Using the estimate of the percentage of net income available to be spent on housing, a total net income figure can be calculated that is needed to afford a given house price. Housing costs per week from section (ii) above are estimated to be: 2002 2004 £102.87 £148.12 and the maximum % of disposable income recommended to be spent on housing is 27.5% Therefore the annual household net income required to meet average home ownership costs is estimated to be: 2002 £19,452
2004 £28,008
Incomes in the South Nottinghamshire area Data on incomes has been purchased from CACI Ltd for each Local Authority ward in the area. From this data net income levels have been calculated by decile for the population of the South Nottinghamshire area. See appendix (xii) for further information on these calculations A formula has been used based on the information in appendix (xii) so that for a given house price and a given income, a percentage of the households who cannot afford this house price can be calculated.
10
Discussions with the Shelter Policy Section have identified a good practice maximum as being in the range of 1/4 - 1/3 of incomes being spent on housing. The Housing Corporation used to work to a maximum of 35% for grant purchases In Appendix (xi), Sheet B, the lowest, first, quartile from the Family Expenditure Survey shows Mortgage as a % of gross income (average) being in the range of 24 – 31% between 1993/2002. See: http://www.odpm.gov.uk/stellent/groups/odpm_housing/documents/page/odpm_house_022792. xls
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The number of new households that cannot afford home ownership is estimated to be: 2002 Review to 2011 52,799 (63.20%)
2004 Review to 2011 48,559 (73.72%)
2004 Review to 2021 86,332 (73.72%)
(from 1996 there are an estimated 83,546 new households formed)
(from 2001 there are an estimated 63,220 new households formed)
(from 2001 there are an estimated 116,239 new households formed)
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(iii)
Social Housing relets available by 2011 and 2021
Table 1 New methodology Data input: Including all properties at present designated for older people To 2011 To 2021 a)Social housing stock at base year (2001) 61,496 61,496 b)Less % Right To Buy sales annually - (i) 2001 to 2011 1.25 % 1.25 % (ii) 2011 to 2021 1.00 % c)Less other stock loss since base year 65 65 d)PLUS new social rented stock built since base year 597 597 e)Less % void rate 1.50 % 1.50 % f)Less % social housing tenants still occupants 40.00 % 21.00 % after 10 years for 2001 to 2011, and 20 years for 2001 to 2021 Table 2 Original methodology Data input: Excluding all properties at present designated for older people To 2011 To 2021 a)Social housing stock at base year (2001) 61,496 61,496 b)Less % Right To Buy sales annually - (i) 2001 to 2011 1.25 % 1.25 % (ii) 2011 to 2021 1.00 % c)Less other stock loss since base year 65 65 d)PLUS new social rented stock built since base year 597 597 e)Less households designated for older people 19.36 % 19.36 % f)Less % void rate 1.50 % 1.50 % g)Less % social housing tenants still occupants 40.00 % 21.00 % after 10 years for 2001 to 2011, and 20 years for 2001 to 2021 The number available has been calculated from: a) Social housing stock at base year. This is the total social housing stock, and includes both Local Authority and Registered Social Landlord properties, in the South Nottinghamshire area at 1.4.2001. See Appendix (xiii). Review 2004/05 The most significant change with this review has been to include those properties designated for older people that are part of the social housing stock in considering the number of relets that will be available by the end of the by 2011 and 2021 (see table 1 above). The reasons for including these properties are explained under the Definitions section at the beginning of this review. The inclusion of these properties, which accounted for 19.36% of properties at 31.03.2004, has the effect of making an estimated extra 7,098 relets available by 2011 and 6,724 by 2021. The total is less for 2021 because it is estimated there will a reduction in total stock numbers by 2021 At present these properties are only available to tenants aged at least over 50, and many at least over 60. Over time it is anticipated numbers of these properties will be available to younger age groups as social landlords adapt to changing demand and apply different lettings policies.
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If social landlords do not respond as expected by changing their lettings policies then the stock will continue to be available only to older households. This will have the effect of increasing the amount of affordable housing needed to meet the Future Need calculated by this study. Table 2 above reproduces the original methodology which provides the calculation for the scenario if all properties at present designated for older people remain so designated. Appendices xviii (D, E and F) illustrate what the need would be in this scenario. It is very unlikely that all of the properties currently designated for older people will be generally available by 2011. Because of this, the preferred option is to assume that 50% of such housing is available for general relet by 2011. The figures resulting from this are given in Appendices xviii (G and H). b) Less % Right To Buy sales annually. These have been estimated by Holmans11 at 1.25% annually between 2001 and 2011 but sales will then slow between 2011 to 2021 to give a social rented stock loss of 1% between 2001 and 2021. The table in Appendix (xiv) illustrates what overall stock losses could be based on different assumptions about the rates of RTB sales. Review 2004/05 It was originally estimated that 0.75% of the total stock would be sold per annum throughout the period from 1996 to 2011. Actual sales from 1996 resulted in the 2002 Review raising this figure to 1%. The estimates to 2011 and 2021 are based on actual sales since 1996. Moves to transfer Local Authority stock to Registered Social Landlords or to Arms Length Management Organisations and steps taken to meet the Decent Homes Standard have increased Right to Buy applications and these sales are expected to increase further. As a result the estimate for the period 2001 to 2011 has been raised to 1.25% of stock annually. It is likely that the rate of sales towards the end of the period, 2021, will slow. More LA stock could be transferred to RSLs and restrictions on RTB of transferred stock (introduced by the 2004 Housing Act) will have an increasing effect. Therefore an overall lower estimate has been used for the period 2011 to 2021. There have been recent proposals from the ODPM to promote shared ownership sales of Registered Social Landlord stock. If this is implemented it has been assumed that the properties will remain ‘affordable’ in perpetuity. c) Less other stock loss since base year. This is largely stock which has been demolished and a small amount which has been sold by RSLs into private ownership. These include 29 in Hucknall (27 of which were designated for older households); 6 in Broxtowe; 5 in Gedling and 25 in Nottingham City. No affordable stock loss has been identified in Rushcliffe since 2001. Alan Holmans 1995 'Housing Demand and Need in England 1991 - 2011, Annex E': Joseph Rowntree Foundation 11
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d) PLUS new affordable stock built since base year. This is stock built by RSLs or provided to RSLs through S106 planning agreements with private developers. It does not include shared ownership or low cost home ownership (see page 26) These include 51 in Hucknall (43 of which were designated for older households); 23 in Broxtowe; 41 in Gedling; 443 in Nottingham City and 39 in Rushcliffe. e) Less % void rate. A figure of 1.5% has been used for these purposes based on ODPM recommended good practice for minimising void stock. f) Less % Social Housing tenants still occupants after 10 years for 2001 to 2011 and 20 years for 2001 to 2021. See Appendix (xv). Using the above data we estimate that the following number of lettings will be available in the social rented sector for new households: 2002 Review (1996 – 2011) 30,548
2004 (for 2001 – 2011) 28,845*
2004 for (2001 – 2021) 42,018
* assuming 50% of properties currently designated for older people are available for general relet in 2011.
22
(iv)
Private Rented relets available by 2011 and 2021
Data input: a)Households in the private rented sector (PRS) b)Household changes since 2001 Census (estimate) c)Student households at 1st April 2004 d)Private renting households in social classifications 1,2,3 & 4 e) Change in private renting households in social classifications 1,2,3 & 4 (estimate)
To 2011 33,702 0 5,683 13,751 0
To 2021 33,702 0 5,683 13,751 0
a) Households in the private rented sector (PRS) (2001 Census). The 2002 review report used the Census records of the number of households in the PRS rather than the amount of stock in the PRS. The implications of this change for the study are discussed on the next page under Review 2004/05. b) Household changes since 2001. This allows for recording any known or estimated changes of households in this tenure since 2001. There are no estimates available. c) Student households at 1st April 2004. This is a record of student households registered for full Council tax exemption (i.e. accommodation occupied solely by students). This data comes from the Council Tax records of each of the Authorities. In Hucknall the number was 12; for Broxtowe the number was 694; for Gedling, it was 75; for Nottingham City, it was 4,679, and for Rushcliffe, it was 223. For the purposes of this model it is assumed that all these households are in the private rented sector d) Private renting households in social classifications 1, 2, 3 and 4 The model uses this as a proxy for high income renters who are presumed to live in high cost accommodation which would not be affordable housing if relet. The social classifications drawn on for this study were changed in 2002 have been changed to reflect the revised 2001 Census. See Appendix (xvi), Sheets A & B. There was considerable growth in the number of higher income earners in the private rented sector between the 1991 and 2001 Census, although the different definitions used by the Census means that the two are not directly comparable. This fits with local knowledge about the growth in luxury developments in the city centre and a more mobile professional population which rents before buying. e) Change in private renting households in social classifications 1,2,3 & 4 (estimate). This allows for recording any known or estimated changes since 2001. There are no estimates available. It is assumed that all affordable private rented accommodation will be available for relet by 2011.
23
Review 2002 Local Authority Housing and Planning Officers worked together as part of this review to determine reasons for the growth and change in the number and type of households in the private rented sector. Reasons identified included national and local drivers of change: • • • • • • • • •
the development of a ‘Buy to let ’market the growth of investment in properties to provide income in lieu of pensions the growth in letting to professional people especially in the City substantial growth in the number of young people moving to South Notts because of expanding Universities the inability to afford to buy with a rising housing market a preference to rent from the private rented sector rather than a Council limited access to social rented housing as stock availability reduces former Right to Buy properties now being rented out on Council estates renting out of properties while working away / abroad
This growth has largely been in the second hand housing market, though there has been a significant growth in new build / converted stock in the City catering for professional people, including those with permanent homes elsewhere who work in Nottingham during the week. Evidence of the growth in the second hand market can be seen in the number of ‘To Let’ boards in streets some miles from the City centre and in areas not likely to be sought out by students The changes in the size of the private rented sector in England between the 1991 and 2001 Censuses have been compared with those in the Greater Nottingham area. The size of the sector in the Greater Nottingham area has grown from 8.6% to 12.7% (a 48% increase) compared to one from 9.4%% to 12% (a 28% increase in England). It is thought this is largely due to the growth of the student population in Greater Nottingham and the fact that the 2001 Census was the first one to record students at their term-time address. Review 2004/05 In the original model, and succeeding reviews up to and including that in 2002, a percentage of stock was excluded for being unfit. As the revised data is now based on the number of households and not the amount of stock, it has been agreed not to exclude a percentage of stock as unfit. It is assumed that for the purposes of the model that the percentage of unfit stock currently let is similar to the percentage of fit stock currently not let, which leads to a negligible impact on the model. Evidence from the Council of Mortgage Lenders12 shows gross new advances for buy to let properties started to fall by the second half of 2004, though the rate was still substantially higher than the lending on buy to let prior to 2003.See: Appendix (xvii) 12
http://www.cml.org.uk/cml/home
24
This and other anecdotal evidence suggests that the sector has increased substantially since the 2001 Census and the 2002 review. The model does not take account of this likely increase in the sector, meaning that affordable housing need will be overestimated. It has been suggested that for the next review a sample survey of the private rented sector is carried out to get an estimate of changes that have occurred since the 2001 Census. Using the above data we estimate that the following number of affordable lettings will be available in the private rented sector for new households: Year of estimate
2002 14,830
2004 14,268
25
(v)
New Low cost home ownership
Data input: Total affordable units built since 2001
To 2011 193
To 2021 193
New Low cost home ownership. This is a cumulative figure of the various new low cost home ownership schemes, including Homebuy, discounted for sale and shared ownership. Review 2004/05 For the 2004 Review it was agreed to use data from annual HIP returns13. In practice we have used Housing Corporation data.
Properties built as a result of new low cost home ownership schemes 2002 1711* (From 1996 to 2002)
2004 193 (from 2001 to 2004)
*This includes 1,080 new homes, built largely at the beginning of this period, that were that were assessed as Council Tax Band ‘A’. These properties are assumed to have provided affordable homes available to new households. Since the 2002 review it has been accepted by the review team that it is no longer possible to provide new housing that is assessed as Council Tax ‘A’ Band.
13
Housing Investment Programme strategy statistical appendix, section N
26
(vi)
TOTAL AFFORDABLE HOMES NEEDED
This brings us to the final step of the model. The number of households that cannot afford home ownership Year of estimate Total
2002 (to 2011) 52,799
2004 (to 2011) 48,559
2004 (to 2021) 86,332
2004 (to 2011) 28,845 14,268 43,113
2004 (to 2021) 42,018 14,268 56,286
2004 193 (from 2001 to 2004) -
2004 193 (from 2001 to 2004) -
The number of lettings available to 2011 and 2021 Year of estimate Social housing Private rented Total
2002 (to 2011) 30,548 14,830 45,378
Affordable owner occupation Year of review Number of new units from low cost homeownership schemes plus new ‘Band A’ Props.
2002 631 (From 1996 to 2002) 1,711
The number of new affordable homes needed Year of estimate Households unable to afford home ownership
2002 (to 2011)
2004 (to 2011)
2004 (to 2021)
52,799
48,559
86,332
LESS PRS and social rented lettings available 45,378 and
43,113
56,286
193
193
5,253
29,853
LESS new affordable owner occupation 1,711 TOTAL NEW AFFORDABLE HOMES NEEDED: 5,710
27
PROPORTION OF ALL PLANNED NEW HOUSING WHICH AFFORDABLE TO MEET FUTURE HOUSING NEEDS Year of estimate Period covered Total projected new homes New homes built by review date New homes still needed New affordable homes needed to address future need
2002 1996 - 2011 30,567 5,632 24,932 5,710
New affordable homes needed to address base need Total affordable homes needed % of new homes still to be built which need to be affordable*
Not included 2002 review 5,710 23%
2004 2001 - 2011 25,270 4,800 20,470 5,253 in 3,051 8,304# 41%
NEEDS
TO
BE
2004 2001 - 2021 37,500 4,800 32,700 29,853 3,051 32,904# 101%
*Figures have been rounded to whole numbers to take account of the many assumptions that have been input into the model. # It is assumed that the all of this base need would be met in the first half of the period (i.e. by 2011). Adding the base need to the future need may lead to a certain amount of double-counting, because some properties provided to meet the base need will be relet before the end-date. Because of the longer time-period, this will have more effect upon the 2021 figures than the 2011 figures.
Although the percentage to 2011 is very high the 2021 figure is very much higher. One reason for the big difference between the two figures is that an extra ten years of new households will be produced by 2021 at a time when the Joint Structure Plan implies a significant decline in housebuilding. This is an issue which will need addressing when the Regional Spatial Strategy is reviewed and rolled forward to 2021 (Note: Under the new planning system, Structure Plans have been abolished and the Regional Spatial Strategy will give District dwelling provision figures).
28
ASSUMPTIONS MADE FOR THE MODEL – AND THEIR LIKELY IMPACTS (see the note below the table for an explanation of the symbols used)
+ = more affordable housing needed ASSUMPTION
LIKELY IMPACT ON MODEL
- = less affordable housing needed X = neutral effect ? = unknown
DEFINITIONS Exclusion of part of Newark and Sherwood District Council that lies within the Likely to be neutral South Nottinghamshire planning sub area That all couple and lone parent families living as part of another household Likely to overestimate need would like their own accommodation. (Note that this does not apply to the (2021) Future Need to 2011 – see page 14) Absence of data for 2011 likely to underestimate need
X
- (2021) + (2011)
BASE NEED That all those in mortgage arrears where court orders for mortgage Likely to overestimate need repossession have had actions entered require affordable housing That no single adults living as part of another household would like their own Likely to underestimate need accommodation. That no rough sleepers are in need of affordable housing Likely to underestimate need That households who have applied for social housing are not counted as being Likely to underestimate need part of a base need for affordable housing unless already counted as part of one of the three groups listed That Base Need can be added to Future Need Likely to overestimate need
+ + + -
HOUSEHOLD PROJECTIONS 29
That household projections from the Structure Plan are accurate That household projections using Structure Plan demographic assumptions controlled to 2011 Local Plan dwelling provision can be used to give new households in 2011 That all new housing proposed by the Joint Structure Plan is built by 2021 That all new housing proposed by the Local Plans (except Rushcliffe) is built by 2011 That Rushcliffe Borough Council’s estimates of new housing by 2011 are achieved That Gedling will develop 1,000 units between 2011 and 2021, in excess of the Joint Structure Plan proposals
Unknown Unknown
? ?
Likely to be neutral Likely to be neutral
X X
Likely to be neutral
X
Likely to overestimate supply
+
That all households with a household representative who will be aged under 30 in 2011 will be new households. That all households with a household representative who will be aged under 40 in 2021 will be new households. Taking half of all households with a household representative who will be aged 30 to 39 in 2011 as an estimate of older new households. Taking half of all households with a household representative who will be aged 40 to 49 in 2021 as an estimate of older new households.
Likely to overestimate need
-
Likely to overestimate need Unknown
?
Unknown
?
That flats should be excluded because of high cost luxury developments
Likely to underestimate supply
That detached properties are excluded
Likely to underestimate supply
Size of loan estimate
Likely to overestimate need
+
Mortgage Interest rate Mortgage loan period to be based on 25 years Mortgage Payment protection
Unknown Could be underestimate of need if a shorter period Likely to overestimate need
Building Insurance
Likely to overestimate need
HOME OWNERSHIP COSTS
?
+ 30
Repair Allowance
Likely to overestimate need
-
% of net income spent on housing
Likely to overestimate need
-
That the incomes of “hew” households are similar to the average for all 2011: likely to underestimate households need (as only 50% of household representatives in their 30s are included)
+ (2011)
2021: likely to overestimate need (as all household representatives in their 30s and 50% of those in their 40s are included)
- (2021)
SOCIAL HOUSING RELETS Amount of stock available at 2001: Right to Buy sales Other stock lost since base year 2001
Likely to be correct Harder to estimate at 2021 Likely to overestimate supply
New affordable stock available Harder to estimate at 2021 That social housing currently designated for older people is available to Likely to overestimate supply younger people at 2021 (50% at 2011) % void rate Likely to be close to actual figure Tenants still occupying after 10 years (2011) Likely to underestimate supply Tenants still occupying after 20 years (2021)
Likely to underestimate supply (more so than 2011)
X
?
+ ?
+ X
-
PRIVATE RENTED SECTOR Households in the sector recorded by 2001Census
Likely to underestimate supply
31
Changes since 2001 Student households at 01/04/2004 Private renting households in social classifications 1,2,3,4 at 2001 census
Certainly underestimates supply Likely to be close to actual figure Likely to underestimate need
Changes to private renting households in social classifications 1,2,3,4 since Likely to underestimate need 2001 census That all affordable private rented accommodation will be available for relet by Likely to overestimate supply 2011
X
+ + +
NEW LOW COST HOME OWNERSHIP New low cost home ownership homes built since 2001
Likely to be close
+
indicates that, if anything, the model underestimates the need (including by overestimating the supply).
–
indicates that, if anything, the model overestimates the need (including by underestimating the supply).
X
32
3.
APPORTIONMENT and FUTURE MONITORING
3.1
The intention of the study has been to produce estimates of the need for affordable housing in the South Nottinghamshire housing market. Since the whole area can be regarded as serving a single market, the distribution of affordable housing need is a matter of policy and market implementation rather than statistical analysis. Although this matter has been discussed by officers of the constituent authorities, no agreement has been reached about the preferred method to apportion affordable housing need between the Districts.
3.2
Base Needs Two possible methods of apportionment of the base need have been discussed: a) to distribute the total provision in the same proportion as the Joint Structure Plan dwelling provision in each of the districts; or b) to provide for the base need in the district where it arises and to distribute the future need in the same proportion as the remaining Structure Plan dwelling provision in each of the districts.
3.3
Future Needs The Joint Structure Plan is the basis for the apportionment of future need to Districts for the period to 2021. As the Structure Plan only gives figures for dwelling provision to 2021, the District Local Plans have been used for dwelling provision to 2011, except in Rushcliffe, where a Borough Council estimate has been used because the end-date of the Local Plan is 2021.
3.4
Illustrative District Apportionment Spreadsheets indicating illustrative apportionment in respect of the two methods referred to in paragraph 3.2 above are included at Appendix (xix). The figures for 2021 (Sheet B) relate to the new methodology, where housing designated for older people has not been excluded from the relets. For 2011 (Sheet A), 50% of such housing has been excluded.
3.5
It should be noted that the district figures are for the overall period from 2001 to 2011/2021, not from 2004. As affordable housing has not been provided at the levels required in any of the Districts, the percentages required from 2004 would be higher. This is illustrated by a comparison between the South Notts figures in Appendix (xix) and those in the table on page 28 - it has risen from 36% (2001 to 2011) to 41% (2004 to 2011). Because the Joint Structure Plan period started in 2001, it is more straightforward to allocate the affordable housing need to Districts from then. It would be more problematic to do it from 2004.
3.6
Because the overall proportion of new development which needs to be “affordable” is so high, the figures for each district are also much greater than is ever likely to be achievable. The importance of this exercise is, however, that it demonstrates that the
33
very high levels of need are not disproportionately located in particular districts, whichever of the two illustrative methods of apportionment is taken. 3.6
Monitoring the provision of affordable housing As the base year of this study is 2001 it is necessary for the local authorities involved to undertake monitoring on the annual provision of affordable housing. This enables targets to be refined in the light of ongoing progress. The authorities involved in the study are working towards a consistent approach to deliver provide comparable data that ensures the South Nottinghamshire study is a working model that continues to project the need for affordable housing into the future. Since the study was first produced, the provision of affordable housing now has to be monitored for various other purposes, including the East Midlands Regional Spatial Strategy14 Monitoring Report. This has aided the adoption of common definitions of what is meant by “affordable housing”.
14
formerly Regional Planning Guidance (RPG).
34
Base Need
Appendix (i)
Court orders for mortgage repossessions: actions entered Housing Review 2004/05 2001
England(1) Wales(1) Total(1) East Midlands(1)
Table 51 No. of Mortgages
No. of Owner occupiers
%
13,865,000 878,000 14,543,000
10,637,000 Using same %
1,212,000
886,457
Hucknall(2)
9865
Broxtowe(3)
36824
Gedling(3)
39360
Nottingham City(3)
65282
Rushcliffe(4)
34835
Total
Table 53d %Actions entered
186166
73.14% 5,414
0.6107%
Using same %s as above
136,162
832
(1) http://www.odpm.gov.uk/stellent/groups/odpm_control/documents/contentservertemplate /odpm_index.hcst?n=1537&l=1 (2) From ADC private sector House Condition & Energy Rating Survey 2000 (Survey work carried out Feb/Mar 2000) It estimated a private stock of 10,607, 93% of which was Owner Occupied. (3) HIP SSA return, Section hsa1E (4) No data is reported for 2001 or 2002 so the 2003 figure is used. Note a difference of 500 owner occupied properties will only mean an estimated difference of 2 to the number of repossessions entered
35
Base Need
Appendix (ii)
"CONCEALED FAMILIES" FROM THE 2001 CENSUS Concealed families Total concealed families Lone parent families with dependent child(ren) with non-dependent child(ren) only Couple families with no children with dependent child(ren) with non-dependent child(ren) only
Hucknall Broxtowe Gedling Nottingham 54 29 23 6 25 19 3 3
256 108 89 19 148 121 20 7
350 166 150 16 184 144 26 14
762 341 273 68 421 294 98 29
Rushcliffe
Total
218 78 67 11 140 107 30 3
1,640 722 602 120 918 685 177 56
Cells in this table have been randomly adjusted to avoid the release of confidential data. Definitions: 1. A 'family' comprises a group of people consisting of a married couple or cohabiting couple with or without child(ren), or a lone parent with child(ren). It also includes a married or cohabiting couple with their grandchild(ren) where there are no children in the intervening generation in the household. Cohabiting couples include same sex couples. Children in couple families need not belong to both members of the couple. 2. A 'concealed family' is one that does not contain the Household Reference Person. 3. A dependent child is a person in a household aged 0 to 15 (whether or not in a family) or a person aged 16 to 18 who is a full time student in a family with parent(s). An adult in a household is defined as a person who is not a dependent child.
Source: 2001 Census. Crown copyright 2003 (Standard Table S011). Crown copyright material is reproduced with the permission of the Controller of HMSO.
36
Base Need
Appendix (iii)
Homeless households in temporary accommodation Bed & Breakfast
Hostels
LA/HA stock
Private sector leased
others
Total
Hucknall(1)
0
0
0
0
0
1
Broxtowe
0
8
100
0
0
108
Gedling
0
17
123
0
0
140
Nottingham(2)
est. 203
Rushcliffe
0
10
117
0
0
127
Total
0
34
340
0
0
579
(1) Pro rata from Ashfield District return (figures rounded up) (2) No returns were made by Nottingham City for a number of quarters until 2003. An average of the first 4 full quarterly returns made from the third quarter in 2003 have been used. Data used for Ashfield & Nottingham, compared with the other Districts, would suggest an under count Source: Supplementary Table: Local Authorities' actions under the homelessness provisions of the 1985 and 1996 Housing Acts: First Quarter 2001
37
Appendix (iv) SHEET A HOUSEHOLD PROJECTIONS FOR 2004 SOUTH NOTTS STUDY PROJECTIONS CONSISTENT WITH THE DISTRICT LOCAL PLANS (as at June 2005)* (June 2005 run) Estimates of households new between 2001 and 2011 - Household representatives under 30 and 50% of 30 to 39s at 2011 New households by 2011 (by type)
Married Lone parent One person Other Multicouple households Households person household Households
Total
July 2005
Throughout this report, points arising from, and changes due to, the 2004 and earlier Reviews are shown in blue text. Major points are highlighted in red text.
1
CONTENTS List of Appendices
Page no. 3
Summary
4
Diagram of Steps in Future Need Calculation
5
Changes from the Previous Studies (including the Context and Critical Findings)
5
Definitions
6
Methodologies
8
Base Need:
Future Need:
Methodology
9
District Base Needs
9
Single Person Households
10
Older People
10
Methodology
11
New Households in 2011 and 2021
14
Home Ownership Costs
15
Net Income spent on Housing
18
New Households that cannot afford Home Ownership
19
Social Housing Relets available by 2011 and 2021
20
Private Rented Relets available by 2011
23
New Low Cost Home Ownership
26
Total Affordable Homes Needed
27
Proportion of All Planned New Housing which needs to be Affordable
28
Assumptions made for the Model – and their Likely Impacts
29
Apportionment and Future Monitoring
33
2
LIST OF APPENDICES App. no. (i) (ii) (iii) (iv)
(v)
(vi) (vii) (viii) (ix)
(x)
(xi)
(xii) (xiii) (xiv) (xv) (xvi)
(xvii) (xviii)
(xix)
Court orders for mortgage repossessions: actions entered “Concealed families” from the 2001 Census Homeless households in temporary accommodation Household projections for the 2004 South Notts Study: Sheet A: Estimates of new households between 2001 and 2011 Sheet B: Estimates of new households between 2001 and 2021 South Notts house prices: Sheet A: Semis and terraced (graph) Sheet B: Deciles by numbers of sales (terraced and semis) Advances to First Time Buyers Mortgage interest rates Payment Protection Insurance as % of mortgage repayment Cost of housing repairs: Sheet A: Household expenditure on repair, maintenance and decoration by tenure Sheet B: Household expenditure on repair, maintenance and decoration Housing cost calculation: Sheet A: 1996 to 2000 Sheet B: 2002 to 2004 Mortgage repayments: Sheet A: Average repayments as % of average gross income for First Time Buyers Sheet B: Average repayments as % of average gross income by income quintile South Nottinghamshire net incomes Social housing stock at 1/4/2001 Right To Buy sales 1996 –2011 Length of residence of household reference person by tenure High income private tenants: Sheet A: Households renting privately by NS-SeC of household reference person Sheet B: NS-SeC definitions National Buy to Let summary Spreadsheets estimating Future Need: Sheet A: Data input with relets including properties designated for older people Sheet B: Data calculations for Sheet A (2004 to 2011) Sheet C: Data calculations for Sheet A (2004 to 2021) - preferred option for 2021 Sheet D: Data input with relets excluding properties designated for older people Sheet E: Data calculations for Sheet D (2004 to 2011) Sheet F: Data calculations for Sheet D (2004 to 2021) Sheet G: Data input with relets excluding 50 % of properties designated for older people (2011 only) Sheet H: Data calculations for Sheet G (2004 to 2011) - preferred option for 2011 Suggested methods of apportionment of Affordable Housing by District: Sheet A: 2001 to 2011 Sheet B: 2001 to 2021
3
SUMMARY The South Nottinghamshire Affordable Housing Needs Model was first formulated during 1997/1998, based on 1996 data. It was intended to carry out a monitoring exercise every 2 years to see how well affordable housing needs were being delivered on the projected needs established from 1996. The model was reviewed and updated for the years 1998, 2000, and 2002. Since the model was intended to provide an ‘end state’ prediction for affordable housing needs for the period 1996-2011, the same base need information for 1996 was retained. Review 2004/05 The big differences with this review are that a new base date of 2001 is included and two different end dates for the period, 2011 and 2021, are used. 2021 is the end-date of the Nottinghamshire and Nottingham Joint Structure Plan, which is due to be adopted during 2005. Trends indicate that the relationship between house price increases and income changes can produce large fluctuations in the ability to purchase properties in the owner occupied sector at any one time. However the purpose of the model is to take a longer term view about affordable housing provision. The monitoring process at the end of each two year period is therefore designed to provide important pointers about the ongoing delivery of affordable housing needs. Figures for the percentage of new houses to be affordable at any one time are indicators of the need based on projecting the particular housing situation at that time. Since provision via the new housing market is a relatively slow process it would be unreasonable to expect fluctuations indicated by the model to become ‘requirements’ within the new Local Development Frameworks. The purpose of this report is therefore to highlight changing trends and to provide an ‘alert’ over the need to continue the provision of affordable housing. Previous versions of the study and model have been submitted to the Ashfield, Broxtowe, Gedling and Nottingham City Local Plan Inquiries. They have also been used by Rushcliffe Borough Council in determining Planning Appeals. Comment about the very high levels of need in by the 2004 Review Anyone reading this review will notice that the levels of need between 2004 and 2021 (and to a lesser extent 2004 to 2011) are much higher than is ever likely to be achievable, as all new housing built during the period would need to be “affordable”. This reflects the current high level of house-prices relative to incomes, something which is unlikely to be sustainable in the longer term. Nevertheless, the review has been worthwhile, as it sets the context for future work to be carried out by the Constituent Authorities as work develops on Local Development Frameworks (successors to Local Plans) and Housing Market and Needs Assessments. The context is that the need for affordable housing is very significant and is higher than it was when the original study was produced in 1996.
4
The diagrams below provide a summary of the steps in the future need calculation. This is then explored in more detail in section 2.2. Calculation 1, Future Need from 2001 to 2011 (i)
(ii)
All new households at 2011
Number who can afford to buy market housing
minus
(iii)
minus
All social housing relets 2001 to 2011
(iv)
minus
All private rented sector relets 2001 to 2011
(v)
minus
All low cost home ownership built 2001 to 2011
(vii)
=
Number needing affordable housing 2001 to 2011
Calculation 2, Future Need from 2001 to 2021 All new households at 2021 minus
Number who can afford to buy market housing
minus
All social housing relets 2001 to 2021
minus
All private rented sector relets 2001 to 2021
minus
All low cost home ownership built 2001 to 2021
=
Number needing affordable housing 2001 to 2021
Changes from the previous studies include: • Definition of low cost homeownership • Inclusion of older peoples’ needs, and of social rented stock designated for older people • Review of how Base Need calculated (though agreed to stick to original methodology as a result) • New method of calculating house prices for first time buyers • Changes to other house price data inputs • A chart outlining the likely impacts of these assumptions on the model The context includes: • Continuing rise in house prices compared to incomes • Continuing increasing numbers of Right to Buy sales and changes in Right to Buy forecasts • Continuing, if slowing, rise of the private rented sector, • Slowing down of the Buy to Let market. It has been suggested that for the next review a sample survey of the private rented sector is carried out to get an estimate of changes that have occurred since the 2001 Census. • Few low cost homeownership completions Critical findings are: • High Future Need shown to 2011 (26%) and • Very high Future Need shown to 2021 (91%)
5
DEFINITIONS The South Nottinghamshire Area For the purposes of this study the following geographical areas are included: Broxtowe Borough Council Gedling Borough Council Hucknall (the part of Ashfield District Council which is in the South Notts. area) Nottingham City Council Rushcliffe Borough Council Together with parts of Newark & Sherwood District the above areas form the South Nottinghamshire sub area of the Structure Plan. That part of Newark and Sherwood District Council that lies within the South Nottinghamshire Planning Sub Area has been excluded from this study because it represents a mainly rural part of the area with limited requirements for new housing. It is unlikely to be significant in generating affordable housing needs within the main conurbation. Review 2004/05 It was agreed to include the same geographical area. Affordable Housing "Dwellings developed specifically for those whose incomes generally deny them the opportunity to purchase or rent houses on the open market". This was agreed in 1997 at a meeting of housing and planning officers of the participating Authorities. Review 2004/05 It was agreed to include within this definition all elements of low cost ownership including shared ownership homes. It was noted that these homes may staircase out of affordable provision if the occupier purchases the remaining shares in the property and later sells on the open market. Social Housing: All rented stock in Local Authority or Housing Association ownership. Concealed Families: Couple and lone parent families who are living as part of another household but whom it is assumed would like their own accommodation. Previously these have been referred to
6
as “concealed households”, we are using the changed Office for National Statistics’ terminology. Household Representative: Office for National Statistics’ terminology used for those previously termed “head of household”. Older Households: In the original study, households with a household representative aged 75 years or older were excluded because their affordable housing needs were likely to be met by housing specifically designated for older people Review 2004/05 National and local policy changes mean that older people are now supported, wherever possible, in their existing homes rather than moving to designated supported housing. It has therefore been agreed to incorporate their needs for affordable housing into the study through this review. The review commentary identifies changes to the methodology as a result of now including older people’s housing needs.
7
METHODOLOGIES The assessment of need has been separated into two main components: 1.
Base needs for affordable housing at 1.4.2001.
2.
Future needs for affordable housing to be met by 2011 and 2021
In addition, the South Nottinghamshire Black and Minority Ethnic housing needs study1 was completed at the beginning of 2004. The study does not give robust predications of future needs, but so far as possible, the needs of the BME communities identified by this study are included within the base and future needs assessments in this report. The two components are addressed by different methodologies. This report explains how we have estimated the number of affordable dwellings needed between 2001 and 2011 and between 2001 and 2021. Review 2004/05 Note base date is now 2001 and all other Base Need references have been changed to 2001. When the original 1996 – 2011 report was published it was agreed that reviews should take place every two years to monitor progress towards meeting the future needs. Reviews for the years 1998 and 2000 were carried out in 2000, and the review for 2002 was carried out at the beginning of 2003. The present review was started in 2004 The South Nottinghamshire Black and Minority Ethnic housing needs study was completed at the beginning of 2004. Note also the needs of older people are now being taken into account under the above components rather than as a separate component as was the case in the original report and previous reviews.
1
Steele. A 2004 Communities in Focus: a study of the housing and related needs of the Black and Minority Ethnic communities in South Nottinghamshire University of Salford
8
1.
BASE NEED
1.1
Methodology For the purposes of the study the following groups of households have been identified as being in need of affordable housing at 01.04.2001: Those in mortgage arrears where court orders for mortgage repossession have had actions entered (see Appendix (i)):
832
The total for the South Nottinghamshire Area has been calculated on a pro rata basis from data from East Midlands mortgage possession statistics, Dept of Constitutional Affairs.
Concealed families (see Appendix (ii):
1640
The data on concealed families does not include estimates of single people living as part of another household who would like their own accommodation, as no source of information about these could be identified. The data is from the Joint Structure Plan projections
Homeless families in temporary accommodation (see Appendix (iii):
579
Note an estimate of 203 is included here for Nottingham City as no data was supplied for the Office of the Deputy Prime Minister (ODPM) P1E returns for the quarter ending 31.04.2001. The data for the other Council areas comes from these P1E returns (for Hucknall, on a pro rata basis for the area of Ashfield). ‘Homeless at home’ households are excluded as there is a likelihood of double counting with concealed families.
TOTAL
3051
Review 2004/05 It should be noted that numbers for rough sleepers have not been included in these base need figures. A count, based on strict ODPM guidelines, of rough sleepers in November 2001, in Nottingham City identified three rough sleepers. A joint snapshot survey in 2004 identified approximately 133 households (largely single people) who reported sleeping rough in the South Nottinghamshire area during the survey fortnight.2 The survey was unable to quantify the numbers that claimed to be ‘long term’ rough sleepers. 1.2
District Base Needs The base need of 3,051 is an estimate of affordable housing need across the study area, rather than on an authority by authority basis. The base needs estimates have intentionally been taken from sources other than Council waiting lists (now known as Housing Registers) as these can be regarded as expressions of housing want rather than need. We have chosen sources that emphasise those groups in greatest need: households without their own homes in 2001. However this
2
Kitney, M 2004 Homeless Watch report: a snapshot survey of homelessness in Nottinghamshire 20th September – 3rd October 2004
9
makes it difficult to provide a robust estimate of base need in each district area. Appendix (xix) contains illustrative tables showing base need by District at 2001. 1.3
Single Person Households The base need estimate fails to include single person households in need of affordable housing, although we are aware that there will be significant numbers of such households who have very restricted opportunities to access social rented housing or to purchase a home. The outturn of 3,051, therefore, significantly underestimates the need for affordable housing. The changes in homelessness legislation that came into force in 2002 have recognised the needs of more vulnerable people, often single person households, than were previously given priority. In future reviews we may need to reconsider how the affordable housing needs of single person households are addressed.
1.4
Older People The needs of older people are included within the above figures. Review 2004/05 This inclusion is a change from the original report and previous reviews, though the impact on base needs is believed to be negligible.
10
2.
FUTURE NEED
2.1
Methodology. The steps in the model involve:
(i.)
Using the Joint Structure Plan figures of the number of new households being formed between 2001 and 2011, and 2001 and 2021 (to give estimates to 2011 and 2021 separately); Review 2004/05 Note the start date for the period has now moved on from 1996. Estimating…..
(ii.)
The average home ownership costs of a first time buyer;
(iii.)
The number of the new households, from (i.) above that cannot afford these home ownership costs, Assuming…… a) income to house price ratios stay the same as in 2004 b) they spend no more than a specified percentage of their incomes on housing costs;
(iv.)
The number of social housing (Local Authority and Housing Association) relets available by 2011 and to 2021; Review 2004/05 Note these now include lets that might be designated for older people. It is assumed that social landlords will review their practices and redesignate such stock if demand is changing.
(v.)
The number of private rented sector relets available by 2011, and to 2021.
(vi.)
The cumulative figure, from 2001, of low cost home ownership available for purchase Review 2004/05 For the 2004 Review it was agreed to use data from annual HIP returns3. In practice we have used Housing Corporation data . Then assuming that all the relets are available to the new households:
(vii.)
Subtracting the number of social housing and private rented relets available and the number of low cost home ownership dwellings provided since 2001 from the number of households that cannot afford home ownership (see iii above). The residual figure represents….
(viii.) The number of households that cannot be accommodated in existing stock and therefore will need new affordable homes to be provided by 2011and then by 2021. 3
Housing Investment Programme strategy statistical appendix, section N
11
The diagrams below provides a summary of the steps in the future need calculation. This is then explored in more detail in section 2.2. Calculation 1, Future Need from 2001 to 2011 (i)
(ii)
All new households at 2011
Number who can afford to buy market housing
minus
(iii)
minus
All social housing relets 2001to 2011
(iv)
minus
All private rented sector relets 2001 to 2011
(v)
minus
All low cost home ownership built 2001 to 2011
(vii)
=
Number needing affordable housing 2001 to 2011
Calculation 2, Future Need from 2001 to 2021 All new households at 2021 minus
Number who can afford to buy market housing
minus
All social housing relets 2001 to 2021
minus
All private rented sector relets 2001 to 2021
minus
All low cost home ownership built 2001 to 2021
=
Number needing affordable housing 2001 to 2021
12
2.2
Step by Step Guide to Estimating Future Needs
Section 2.2 provides a step by step guide to the methodology, while Appendix (xviii), sheets A, D and G contains the data input figures using different assumptions and sheets B, C, E, F and H the corresponding data calculations.
13
(i)
New Households in 2011 and 2021
Data Input: Total in 2011/2021
To 2011 65,869
To 2021 117,107
Household projections from 2001 - 2011 and 2001 – 2021 have been supplied by the County Council. These use the same methodology and assumptions as the Joint Structure Plan4 Projections, are for the four districts and Hucknall, and have been aggregated to give total figures for the South Nottinghamshire Area. The Joint Structure Plan figures to 2021 have been increased by 1,000 to allow for extra housing in Gedling. The Revised Deposit Gedling Local Plan with Proposed Modifications (January 2005) provides for all of the Joint Structure Plan dwellings to 2021 to be completed by 2011. To allow for some development to take place in Gedling after 2011, a notional 1,000 extra dwellings and households have been added to the Joint Structure Plan figures. The Joint Structure Plan does not provide any housing figures for 2011, so the County Council have supplied special projections controlled to the housing development provided for in the District Local Plans to 2011. These have been used for the 2011 figures. Because it is not possible to identify those households in 2011 and 2021 which are new (i.e. they did not exist in 2001), an assumption has been made that all households with a representative aged under 30 in 2011 and under 40 in 2021 (i.e. people aged under 20 in 2001) are new households. An allowance has also been made for older household representatives: new households forming due to divorce or other household dissolutions. In the absence of any better estimates, half of the households with a representative aged between 30 to 39 in 2011 and 40 to 49 in 2021 have been taken as an allowance for these households. It is recognised that this is an arbitrary allowance, giving a notional estimate of household formation and thus affordable housing need. The projections for 2021 include concealed families (i.e. couple and lone parent families living as part of a wider household), but those for 2011 do not. There is some doubt about the extent to which they should be included, as, due to the definitions, not all concealed families will wish to have their own accommodation. So, to include all of them may overestimate need. Although they have been included in the analysis for 2021 they only form a small part of the need. Leaving them out would not substantially affect the results, as there are only just over 1,640 of them in the age groups taken. The future need for 2011 would probably be about 1,500 higher if they had been included in the projections supplied by the County Council. A breakdown of the projections to show totals by District area and household type are provided at Appendix (iv), Sheet A for 2001 - 2011; Sheet B for 2001 - 2021. The model uses projections consistent with the Joint Structure Plan Deposit Draft (Sept 2004), except for Gedling in 2021.
4
Joint Structure Plan Technical Report – Housing, November 2003
14
(ii)
Home Ownership Costs
These have been calculated using the following data inputs: Data Input: a) Mean house price (£) b) Size of loan (%) c) Mortgage Interest rate (%) d) Loan period (years) e) Payment Protection Insurance as % mortgage repayment f) Building insurance (average for terraced/semis) g) Repair allowances per annum
To 2011 £97,000 89.00 % 5.92 % 25 5.03 % £100.01 £563
To 2021 £97,000 89.00 % 5.92 % 25 5.03 % £100.01 £563
a) House price. This figure has been calculated using data from Land Registry quarterly returns between (and including) 1st October 2003 and 30th September 2004 Review 2004/05 A major change with this Review has been to use the frequency distributions of house prices for terrace and semi-detached properties, the types of properties most likely to be purchased by first time buyers (see Appendix (v)). Flats have been excluded because their prices are made unrepresentatively high by luxury developments in Nottingham City and Rushcliffe. These distributions have been converted both into £10,000 bandings and into deciles. For terrace properties the modal banding (i.e. the one with the greatest number of sales) is between £70,001 and £80,000, though the £80,001 to £90,000 banding is of only a very slightly smaller size. For semi detached properties the modal banding is between £90,001 and £100,000. It is assumed that first time buyers will be able to afford more than half of all terraced properties, but less than half of semi detached properties. The 7th decile for terrace properties (i.e. the price below which 70% of all sales take place) is £96,902 and the 4th decile for semi-detached properties (the price below which 40% of sales take place) is £97,083. Using a figure of approximately £97,000 as a house price to expect first time buyers to pay equates closely to the figure that would apply using the methodology of previous reviews5*. The previous methodology would have given a figure of £99,556. Compared with the frequency distribution in the previous paragraph, this figure is in the price banding in which the greatest number of semi detached sales takes place and just above the two price bandings with the most terrace sales.
5
This calculation would take a mean of all terraced house sales and 35% of semi detached sales, centred on 31.03.04. A multiplier of 0.975 would be applied to take account of the fact that first time buyers would most likely purchase at slightly below the mean.
15
b) Size of the loan. This has been estimated using data from the Council of Mortgage Lenders. Note a figure of 89% has been used for 2004 as at the time of completing this review the full 2004 data was not available. See Appendix (vi). Review 2004/05 The source of this data has been re-assessed and has been changed to include a median value rather than a mean value to reflect a more realistic situation for most first time buyers who don’t have substantial deposits. The mean figure for the size of mortgage loans is lower as it reflects those first time buyers with substantial savings / inheritance that they are able to put down as a deposit. c) Mortgage Interest rate. Previously a rate had been estimated based on a combination of data contained in the current Housing Finance Review available. For the 2004/05 review a figure based on a ten year average from the fourth quarter of 1994 has been used from Council of Mortgage Lenders data. See Appendix(vii). Review 2004/05 Data was both available from UK Parliamentary Publications and the Council of Mortgage Lenders. Three possible estimates were considered from each of these above two sources: • A figure based on a ten year average from the fourth quarter of 1994; • the maximum rate for a quarter in this period (i.e. the first quarter 1998) and • an average spanning this date from the third quarter 1997 to the third quarter 1998 It was agreed to use the estimates based on the Council of Mortgage Lenders data (which was lower) and from these, the figure based on a ten year average from the fourth quarter of 1994. d) Loan period. This is assumed to be 25 years a) to d) above allow a calculation of mortgage costs. In addition the following costs of home ownership have also been taken into account: e) Payment Protection Insurance as % mortgage repayment. This information comes from the Council of Mortgage Lenders6 The figure for the first half 2004 has been used, which was the most recent available. See Appendix(viii). Although payment protection insurance is optional and buyers may choose to reduce costs by not taking out such insurance, after discussion we decided to include this cost as the study is concerned that home ownership is truly affordable. f)
Building Insurance average for terraced / semis. This information comes from the British Insurance Premium Index 7
6
Table 1, MPPI Policies in force from the Council of Mortgage Lenders. See: http://www.cml.org.uk/cml/home 7 http://www.theaa.com/services/insuranceandfinance/insuranceindex/?page=intro
16
A figure for the average insurance premium quoted for terraces and semi detached houses across the Midlands from the October 2004 release has been used as the best available estimate. Actual costs, of course, will vary depending on the location of the property and its type. g) Repair allowances per annum. An estimate was originally determined from a national report on housing conditions8. See Appendix (ix) SHEET A. Review 2004/05 Each review has updated this figure using the Retail Price Index (RPI) for all items9 from: Alternative uprating multipliers were considered. For example using an RPI figure for DIY materials the figure would be £501.10. Alternatively using the RPI figure for repair and maintenance charges the figure would be £765.60. See Appendix (ix) SHEET B.
Using the above data a Housing Cost Calculation for first time buyers in the South Nottinghamshire area has been calculated using tables shown in Appendix (x). From these a figure for average weekly housing costs is arrived at which is estimated to be: 2002* £102.87
2004 £148.12
*Note this, and all subsequent references to the 2002 estimate in this report, refer to what was the 2002(2) estimate in the 2002 Review Report
8
Leather P and Morrison T 1998 The state of UK housing: a factfile of housing conditions; Policy Press 9 http://www.statistics.gov.uk/rpi
17
% Net Income spent on housing Data input: % net income
To 2011 27.5 %
To 2021 27.5 %
An estimate of the maximum percentage of income that first time buyers should be advised to spend on home ownership has been based on accepted professional recommended good practice10. Data recording what has been spent in the past is contained in the Housing Finance Review 2004/2005 and also in the Survey of English Housing. See Appendix (xi). Review 2004/05 The description “net income” has now been used instead of “disposable income”, as it is thought to better reflect what is being talked about, i.e. gross household income minus statutory deductions and payments of income tax and national insurance contributions. Using the estimate of the percentage of net income available to be spent on housing, a total net income figure can be calculated that is needed to afford a given house price. Housing costs per week from section (ii) above are estimated to be: 2002 2004 £102.87 £148.12 and the maximum % of disposable income recommended to be spent on housing is 27.5% Therefore the annual household net income required to meet average home ownership costs is estimated to be: 2002 £19,452
2004 £28,008
Incomes in the South Nottinghamshire area Data on incomes has been purchased from CACI Ltd for each Local Authority ward in the area. From this data net income levels have been calculated by decile for the population of the South Nottinghamshire area. See appendix (xii) for further information on these calculations A formula has been used based on the information in appendix (xii) so that for a given house price and a given income, a percentage of the households who cannot afford this house price can be calculated.
10
Discussions with the Shelter Policy Section have identified a good practice maximum as being in the range of 1/4 - 1/3 of incomes being spent on housing. The Housing Corporation used to work to a maximum of 35% for grant purchases In Appendix (xi), Sheet B, the lowest, first, quartile from the Family Expenditure Survey shows Mortgage as a % of gross income (average) being in the range of 24 – 31% between 1993/2002. See: http://www.odpm.gov.uk/stellent/groups/odpm_housing/documents/page/odpm_house_022792. xls
18
The number of new households that cannot afford home ownership is estimated to be: 2002 Review to 2011 52,799 (63.20%)
2004 Review to 2011 48,559 (73.72%)
2004 Review to 2021 86,332 (73.72%)
(from 1996 there are an estimated 83,546 new households formed)
(from 2001 there are an estimated 63,220 new households formed)
(from 2001 there are an estimated 116,239 new households formed)
19
(iii)
Social Housing relets available by 2011 and 2021
Table 1 New methodology Data input: Including all properties at present designated for older people To 2011 To 2021 a)Social housing stock at base year (2001) 61,496 61,496 b)Less % Right To Buy sales annually - (i) 2001 to 2011 1.25 % 1.25 % (ii) 2011 to 2021 1.00 % c)Less other stock loss since base year 65 65 d)PLUS new social rented stock built since base year 597 597 e)Less % void rate 1.50 % 1.50 % f)Less % social housing tenants still occupants 40.00 % 21.00 % after 10 years for 2001 to 2011, and 20 years for 2001 to 2021 Table 2 Original methodology Data input: Excluding all properties at present designated for older people To 2011 To 2021 a)Social housing stock at base year (2001) 61,496 61,496 b)Less % Right To Buy sales annually - (i) 2001 to 2011 1.25 % 1.25 % (ii) 2011 to 2021 1.00 % c)Less other stock loss since base year 65 65 d)PLUS new social rented stock built since base year 597 597 e)Less households designated for older people 19.36 % 19.36 % f)Less % void rate 1.50 % 1.50 % g)Less % social housing tenants still occupants 40.00 % 21.00 % after 10 years for 2001 to 2011, and 20 years for 2001 to 2021 The number available has been calculated from: a) Social housing stock at base year. This is the total social housing stock, and includes both Local Authority and Registered Social Landlord properties, in the South Nottinghamshire area at 1.4.2001. See Appendix (xiii). Review 2004/05 The most significant change with this review has been to include those properties designated for older people that are part of the social housing stock in considering the number of relets that will be available by the end of the by 2011 and 2021 (see table 1 above). The reasons for including these properties are explained under the Definitions section at the beginning of this review. The inclusion of these properties, which accounted for 19.36% of properties at 31.03.2004, has the effect of making an estimated extra 7,098 relets available by 2011 and 6,724 by 2021. The total is less for 2021 because it is estimated there will a reduction in total stock numbers by 2021 At present these properties are only available to tenants aged at least over 50, and many at least over 60. Over time it is anticipated numbers of these properties will be available to younger age groups as social landlords adapt to changing demand and apply different lettings policies.
20
If social landlords do not respond as expected by changing their lettings policies then the stock will continue to be available only to older households. This will have the effect of increasing the amount of affordable housing needed to meet the Future Need calculated by this study. Table 2 above reproduces the original methodology which provides the calculation for the scenario if all properties at present designated for older people remain so designated. Appendices xviii (D, E and F) illustrate what the need would be in this scenario. It is very unlikely that all of the properties currently designated for older people will be generally available by 2011. Because of this, the preferred option is to assume that 50% of such housing is available for general relet by 2011. The figures resulting from this are given in Appendices xviii (G and H). b) Less % Right To Buy sales annually. These have been estimated by Holmans11 at 1.25% annually between 2001 and 2011 but sales will then slow between 2011 to 2021 to give a social rented stock loss of 1% between 2001 and 2021. The table in Appendix (xiv) illustrates what overall stock losses could be based on different assumptions about the rates of RTB sales. Review 2004/05 It was originally estimated that 0.75% of the total stock would be sold per annum throughout the period from 1996 to 2011. Actual sales from 1996 resulted in the 2002 Review raising this figure to 1%. The estimates to 2011 and 2021 are based on actual sales since 1996. Moves to transfer Local Authority stock to Registered Social Landlords or to Arms Length Management Organisations and steps taken to meet the Decent Homes Standard have increased Right to Buy applications and these sales are expected to increase further. As a result the estimate for the period 2001 to 2011 has been raised to 1.25% of stock annually. It is likely that the rate of sales towards the end of the period, 2021, will slow. More LA stock could be transferred to RSLs and restrictions on RTB of transferred stock (introduced by the 2004 Housing Act) will have an increasing effect. Therefore an overall lower estimate has been used for the period 2011 to 2021. There have been recent proposals from the ODPM to promote shared ownership sales of Registered Social Landlord stock. If this is implemented it has been assumed that the properties will remain ‘affordable’ in perpetuity. c) Less other stock loss since base year. This is largely stock which has been demolished and a small amount which has been sold by RSLs into private ownership. These include 29 in Hucknall (27 of which were designated for older households); 6 in Broxtowe; 5 in Gedling and 25 in Nottingham City. No affordable stock loss has been identified in Rushcliffe since 2001. Alan Holmans 1995 'Housing Demand and Need in England 1991 - 2011, Annex E': Joseph Rowntree Foundation 11
21
d) PLUS new affordable stock built since base year. This is stock built by RSLs or provided to RSLs through S106 planning agreements with private developers. It does not include shared ownership or low cost home ownership (see page 26) These include 51 in Hucknall (43 of which were designated for older households); 23 in Broxtowe; 41 in Gedling; 443 in Nottingham City and 39 in Rushcliffe. e) Less % void rate. A figure of 1.5% has been used for these purposes based on ODPM recommended good practice for minimising void stock. f) Less % Social Housing tenants still occupants after 10 years for 2001 to 2011 and 20 years for 2001 to 2021. See Appendix (xv). Using the above data we estimate that the following number of lettings will be available in the social rented sector for new households: 2002 Review (1996 – 2011) 30,548
2004 (for 2001 – 2011) 28,845*
2004 for (2001 – 2021) 42,018
* assuming 50% of properties currently designated for older people are available for general relet in 2011.
22
(iv)
Private Rented relets available by 2011 and 2021
Data input: a)Households in the private rented sector (PRS) b)Household changes since 2001 Census (estimate) c)Student households at 1st April 2004 d)Private renting households in social classifications 1,2,3 & 4 e) Change in private renting households in social classifications 1,2,3 & 4 (estimate)
To 2011 33,702 0 5,683 13,751 0
To 2021 33,702 0 5,683 13,751 0
a) Households in the private rented sector (PRS) (2001 Census). The 2002 review report used the Census records of the number of households in the PRS rather than the amount of stock in the PRS. The implications of this change for the study are discussed on the next page under Review 2004/05. b) Household changes since 2001. This allows for recording any known or estimated changes of households in this tenure since 2001. There are no estimates available. c) Student households at 1st April 2004. This is a record of student households registered for full Council tax exemption (i.e. accommodation occupied solely by students). This data comes from the Council Tax records of each of the Authorities. In Hucknall the number was 12; for Broxtowe the number was 694; for Gedling, it was 75; for Nottingham City, it was 4,679, and for Rushcliffe, it was 223. For the purposes of this model it is assumed that all these households are in the private rented sector d) Private renting households in social classifications 1, 2, 3 and 4 The model uses this as a proxy for high income renters who are presumed to live in high cost accommodation which would not be affordable housing if relet. The social classifications drawn on for this study were changed in 2002 have been changed to reflect the revised 2001 Census. See Appendix (xvi), Sheets A & B. There was considerable growth in the number of higher income earners in the private rented sector between the 1991 and 2001 Census, although the different definitions used by the Census means that the two are not directly comparable. This fits with local knowledge about the growth in luxury developments in the city centre and a more mobile professional population which rents before buying. e) Change in private renting households in social classifications 1,2,3 & 4 (estimate). This allows for recording any known or estimated changes since 2001. There are no estimates available. It is assumed that all affordable private rented accommodation will be available for relet by 2011.
23
Review 2002 Local Authority Housing and Planning Officers worked together as part of this review to determine reasons for the growth and change in the number and type of households in the private rented sector. Reasons identified included national and local drivers of change: • • • • • • • • •
the development of a ‘Buy to let ’market the growth of investment in properties to provide income in lieu of pensions the growth in letting to professional people especially in the City substantial growth in the number of young people moving to South Notts because of expanding Universities the inability to afford to buy with a rising housing market a preference to rent from the private rented sector rather than a Council limited access to social rented housing as stock availability reduces former Right to Buy properties now being rented out on Council estates renting out of properties while working away / abroad
This growth has largely been in the second hand housing market, though there has been a significant growth in new build / converted stock in the City catering for professional people, including those with permanent homes elsewhere who work in Nottingham during the week. Evidence of the growth in the second hand market can be seen in the number of ‘To Let’ boards in streets some miles from the City centre and in areas not likely to be sought out by students The changes in the size of the private rented sector in England between the 1991 and 2001 Censuses have been compared with those in the Greater Nottingham area. The size of the sector in the Greater Nottingham area has grown from 8.6% to 12.7% (a 48% increase) compared to one from 9.4%% to 12% (a 28% increase in England). It is thought this is largely due to the growth of the student population in Greater Nottingham and the fact that the 2001 Census was the first one to record students at their term-time address. Review 2004/05 In the original model, and succeeding reviews up to and including that in 2002, a percentage of stock was excluded for being unfit. As the revised data is now based on the number of households and not the amount of stock, it has been agreed not to exclude a percentage of stock as unfit. It is assumed that for the purposes of the model that the percentage of unfit stock currently let is similar to the percentage of fit stock currently not let, which leads to a negligible impact on the model. Evidence from the Council of Mortgage Lenders12 shows gross new advances for buy to let properties started to fall by the second half of 2004, though the rate was still substantially higher than the lending on buy to let prior to 2003.See: Appendix (xvii) 12
http://www.cml.org.uk/cml/home
24
This and other anecdotal evidence suggests that the sector has increased substantially since the 2001 Census and the 2002 review. The model does not take account of this likely increase in the sector, meaning that affordable housing need will be overestimated. It has been suggested that for the next review a sample survey of the private rented sector is carried out to get an estimate of changes that have occurred since the 2001 Census. Using the above data we estimate that the following number of affordable lettings will be available in the private rented sector for new households: Year of estimate
2002 14,830
2004 14,268
25
(v)
New Low cost home ownership
Data input: Total affordable units built since 2001
To 2011 193
To 2021 193
New Low cost home ownership. This is a cumulative figure of the various new low cost home ownership schemes, including Homebuy, discounted for sale and shared ownership. Review 2004/05 For the 2004 Review it was agreed to use data from annual HIP returns13. In practice we have used Housing Corporation data.
Properties built as a result of new low cost home ownership schemes 2002 1711* (From 1996 to 2002)
2004 193 (from 2001 to 2004)
*This includes 1,080 new homes, built largely at the beginning of this period, that were that were assessed as Council Tax Band ‘A’. These properties are assumed to have provided affordable homes available to new households. Since the 2002 review it has been accepted by the review team that it is no longer possible to provide new housing that is assessed as Council Tax ‘A’ Band.
13
Housing Investment Programme strategy statistical appendix, section N
26
(vi)
TOTAL AFFORDABLE HOMES NEEDED
This brings us to the final step of the model. The number of households that cannot afford home ownership Year of estimate Total
2002 (to 2011) 52,799
2004 (to 2011) 48,559
2004 (to 2021) 86,332
2004 (to 2011) 28,845 14,268 43,113
2004 (to 2021) 42,018 14,268 56,286
2004 193 (from 2001 to 2004) -
2004 193 (from 2001 to 2004) -
The number of lettings available to 2011 and 2021 Year of estimate Social housing Private rented Total
2002 (to 2011) 30,548 14,830 45,378
Affordable owner occupation Year of review Number of new units from low cost homeownership schemes plus new ‘Band A’ Props.
2002 631 (From 1996 to 2002) 1,711
The number of new affordable homes needed Year of estimate Households unable to afford home ownership
2002 (to 2011)
2004 (to 2011)
2004 (to 2021)
52,799
48,559
86,332
LESS PRS and social rented lettings available 45,378 and
43,113
56,286
193
193
5,253
29,853
LESS new affordable owner occupation 1,711 TOTAL NEW AFFORDABLE HOMES NEEDED: 5,710
27
PROPORTION OF ALL PLANNED NEW HOUSING WHICH AFFORDABLE TO MEET FUTURE HOUSING NEEDS Year of estimate Period covered Total projected new homes New homes built by review date New homes still needed New affordable homes needed to address future need
2002 1996 - 2011 30,567 5,632 24,932 5,710
New affordable homes needed to address base need Total affordable homes needed % of new homes still to be built which need to be affordable*
Not included 2002 review 5,710 23%
2004 2001 - 2011 25,270 4,800 20,470 5,253 in 3,051 8,304# 41%
NEEDS
TO
BE
2004 2001 - 2021 37,500 4,800 32,700 29,853 3,051 32,904# 101%
*Figures have been rounded to whole numbers to take account of the many assumptions that have been input into the model. # It is assumed that the all of this base need would be met in the first half of the period (i.e. by 2011). Adding the base need to the future need may lead to a certain amount of double-counting, because some properties provided to meet the base need will be relet before the end-date. Because of the longer time-period, this will have more effect upon the 2021 figures than the 2011 figures.
Although the percentage to 2011 is very high the 2021 figure is very much higher. One reason for the big difference between the two figures is that an extra ten years of new households will be produced by 2021 at a time when the Joint Structure Plan implies a significant decline in housebuilding. This is an issue which will need addressing when the Regional Spatial Strategy is reviewed and rolled forward to 2021 (Note: Under the new planning system, Structure Plans have been abolished and the Regional Spatial Strategy will give District dwelling provision figures).
28
ASSUMPTIONS MADE FOR THE MODEL – AND THEIR LIKELY IMPACTS (see the note below the table for an explanation of the symbols used)
+ = more affordable housing needed ASSUMPTION
LIKELY IMPACT ON MODEL
- = less affordable housing needed X = neutral effect ? = unknown
DEFINITIONS Exclusion of part of Newark and Sherwood District Council that lies within the Likely to be neutral South Nottinghamshire planning sub area That all couple and lone parent families living as part of another household Likely to overestimate need would like their own accommodation. (Note that this does not apply to the (2021) Future Need to 2011 – see page 14) Absence of data for 2011 likely to underestimate need
X
- (2021) + (2011)
BASE NEED That all those in mortgage arrears where court orders for mortgage Likely to overestimate need repossession have had actions entered require affordable housing That no single adults living as part of another household would like their own Likely to underestimate need accommodation. That no rough sleepers are in need of affordable housing Likely to underestimate need That households who have applied for social housing are not counted as being Likely to underestimate need part of a base need for affordable housing unless already counted as part of one of the three groups listed That Base Need can be added to Future Need Likely to overestimate need
+ + + -
HOUSEHOLD PROJECTIONS 29
That household projections from the Structure Plan are accurate That household projections using Structure Plan demographic assumptions controlled to 2011 Local Plan dwelling provision can be used to give new households in 2011 That all new housing proposed by the Joint Structure Plan is built by 2021 That all new housing proposed by the Local Plans (except Rushcliffe) is built by 2011 That Rushcliffe Borough Council’s estimates of new housing by 2011 are achieved That Gedling will develop 1,000 units between 2011 and 2021, in excess of the Joint Structure Plan proposals
Unknown Unknown
? ?
Likely to be neutral Likely to be neutral
X X
Likely to be neutral
X
Likely to overestimate supply
+
That all households with a household representative who will be aged under 30 in 2011 will be new households. That all households with a household representative who will be aged under 40 in 2021 will be new households. Taking half of all households with a household representative who will be aged 30 to 39 in 2011 as an estimate of older new households. Taking half of all households with a household representative who will be aged 40 to 49 in 2021 as an estimate of older new households.
Likely to overestimate need
-
Likely to overestimate need Unknown
?
Unknown
?
That flats should be excluded because of high cost luxury developments
Likely to underestimate supply
That detached properties are excluded
Likely to underestimate supply
Size of loan estimate
Likely to overestimate need
+
Mortgage Interest rate Mortgage loan period to be based on 25 years Mortgage Payment protection
Unknown Could be underestimate of need if a shorter period Likely to overestimate need
Building Insurance
Likely to overestimate need
HOME OWNERSHIP COSTS
?
+ 30
Repair Allowance
Likely to overestimate need
-
% of net income spent on housing
Likely to overestimate need
-
That the incomes of “hew” households are similar to the average for all 2011: likely to underestimate households need (as only 50% of household representatives in their 30s are included)
+ (2011)
2021: likely to overestimate need (as all household representatives in their 30s and 50% of those in their 40s are included)
- (2021)
SOCIAL HOUSING RELETS Amount of stock available at 2001: Right to Buy sales Other stock lost since base year 2001
Likely to be correct Harder to estimate at 2021 Likely to overestimate supply
New affordable stock available Harder to estimate at 2021 That social housing currently designated for older people is available to Likely to overestimate supply younger people at 2021 (50% at 2011) % void rate Likely to be close to actual figure Tenants still occupying after 10 years (2011) Likely to underestimate supply Tenants still occupying after 20 years (2021)
Likely to underestimate supply (more so than 2011)
X
?
+ ?
+ X
-
PRIVATE RENTED SECTOR Households in the sector recorded by 2001Census
Likely to underestimate supply
31
Changes since 2001 Student households at 01/04/2004 Private renting households in social classifications 1,2,3,4 at 2001 census
Certainly underestimates supply Likely to be close to actual figure Likely to underestimate need
Changes to private renting households in social classifications 1,2,3,4 since Likely to underestimate need 2001 census That all affordable private rented accommodation will be available for relet by Likely to overestimate supply 2011
X
+ + +
NEW LOW COST HOME OWNERSHIP New low cost home ownership homes built since 2001
Likely to be close
+
indicates that, if anything, the model underestimates the need (including by overestimating the supply).
–
indicates that, if anything, the model overestimates the need (including by underestimating the supply).
X
32
3.
APPORTIONMENT and FUTURE MONITORING
3.1
The intention of the study has been to produce estimates of the need for affordable housing in the South Nottinghamshire housing market. Since the whole area can be regarded as serving a single market, the distribution of affordable housing need is a matter of policy and market implementation rather than statistical analysis. Although this matter has been discussed by officers of the constituent authorities, no agreement has been reached about the preferred method to apportion affordable housing need between the Districts.
3.2
Base Needs Two possible methods of apportionment of the base need have been discussed: a) to distribute the total provision in the same proportion as the Joint Structure Plan dwelling provision in each of the districts; or b) to provide for the base need in the district where it arises and to distribute the future need in the same proportion as the remaining Structure Plan dwelling provision in each of the districts.
3.3
Future Needs The Joint Structure Plan is the basis for the apportionment of future need to Districts for the period to 2021. As the Structure Plan only gives figures for dwelling provision to 2021, the District Local Plans have been used for dwelling provision to 2011, except in Rushcliffe, where a Borough Council estimate has been used because the end-date of the Local Plan is 2021.
3.4
Illustrative District Apportionment Spreadsheets indicating illustrative apportionment in respect of the two methods referred to in paragraph 3.2 above are included at Appendix (xix). The figures for 2021 (Sheet B) relate to the new methodology, where housing designated for older people has not been excluded from the relets. For 2011 (Sheet A), 50% of such housing has been excluded.
3.5
It should be noted that the district figures are for the overall period from 2001 to 2011/2021, not from 2004. As affordable housing has not been provided at the levels required in any of the Districts, the percentages required from 2004 would be higher. This is illustrated by a comparison between the South Notts figures in Appendix (xix) and those in the table on page 28 - it has risen from 36% (2001 to 2011) to 41% (2004 to 2011). Because the Joint Structure Plan period started in 2001, it is more straightforward to allocate the affordable housing need to Districts from then. It would be more problematic to do it from 2004.
3.6
Because the overall proportion of new development which needs to be “affordable” is so high, the figures for each district are also much greater than is ever likely to be achievable. The importance of this exercise is, however, that it demonstrates that the
33
very high levels of need are not disproportionately located in particular districts, whichever of the two illustrative methods of apportionment is taken. 3.6
Monitoring the provision of affordable housing As the base year of this study is 2001 it is necessary for the local authorities involved to undertake monitoring on the annual provision of affordable housing. This enables targets to be refined in the light of ongoing progress. The authorities involved in the study are working towards a consistent approach to deliver provide comparable data that ensures the South Nottinghamshire study is a working model that continues to project the need for affordable housing into the future. Since the study was first produced, the provision of affordable housing now has to be monitored for various other purposes, including the East Midlands Regional Spatial Strategy14 Monitoring Report. This has aided the adoption of common definitions of what is meant by “affordable housing”.
14
formerly Regional Planning Guidance (RPG).
34
Base Need
Appendix (i)
Court orders for mortgage repossessions: actions entered Housing Review 2004/05 2001
England(1) Wales(1) Total(1) East Midlands(1)
Table 51 No. of Mortgages
No. of Owner occupiers
%
13,865,000 878,000 14,543,000
10,637,000 Using same %
1,212,000
886,457
Hucknall(2)
9865
Broxtowe(3)
36824
Gedling(3)
39360
Nottingham City(3)
65282
Rushcliffe(4)
34835
Total
Table 53d %Actions entered
186166
73.14% 5,414
0.6107%
Using same %s as above
136,162
832
(1) http://www.odpm.gov.uk/stellent/groups/odpm_control/documents/contentservertemplate /odpm_index.hcst?n=1537&l=1 (2) From ADC private sector House Condition & Energy Rating Survey 2000 (Survey work carried out Feb/Mar 2000) It estimated a private stock of 10,607, 93% of which was Owner Occupied. (3) HIP SSA return, Section hsa1E (4) No data is reported for 2001 or 2002 so the 2003 figure is used. Note a difference of 500 owner occupied properties will only mean an estimated difference of 2 to the number of repossessions entered
35
Base Need
Appendix (ii)
"CONCEALED FAMILIES" FROM THE 2001 CENSUS Concealed families Total concealed families Lone parent families with dependent child(ren) with non-dependent child(ren) only Couple families with no children with dependent child(ren) with non-dependent child(ren) only
Hucknall Broxtowe Gedling Nottingham 54 29 23 6 25 19 3 3
256 108 89 19 148 121 20 7
350 166 150 16 184 144 26 14
762 341 273 68 421 294 98 29
Rushcliffe
Total
218 78 67 11 140 107 30 3
1,640 722 602 120 918 685 177 56
Cells in this table have been randomly adjusted to avoid the release of confidential data. Definitions: 1. A 'family' comprises a group of people consisting of a married couple or cohabiting couple with or without child(ren), or a lone parent with child(ren). It also includes a married or cohabiting couple with their grandchild(ren) where there are no children in the intervening generation in the household. Cohabiting couples include same sex couples. Children in couple families need not belong to both members of the couple. 2. A 'concealed family' is one that does not contain the Household Reference Person. 3. A dependent child is a person in a household aged 0 to 15 (whether or not in a family) or a person aged 16 to 18 who is a full time student in a family with parent(s). An adult in a household is defined as a person who is not a dependent child.
Source: 2001 Census. Crown copyright 2003 (Standard Table S011). Crown copyright material is reproduced with the permission of the Controller of HMSO.
36
Base Need
Appendix (iii)
Homeless households in temporary accommodation Bed & Breakfast
Hostels
LA/HA stock
Private sector leased
others
Total
Hucknall(1)
0
0
0
0
0
1
Broxtowe
0
8
100
0
0
108
Gedling
0
17
123
0
0
140
Nottingham(2)
est. 203
Rushcliffe
0
10
117
0
0
127
Total
0
34
340
0
0
579
(1) Pro rata from Ashfield District return (figures rounded up) (2) No returns were made by Nottingham City for a number of quarters until 2003. An average of the first 4 full quarterly returns made from the third quarter in 2003 have been used. Data used for Ashfield & Nottingham, compared with the other Districts, would suggest an under count Source: Supplementary Table: Local Authorities' actions under the homelessness provisions of the 1985 and 1996 Housing Acts: First Quarter 2001
37
Appendix (iv) SHEET A HOUSEHOLD PROJECTIONS FOR 2004 SOUTH NOTTS STUDY PROJECTIONS CONSISTENT WITH THE DISTRICT LOCAL PLANS (as at June 2005)* (June 2005 run) Estimates of households new between 2001 and 2011 - Household representatives under 30 and 50% of 30 to 39s at 2011 New households by 2011 (by type)
Married Lone parent One person Other Multicouple households Households person household Households
Total
