Publication Housing Social security 4 July, 2017

A new vision for housing delivery

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On 3 July 2017, Cllr Nickie Aiken, Leader of Westminster City Council laid out her vision for housing in a speech. This was followed by a panel where Nickie was joined by other panellists Olivia Harris, Chief Executive of Dolphin Living; Natalie Elphicke, Chief Executive of the Housing and Finance Institute, and James Cooksey, Director General of Central London at The Crown Estate. Nickie's speech can be found below (check against delivery).

It has been only days since the General Election. In that time we have all been rocked by uncertainty arising from the election result, by terrorist incidents, and by the tragedy at Grenfell Tower.

In times like this, locally elected politicians have to work closely alongside expert public bodies, emergency services, other local authorities and central Government. Many of these publicly funded institutions have been subjected to the scrutiny and creative thinking of Reform over the years and have been reformed for the better.

The Westminster Way

My ambition for the City of Westminster is to create a City for All. As I said a fortnight ago at the London Real Estate Forum, City for All is not just some vacuous slogan.

It is a vision about the kind of community we want to create. It is about people and their families having the chance to make a life here and not having to leave as their families grow. It is about having a truly mixed community, containing people of all ages and from right across the income scale, a community where people who work here can live here as well and it is about creating new forms of housing tenure and building thousands of new homes.

So be in no doubt that Westminster is a council with very big ambitions. We are determined to build on our heritage as the Council which pioneered the mortgage accelerator scheme, which invented the One Stop Shop, and which has consistently delivered the lowest band D council tax in the country.

The Challenges We Face

If there was one thing that united the parties at the last General Election, it was the acceptance that policy needs to be reshaped to tackle social and generational inequality. Here in Westminster, that inequality is all too stark. I have said before and I will keep on saying I do not want to preside over a borough where the housing market is polarised between multimillion properties for oligarchs and social housing estates, with not much in between.

The City of Westminster always used to contain families – not just rich families, but ordinary working families like my husband’s family - that had been here for generations. I want to make it possible for young residents of Westminster to imagine a future where they continue to live, work, raise a family and - if they want to - retire in the City. I am determined that those who work hard for themselves and their family do not have to move out when their family grows. Yet at the moment if they are in social housing, they often have to wait years for a council house or flat big enough to accommodate them to become available. If they own their own flat, the cost of buying one with an extra bedroom or two – together with the extra stamp duty payable – makes the move within the same neighbourhood prohibitive. And if they rent, they can move to a bigger, more expensive rental property but they will never have the security of equity in a home that they aspire to own.

We end up with hollowed out communities, left deprived of families which are so essential to the health of a balanced community. Westminster is a magnet for people to come and live - both from other parts of the UK and from the rest of the world. The challenge of housing all who arrive here is formidable.

But I do not see why, if life’s journey starts in Westminster, it must necessarily end somewhere else. I want residents to see Westminster as a place where they can settle for life.

Local councils have two big levers at their own disposal to help them deliver on their housing vision. Their own housing renewal programme and Planning policy. At Westminster City Council, we are using both.

Housing renewal

A quarter of Westminster’s housing stock is social rented. This includes several estates owned by the Council, managed by Citywest homes. Westminster City Council has always made it our business to win the backing of local residents when we refurbish and regenerate housing estates. Residents will understandably be even more sensitive to any changes we propose in the aftermath of the Grenfell Tower tragedy. I recently ordered an urgent review of the safety of all recently refurbished council-owned properties in Westminster. We are determined to check and secure them all. And we will make available the necessary resources for that to happen.

We are making renewal of our housing estates business as usual. We have an ambitious programme: over £285m will be spent over the next 5 years repairing and improving council homes to meet the changing needs of the population. Our first duty is to make sure residents affected by estate renewal are treated fairly and that those displaced have the opportunity to return to high quality, accommodation that is safe to live in. By setting aside some properties for sale on the open market, we can finance the building of new affordable homes.

In Westminster, because house prices are so high, we have to look at products to serve those who cannot afford to buy a home in Westminster but who cannot gain access to social housing either. Making available more intermediate housing to rent is therefore a central plank in our strategy to House a City for All.

Planning Policy

The population and economy of the City of Westminster is set to grow. The Council’s new City Plan will signal our openness to new ideas from developers about making the most efficient use of space while protecting our City’s heritage and distinctiveness. For example, we will not routinely resist adding extra floors to existing buildings.

We want to work with developers who contribute to our community and who share our ambitions of long term community sustainability. But we are not going to swallow whole developers’ arguments that they can’t afford to deliver affordable housing because of viability. Economic viability must be married with community sustainability.

We won’t be short changed on affordable housing simply because a developer has paid too much for a site. Of course we accept that developers need to make a profit. But we also need to recognise that developers must play their part in ensuring socially balanced developments.  In Westminster it will be an essential precondition for making a profit.

We are not simply going to take the cheque from developers, as has often happened in previous years. They will have to make on-site provision for affordable housing. It will be a rigorously applied policy: at least thirty per cent of new homes must be affordable.

Intermediate housing

If we are going to meet a wide range of housing needs in Westminster, we have to produce more intermediate housing providing more innovative new housing products which meet the circumstances of different types of people in different neighbourhoods.

At the moment, just one in every thirty homes in Westminster is in the intermediate category. I am determined to improve this ratio, and to make it possible for aspirational Westminster residents to achieve their dream of home ownership.

This is a place where existing models of shared ownership do not always work well because even a 25% share in a property may be well beyond the reach of someone on average earnings.

So we intend to look at new ways of helping people from renting to ownership. We want more scope to develop housing products that meet the unique demands of Westminster. Products like discounted shared ownership, where the price of the property is reduced, shared ownership, which enables you to buy a smaller stake or hybrid products which combine an equity loan with shared ownership.

We want to start a conversation with lenders, with the GLA and the regulator (the HCA), to make sure these kinds of products become standard and can be used across London. We intend to be a brand leader in making the most of intermediate housing and to work with government and others to try out new approaches. If something works here, it is likely to work in any higher value area. Government should allow us the room to innovate and I intend working with Ministers to give us the space we need.

To this end, we have made clear that we will change the balance in the new affordable housing we deliver, so that 60 per cent will be made available as intermediate tenure and 40 per cent for social rented.

Our Asks of Government

Affordable housing delivery tariff

We also need Government intervention in resetting the framework for securing a fair share of economic value from developers for the community. New developments do put pressure on what we traditionally think of as physical and social infrastructure. They also benefit from that infrastructure. And they make a contribution to the costs of this infrastructure through the Community Infrastructure Levy (CIL).

We also use S106 planning obligations to contribute towards the creation of sustainable communities and to mitigate the negative site-specific impacts of a development.  The CIL is a simple mechanism that makes clear up front what a developer will be expected to pay.

It is set by taking account of the costs of infrastructure needed and what developers can afford to pay. This brings welcome certainty into the process for both the Council and developer. It avoids delay and expense of exchanging reports by surveyors haggling over costs and values, often behind closed doors, a process that has risked bringing the planning system into disrepute.

It is a good model for supporting affordable housing. By making developers pay specific, automatic contributions for affordable housing, both sides could reduce the amount of time spent negotiating S106 obligations and speed up decisions on planning applications.

I would suggest a locally-set charge paid on net increases in floor space. It would be applied to all development rather than just residential, as is largely the case with section 106. This would establish a value that would be met by building on-site or, in specific circumstances where the council agrees that affordable housing cannot be delivered on-site, through a payment in lieu.

I do not support a London-wide tariff which we believe to be unworkable and would slow down delivery because of the wide variation in viability conditions across the capital. It would also undermine our effort to deliver local homes for local people, the temptation would always be for a Mayor to take Westminster money and spend it somewhere else.

The process for setting a tariff will allow a public dialogue between local authorities, local people and developers about the housing need of an area and how it should be met. This would have the certainty and speed of CIL, but instead of money it would deliver affordable homes.

I know this kind of approach was suggested in the Government’s review of CIL led by Liz Peace. I am keen to progress this idea further with the Government.

Flexible Housing Zone

Now we recognise the unique challenge of building more affordable homes in the heart of London, which has some of the highest land values and development costs in the world and a limited supply of brownfield land.

There can’t be a one size fits all solution. But if we can escalate the delivery of more affordable homes in Westminster, with some of the highest land values in the UK, it can be achieved anywhere.

Councils could significantly speed up the delivery of affordable housing if the Government gave us the chance to operate in a more flexible fashion. To be allowed to break the chains on borrowing against the Housing Revenue Account (HRA), to have more flexibility in how we spend right to buy receipts, to get the restrictions lifted on offering intermediate housing for rent within the HRA, to apply the definition of “affordable housing” more flexible in planning policy, so that more intermediate housing products fall within the definition, to make better use of existing stock, such as addressing under-occupation by tenants with secure tenancies, and to have a legal and policy framework that facilitates cross-boundary working by local authorities.

What I’m suggesting is that the Government could grant councils “flexible housing zone” status. This would be in recognition of Westminster as such a high cost area for development, and in return for a commitment to speed up delivery of affordable housing.

It need not be a policy that is unique to Westminster. The Government could also allow groups of local authorities to make bids for “flexible housing delivery projects,” where appropriate in conjunction with registered providers or private sector partners.

By bringing together land, money and expertise across administrative boundaries, new housing could be delivered more quickly than the individual authorities could deliver on their own. This might allow a borough with borrowing power or section 106 contributions, to come together with a borough which may have a large site that is currently unviable or requires some enabling infrastructure to get development going. The Government threw down the gauntlet for this kind of approach in February’s Housing White Paper, when it invited local authorities to come forward to discuss “bespoke deals” with them.

We intend to build on this with a comprehensive proposal under which government gives us the room and flexibility to innovate and deliver. At a time when Government and Parliament are going to be preoccupied with other things, the best thing for us in local authorities to do is to help ourselves, to work out local solutions to local problems and get on with it. We cannot afford to wait for someone else to come along and solve our problems for us.

This is not an easy agenda to address, but we are keen to work with other boroughs and agencies to take it forward.