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The Vale of Glamorgan Council

Cabinet Meeting: 16 November, 2015

Report of the Cabinet Member for Housing, Building Maintenance and Community Safety

Local Housing Market Assessment 2015

Purpose of the Report

  1. To adopt the 2015 Local Housing Market Assessment.

Recommendation

  1. THAT the Local Housing Market Assessment 2015 is accepted and the policy implications for the Vale of Glamorgan be noted.

Reason for the Recommendation

  1. To ensure the Council is able to meet the demand for affordable housing units required in the Vale of Glamorgan.

Background

  1. Local authorities have an important strategic housing role and statutory responsibilities in relation to the functioning of the housing market. Relevant to the adoption of the Local Housing Market Assessment (LHMA); Section 8 of the Housing Act 1985 requires local authorities to consider the housing conditions and needs in their local area; this includes a duty for local authorities to conduct a periodic review of the housing market. This review provides the Council with a comprehensive understanding of the local housing market and a robust evidence base for effective strategic housing and planning services.
  2. In addition to the above piece of legislation, Planning Policy Wales, which sets out the land use planning policies of the Welsh Government, emphasises that local authorities should understand their whole housing system so that they can develop evidence-based market and affordable housing policies in their local housing strategies and development plans.
  3. Planning Policy Wales is supplemented by a series of Technical Advice Notes; Technical Advice Note (TAN) 2 provides guidance on the role of the planning system in delivering affordable housing. TAN 2 requires all Welsh local authorities to undertake a LHMA. This builds upon the requirement for local authorities to review and understand their housing market, as discussed above, by taking a holistic view of the housing market across all tenures.
  4. It should be noted that whilst Section 8 of the Housing Act 1985 requires local authorities to consider housing needs and to review the housing market 'periodically', in 2013 the Welsh Government utilised section 87 of the Local Government Act 2003 to set a requirement for LHMA to be updated biannually.
  5. The previous LHMA for the Vale of Glamorgan was undertaken in 2008 following guidance published by the Welsh Government in 2006. The guidance encouraged adjoining local authorities to work together to assess housing demand and need. For this reason, the LHMA 2008 for the Vale of Glamorgan was commissioned jointly with Cardiff City Council. The assessment identified the need for an additional 652 units of affordable housing per year across the county. Cabinet adopted the 2008 assessment on 15th July 2009 (Cabinet Minute C538).
  6. In 2010 an update to the LHMA 2008 was commissioned in order to ensure the datasets reflected updated population statistics and household financial profiles. The assessment identified the need for an additional 915 units of affordable housing per year, which was presented across five housing market areas (Barry, Penarth and Llandough, East Vale, Rural, Coastal). Cabinet agreed the adoption of the LHMA Update 2010 on 15th December 2010 (Cabinet Minute C1154). In addition, Cabinet also agreed the adoption of the Rural Affordable Housing Need Report 2010 (Cabinet Minute C1153) which provided a breakdown of the number of affordable housing units required in the rural Vale (outside of Barry and Penarth) presented by Community Council area.
  7. The LHMA 2015 will provide a further update to the housing market information in the Vale of Glamorgan.
  8. The LHMA 2015 is over 100 pages in length. Consequently, a copy of report has been placed on the Council's website and is available to view in both the Cabinet Office and the Members Room. A further copy is available in the Democratic Services office should Members wish to inspect the document.

Relevant Issues and Options

  1. The two previous LHMA's for the Vale of Glamorgan (2008 and 2010) and the Rural Affordable Housing Need Report 2010 were commissioned by the Council and undertaken by consultants. The 'Local Housing Market Assessment 2015' (Appendix 1, available on the Council's website and available to view in the Cabinet Office and Members Room) has been conducted in-house utilising the Welsh Government's step-by-step guide 'Getting Started on Your Local Housing Market Assessment' (2014). This guide provides a quantitative approach to calculating housing need which supplements the comprehensive and detailed Welsh Government 'Local Housing Market Assessment Guidance' published in 2006.
  2. The LHMA 2015 provides a review of the housing market in the Vale of Glamorgan County; considering all geographical areas, at ward level or by major settlement. This is achieved by providing an overview of the housing market, socio-economic, demographic and population statistics. This analysis provides a review of the housing market of the Vale of Glamorgan as a whole, across all tenures; home ownership, private renting and affordable housing. The assessment was conducted between September 2014 and January 2015; therefore the data and statistics used were those available or collected during this period of time.
  3. In addition to a review of the local housing market, a fundamental aspect of any LHMA is a calculation of the net need for 'affordable housing'. Estimates of shortfalls or surpluses of affordable housing, in different areas and of different sizes, are crucial inputs into the local housing and planning frameworks.
  4. For the purposes of the LHMA affordable housing is defined as: 'housing provided to those whose needs are not met by the market', this includes social rented housing and intermediate housing products.
  5. Historically, only households in need of social rented accommodation have been considered to be in housing need. However the economic climate, increasing housing costs, household incomes and the financial difficulties faced by households being able to afford their housing and living costs, have led to new groups of households being squeezed out of the home ownership and private rented sectors. As such, alternative forms of affordable housing are needed, these types of accommodation are broadly categorised as 'intermediate housing' products and can include properties available for intermediate rent and low cost home ownership. Intermediate housing products are included in the assessment of housing need and the net need for affordable housing.
  6. The LHMA 2015 considers housing data and calculates the level of housing need across 12 housing market areas in the Vale of Glamorgan; outside of Barry and Penarth and Llandough these areas are coterminous with the ward boundaries. Table 1 below shows the 12 housing market areas:
  7. Table 1
 

1 Barry

5 Llantwit Major

9 St. Athan

2 Cowbridge

6 Penarth and Llandough

10 St. Bride's Major

3 Dinas Powys

7 Peterston-Super-Ely

11 Sully

4 Llandow/Ewenny

8 Rhoose

12 Wenvoe

  1. The quantitative assessment of housing need, as set out by the Welsh Government's step-by-step guide, estimates the need for affordable housing over the next five years. The assessment of housing takes account of three stages:

(X) Newly Arising Housing Need (newly arising need for social rented housing, newly arising need for intermediate housing products and existing households falling into need for social housing)

(Y) Backlog of Housing Need (backlog of need for social rented housing and the backlog of need for intermediate housing products)

(Z) Supply of Affordable Housing (re-lets / re-sales of existing affordable housing and new build supply)


Table 2 below shows the figures used in the three stages:

Table 2

 
 

Social Housing

Intermediate Housing

LCHO

Intermediate Rented

(X) Newly Arising Housing Need

527.41

106.76

102.39

(Y) Backlog of Housing Need

429.40

18.20

11.60

(Z) Supply of Affordable Housing

612.13

10.60

0.80

Annual Net Need for Affordable Housing

(X + Y - Z)

331*

228

 

* Adjusted to account for the turnover of existing social housing, as per the calculation detailed in the Welsh Government guidance.

It should also be noted that out of the projected annual supply of 612.13 social rented units above in Table 2. 580.33 units are derived from the turnover in existing social housing stock and not new housing development.

  1. The calculation results in an annual requirement of 559 affordable units in the Vale of Glamorgan during the five year period of the assessment; 2015-2020 (2,795 over the five year period).
  2. The net need for 559 affordable housing units per year comprises 331 units of social rented accommodation and 228 units of intermediate housing.

Social Rented Accommodation

  1. The net need for social rented accommodation is broken down within the report to detail the need for general needs properties, adapted/accessible properties and older person's accommodation. As well as by property size and area.
  2. The need for social rented accommodation is greatest for general needs properties. There is an overall shortfall of 387 units per year. The need is highest in the Barry and Penarth and Llandough housing market areas. In terms of the properties needed, the most significant demand is for smaller units, in particular one bedroom properties.
  3. The net need for adapted and accessible social rented accommodation is 0.27 units per year. This includes the need for level access properties with minor adaptations and those with acute needs which are most likely to require a purpose built adapted property. The relatively low level of need for this property type is due to application of the turnover rate of existing adapted housing available as part of the calculation. The gross need for accessible and adapted properties is 67.2 units per year, this is then reduced to the net need when the supply and turnover rate are applied. This is a limitation of the calculation which is discussed further in the assessment.
  4. Overall across the Vale of Glamorgan there is a surplus of older person's social rented accommodation. Indeed, surpluses were identified across half of the housing market areas and property size, which essentially means that there are more let's being made to older person's accommodation per annum than there are households on the waiting list in need of such accommodation. . However, this is in part due to the areas where the current accommodation is located and the high turnover. However, the need for specialist tailored older person accommodation in specific areas remains high and will continue to increase in line with the increase in the older persons' population projections in the Vale of Glamorgan. This overall surplus has however impacted directly on the headline affordable housing need figure, as the older persons accommodation available is deducted as part of the net need calculation from the need for other property types.

Intermediate Housing

  1. The net need for intermediate housing is 228 units per year in the Vale of Glamorgan, of which 50% of the demand is for Low Cost Home Ownership (LCHO) 50% for intermediate rented accommodation.
  2. The demand for LCHO is greatest amongst new households who are unable to afford to buy a property on the open market, but could afford to purchase a subsidised property. This reflects the growing difficulties that first time buyers face in accessing a mortgage on the open market; due to higher deposits and tighter lending criteria.
  3. The demand for LCHO products is highest in the Barry and Penarth and Llandough housing market areas. The LCHO properties provided should be a mix of two and three bed houses.
  4. LCHO provided by Registered Social Landlords in the Vale of Glamorgan has to date been provided on a 70:30 equity share basis (whereby the property is purchased for 70% of the market value). Due to the high property prices in the Vale of Glamorgan it is suggested that consideration be given to offering LCHO on a 60:40 equity share basis in some areas.
  5. The demand for intermediate rented accommodation is highest in the Barry and Penarth and Llandough housing market areas. There is also demand in rural areas of the Vale of Glamorgan, most notably in Cowbridge and Dinas Powys.
  6. Implementation of an intermediate rent model in the Vale of Glamorgan may be hindered by the gap between Local Housing Allowance and private rent levels in many areas. Consideration will need to be given to how a model of intermediate rent could be developed in the Vale of Glamorgan to meet the identified need.
  7. The calculation of the net need for intermediate housing across the Vale of Glamorgan indicates a requirement for a 50:50 split between LCHO and intermediate rent, however it should be noted that the need in the individual housing market areas varies.
  8. The net need for affordable housing provided in the LHMA 2015 is calculated in accordance with the Welsh Government LHMA Guidance 2006 as well as meeting the requirements of Technical Advice Note 2 (TAN2) Planning and Affordable Housing (June 2006).
  9. The Welsh Government LHMA guidance (2006) states that in addition to providing an annual net need figure for affordable housing, it is also important to use the data to:
  • Highlight where the data points to a large future shortfall or surplus of a particular dwelling size or tenure.
  • Illustrate particular locational requirements.
  • Identify future areas of concern where intervention may be advisable.
  1. This is important to note in terms of the LHMA 2015, as whilst it is necessary to provide a net affordable housing figure across all property types, affordable tenures and areas, the figure calculated for the Vale of Glamorgan is misleading as it distorts differences in sub market areas, tenures and property types required.
  2. One of the reasons that the net housing need figure is misleading is due to the way in which the requirement for social housing is calculated. Existing social housing stock which is considered to be 'surplus' or where there is a higher turnover rate (the frequency with which a property becomes available for re-let) is essentially deducted from the social housing required. However this does not take into account that the properties which are available do not 'match' those which are required.
  3. To illustrate this point, consider the need for one bed social rented accommodation; there is a need for 482 general need one bed properties per year, but at the same time there is a 'surplus' or high turnover rate of one bed older person's accommodation. The oversupply of older persons one beds is deducted from the need for general needs one beds. However in practice the properties available cannot meet the need.
  4. Across the range of property sizes there are also surpluses of larger properties, for example three bed general needs properties, which again are essentially deducted from the need for smaller properties. These larger properties however cannot in the short term be used to meet the need for smaller properties. Although it is acknowledged that in the long term this information could be used by social landlords to consider the reconfiguration of their housing stock.
  5. The issue is further compounded by differences between need and demand in different housing market areas and between types of property; for example the areas with surpluses of larger properties mask the need for smaller social housing units and the need for general needs accommodation compared to sheltered accommodation.
  6. Consequently, the headline net social housing need of 331 units per year is an under estimation of the number of social rented properties actually needed in the county.
  7. In order to highlight where there are shortfalls of a particular dwelling size or tenure and to illustrate particular locational requirements the LHMA 2015 also demonstrates the annual need for social housing with surpluses excluded. With surpluses excluded, there is an annual requirement for 581 social rented units of accommodation per year.
  8. The Welsh Government LHMA Guide (2014) highlights that the development of a LHMA is often described as "more of an art than a science" and therefore the 'headline' net housing need figure calculated by this approach should not be used as a definitive measure of need or as a target figure. Rather it should be used as an indication of the scale of the affordable housing problem and a benchmark to which the Council will work towards as far as practically deliverable through a range of various methods. These methods include (but are not limited to) Social Housing Grant, Housing Finance Grant, the Smaller Properties Programme, private finance secured by Housing Associations, Section 106 contributions (on-site provision and/or commuted sums) and other external funding.

Resource Implications (Financial and Employment)

  1. Existing staff are in place in the Housing and Planning Departments of the Council to negotiate Section 106 planning obligation agreements with private developers and to submit bids for Social Housing Grant to the Welsh Government to finance additional affordable housing.
  2. Limited Social Housing Grant funding available to the Vale of Glamorgan and a decreasing Social Housing Grant budget across Wales will limit the amount of affordable housing funded in this way.

Sustainability and Climate Change Implications

  1. The development of the LHMA informs the need for affordable housing and contributes to meeting that demand through the development of the right types of housing. This helps to develop sustainable and balanced communities in the Vale of Glamorgan.

Legal Implications (to Include Human Rights Implications)

  1. The Council has a statutory duty to understand the local housing market; Section 8 of the Housing Act 1985 requires local authorities to consider housing conditions and needs in their local area and conduct a periodic review of the housing market.
  2. Adoption of the LHMA 2015 will contribute to the Local Authority meeting this statutory duty.

Crime and Disorder Implications

  1. Promoting an adequate supply of housing in the Vale of Glamorgan will contribute to a reduction of homelessness, greater community cohesion and safer communities.

Equal Opportunities Implications (to include Welsh Language issues)

  1. The development of the LHMA 2015 is supportive of the Council's Equal Opportunities ethos as it identifies the supply of housing needed to meet the needs of the people throughout the County, including the sizes and types of affordable housing needed.
  2. The adoption of the LHMA 2015 will contribute to promoting equality of access to housing.
  3. An outcome of the LHMA 2015 is the net need for affordable housing, this includes the requirement for adapted and purpose built housing. These properties are needed to meet the specific requirements of individuals with a physical disability or medical need, as well as older people.

Corporate/Service Objectives

  1. The development of the LHMA 2015 is consistent with the Housing Outcomes identified in the Corporate Plan 2013-17:
  2. 'Vale of Glamorgan residents have access to affordable, good quality suitable housing and housing advice and support'.
  3. The development of the LHMA 2015 contributes to achieving objective H4 of the Corporate Plan 2013-17:
  4. H4 - Maximise the range and choice of sustainable, affordable housing delivered in line with planning requirements and through Social Housing Grant and other funding streams. (2016/17)
  5. The development of the LHMA 2015 also contributes to Service Outcome 1 of the Housing and Building Services Service plan 2014-18: Everyone has a home that they can afford that meets their needs.

Objective 4: To increase the supply of affordable housing.

  1. The development of a new LHMA is a key objective of Aim 1 of the Vale of Glamorgan Council Local Housing Strategy 2015-2010: to provide more homes and more choice; ensuring that all residents had access to suitable and affordable accommodation. Cabinet agreed the adoption of the Local Housing Strategy 2015-2020 on 26th January 2015 (Cabinet Minute C2621).

Policy Framework and Budget

  1. This is a matter for Executive decision.

Consultation (including Ward Member Consultation)

  1. There has been no direct individual ward member consultation in respect of this report as it is an issue that affects all areas of the Vale of Glamorgan.

Relevant Scrutiny Committee

  1. Housing and Public Protection.

Background Papers

Appendix 1 - Local Housing Market Assessment 2015

Contact Officer

Pam Toms, Housing Solutions & Supporting People Team Leader

Officers Consulted

Mike Ingram, Operational Manager, Housing

Hayley Selway, Head of Housing and Legal Services

Andrew Wallace, Planning Policy

Marcus Goldsworthy, Head of Regeneration & Planning

Victoria Robinson, Principal Planner (S106)

Committee Reports, Legal Services

Lori Bigglestone, Finance

Responsible Officer:

Miles Punter - Director of Environment and Housing Services

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