Housing Renewal The Regulatory Reform Order

The biggest change in Private Sector Renewal in 50 years

Why?

• Housing Policy Paper• LGA paper• Freedoms and Flexibility Required• Existing legislation does not

recognise current market conditions

Why?

• New powers in the Regulatory Reform Order will mark a significant step change in Housing Renewal

• Offers a real opportunity to:– raise the profile of Private Sector Renewal

(PSR)– link PSR into the wider strategic and

regeneration context

The problem

• Government expects owners to look after their properties

• But Government may intervene:– to protect health and safety where owners cannot

afford to carry out the work– where concentrations of housing in poor repair are

bringing or keeping area down

• 1 million homes need help• 300,000 more in areas of low demand and

probably need demolition

• Cost of dealing with poor conditions in private sector is estimated by government at £11 billion

• Current local authority grant spend is £ 228 million (exc DFGs)

• 48 years to tackle at current rate and with current policies

• THIS IS PROBABLY AN UNDERESTIMATE

• Government’s view that local authorities should act more strategically reflecting local priorities

• (In theory) Single Capital Pot will allow resources to go to local priorities

• Subject to overriding policy constraints such as;– Major repairs allowance– Neighbourhood Renewal : Floor Targets

Purpose of Reform

• To give local authorities stronger and flexible set of policy tools to support a locally determined strategy:

– will help to compete for resources at local level

– enable policy stretch: make existing funds go further

The Order - Enabling

• Provide assistance for the purpose of improving living accommodation in the area;

• Help person acquire accommodation in ANY area

• Adaptations for Special Needs• Renewal Areas

Type of Assistance

• Grants or Loans???

Grants or Loans? : PIU Report

• ‘Loans only’ would double number of households assisted

• Loans with minimum equity retention (£10K) plus keeping Home Repairs Assistance would increase numbers helped by 50%

• Leverage using third party lenders might be even higher

The proposals - protections

• Various protections requiring LAs to:

• have regard to person’s ability to afford contribution

• set out in writing terms & condition, and satisfy themselves that person is aware of financial commitments (especially wrt to loans)

• satisfy themselves that owner has consented to assisted works

• get participants’ consent before varying any works or conditions

The Order: Timing

• Order likely to take effect from May/June 2002

• New power cannot be used until LA publish a policy on what they are going to do with it.

• Existing powers will continue for one year after Order is made, allowing time for new policy formulation

Guidance

• DTLR will issue replacement guidance for 17/96 at same time as the Order takes effect: will be advisory only

• DTLR/DoH Adaptations guidance(statutory) in summer 2002: will be consulting shortly

• Best Practice Guidance on ‘Addressing the Needs of Run Down Private Sector Housing’: June 2002

• Good Practice Guidance on housing renewal policies planned for future

The Challenge

• Secure the money for Private Sector Renewal - bigger slice of the capital pot?

• Review strategy and publish a policy

• Make use of the new powers to design a policy which is better suited to local needs and priorities

WHAT DO WE NEED TO THINK ABOUT?

Corporate

• Community Plan• Local Strategic Partnership• Local Regeneration Strategy• Public Service Agreement Targets• Best Value Reviews - Outcomes vs

Outputs• Single Capital Pot/Capital Investment

Strategy

Local

• Community Consultation• Local Planning• Neighbourhood Renewal Assessments?• Market Demand Studies?• Focus Groups?• Demography - capacity for self reliance

- our elderly population!!!• B & ME/Cultural Diversity

Partners we must involve

• All Council Departments• Home Improvement Agencies• RSLs• Local Lending Institutions• RDAs, Gos and the Housing Corporation• Other local authorities in our region• Local Developers, Estate Agents• Voluntary Groups

Partners we must involve

• Police, Fire and Ambulance• Local Chambers of Commerce• Local Enterprise Agencies• Local Employment Agencies• Local Lending

Institutions/Intermediaries• Local Elected Members• LOCAL RESIDENTS!!!

SETTING PRIORITIES

• Money is tight so we need to:– Establish a client based priority list e.g. those

who can’t afford get grants, those who can get loans

– Link in with our Area Regeneration Strategy - use the benefit of bending programmes and layering resources

– Establish our most problematic sectors - HMOs, Amateur Landlords

– Establish property-based issues - eg empties, pre-1919, former RTB

FINANCIAL PRIORITISATION

• Prevention is better than cure. Can early intervention save money in the long run?

• Stop the rot from spreading. Isolate and concentrate on the worst but prevent the spread.

We must have a policy

• Private Sector Housing has missed out on major investment

• We are living with the consequences• We a need a process which demonstrates

the importance of Private Sector Renewal in the overall regeneration agenda

• A policy gives us the strategic edge and the tools to intervene and make things happen

FORM OF ACTION

– What works in one ward may not be relevant to another

– It depends on the local characteristics of our area

– What do our residents want?– BEST VALUE is the determining factor

• the best use of available resources• administrative resources• option of levering in private loans?• Are grants the better option?

IN SUMMARY - THESE NEED A REVIEW

• Grants Policy• Loans Policy• Advice Policy• Regeneration Policy• Accreditation/Licensing Policy• Empty Homes/Enforcement Policy• What gets priority

Things to consider

• Eligibility Criteria• Amount of Assistance• Means Testing• Conditional Support

PUBLISHING OUR POLICY

• We must publish - transparency and fairness

• Housing Inspectorate/Government Office will want to see it

• Policy must be consulted on and agreed upon with elected members

WHAT SHOULD THE PUBLISHED POLICY CONTAIN?

• Links to strategic aims• Main Objectives• Form of assistance - maximum

amounts, eligibility, application procedure, repayment conditions

• Availability of advice• Contacts for enquiries, applications

etc

What are our Options?Proactive/Reactive???

The approach

• Pro-active intervention– Area renewal– Enforcement

• Demand– Individual requests for assistance

• Approach to the two will be different• Tools for the two approaches will be

different

Loan Administration

• Direct by LA?• Third party

– Lending institute– Registered Social Landlord (RSL)– Community Development Financial

Institution (CDFI)

Area Based Renewal

• Neighbourhood Renewal Assessment

• Delivery mechanisms– Block repair– Environmental improvements– Clearance– New Build– Stock rationalisation

Relocation

• Clearance

– Retention of community

– Fairness

• Other options – Homebuy, shared

ownership etc

• Disabled adaptations

Choice of Options

• Not straightforward• Options will be driven by choice of

intervention or reaction– Unlikely that a loan only option would

work in intervention– Purely reactive policy is unlikely to

give best value if only funded by grants

We need to research…..

• Housing market intelligence– Values of properties– Demand for housing areas and property

types• Views of clients and other stakeholders• Speed of intervention needed• Administrative cost of complicated

assessment procedures• Realistic support of partners

Reactive Policy

• Can the client afford a commercial loan?• If not will a subsidised loan work?• If not will an interest free or shared

appreciation loan work?• Is there sufficient equity in the

property?• If not and work is essential then a grant

may be the final option

Intervention Policy

• What are the aims and objectives of intervention?

• What action is needed to achieve aims and objectives that the private sector is unlikely to fund?

• Should this be directly undertaken by LA?

• Should homeowners be expected to contribute?

GOVERNMENT ADVICE WILL BE GIVEN ON

• HOW OFTEN WE SHOULD REVIEW THE POLICY

• HOW WE SHOULD PLAN FOR PREVENTION OF LEGAL CHALLENGE

• GOOD PRACTICE…. IN DUE COURSE

POLICY DEVELOPMENTSumming Up

• This is a huge challenge• However if we get it right we have the freedom

and flexibility to design procedures and services which are specific to our local problems

• We need to get the lending industry on board. We need to get local finances right

• We must assess where the Market Renewal Prospectus fits in