Research to Identify the Role of the Intermediate Housing Market in the West Midlands Region. Final Report

Transcription

1 Research to Identify the Role of the Intermediate Housing Market in the West Midlands Region Final Report Housing Vision Consultancy with Gill Leng July 2010

2 Research to Identify the Role of the Intermediate Housing Market in the West Midlands Region: Final Report By the Housing Vision Consultancy with Gill Leng Client Contact: Fran Gilbert Regional Adviser: Housing Monitoring and Research West Midlands Regional Assembly Regional Partnership Centre Albert House Quay Place Edward Street Birmingham B1 2RA Neville Rowe Principal Policy Officer Strategy and Research Unit Partnerships and Housing Directorate Sandwell MBC Council House Smethwick B66 3N Project Director: Dr Richard Turkington Director The Housing Vision Consultancy 59 Stocks Lane Newland Malvern Worcs. WR13 5AZ Date: 14 July (phone) (phone/fax) (mobile) Final Report i

3 Contents 1. Introduction and Overview 1 2. Conclusions and Recommendations 5 3. A Profile of the Private Rented Sector in the West Midlands The Intermediate Housing Sector in the West Midlands: patterns and trends Affordability and the Impact of Changing Economic Conditions The Private Rented and Intermediate Housing Sectors: archetype case studies The Birmingham Ladywood Ward Case Study The Soho and Victoria, Smethwick and St Pauls Wards, Smethwick, Sandwell Case Study 9. Berryhill and Hanley East, Burslem South and Hanley West and Shelton Wards, Stoke-On-Trent Case Study The Ledbury Ward, Herefordshire Case Study North Warwickshire Borough Council Area Case Study 240 APPENDICES (see separate Word attachment) 1 Further profiling of the private rented sector from the 2001 Census 2 Concentrations of private renting by ward and Lower level Super Output Area 3 Owning housing associations, CORE sales, Affordability Matrices (see separate MS Excel attachment) Final Report ii

4 List of Tables Table 2.1: the cost and supply of private renting and shared ownership Table 3.1: trends in tenure by region, West Midlands, Table 3.2: estimated size of the private rented sector by local authority and proportion of households renting privately, 2008 Table 3.4: accommodation type for households in the private rented sector, West Midlands, Table 3.5: houses in multiple occupation for local authorities and HMAs at 1st April 2009 Table 3.6: private rented housing in the West Midlands, 2001 Table 3.7: average rents by local authority area for private rented properties by bed size, 2008 Table 3.8: occupancy rating for households privately renting or living rent free in local authorities and HMAs in the West Midlands, 2001 Table 3.9: types of household in the private rented sector in the West Midlands, HMAs and local authorities, 2001 Table 3.10: distribution of asylum seekers including dependents in dispersed accommodation, central West Midlands, Table 3.11: distribution of asylum seekers including dependents, subsistence only, central West Midlands, Table 3.12: primary client group by previous accommodation, refugees West Midlands, , percentages Table 3.13: NI Registrations in the West Midlands, , thousands Table 4.1: shared ownership for local authorities and HMAs in the West Midlands, 2001 Table 4.2: Shared Ownership and Shared Equity completions, Table 4.3: shared ownership and shared equity completions, Table 4.4: shared ownership and shared equity units in 2001 and properties owned by larger RSLs in the West Midlands, 2009 Table 4.5: sales type from 2001/2002 to the end of the first quarter of 2009/2010 in the West Midlands Table 4.6: CORE sales data from 2001/2002 to end of first quarter of 2009/2010 Table 4.7: CORE sales for the West Midlands 3 years data 1/4/2006 to 31/3/ re-sales and other Table 4.8: all sales (new-build, initial and re-sales) by scheme type for the West Midlands, 1/4/2006 to 31/3/2009 Table 4.9: type of scheme for the West Midlands, 1/4/2006 to 31/3/2009 Table 4.10: Table 4.11: properties sold for the West Midlands, 1/4/2006 to 31/3/2009 by property type CORE Sales for the West Midlands 3 years data 1/4/2006 to 31/3/ number of bedrooms Table 4.12: property type by number of bedrooms for new build 1/4/2006 to 31/3/2009 Table 4.13: beds required by approved HomeBuy applicants, West Midlands, November 2009 Table 4.14: purchase price, CORE sales for the West Midlands, 1/4/2006 to 31/3/2009 Table 4.15: the location of properties sold in the West Midlands, 1/4/2006 to 31/3/2009 Table 4.16: location of new properties sold in the West Midlands, 1/4/2006 to 31/3/2009 Table 4.17: types of household in the shared ownership sector in the West Midlands local authorities Table 4.18: age in bands, Person 1, CORE sales data for West Midlands 1/4/2006 to 31/3/2009 compared with 2001 Census West Midlands and England Table 4.19: age in bands, Person 2, CORE sales data for West Midlands 1/4/2006 to 31/3/2009 compared with 2001 Census West Midlands and England Table 4.20: age in bands, approved applicants, West Midlands, November 2009 Table 4.21: ethnic origin, Person 1, CORE sales data for West Midlands 1/4/2006 to 31/3/2009 compared with 2001 Census West Midlands and England Final Report iii

5 Table 4.22: ethnicity, approved applicants, West Midlands, November 2009 Table 4.23: CORE Sales for the West Midlands 3 years data 1/4/2006 to 31/3/ economic status of Person 1 Table 4.24: CORE sales for the West Midlands 3 years data 1/4/2006 to 31/3/ economic status of Person 2 Table 4.25: CORE sales for the West Midlands 3 years data 1/4/2006 to 31/3/ gross annual income single purchaser Table 4.26: gross annual income of joint income purchasers for the West Midlands, 1/4/2006 to 31/3/2009 Table 4.27: CORE sales for the West Midlands 3 years data 1/4/2006 to 31/3/ total savings of purchasers before any deposit is paid Table 4.28: income in bands, approved applicants, West Midlands, November 2009 Table 4.29: previous tenure of Person 1, CORE sales for the West Midlands, 1/4/2006 to 31/3/2009 Table 4.30: have any purchasers previously owned a property, CORE sales for the West Midlands, 1/4/2006 to 31/3/2009 Table 4.31: current tenure/housing circumstances, approved applicants, West Midlands, November 2009 Table 4.32: main previous locations of Person 1, CORE sales for the West Midlands, 1/4/2006 to 31/3/2009 Table 4.33: gender of approved HomeBuy applicants, West Midlands, November 2009 Table 4.34: disabled person in household of approved HomeBuy applicants, West Midlands, November 2009 Table 4.35: Key Worker in household of approved HomeBuy applicants, West Midlands, November 2009 Table 7.1: Table 7.2: Table 7.3: Table 7.4: Table 8.1: Table 8.2: Table 8.3: Table 8.4: Table 9.1: Table 9.2: Table 9.3: Table 9.4: Table 10.1: Table 10.2: Table 10.3: Table 10.4: tenure Ladywood case study area types of household in the private rented sector or living rent free Ladywood case study area accommodation type private renting and living rent free in unshared dwellings Ladywood case study area occupancy rating for households privately renting or living rent free Ladywood case study area tenure Sandwell case study area types of household in the private rented sector and living rent free Sandwell case study area accommodation type private renting and living rent free in unshared dwellings Sandwell case study area occupancy rating for households privately renting or living rent free Sandwell case study area tenure Stoke-on-Trent case study area types of household in the private rented sector and living rent free Stoke-on-Trent case study area accommodation type private renting and living rent free in unshared dwellings Stokeon-Trent case study area occupancy rating for households privately renting or living rent free Stoke-on-Trent case study area tenure Ledbury case study area types of household in the private rented sector and living rent free Ledbury case study area accommodation type private renting and living rent free in unshared dwellings Ledbury case study area occupancy rating for households privately renting or living rent free Ledbury case study area Final Report iv

6 Table 11.1: Table 11.2: Table 11.3: Table 11.4: tenure North Warwickshire area types of household in the private rented sector and living rent free North Warwickshire accommodation type private renting and living rent free in unshared dwellings North Warwickshire occupancy rating for households privately renting or living rent free North Warwickshire Final Report v

7 Acronyms and Abbreviations ASHE BCC CAB CLG CML CORE DIYSO DWP EU GHI HCA HMA HMO HMRA HSSA IHS LHA LQ LSE NASS NHPAU NI NINO ONS PRS RCGF RSL RSR SE SHB SHMA SO TSA VOA WRS Annual Survey of hours and Earnings Birmingham City Council Citizens Advice Bureau Department of Communities and Local Government Council of Mortgage Lenders COntinuous REcording System Do it Yourself Shared Ownership Department for Work and Pensions European Union Gross Household Income Homes and Communities Agency Housing Market Assessment Homes in Multiple Occupation Housing Market Renewal Area Housing Strategy Statistical Appendices Intermediate Housing Sector Local Housing Allowance Lower Quartile Leasehold Scheme for the Elderly National Asylum Support Service National Housing and Planning Advice Unit National Insurance National Insurance Number Office for National Statistics Private Rented Sector Recycled Capital Grant Fund Registered Social Landlord Regulatory and Statistical Return Socio Economic Social HomeBuy Strategic housing Market Assessment Shared Ownership Tenant Services Authority Valuation Office Agency Workers Registration Scheme Final Report vi

8 1. INTRODUCTION Definitions Applied 1.1 For the purposes of this report, we have applied the following definitions: Housing refers to all activity that aims to meet housing need and aspirations. This can be capital investment in new supply, regeneration and improvement etc, or revenue investment in homelessness, housing support, housing options etc services. Regional policy will have varying levels of influence over this activity. The Intermediate market consists of housing that seeks to provide affordable accommodation for those who cannot access market housing, including those who can only just afford private rented sector (PRS) rents, to those who are able to consider a move in to shared ownership or potentially home ownership in the future. Vulnerable households are considered to be those on low incomes or who experience other disadvantage, including asylum seekers, refugees and economic migrants. Guided by its availability, some data has been presented using the constituent districts of the Shropshire Council area. Project Aims 1.2 The principal aims of this report are: to identify the contribution that Regional Housing Policy can make and the policy areas that need to be targeted, in order to encourage households, and particularly vulnerable households, actively to seek accommodation in the intermediate market and make it a tenure of choice. to identify the contribution that local housing policies can make in order to encourage households and particularly vulnerable households actively to seek accommodation in the intermediate market, along with identifying those issues which would be better addressed at the national level. to examine the interactions between the PRS and shared ownership sectors and identify how they both relate to home ownership. to acknowledge and signpost for future research, the recent trends which have emerged in the PRS/intermediate market for asylum seekers, refugees and economic migrants. Project Objectives Final Report 1

9 1.3 The project has the following objectives: to analyse the role and performance of the private rented sector in the West Midlands; to analyse the role and performance of the shared ownership/equity sector in the West Midlands; to understand the interactions between the PRS and shared ownership/equity markets; to understand the role of asylum seekers, refugees and economic migrants in the intermediate housing market; and to determine the appropriate policy implications. The Approach Adopted 1.4 The project aims and objectives have been addressed through three main activities: 1. Construction of an intermediate housing regional evidence base, including a review of key findings from all Strategic Housing Market Assessments of the role and potential of both the private rented and intermediate housing sectors. 2. The development of an affordability matrix on which to model the cost and affordability of open market, intermediate and private rented options. 3. In order to take account of the range of housing market conditions across the region, in-depth analysis was undertaken of the role and potential of the private rented and intermediate housing sectors in five archetype areas. These were selected on the basis of: the extent to which they represented a type of housing sub-market evident across the region; the availability of data on the role of each sector; and the support available to enable access to data and contacts for fieldwork. 1.5 Following consultation with the Steering Group, the following archetypes were selected: Major Urban Area (Inner): the Birmingham Ladywood ward; Final Report 2

10 Major Urban Area (Outer): the Soho and Victoria, Smethwick and St Pauls wards, Smethwick; Urban Regeneration Zone/HMRA Pathfinder: the Berryhill and Hanley East, Burslem South and Hanley West and Shelton wards, Stoke-on-Trent; Market/county town: Ledbury, Herefordshire; and Rural area: the local authority area of North Warwickshire. 1.6 The following activities were undertaken in each area: A data-based analysis of the profile of the private rented and intermediate housing sectors; An analysis of affordability in each area; In-depth consultation with an agreed sample of stakeholders consisting of: consumers; private landlords; lettings agents; local authorities (housing options, private sector and enabling teams); housing associations; and lenders. Data Sources and Geography 1.7 Detail of data sources consulted has been set out in the introduction to each chapter as appropriate. A particular issue concerns the poor adequacy of national and regional data concerning the private rented sector. 1.8 A wide range of agencies has been consulted in order to access data, with particular thanks to: the Homestamp Consortium; the Homes and Communities Agency (HCA); Mercian Housing Association (a previous regional HomeBuy Agent); the Office for National Statistics (ONS); the Orbit Housing Group (the current regional HomeBuy Agent); Final Report 3

11 the Valuation Office Agency (VOA); and West Mercia Housing Group (a previous regional HomeBuy Agent). 1.9 In terms of national and regional data sources, the following geographic levels have been applied, with analysis determined by the availability of data at each level: The West Midlands Region; The six sub-regional Strategic Housing Market Areas; The region s constituent local authorities; Electoral wards, making a distinction between 2001 and later boundaries; ONS Lower Super Output Areas; and ONS Census Output Areas. Final Report 4

12 2. CONCLUSIONS AND RECOMMENDATIONS Introduction 2.1 It is assumed that the vision for the intermediate housing market in the West Midlands is that it offers households a choice of affordable and good quality homes, with tenure and locations to meet a wide range of needs and aspirations. Suggestions for future housing policy, the evidence base, models and services are based on this vision. The Definition of the Intermediate Housing Sector 2.2 The brief for the project established the premise that the private rented and intermediate housing markets might be considered as an integrated intermediate housing sector located between full cost market and social housing sectors. This has not been established. Intermediate housing is principally made up of shared ownership/equity housing, the price of which is determined in relation to new-build open market properties. In this context, intermediate housing is primarily a market product whose affordability in many, and especially higher value locations, is questionable when compared against formal measures, and which may be less affordable than open market re-sale properties. 2.3 Private renting - a highly varied sector - and with the exception of Intermediate Rented properties, is clearly part of the market sector with values often equivalent to or in excess of either full or low cost intermediate home ownership. 2.4 The overlaps between these two sectors of the housing market are minimal, extending to shared ownership/equity providing a stepping stone from private renting into home ownership, and to a much greater extent than from social renting. 2.5 A more practical working definition is that the intermediate housing sector is constituted of affordable shared ownership/equity housing (however labelled) and Intermediate Renting only. The Potential of the Private Rented Sector 2.6 Home ownership is still the main aspiration and private renting has grown by default rather than by choice, through the availability of easy finance for landlords and investors during the previous decade, and through the reduced affordability of home ownership. However, the profile of the private rented sector has changed over the past decade, it has a contribution to make to improved economic performance and sustainable community outcomes and action to change perceptions of the sector is required at regional and local levels. Final Report 5

13 2.7 With exceptions such as long term renting in deep rural areas, the private rented sector is operating mainly as a default tenure and a holding ground for households unable to access home ownership. There is little evidence of renting by choice, and whilst there is movement within the sector, there is currently much less movement out into shared or full home ownership. 2.8 As the owner occupied market becomes more affordable, the private rented sector is expected to shrink as speculative and accidental landlords exit and tenants access home ownership. The greater likelihood is that the sector will decline over the next three to five years and that recent gains in supply for those in housing need may be lost. Action is urgently required to secure and sustain such supply and there is real potential for joint working beyond local authority administrative boundaries to achieve this, for example, providing housing services that support tenancy sustainment. 2.9 It is clear that landlords are cautious about stepping into new areas, such as housing vulnerable tenants, and payment of Local Housing Allowances directly to tenants has had a big impact on this. There is little evidence that the increased availability of former asylum seeker accommodation has impacted on the private rented sector. It is likely that any growth in supply - especially in the provision of new rented homes - will only be achieved through national intervention in the form of tax breaks or subsidies or where financial institutions can be sure that their long term investment is secure. The Potential of the Intermediate Sector 2.10 There is clearly a place for the sector - where it is affordable in relation to local incomes - and competitive with open market re-sale properties. However, it is a niche product whose place needs to be determined according to local market conditions. Investment needs to be more strategic to increase choice and re-balance local housing markets across the region and there is an urgent need to plan for the impact on the sector of worsening economic conditions The main barriers to people accessing the sector are financial, due to lending practices and the amount of money required in deposit. The sector is designated a high risk market by new lenders who are then reluctant to fund mortgage products which in turn drives up costs and reduces affordability and access Development of products and services has been ad hoc. Much better marketing of products is required - to all parties from lenders to consumers - and more effective use could be made of the full range of products, especially Rent to Buy, which is working well. Final Report 6

14 Policy Direction The regional strategy should make it clear that the private rented sector in particular has a contribution to make to improved economic performance and sustainable community outcomes. This should be supported by action to change the perception of the sector at regional and local levels The private rented sector in the West Midlands has potential to offer a greater choice of quality affordable accommodation, enabling mobility and access to a wider range of locations. There is also much potential for management and investment in the sector to contribute to other outcomes, such as improved health, economic wellbeing and environmental outcomes from investment in affordable warmth and energy efficiency initiatives. This latter contribution appears to be largely unrecognised locally, as evidenced by the Audit Commission s 2009 Building Better Lives research and, more recently highlighted in feedback to the HCA/Communities and Local Government (CLG) Private Rented Sector Positive Practice Group Consultation and a review of strategic housing market assessments in the region suggests that the private rented sector at the moment is primarily considered as one for households in need, with no other options available to them this covers households who cannot access social rented accommodation due to exclusions and households who can t gain access to the home-ownership market owing to financial issues Young people and homeless households are highlighted as two specific groups for whom the market meets a need and local homelessness strategies have been encouraged to look to the private rented sector to reduce the pressure on the social rented sector. However, consultation with landlords indicates that it is exactly these households that they prefer not to accommodate unless there is confidence that households will be supported in their tenancy (see later recommendation) The overall perception that the private rented sector is always there to offer cheap accommodation hides the fact that high rent levels are particularly prevalent in some areas urban and rural preventing access to low income households Local resources to promote and enable access, and to develop the private rented market, appear limited in comparison to the input that enables access to the intermediate home ownership market and there is a primary focus on enforcement action in some areas. It appears that the sector s role in sustainable communities or in economic prosperity is not always acknowledged, particularly by non-housing professionals: the Rugg Review 1 also highlighted this as an issue. 1 Available on-line at Final Report 7

15 2.18 The local approach reflects government policy in recent times: there are no specific targets or resources relating to performance in the sector overall (there are targets and resources in specific renewal areas), and there has been an emphasis on local authorities using legislative powers and their own resources to address issues. There has been a recent acceptance by the government that this approach has not enabled local authorities and their partners to take appropriate and positive action, and proposals for changes in policy and legislation have been made. This comes alongside recognition that the private rented sector has a number of roles to play in the economy, ranging from providing accommodation to households who need to be mobile for employment reasons to landlords operating as businesses. Developing a more strategic approach to the development of the private rented and intermediate housing sectors The following table provides the basis for developing a more strategic approach to the supply of private rental and shared ownership/equity properties. A series of traffic light thresholds have been established in relation to: gross median weekly residents pay, ASHE, 2009 (red - low: green - high); property prices, 2009 (red - high: green - low); weekly private rent levels, using a two bed archetype (red - high: green - low); the private rental supply rate, 2008 (red - low: green high); and the shared ownership supply rate, 2009 (red - low: green - high). This is an experimental maximum figure combining the total in 2001 and supply to 2009 without adjustment for staircased sales Reviewing each local authority s traffic lights quickly establishes its relative position in relation to either or both of the cost of private renting and the rate of supply, and the cost of open market purchase and the supply rate of shared ownership. A coincidence of high costs and a low supply rate suggests the potential to intervene to improve supply. Final Report 8

16 Table 2.1: the cost and supply of private renting and shared ownership Local Authority Gross median FT wkly pay 2b PR 2008 PR rate 2008 LQ prices q SO rate 2009 Birmingham % 99, % Bridgnorth % 129, % Bromsgrove % 142, % Cannock Chase % 95, % Coventry % 95, % Dudley % 101, % East Staffordshire % 103, % Herefordshire % 140, % Lichfield % 130, % Malvern Hills % 160, % Newcastle-under-Lyme % 93, % North Shropshire % 129, % North Warwickshire % 114, % Nuneaton & Bedworth % 95, % Oswestry % 129, % Redditch % 108, % Rugby % 110, % Sandwell % 91, % Shrewsbury & Atcham % 129, % Solihull % 152, % South Shropshire % 129, % South Staffordshire % 137, % Stafford % 124, % Staffordshire Moorlands % 103, % Stoke-on-Trent % 64, % Stratford-on-Avon % 162, % Tamworth % 109, % Telford and Wrekin % 107, % Walsall % 89, % Warwick % 155, % Wolverhampton % 90, % Worcester % 128, % Wychavon % 147, % Wyre Forest % 115, % Averages % 117, % 2.21 Key findings: The table identifies those local authorities which have relatively low private rental supply rates and high rental costs and which consist of: Final Report 9

17 Bromsgrove; Redditch; Rugby; Solihull; Tamworth; and Wychavon. The table identifies those local authorities which have relatively low shared ownership supply rates and medium to high purchase costs, and which consist of: Bridgnorth; Redditch; South Staffordshire; Tamworth; Wychavon; and Wyre Forest. The table identifies those local authorities which have both relatively low private rental supply rates and high rental costs and relatively low shared ownership supply rates and medium to high purchase costs. They consist of: Redditch; Tamworth; and Wychavon There is the potential to intervene in the housing market to increase supply in both sectors and it is strongly recommended that its feasibility is assessed at local authority level. Further analysis is required to identify whether there are specific reasons for low supply rates, for example, high new-build prices render shared ownership properties unaffordable and/or open market re-sale properties are more affordable than shared ownership. In the private rented sector, there may be a shortage of properties suitable for purchase by investors and landlords. If low cost home ownership is an aspiration for the region then policy should support the development of this tenure in a wider range of locations and type The research identifies that the role of shared ownership in the West Midlands is to enable access to affordable home ownership in areas where house prices are high. Despite this the existing supply of shared ownership appears to be in areas where house prices are not high. Final Report 10

18 2.24 Stoke-on-Trent has the highest proportion of households in shared ownership and Birmingham has the highest number of shared ownership homes yet the Housing Market Area (HMA) covering the Stoke area, for example, suggests that there is not necessarily a role for intermediate housing here. There is also evidence that there are a considerable number of small areas where there is no shared ownership many of these areas have high house prices. Our customer research suggests that the location of shared ownership offers limited choice, and that their aspirations to move from this tenure in future include wanting to live somewhere else this has implications for sustainable communities The type of accommodation available for low cost ownership is felt to be limited by customers. Data shows that the largest proportion of sales in recent times was of purpose-built accommodation, and one third of sales were flats and maisonettes The existing supply of shared ownership clearly reflects investment decisions in the past Stoke and Birmingham, for example, are home to the housing market renewal pathfinders where investment has been considerable and shared ownership has been introduced into new areas of housing to offer a mixed tenure. Consideration should be given to supporting local areas to increase the range of affordable tenures where there is currently limited choice, particularly if this supports regional economic performance and local ambitions for sustainable communities Some areas appear to lack choice, for example, Tamworth has one of the lowest proportions of shared ownership and also a low level of private rented accommodation. Decisions on whether increasing choice would be beneficial should relate to Tamworth s vision for sustainable communities and to the region s ambitions for economic performance on the latter point the question would be what role does Tamworth play in the economy and will increased choice contribute more to this? 2.28 There is already felt to be scope to develop the private rented sector in some areas of the West Midlands to increase choice. The West and North strategic housing market assessments suggest this and customers also support the notion. The potential for joint working at spatial levels beyond local authority administrative boundaries should be explored to make the best use of the intermediate housing market Work undertaken by the government s taskforce for the private rented sector, with input from local authorities, landlords and the third sector, suggests that solutions may be more effective if delivered cross-boundary, particularly to Final Report 11

19 make best use of resources. An example of such a solution is the development local lettings agencies: in theory these could be delivered at a number of different spatial levels from city regions to regional Some landlords and letting agents interviewed in this research own and manage homes in a number of local authority areas. Different systems and relationships present a challenge to managing an effective business model. The government proposes that new and positive relationships should be developed with landlords: this would make more sense across local authority boundaries in some cases Local authorities are facing real reductions in resources and feedback suggests that existing services to the private rented sector may be affected as local priorities do not necessarily reflect the challenges faced, or role the sector could play. The potential for savings from cross-authority services and procurement has recently been identified in the work of the HCA and CLG s Private Rented Sector Positive Group. The Evidence Base Develop a regional and local evidence base to support a real-time understanding of changes in the market, and impact on sustainable communities and vulnerable people, particularly to prepare for economic recovery The economic downturn appears to have led to an increase in the supply of private rented homes: homeowners have been unable to sell but have moved regardless. There is also a suggestion that homeowners have moved into the private rented sector, perhaps for employment reasons, and that these tenants are able to pay more for rented accommodation Landlords and lettings agents consulted in this research suggest that the private rented sector market will remain the same or grow within the next three-year period, followed by a decrease in supply as accidental landlords sell. There is little interest from those professional landlords consulted to increase their portfolio Whilst it is assumed that supply will decrease if and when the housing market recovers, any decline in demand will depend on the speed with which households who can afford home ownership leave the private rented sector. If demand remains the same yet supply decreases there is potential for rent levels to increase. Up-to-date market intelligence is needed so action can be taken to mitigate negative impacts and to possibly secure accommodation as it becomes available to meet wider housing needs There is a perception that the current economic situation has increased the risk of households falling back into the private rented sector from the Final Report 12

20 intermediate market but there is very little recorded evidence. However, approaches have been made to Registered Social Landlords (RSLs) from shared ownership purchasers requesting a buy back of shares, and this has required policy development within the RSLs as there is no precedent The impact of owner-occupied homes becoming private rented on existing communities is not clear or apparently understood. Work is required at a local level to improve the evidence base for strategic and policy decisions relating to the private rented sector and intermediate housing market, particularly at a neighbourhood level There is a clear need for a more robust local understanding of the private rented sector and intermediate housing market, and of the demand for homes in these markets. Supply of low cost home ownership in particular does not appear to meet need, with customers reporting that they changed their original requirements to suit what was available, usually from a house to a flat, suggesting that plans have not been based on robust evidence and that supply has been driven by something else, for example, financial gain to developers Relationships between local authorities and landlords appear variable, with conflict existing in some areas between the local authority enforcement role and the local authority strategic partner role. This affects the willingness of landlords to share information Knowledge about investment requirements in the private rented sector is limited to that from the English House Condition Survey, Private Sector Stock Condition Surveys and more localised inspections. For future investment to have a positive impact on housing markets and to contribute more to sustainable communities, a better understanding is needed. Undertake further research to understand affordable housing choice in rural areas, and the potential for private rented homes and intermediate housing to meet unmet need As with home ownership the private rented sector is unaffordable to people on low incomes in rural areas. Young single and young couple households face particular challenges so targeted solutions should be sought. Regional work should be undertaken to a) identify employers of economic migrants; and b) to discuss the housing requirements of employees Although there are variances across the region in the numbers of economic migrants living and working in an area, most areas report that the numbers are reducing as they perceive the migrant workforce to be returning to their Final Report 13

21 country of origin. However, there appear to be examples of where the economic migrant community has effectively changed the private rented market in some areas. At this stage the evidence is anecdotal there is very little monitoring of the migrant workforce and no evidence of research into the housing needs and demands they present or the impact of this on the housing market. A review of the ownership of private rented homes should be undertaken following the next Census The Census 2001 suggests that 2.5% of homes in the private rented sector are owned by the employer of a family member, whilst 6.8% are owned by a relative or a friend of a family member. A review of more recent data could inform the following: The relationship between the economy, housing market and meeting housing need. If the number of homes owned by an employer has reduced this may be linked to the economic situation but what does it mean for employers and employees in future? What has happened to the accommodation and could it have been better used? Could more have been done to secure accommodation to meet other needs? The relationship between the economy, housing market and sustainable communities. If there are still a large number of homes owned by employers in some areas do we know who they are? This knowledge could inform action to mitigate against large numbers of households having to move should the employer no longer be in business, or action to ensure that the accommodation is made best use of in this event. The relationship between the housing market and consumer behaviour. If the number of homes owned by family or friends of a household member has changed does this reflect affordability for a particular demographic, for example, parents renting to their children, or families renting to their parent? Is this linked to changes in university accommodation and young people not being able to afford to live away from home? Action should be taken to understand the apparent imbalance in occupancy within the private rented sector and to identify if action can be taken to address this in some areas In addition to an aspiration to make the best use of housing supply to meet need and aspirations, addressing under-occupation and overcrowding should have a positive impact for some households. Overcrowding is known to impact on poor health and wellbeing, educational attainment and so on, whilst under-occupation for older households and low income households can be expensive and there is link between under-occupation and fuel poverty: households are unable to afford an acceptable level of thermal comfort. Final Report 14

22 2.44 There are much higher levels of under-occupation than overcrowding in the private rented sector, albeit these are not necessarily in the same areas: In the region 11.9% of all private renting households lived in overcrowded accommodation in 2001 (25,242 households) with proportions in Birmingham (17.1% or 7,887 households), Coventry (16.9% or 2,595 households) and Warwick (15.6% or 1,042 households). More than one third (34.4%) of households in privately rented or rent free accommodation in the West Midlands were under-occupied when the occupancy rating of Plus Two or More Rooms was used (72,835 households). There were greater proportions in some areas including Shropshire (44.5% or 7,088 households); North Warwickshire (44.4% or 1,004 households); and Herefordshire (44.2% or 4,331 households) The type of households living in the private rented sector suggests there may be something to be gained from further work to understand the imbalance: There were a greater proportion of single households living in the private rented sector in the West Midlands than other household types (46,920 households in 2001). There were also 17,637 pensioner households (11.2% of all households). 13.7% of privately rented households in the West Midlands were lone parent households. More than one quarter (27.2%) of privately rented households in the West Midlands has dependent children. This was higher than the national percentage of 24.6% It is accepted that under-occupation will be a choice for many households who can afford to live in this situation, but for some there may be benefits to moving to smaller accommodation if the barriers to enabling this were removed. Further research would enable the region to understand whether there is a need for action, and the potential for this. Final Report 15

23 Regional policy should be informed by a more detailed understanding of the student population, their contribution to the economy and the housing market, and plans by educational establishments to accommodate students The student housing market within the private rented sector is considerable in a number of West Midland areas, with concentrations in some relatively small areas, for example, Selly Oak in Birmingham (it had more than 2,000 households renting with a private landlord or agency in 2001) It is possible that the student population will feature less in the private rented sector in future, leaving neighbourhoods and particular types of accommodation vacant: The provision of purpose-built accommodation to improve the offer to students is often part of plans for growth by universities, thus reducing the need for students to find accommodation in the private rented sector: this was reported by one lettings agent in Stoke and is a known occurrence elsewhere in the country. The economy is reported to have had an impact on the number of students choosing to live away from home: many are choosing to remain within the family home. Products and Services In order to increase access to a wider choice of housing, to develop accommodation models and housing services that enable households to increase their household income through education, training and employment and save for the future The lack of savings for a deposit restricts access to the private rented sector, the intermediate housing market and owner occupation, yet the aspiration for home ownership remains Living with family and friends is the main form of previous accommodation for those moving into the shared ownership market (1,310 people or 39.3% of the total moving into the shared ownership market), followed by the private rented sector (999 people or 29.9%): these forms of accommodation appear to enable households to save to move into the ownership market. However, if something was to change, for example rents go up in the private sector or families and friends are unable to accommodate owing to their own income problems, then access to the home ownership market would be further from reach for many households The solution could lie in a combination of products and services: Final Report 16

24 Local authorities provide rent deposit and guarantee schemes to enable some households to access the private rented sector; There are other products and services on offer that could be extended: customers like the Rent to Buy scheme as it gives them an opportunity to save, and some local authorities are linking up with Credit Unions in response to demand for access to savings; An affordable housing model targeted at young people has been developed by St. Basils in Birmingham whereby young people who are accessing training and employment are enabled to save for a deposit during their tenancy so they have a greater choice of accommodation options when they move-on; and The Homes and Communities Agency is undertaking work with the Council of Mortgage Lenders to develop new models to enable access to the intermediate housing sector There is evidence to support targeted models: Young single people, couples in the 25 to 35 years age bracket and people who have been through relationship breakdown have been found to access the private rented sector as they are unable to afford a deposit; and The majority of registered HomeBuy applicants in 2009 were in the age bracket 18 to 39 years (75.8% of all applicants 28.6% 18 to 29 years and 47.2 % 30 to 39 years). Develop mechanisms to increase and improve access to the private rented sector and intermediate housing market, working with landlords, housing associations and housing support providers Local lettings agencies are one of the government s proposals for the private rented sector and work has already begun to establish how these could work in practice. Consideration should be given to schemes that cross administrative boundaries to increase access for customers and to reduce costs Within the West Midlands access to the private rented sector through local authority housing services varies: some appear to do limited signposting activity whilst others advertise accredited landlords through their choice-based lettings scheme. Anecdotally the difference in approach is related to the local housing market, the landlords and lettings agents that operate there and the capacity of the local authority to offer services. Final Report 17

25 2.55 Housing associations have expressed an interest in enabling access to the private rented sector and there are already examples of this working elsewhere in the country, including services that enable access to the private rented sector across administrative boundaries. Local authorities in the region should be supported to explore potential efficiencies in their approach to enabling access, managing and servicing the private rented sector Our research identified that reductions in public sector funding present a threat to the level of service that local authorities can provide to those who own and live in the private rented sector, for example, the provision of rent deposit schemes is expected to reduce Experience elsewhere suggests there may be efficiencies to be gained from local authorities with a small number of private rented homes procuring services to manage the sector from other authorities. For example, local authorities such as Birmingham, Worcester, Coventry and Warwick have a very high number of houses in multiple occupation (HMO): they could provide services to those local authorities in the same housing market areas with very few HMOs. Review the provision of housing services that support tenancy sustainment in the private rented sector, and support local authorities and other partners, for example, housing associations to take action to address gaps Young and vulnerable households are prevented from entering the private rented sector as landlords feel there is a greater level of risk associated with them: there is a perception that these households are less able to pay for and manage a tenancy. Landlords are more likely to accept these households if tenants are provided with the right information and tenancy support from the local authority or other organisations, and if rent is payable directly to them rather than the tenant Consultation feedback suggests that there may be potential in the community and voluntary sector for the provision of support services to vulnerable tenants in order to encourage landlords to offer them accommodation. Review marketing and the quality of services provided that enable access to the low cost home ownership market. Explore alternative approaches appropriate to the level of supply Awareness of low cost home ownership and how to access the market appears to be more by accident than design. All customers report a variety of routes, from direct marketing to the home, knowing someone else who has become a shared owner, and through contact with a lender who has Final Report 18

26 suggested it when a full mortgage has not been available. Customers didn t feel that others would know about the market Customers report that the process of registering for shared ownership has generally been a good experience where they have been provided with full information. Dissatisfaction with services appears to relate to unrealistic expectations about the length of the process, the costs associated with entering into shared ownership and so on Housing associations are felt to have offered a good service. Housing associations have also been flexible with their products during recession, supporting homeowners to staircase down and changing the entry requirements to schemes to enable greater access, for example, the price ceiling Customers indicate that independent financial advice services vary in quality and usefulness and this impacts on overall satisfaction with the process of accessing shared ownership. Again, there is an indication that customers may have unrealistic expectations about what others should be doing to support them. Explore the potential for intermediate housing and the private rented sector to offer households who are prepared to share accommodation a greater choice Consultation feedback identified that existing shared ownership terms and conditions prevent households from sub-letting their homes: this prevents them increasing their income and could lead to households having to sell or staircase down. Open market home owners are able to sub-let The research identified that single people are unable to access the shared ownership market due to the mortgage required on one income: enabling shared households to access ownership could bridge this gap There are examples of households choosing to purchase together elsewhere in the country: these are not necessarily households who were already friends or family, they have been brought together by a specific scheme or service The profile of shared dwellings in the private rented sector indicates that some areas have limited availability yet this is often the only affordable option for some households, particularly young people who face Housing Benefit restrictions on their rental income if under the age of 25. Final Report 19

27 3. A PROFILE OF THE PRIVATE RENTED SECTOR IN THE WEST MIDLANDS EXECUTIVE SUMMARY Patterns and Trends in Supply The lack of comprehensive data severely constrains the ability to identify trends in the private rented sector. In 2001, 8% of all West Midlands households (169,000) were renting privately. By 2008, this is estimated to have increased by 33.3%, accounting for 11% of all households (224,000). This was close to the national increase of 34.4% over the same period. If this rate of increase is applied to local authorities, the proportion renting privately is estimated to range from under 5% in Tamworth to over 15% in North Shropshire, South Shropshire and Bridgnorth. In 2001, most private renting in the West Midlands was from a private landlord or letting agency (87%); 7% was from a Relative or Friend of a Household Member and 3% from Employer of a Household Member. Trends by Property Type According to Survey of English Housing data for : 42% of privately rented properties were terraced houses; 22% were semi-detached; 12% detached houses; 14% purpose-built flats and 7% were converted flats. Since , only the proportions of terraced houses and purpose built flats have increased (by 4% and 3% respectively), the proportions of all other property types have fallen. Trends in Homes in Multiple Occupation (HMO) The total known HMOs for the West Midlands at 1 April 2009 was 6,482, and is considerably higher than the number of shared dwellings identified in the private rented sector at the time of the 2001 Census (1,494). The largest proportion was in the South HMA (41% of the total) and the lowest in the North HMA (5.5%). Worcester has a higher number of verifiable HMOs than Birmingham; the lowest levels are in Malvern Hills, Solihull and Tamworth. The total Estimated HMOs for the West Midlands) at 1 April 2009 was 17,675; Final Report 20

28 the largest proportion was in the HMA (20.3% of the total) and the lowest in Central One (13.4%). Coventry has the highest proportion of estimated HMOs (18%); none are recorded for South Staffordshire or Stratford on Avon. Current Patterns in Rent Levels The most comprehensive data on private rents is derived from rent determinations in Housing Benefits cases from the Rent Service and these are representative of the lower half of the market. Rent levels vary widely; high rents by bed size are recorded for: Newcastle-under-Lyme (bedsits); Stratford-upon-Avon (one and four beds); Warwick (two beds); and Wychavon (three beds). And low rents in: Cannock Chase (for bedsits); Stoke-on-Trent (for three beds); and Staffordshire Moorlands (for all of one, two and four beds). Who was Housed in the Private Rented Sector in 2001? The private rented sector houses different combinations of households in different areas. At 2001, those living in the private rented sector consisted of the following household types: single people: 30% - ranging from 23% in South Staffordshire to 41% in Redditch; couples: 16% - ranging from under 12% in Birmingham, Coventry and Wolverhampton to 24% in Stoke-on-Avon and Wychavon; families with dependent children: 27% - ranging from 16% in Warwick to 37% in Sandwell and Walsall; and pensioners: 11% - ranging from 7% in Telford and Wrekin to 16% in Warwick. No comprehensive data is available enabling profiling of those housed in the West Midlands private rented sector since Introduction 3.1 This section uses published data sources to address a series of questions fundamental to understanding the role and potential of the private rented Final Report 21

29 sector in the West Midlands and provides a baseline and context for the more detailed archetypal case studies to follow. The questions posed are: what is the profile of the private rented sector? what is the distribution of the private rented sector? and who lives in the private rented sector? 3.2 Understanding and analysis of the private rented sector is heavily constrained by the limitations of the data available. Other than the decennial Census, no data base exists which records the changing profile of the private rented sector, and those which are available are based largely on limited samples. The data sources consulted are as follows: 2001 Census data; HSSA Annual Returns; CORE data of RSL letting and sales; Dataspring (RSR Return and Private Rent data); HCA data on intermediate housing sector completions Supporting People Client Records; Home Office Immigration Control Statistics; and CLG Live Tables. The Profile of the Private Rented Sector by Sector and Property Type 3.3 This section uses the most recently available data to identify the changing profile of the private rented sector by size; property type - including Homes in Multiple Occupation; geographic distribution; rent levels; overcrowding and under-occupation. As a starting point, the following map identifies the level of private renting across the region in Final Report 22

30 3.4 Key findings: The localised concentration of private renting in urban areas is to be expected, but the significance of private renting in more rural locations is also apparent. Final Report 23

31 What is the Size of the Private Rented Sector? 3.5 The most recent figures on which greatest confidence can be placed are those derived from the 2001 Census. However, these are now out of date and it is necessary to rely on estimates derived from the English Housing Condition Survey, the Survey of English Housing and the Labour Force Survey. The following table identifies the West Midlands changing pattern of tenure for the period Table 3.1: trends in tenure by region, West Midlands, Year Own outright Buying with mortgage All owner occupiers Social renters Private renters All tenures Thousands of households , , , , , , , , , , , , , , , ,227 Percentages England (Source: ONS, Labour Force Survey) 3.6 Key findings: In 2001, 169,000 of all households (8%) were renting privately; by 2008, this is estimated to have increased to 242,000 or 11% of all households; and this represents an increase of 73,000 households or a 43% increase since No comprehensive data is available on increases by local authority area; therefore, the estimated regional increase of 43% between 2001 and 2008 Final Report 24

32 has been applied to 2001 local authority totals, and the outcome expressed as a proportion of all households. Table 3.2: estimated size of the private rented sector by local authority and proportion of households renting privately, 2008 Local authority Private renting 2001 Private renting 2008 Estimated private renting rate 2008 Estimated households 2006 Birmingham 30,625 43, % 405,000 Bridgnorth 2,494 3, % 22,000 Bromsgrove 1,296 1, % 37,000 Cannock Chase 1,669 2, % 39,000 Coventry 10,644 15, % 126,000 Dudley 4,384 6, % 127,000 East Staffordshire 2,968 4, % 45,000 Herefordshire, County of 6,734 9, % 79,000 Lichfield 1,695 2, % 39,000 Malvern Hills 2,231 3, % 32,000 Newcastle-under-Lyme 2,434 3, % 53,000 North Shropshire 2,677 3, % 25,000 North Warwickshire 1,594 2, % 26,000 Nuneaton and Bedworth 2,427 3, % 51,000 Oswestry 1,530 2, % 17,000 Redditch 1,202 1, % 33,000 Rugby 2,090 2, % 39,000 Sandwell 5,345 7, % 118,000 Shrewsbury and Atcham 3,832 5, % 42,000 Solihull 2,951 4, % 83,000 South Shropshire 2,143 3, % 19,000 South Staffordshire 1,714 2, % 43,000 Stafford 3,177 4, % 53,000 Staffordshire Moorlands 1,865 2, % 40,000 Stoke-on-Trent 6,873 9, % 104,000 Stratford-on-Avon 3,673 5, % 51,000 Tamworth 1,007 1, % 30,000 Telford and Wrekin 3,762 5, % 68,000 Walsall 4,386 6, % 103,000 Warwick 5,025 7, % 62,000 Wolverhampton 6,401 9, % 100,000 Worcester 3,267 4, % 41,000 Wychavon 2,635 3, % 50,000 Wyre Forest 2,418 3, % 42,000 Totals 139, , % 2,244,000 Final Report 25

33 (Source: ONS, 2001 Census and Labour Force Survey) 3.8 Key findings: Whilst almost 11% of West Midlands households were estimated to be renting privately in 2008, this proportion ranges from under 5% in Tamworth to over 15% in North Shropshire, South Shropshire and Bridgnorth. 3.9 The following table provides a breakdown of the estimated number of households in furnished and unfurnished accommodation at Table 3.3: tenure by Government Office Region, households, 2008 Region Owned outright Owner Occupied Buying with a mortgage Social Rented Private rented All All Unfurnished Furnished All Total West Mids 719, ,000 1,550, , ,000 58, ,000 2,227,000 West Mids 32% 37% 70% 20% 8% 3% 11% 100% England 31% 37% 68% 18% 10% 4% 14% 100% (Source: ONS Labour Force Survey, Table S135) 3.10 Key findings: 8% of households were estimated to be housed in unfurnished private rented accommodation in 2008, and 3% in furnished private rented accommodation, a total of 11% of all households. What Type of Housing is Provided by the Private Rented Sector? 3.11 The following table summarises the changing profile of the private rented sector by property type between 1998 and Final Report 26

34 Table 3.4: accommodation type for households in the private rented sector, West Midlands, Accommodation Type & & & & & s % 000s % 000s % 000s % 000s % Detached House Semi Detached House Terrace House Purpose Built Flat Conversion with Flat With business Premises Total (Source: Survey of English Housing, CLG website, Notes: Data is for two years combined No definition is offered of the term With business premises but is taken to infer, for example, a flat over a shop and a live: work unit Key findings: Just over two fifths (42%) of private rented housing was terraced in 2006/2008. This had increased by 1% since 1998/2000. Just over one fifth (22%) of private rented housing was semi detached. This was the same as in the period 1998/2000. More than one fifth (12%) were detached homes in 2006/2008. This had decreased by 1% since 1998/ % were purpose built flats in 2006/2008. This had increased by 3% since 1998/ % were flat conversions. This had decreased by 4% since 1998/ % were premises with businesses. This had remained the same since 1998/2000. Further Profiling of the Private Rented Sector from the 2001 Census 3.13 The detailed tables underpinning these headlines are at Appendix One: Shared and unshared dwellings The majority of dwellings in 2001 were unshared (98.9%). This was slightly higher than the national figure for unshared dwellings (98.3%). Final Report 27

35 Worcester had the highest percentage (3.9%) of shared dwellings which is associated with the use of non-purpose-built accommodations by the University s students; Other local authorities with higher percentages of shared dwellings were Redditch (3.1%), Wolverhampton (2.5%) and Birmingham (1.8%). Types of private renting At 2001, households were housed in four categories of private renting: Private Landlord or Letting Agency 87.3% Employer of a Household Member 2.5% Relative or Friend of a Household Member 6.8% Other 3.5% Property types Two thirds (66.8%) of privately rented homes were in houses/bungalows compared to just over half (53.2%) in England. Almost one third (32.6%) in the West Midlands were in flats or maisonettes compared to 46.2% in England. A very small percentage in both the West Midlands (0.5%) and England (0.6%) were in caravans or other mobile or temporary structures. The highest local authority percentage in houses/bungalows was in Stokeon-Trent (78.6%) and the lowest in Warwick (53.1%). The highest local authority percentage in flats/maisonettes was in Warwick (46.7%) and the lowest in East Staffordshire (20.9%). The highest local authority percentage in caravans or other mobile or temporary structures was in South Staffordshire (4.2%) and the lowest in Cannock Chase and Redditch where there were none. Houses in Multiple Occupation (HMO) 3.14 The following table provides the most recent data of the number of verifiable and estimated HMOs by HMA and local authority. Final Report 28

36 Table 3.5: houses in multiple occupation for local authorities and HMAs at 1st April 2009 LA & HMA No. of verifiable HMOs % Estimated total of HMOs % Birmingham 1, , Lichfield Tamworth Solihull Central 1 1, , North Warwickshire Coventry , Rugby Nuneaton and Bedworth Central 2 1, , South Staffordshire Cannock Chase Wolverhampton , Sandwell Dudley Walsall Telford and Wrekin UA Central , Worcester 1, , Wychavon Wyre Forest Bromsgrove Malvern Hills Stratford-on-Avon Redditch Warwick 1, , South 2, , East Staffordshire Newcastle-under-Lyme Stafford Staffordshire Moorlands Stoke-on-Trent UA , North , Herefordshire , Shropshire West , Totals West Midlands 6,842 17,675 (Source: HSSA Return 2009) 3.15 Key findings: The total known HMOs for the West Midlands (6,482) at 1 April 2009 is considerably higher than the number of shared dwellings identified in the private rented sector at the time of the 2001 Census (1,494). Final Report 29

37 Two fifths (40.7%) of the verifiable HMOs in the West Midlands were located in South HMA, and the lowest percentage of verifiable HMOs were located in North (5.5%). One fifth (20.3%) of the West Midlands estimated HMOs were in Central Two HMA, and the lowest percentage (12.1%) of the West Midlands estimated HMOs were in the West HMA. Worcester had the highest number of verifiable HMOs (1217) in the West Midlands followed by Birmingham (1,193). The lowest number was in South Staffordshire which had no verifiable HMOs. Coventry had the highest number of estimated HMOs (3,180) followed by Birmingham with 2,153. The lowest number was in South Staffordshire (6). The Stratford upon Avon figure of zero is incorrect as it should include the verifiable HMOs therefore should be at least 179. What is the Distribution of the Private Rented Sector? 3.16 No comprehensive data is available to identify the current situation; the following table summarises private renting in the West Midlands at Final Report 30

38 Table 3.6: private rented housing in the West Midlands, 2001 Rented from: Rented from: Private landlord or Private landlord or Rented from: Area All Households letting agency letting agency % Other Birmingham 390,792 30, Lichfield 37,500 1, Tamworth 29,380 1, Solihull 80,930 2, Central 1 538,602 36, North Warwickshire 25,174 1, Coventry 122,353 10, Rugby 36,483 2, Nuneaton and Bedworth 48,683 2, Central 2 232,693 16, South Staffordshire 41,973 1, Cannock Chase 37,102 1, Wolverhampton 97,122 6, Sandwell 115,426 5, Dudley 124,988 4, Walsall 101,333 4, Telford and Wrekin 63,768 3, Central 3 581,712 27, Worcester 39,060 3, Wychavon 46,819 2, Wyre Forest 40,281 2, Bromsgrove 35,168 1, Malvern Hills 30,069 2, Stratford-on-Avon 47,202 3, Redditch 31,652 1, Warwick 53,356 5, South 323,607 21, East Staffordshire 42,717 2, Newcastle-under-Lyme 50,738 2, Stafford 50,025 3, Staffordshire Moorlands 38,799 1, Stoke-on-Trent 103,196 6, North 285,475 17, Herefordshire, County of 74,282 6, Shropshire 117,301 10, West 191,583 17, West Midlands 2,153, , England 20,451,427 1,798, (Source: KS18 Tenure, 2001 Census data, Neighbourhood Statistics website, Note: The category Other also includes some private renting 3.17 Key findings: Warwick had the highest percentage of households privately renting at 9.4% and Tamworth had the lowest percentage at 3.4%. Final Report 31

39 Birmingham had the largest numbers renting from a Private Landlord or Lettings agency (30,625) and Tamworth had the smallest numbers (1,007). Central Two HMA had the highest percentage (7.2%) of the HMAs renting with a private landlord or agency and Central Three had the lowest percentage (4.8%). Selly Oak in Birmingham, which is known to have a high number or students, had more than 2,000 households renting with a private landlord or agency. 14 wards had more than 1,000 households renting with a private landlord or agency; 10 were in Birmingham, two in Coventry, one in Wolverhampton and one in Stoke-on-Trent. A detailed table identifying concentrations of private renting by ward and Lower Level Super Output Area ids provided at Appendix Two The following maps identify the distribution of the private rented sector in the HMA areas at the time of the 2001 Census. Final Report 32

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46 What is the Pattern of Rents in the Private Sector? 3.19 There is no comprehensive dataset available which summarises private rents. The following table, which identifies average private sector rents by bed size for local authorities at 2008, has been derived from Rent Service data on rent determinations in Housing Benefit cases. This has been described by the Cambridge Centre for Housing and Planning Research as the most comprehensive dataset for private sector rents 2, but as it is drawn from Housing Benefit cases, it is more likely to be representative of rents in the lower half of the market. The weekly private rent consists of net rents and service charges eligible for Housing Benefit. The Rent Service is an Executive Agency of the Department for Work and Pensions (DWP). 2 Cambridge Centre for Housing and Planning Research. Guide to Local Rents 2009, see: Final Report 39

47 Table 3.7: average rents by local authority area for private rented properties by bed size, 2008 Local Authority Bedsit 1 bed 2 bed 3 bed 4 bed Rent No. Rent No. Rent No. Rent No. Rent No. Birmingham , , , , ,444 Coventry Dudley , , Sandwell , , ,129 Herefordshire Shropshire , , Solihull Cannock Chase East Staffordshire Lichfield Newcastle-under-Lyme South Staffordshire Stafford Staffordshire Moorlands Tamworth Stoke-on-Trent , , Telford and Wrekin , , Walsall , , Wolverhampton , , ,473 North Warwickshire Nuneaton and Bedworth Rugby Stratford-on-Avon Warwick Bromsgrove Malvern Hills Redditch Worcester City Wychavon Wyre Forest WM average/total , , , , ,715 National average/total , , , , ,407 (Source: Dataspring p 6, Rents and Rates of Return in the Housing Association and Private Sectors 1988/99 to 2007/08) Notes: Numbers for Coventry appear to be very low Final Report 40

48 3.20 Key findings: The data on private rents is for rent determinations in Housing Benefits cases from the Rent Service and these are representative of the lower half of the market. Coventry had the highest weekly rent for bedsits at compared with the West Midlands average of and Cannock Chase had the lowest at per week. Based on only a small number of properties, Coventry had the highest weekly rent for one-bedroom properties ( ); and Stoke-on-Avon the next highest at Stoke-on-Trent had the lowest weekly one bed private rent at Warwick had the highest two bed weekly private rent at Stokeon-Trent had the lowest rent at Wychavon had the highest three bed weekly private rent at Stoke-on-Trent had the lowest rent at Stratford-on-Avon had the highest four bed weekly private rent at Staffordshire Moorlands had the lowest four bed weekly private rent at Overcrowding in the Private Rented Sector 3.21 The following table identifies the extent of under-occupation and overcrowding in the private rented sector in the West Midlands. Unfortunately, comprehensive data is only available from the 2001 Census. Final Report 41

49 Table 3.8: occupancy rating for households privately renting or living rent free in local authorities and HMAs in the West Midlands, 2001 Area All Household Private Renting or Living Rent Free Under-occupied Plus Two or More % Plus One % Zero % Overcrowding Minus 1 or Less % Birmingham 46,155 13, , , , Lichfield 2,708 1, Tamworth 1, Solihull 4,246 1, , , Central 1 54,773 16, , , , North Warwickshire 2,263 1, Coventry 15,375 4, , , , Rugby 3,268 1, Nuneaton and Bedworth 3,664 1, , Central 2 24,570 7, , , , South Staffordshire 2,751 1, Cannock Chase 2, Wolverhampton 10,065 3, , , , Sandwell 10,784 3, , , , Dudley 8,533 2, , , Walsall 7,946 2, , , Telford and Wrekin 5,839 2, , , Central 3 48,515 16, , , , Worcester 4,326 1, , , Wychavon 4,076 1, , Wyre Forest 3,642 1, , , Bromsgrove 2, Malvern Hills 3,225 1, Stratford-on-Avon 5,393 2, , , Redditch 2, Warwick 6,694 1, , , , Final Report 42

50 Area All Household Private Renting or Living Rent Free Under-occupied Plus Two or More % Plus One % Zero % Overcrowding Minus 1 or Less % South 31,544 11, , , , East Staffordshire 4,365 1, , Newcastle-under-Lyme 3,945 1, , Stafford 4,886 2, , , Staffordshire Moorlands 2,927 1, Stoke-on-Trent 10,709 3, , , North 26,832 9, , , , Herefordshire, County of 9,797 4, , , Shropshire 15,932 7, , , , West 25,729 11, , , , West Midlands 211,962 72, , , , England 2,456, , , , , (Source: Standard Table S053 Occupancy Rating by Tenure and Household Composition, 2001 Census data, NOMIS website, nomisweb.co.uk.) Final Report 43

51 3.22 Key findings in relation to overcrowding (Occupancy Rating Minus One or Less): 11.9% of households living in privately rented or rent free accommodation were overcrowded in the West Midlands. This was a total of 25,242 households. (Not all rent free accommodation was privately rented.) Central One had the highest percentage (15.6%) of overcrowded households of the HMAs in the West Midlands and North had the lowest percentage (8.1%). The highest percentages of overcrowding in the privately rented or rent free accommodation sector in local authorities were in Birmingham (17.1%), Coventry (16.9%), Worcester (16.8%) and Warwick (15.6%). Local authorities with more than 1,000 overcrowded households living in private rented or rent free accommodation were: Birmingham 7,887 Coventry 2,595 Wolverhampton 1,403 Shropshire 1,228 Sandwell 1,159 Warwick 1, The following maps identify the distribution of overcrowding in the private rented sector in the HMA areas at the time of the 2001 Census. Final Report 44

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58 3.24 Key findings in relation to under-occupation (Occupancy Rating of Plus Two or More Rooms): More than one third (34.4%) of households in privately renting or rent free accommodation in the West Midlands were under-occupied when the occupancy rating of Plus Two or More Rooms was used. This was 72,835 households. (Not all those living rent free were in the private rented sector.) This was higher than the national rate of 28.5% under-occupancy of Plus Two or More Rooms in the privately rented or rent free accommodation. The West HMA had the highest percentage (44.4%) of under-occupancy of Plus Two or More Rooms in privately rented or living rent free accommodation of the HMAs, and Central One had the lowest percentage (29.6%). Shropshire had the highest percentage (44.5%) of under-occupancy of Plus Two or More Rooms in privately rented or living rent free accommodation for Local Authorities. Local authorities with more than 4,000 under-occupied households of Plus Two or More Rooms in privately rented or living rent free accommodation were: Birmingham 13,019 Shropshire 7,088 Herefordshire 4,331 Coventry 4,275 Who Lives in the Private Rented Sector? Household Types 3.25 There is no current data profiling who currently lives in the private rented sector. The following table identifies private renters by household type in West Midlands local authorities, the region and England Final Report 51

59 Table 3.9: types of household in the private rented sector in the West Midlands, HMAs and local authorities, 2001 Single Person Couples Families with Dependent Children Pensioners Other Total Households Area No. % No. % No. % No. % No. % No. Birmingham 10, , , ,508 Lichfield ,062 Tamworth ,149 Solihull ,400 Central 1 12, , , ,119 North Warwickshire ,778 Coventry 3, , , ,429 Rugby ,511 Nuneaton and Bedworth ,807 Central 2 5, , , ,525 South Staffordshire ,990 Cannock Chase ,874 Wolverhampton 2, , ,958 Sandwell 1, , ,043 Dudley 1, , ,085 Walsall 1, , ,950 Telford and Wrekin 1, , ,504 Central 3 9, , , ,404 Worcester 1, ,637 Wychavon ,029 Wyre Forest ,749 Bromsgrove ,529 Malvern Hills ,594 Stratford-on-Avon 1, , ,264 Redditch ,369 Warwick 1, , ,599 Final Report 52

60 Single Person Couples Families with Dependent Children Pensioners Other Total Households Area No. % No. % No. % No. % No. % No. South 7, , , ,770 East Staffordshire 1, , ,471 Newcastle-under-Lyme ,847 Stafford 1, ,749 Staffordshire Moorlands ,244 Stoke-on-Trent 2, , ,710 North 6, , , ,021 Herefordshire, County of 2, , , ,754 Shropshire 3, , , ,676 West 5, , , ,430 West Midlands 46, , , ,266 England 602, , , , , ,037,470 (Source: T08 Theme Table on Households, 2001 Census data, NOMIS website, Final Report 53

61 3.26 Key findings: 29.8% of private rented households in the West Midlands were single person households (excluding pensioners) which is typical for England; The local authority with the highest percentage of its private rented households in one person households was Redditch (40.8%) and the lowest was South Staffordshire (23.1%). 15.9% of private rented households in the West Midlands were couples which is slightly lower than the England average. The local authority with the highest percentage of its private rented households as couples was Stratford-on-Avon (23.9%) and the local authority with the lowest percentage was Coventry (11.5%). 11.2% of private rented households in the West Midlands were Pensioners which is close to the England average. The local authority with the highest percentage of its private rented households as pensioner households was South Staffordshire (18.1%) and the local authority with the lowest percentage was Telford and Wrekin (7.2%). More than one quarter (27.2%) of privately rented households in the West Midlands had dependent children which is above the England average. The local authority with the highest percentage of its private rented households having dependant children was Walsall (36.6%), and the local authority with the lowest percentage was Warwick (15.8%). 13.7% of privately rented households in the West Midlands were lone parent households. The local authority with the highest percentage of its privately rented households being lone parent households was Sandwell (21.1%); however, the local authority with the highest numbers of lone parent households in privately rented accommodation was Birmingham (4,685 households). Asylum seekers, refugees and the private rented sector 3.27 A significant reduction in the overall asylum seeker accommodation portfolio held by both local authority and private sector providers in the West Midlands Region has led to questions concerning the use of this accommodation. The tables in this sub-section address the housing circumstances of asylum Final Report 54

62 seekers. The following table identifies the distribution of asylum seekers in dispersed accommodation in the central West Midlands for Table 3.10: distribution of asylum seekers including dependents in dispersed accommodation, central West Midlands, Local Authority Dec 2008 March 2009 June 2009 Sep 2009 Birmingham 1,295 1,375 1,380 1,370 Coventry Dudley Sandwell Stoke-on-Trent Walsall Wolverhampton Total 3,910 3,940 3,850 3,655 (Source: Home Office Immigration Control Statistics, Note: Figures may not add to total due to rounding to nearest Key findings: The overall number of asylum seekers in dispersed accommodation had decreased between December 2008 and September 2009 by 255 households in the West Midlands to a total of 3,655 households. Asylum seekers appear to be concentrated in a few local authorities in the West Midlands. Asylum seekers in dispersed accommodation were located in the West Midlands as follows at September 2009: Birmingham 37.5% Wolverhampton 15.2% Coventry 14.6% Stoke-on-Trent 13.5% Dudley 9.7% Sandwell 6.6% Walsall 2.7% 3.29 The following table identifies the distribution of asylum seekers receiving subsistence support only in the central West Midlands for Final Report 55

63 Table 3.11: distribution of asylum seekers including dependents, subsistence only, central West Midlands, Local Authority Dec 2008 March 2009 June 2009 Sep 2009 Birmingham Coventry Sandwell Stoke-on-Trent Walsall Wolverhampton Other Total (Source: Home Office Immigration Control Statistics, Note: Figures may not add to total due to rounding to nearest 5. Table shows LAs with less than 15 cases as Other Excludes unaccompanied asylum seeking children supported by local authorities 3.30 Key findings: There were 290 households in the West Midlands receiving subsistence support only at September The numbers of asylum seekers receiving subsistence support only had reduced between December 2008 and September 2009 by 35 households. Asylum seekers receiving subsistence support only are located in the same main local authorities as those in dispersed accommodation with the exception of Dudley (although some may be included in the Other category). Birmingham had the highest percentage (39.6%) of asylum seekers receiving subsistence support only at September The following table provides data relevant to the private rented sector by identifying the previous accommodation of refugees for the period Final Report 56

64 Table 3.12: primary client group by previous accommodation, refugees West Midlands, , percentages Primary Client Group No data LA general needs tenancy RSL general needs tenant Private sector tenancy Tied housing or rented with job Supported housing Direct access hostel Housing for Older People Care home Hospital Prison Approved probation hostel 2003/ / / / / / /10 Interim Primary Client Group Children s home/ foster care B and B Short life housing Living with family Living with friends Any other temp accomm. Rough sleeping Other Women s refuge Foyer Home Office Asylum Support Owner occupation (private) Total 2003/ , / , / / / / /10 Interim (Source: Supporting People Client Records Final Report 57

65 3.32 Key findings: The total number of refugees in the Supporting People programme declined from 1,284 in 2003/04 to 473 in 2008/09. It is not clear whether this is due to an overall a reduction in the number of refugees in the West Midlands or in the number of refugees in the Supporting People programme. The dataset shows that almost one fifth (19.5%) of refugees in the Supporting People programme previously lived in private rented accommodation at the time of the last full dataset (2008/09). This percentage decreased from 23.5% in 2006/2007 to 19.5% in 2007/08 and then increased to 21.3% for the 2009/10 interim dataset. The percentage living in private rented accommodation prior to Supporting People had increased from 2.1% in 2003/04 to 23.5% in 2007/08. In the last full year s dataset 2008/09 and the 2009/10 interim dataset there is data for the percentage previously receiving Home Office Asylum Support. In 2008/09 this was 20.5% and in 2009/10 Interim dataset this was 28.9%. It is not clear whether this data was not recorded prior to 2008/09, or whether there were no refugees receiving this support prior to this time. It is also not clear whether any of those receiving this support could be in a private sector tenancy or not. Migrant workers 3.33 The following table and chart summarises DWP registered National Insurance Number (NINo) registrations of international migrant workers in local authorities in the West Midlands for the period These numbers could be affected by other people with work permits/business visas or by the movement of people who initially register in one area and move on to another, but no data sets are available in either case. Final Report 58

66 Thousands of NINO Registrations as at June 2009 (Source: DWP website, Thousands Final Report 59

67 Table 3.13: NI Registrations in the West Midlands, , thousands Local Authority Total Birmingham Coventry Sandwell Wolverhampton Herefordshire, County of Stoke-on-Trent Walsall Telford and Wrekin Warwick Stratford-on-Avon Rugby Shropshire Worcester Wychavon East Staffordshire Dudley Stafford Redditch Solihull Nuneaton and Bedworth Newcastle-under-Lyme Lichfield Wyre Forest Malvern Hills Tamworth Bromsgrove Staffordshire Moorlands North Warwickshire Cannock Chase South Staffordshire West Midlands (Source: NINO Registrations, DWP website, Final Report 60

68 3.34 Key findings: 265,520 migrant workers were registered in the West Midlands between 2002 and This is how many migrant workers would be living in the West Midlands if they had all remained since their initial registration. National Insurance (NI) registrations for migrant workers from 2002 to 2009 show that the largest number of migrant workers in the West Midlands registered in Birmingham (82,190). There are also high numbers of registrations in Coventry, Sandwell, Wolverhampton, Herefordshire, and Stoke-on-Trent (more than 94,000). Herefordshire is the rural location attracting the highest numbers of migrant workers in the West Midlands. Final Report 61

69 4. THE INTERMEDIATE HOUSING SECTOR IN THE WEST MIDLANDS: PATTERNS AND TRENDS EXECUTIVE SUMMARY The 2001 Baseline The intermediate housing sector includes both new-build housing such as shared ownership/homebuy and re-sale housing which includes shared ownership and Right to Buy sales. The most complete and continuous data relates to shared ownership completions and sales (including new-build properties and re-sales). The intermediate housing sector remains very much a minority or niche tenure. In 2001, there were 14,486 shared ownership properties in the West Midlands region which represented only 0.7% of all households. The highest proportionate level was in Stoke (1.1%) and the lowest in Redditch and Tamworth (0.3%). The impact of shared ownership/equity completions since 2001: 6,956 completions to 2009 represented a 48% growth since 2001 and implied an overall total of 21,442 units. The largest numeric growth was in Central One - especially Birmingham - and the smallest in the mixed urban and rural North HMA. The largest proportionate growth was in the more rural West HMA (68.5%) and the lowest in the North HMA (24.7%). Bromsgrove and East Staffordshire doubled their supply whilst Newcastleunder-Lyme, Staffordshire Moorlands and Stoke increased supply by 10% or less. Shared ownership/equity stock owned at 2009: At 31 March 2009, RSLs with 1,000 or more properties in the region owned 13,768 properties. Taking into account smaller housing associations, it is likely that the number of shared ownership properties has remained similar between 2001 and Shared ownership/shared equity properties owned by RSLs with stocks of 1,000+ at March 2009 ranged from the higher totals of: 3,943 in Birmingham; Final Report 62

70 813 in Coventry; 743 in Herefordshire; and 734 in Dudley. To the lowest totals of: 47 in Bridgnorth; 53 in Oswestry; 68 in Staffordshire Moorlands; and 91 in Newcastle-under-Lyme. The local authority which has seen the largest increase in shared ownership units since the 2001 Census is Shropshire (plus 1,175 units) and the local authority which has seen the largest fall is Stoke-on-Trent (minus 981 units). Intermediate housing sales: Between April 2001 and the first quarter of 2009, there were 15,068 intermediate housing sales of all types in the West Midlands, including resales, of which the main types were: 31% new build shared ownership/homebuy of different types (4,621); 2% were Open Market HomeBuy (246); 13% were re-sale shared ownership/homebuy (2,016); and 54% were Right to Buy/Acquire or outright sales (8,170). Types of properties built and required: Of all intermediate housing sales between 2006 and 2009: 65% were houses, and 33% flats and maisonettes. Of all new-build sales between 2006 and 2009: 58% of properties sold were houses or bungalows and 42% were flats/maisonettes; and 69% were one or mainly two bed; 28% three bed and 3% were four bed or larger. The following table compares new-build sales between 2006 and 2009 by bed size with the requirements of HomeBuy approved applicants (at November 2009) and suggests that the pattern of properties built broadly follows that of applicants requirements but there are mismatches for most properties. Final Report 63

71 Bed size New-build Sales ( ) Applicants (11.09) 1 bed 4% 8% 2 bed 65% 50% 3 bed 28% 39% 4 bed 3% 4% Who is Housed in the Intermediate Housing Sector? By gender It is interesting to note that 49% of HomeBuy approved applicants at November 2009 were men and 51% were women. By household type The intermediate housing sector has different functions in different localities with wide variations in the pattern of household types accommodated. At 2001, those living in the intermediate housing sector were constituted of the following household types: 24% single person: ranging from 12% in Wyre Forest to 32% in Stafford; 14% couples: ranging from 10% in Wolverhampton to 21% in Warwick; 35% families with dependent children: ranging from 19% in Stafford to 46% in Telford and Wrekin; 16% pensioners: ranging from 8% in Stoke-on-Avon to 29% in Rugby; and 14% lone parents: ranging from 12% in Wyre Forest to 32% in Stafford. 4% of HomeBuy approved applicants at November 2009 had one or more person in the household with a disability. 15% of HomeBuy approved applicants at November 2009 included a Key Worker in the household. By age The following table compares intermediate housing sales between 2006 and 2009 by age band with HomeBuy approved applicants (at November 2009) in the context of the total West Midlands population. It suggests that the sector has been working well for younger age groups, especially under 30, but that either older applicants are less successful or the age of applicants is increasing. Final Report 64

72 Age band Age - West Midlands Sales ( ) Applicants (11.09) % 20% 29%(18-29) % 24% % 37% 47% (30-39) % 11% 23% (40-49) + 2% (50-59) % 2% 2% (60+) % 2% 0% By ethnicity The following table compares intermediate housing sales between 2006 and 2009 by broad categories of ethnicity with HomeBuy approved applicants (at November 2009) in the context of the total West Midlands population. It suggests that the sector has been working well for Black groups but less well for Asian groups. Ethnicity Age - West Midlands Sales ( ) Applicants (11.09) White 89% 86% 79% Black 2% 4% 9% Asian 7% 3% 8% By income and employment The following table compares intermediate housing sales between 2006 and 2009 by single and joint incomes with HomeBuy approved applicants (at November 2009). The variation between income levels for single and joint income sales is to be expected in the different cost of smaller and larger properties. The table suggests that the sector has been working well for lower income single income purchasers, and middle income joint purchasers but that either higher income applicants are less successful or their income level is increasing. Income band Single Income Sales Joint Income Sales Applicants (11.09) Under 20k 57% 8% 32% 20-35k 42% 71% 45% 35k+ 1% 21% 23% 85% of sales were to people in full-time work (30 hours+); 5% to people in parttime work; 7% to retired people; and 2% to those with a disability/long terms sickness. By previous tenure The following table compares intermediate housing sales between 2006 and 2009 by previous tenure/housing circumstances with HomeBuy approved applicants (at November 2009). The table identifies that the sector has been working well for those living with family/friends and private renters, but that it is working much less well for social renters. Relationship breakdown is a likely explanation for the previous home owning applicants and purchasers. Final Report 65

73 Previous tenure Sales Applicants Living with family/friends 39% 34% Private renting 30% 33% Social renting 17% 7% Owner occupation 12% 6% Structure and Data Sources 4.1 This section addresses a series of questions fundamental to understanding the role and potential of the intermediate housing sector in the West Midlands and which provide a baseline and context for the more detailed archetypal case studies to follow. The questions are: what is the profile of the intermediate housing sector; what is the distribution of the intermediate housing sector; and who lives in the intermediate housing sector? 4.2 Unfortunately, and largely as a result of data being derived for different purposes, to different definitions and to different timescales, there is inconsistency between the main sources which consist of: HCA Outturn Reports - in relation to completions; HomeBuy Agent Returns - in relation to purchasers; and CORE data - in relation to sales. What are Intermediate Housing Products? 4.3 One of the main problems in analysing the intermediate housing sector is the frequency with which this term and shared ownership/equity housing are used interchangeably. Whilst intermediate housing consists primarily of shared ownership and shared equity housing - both of which were introduced to help people who are in housing need who could not afford to buy a home outright - data for the sector includes a wide range of products. The emphasis has been placed here on purpose-built products (summarised below) which have supplemented the dwelling stock. Intermediate housing data may also include local authority Right to Buy and housing association Right to Acquire properties. 4.4 In terms of purpose-built intermediate housing, priority is normally given to existing local authority or housing association tenants; those on local authority or housing association waiting lists; Key Workers (for example, nurses and teachers), and other first time buyers (with a combined household income of Final Report 66

74 up to 60,000 per year who are unable to purchase a home without assistance). New Build HomeBuy 4.5 New Build HomeBuy, householders purchase their home as a leasehold property on shared ownership terms. The purchaser will buy an initial share of the property of between 25 per cent and 75 per cent; this is usually the maximum they can afford to buy and is invariably funded by taking out a mortgage. While the minimum share that can be bought may vary, the minimum initial share for schemes funded by the Homes and Community Agency (HCA) is 25 per cent. The share owned by the leaseholder can be varied by 'staircasing'. Generally, staircasing will be upward, thereby increasing the share owned. In exceptional circumstances (as a result of financial difficulties, and where the alternative is repossession), and at the discretion of the housing association, shared owners may staircase down, thereby reducing the share they own (see Flexible Tenure below). HomeBuy Direct 4.6 HomeBuy Direct is a shared equity scheme designed to help first time buyers into affordable home ownership. The scheme also helps participating developers by enabling more first time buyers to purchase their newly built properties. 4.7 HomeBuy Direct is offered on specific new build properties brought forward by developers. The purchaser takes out a mortgage to cover at least 70 per cent of the purchase price and this is topped up with an equity loan covering up to 30 per cent of the price. The maximum value of homes purchased through HomeBuy Direct is 300, The equity loan is co-funded by the HCA and the development partner. The loan is offered without charge until year five when a charge of 1.75% per annum is introduced. The loan is repayable on sale/25 years. The total amount that the purchaser pays back on the equity loan component corresponds to the property s market value at the time of repayment. Intermediate Rent to HomeBuy 4.9 A recent product developed in the current economic climate offers householders an option to purchase a New Build HomeBuy property in stages. In the scheme, the householder pays an intermediate rent which is no more than 80 per cent of the market rent for up to five years. They use the time that they are paying the reduced rent to save up for a deposit in order to obtain a mortgage for the home they are living in. At the end of the intermediate rent period the householder is to buy their home through the New Build HomeBuy shared ownership scheme. It is anticipated that the Final Report 67

75 property should be purchased within three years but it may be up to a maximum of five years where there are sound reasons for doing so The standard New Build HomeBuy eligibility criteria apply to this product. This includes households earning less than 60,000, in housing need and who could not afford to buy a suitable property on the open market without assistance. Priority will normally be given to existing public sector tenants, those on local authority or housing association waiting lists in priority housing need and key public sector workers. Shared Ownership for the Elderly 4.11 This scheme is basically the same as new Build HomeBuy, and is only for people aged 55 or over. Shared Ownership for the Elderly is designed to assist eligible applicants to purchase up to a maximum 75 per cent of a newly built property on shared ownership terms. Home Ownership for People with Long Term Disabilities 4.12 Home Ownership for People with Long Term Disabilities (HOLD) is a tailored product for purchasers whose specific needs are not met by the standard HomeBuy products. The scheme enables eligible applicants to select a home on the open market, which is then purchased by a housing association and sold to the applicant on shared ownership terms. Where people have no financial resources, it is sometimes possible to obtain help from the Income Support system, if buying would be better suited to the individual's needs. Social HomeBuy 4.13 The Social HomeBuy (SHB) scheme was introduced in April 2006 and allows Registered Social Landlords (RSLs) and local authorities to dispose of rented housing at a discount on shared ownership terms, to its secure and assured tenants who occupy properties eligible for the scheme, where landlords choose to participate. Homes can be bought on a shared ownership basis with a minimum share of 25 per cent and in minimum 10 per cent tranches up to 100 per cent. The home can also be bought outright at the outset. Homes cannot be purchased through SHB in areas designated as rural under Section 17(1)(b) of the Housing Act Social HomeBuy discounts are between 9,000 and 16,000 depending on the location. The amount of discount received will be in proportion to the share of the property bought. Discount is now available for both initial and subsequent shares. The tenant can then purchase further shares in the home and staircase up to a 100 per cent ownership of the home The take up of the product has been low and has been attributed to high property prices proportionate to discounts, the costs being much higher than Final Report 68

76 social rents and that even at 25 per cent purchase a tenant immediately becomes responsible for all repairs and maintenance. Flexible tenure: reverse staircasing 4.16 Reverse staircasing on the following terms is a permitted use of the Recycled Capital Grant Fund (RCGF). It is a 'safety-net' to enable a shared owner to remain in their home, despite changes in their financial circumstances, and is an option of last resort where the leaseholder has got into or is about to get into mortgage arrears and is at risk of losing their home. Shared owners have no right to reverse staircasing. Reverse staircasing is defined as: the repurchase of equity by a housing association from a shared owner in difficulty, but not necessarily in arrears, with his/her mortgage repayments; or in the case of property specifically built as Shared Ownership for the Elderly, the repurchase of equity to pay for essential repairs or maintenance if the leaseholder cannot afford to pay for the work Equity re-purchase should be at a level at which the shared owner can afford the lower payments. This can include repurchasing sufficient equity to clear the mortgage, pay off the arrears of interest and principal on the mortgage, and reduce payments to nil. There is also an option of full repurchase under which the leaseholder becomes an assured tenant of the housing association. However, once the property has staircased to 100 per cent or been taken into possession by the lender, flexible tenure ceases to be an option. What is the Profile of the Intermediate Housing Sector? The Starting Point: shared ownership in As a starting point, the following map identifies the level of shared ownership around the region in 2001 and identifies both the extreme patchiness of provision and the extent of the areas in which no or very few properties had been provided. Final Report 69

77 4.19 The following table summarises the size and local authority location of the shared ownership sector in Final Report 70

78 Table 4.1: shared ownership for local authorities and HMAs in the West Midlands, 2001 Area Households Shared ownership: Shared ownership: No. % Birmingham 390,792 3, Lichfield 37, Solihull 80, Tamworth 29, Central 1 538,602 4, Coventry 122, North Warwickshire 25, Nuneaton and Bedworth 48, Rugby 36, Central 2 232,693 1, Cannock Chase 37, Dudley 124, Sandwell 115, South Staffordshire 41, Telford and Wrekin 63, Wolverhampton 97, Walsall 101, Central 3 581,712 3, Bromsgrove 35, Malvern Hills 30, Redditch 31, Stratford-on-Avon 47, Warwick 53, Worcester 39, Wychavon 46, Wyre Forest 40, South 323,607 1, East Staffordshire 42, Newcastle-under-Lyme 50, Stafford 50, Staffordshire Moorlands 38, Stoke-on-Trent 103,196 1, North 285,475 2, Herefordshire, County of 74, Shropshire 117, West 191,583 1, West Midlands 2,153,672 14, England 20,451, , (Source: KS18 Tenure, 2001 Census data, Neighbourhood Statistics website, Note: The Category Other includes some private renting Final Report 71

79 4.20 Key findings: There was a total of 14,486 shared ownership households in the West Midlands which was 0.7% of households, the same as the national percentage. The largest sub-regional proportion of shared ownership properties was in Central One (0.8% of total households). The smallest sub-regional proportion of shared ownership properties was in South HMA (0.6% of the total households). The local authority with the highest proportion of shared ownership properties was Stoke-on-Trent (1.1%), though the local authority with the highest numbers of shared ownership properties was Birmingham (3,438). Local authorities with 500 or more shared ownership properties were: Birmingham 3,438 Stoke-on-Trent 1,148 Sandwell 835 Coventry 821 Dudley 700 Walsall 692 Herefordshire 640 Shropshire 630 Wolverhampton 538 Local authorities with less than 100 shared ownership properties were: Tamworth 99 Redditch As emphasised in the opening section of this chapter, the distribution of shared ownership housing was very patchy in 2001 with most areas having none at all. Only twenty-one wards had more than 100 shared ownership households; fifteen in Birmingham; two in Dudley; and one in Stoke-on-Trent, Coventry, Walsall and Sandwell. Cabin Lane, Oswestry had the highest percentage (5.31%) of wards with more than 50 shared ownership households. Full details by ward are provided at Appendix Four Birmingham had the highest number and proportion of shared ownership households, but as the following map demonstrates, there were concentrations in no more than ten wards. Final Report 72

80 Final Report 73

81 4.23 The following maps show the distribution of shared ownership in the HMAs at the time of the 2001 Census: Final Report 74

82 Final Report 75

83 Final Report 76

84 Final Report 77

85 Final Report 78

86 Final Report 79

87 What has been the Trend in Shared Ownership/Equity Completions Since 2001? 4.24 The following table summarises annual shared ownership and shared equity completions between 2001 and 2009 Table 4.2: Shared Ownership and Shared Equity completions, Local Authority 01/2 02/3 03/4 04/5 05/6 06/7 07/8 08/9 Totals Birmingham ,118 Bridgnorth Bromsgrove Cannock Chase Coventry Dudley East Staffordshire Herefordshire UA Lichfield Malvern Hills Newcastle-under-Lyme North Shropshire North Warwickshire Nuneaton & Bedworth Oswestry Redditch Rugby Sandwell Shrewsbury & Atcham Solihull South Shropshire South Staffordshire Stafford Staffs. Moorlands Stoke-on-Trent UA Stratford-on-Avon Tamworth Telford & Wrekin UA Walsall Warwick Wolverhampton Worcester Wychavon Wyre Forest ,067 1,113 1,414 1,437 6,956 (Source: HSSA Returns) Final Report 80

88 4.25 Key findings: During the period 2001 to 2009, the largest number of shared ownership and shared equity completions was in Birmingham (2,118). Other local authorities with more than 300 (but less than 400) completions between 2001 and 2009 were Shropshire, Herefordshire, Coventry and Solihull. Local authorities with less than 50 completions during the period 2001 to 2009 were North Warwickshire, Newcastle-under-Lyme and Staffordshire Moorlands. What has been the Impact of Shared Ownership/Equity Completions Since 2001? 4.26 The following table reviews the impact of shared ownership and shared equity completions between 2001 and 2009 compared with the 2001 baseline total. Final Report 81

89 Table 4.3: shared ownership and shared equity completions, Local Authority Total 2001 Completions % of total completions % growth since 2001 Birmingham 3,438 2, Lichfield Tamworth Solihull Central 1 4,115 2, North Warwickshire Coventry Nuneaton and Bedworth Rugby Central 2 1, Cannock Chase Dudley Sandwell South Staffordshire Telford and Wrekin UA Walsall Wolverhampton Central 3 3,598 1, Bromsgrove Malvern Hills Redditch Stratford-on-Avon Warwick Worcester City Wychavon Wyre Forest South 1,980 1, East Staffordshire Newcastle-under-Lyme Stafford Staffordshire Moorlands Stoke-on-Trent UA 1, North 2, Herefordshire UA Shropshire UA West 1, Total 14,486 6, % 48.0 (Source: KS18 Tenure, 2001 Census data and HSSA Returns) 4.27 Key findings: Completions to 2009 represented a 48% growth compared with the 2001 stock; The largest numeric growth was in Central One - especially Birmingham - and the smallest in the mixed urban and rural North HMA; Final Report 82

90 The largest proportionate growth was in the more rural West HMA (68.5%) and the lowest in the North HMA (24.7%); Bromsgrove and East Staffordshire doubled their supply whilst Newcastleunder-Lyme, Staffordshire Moorlands and Stoke increased supply by 10% or less. Shared Ownership and Shared Equity Stock in 2001 and The following table summarises total shared ownership and shared equity properties in 2001 and owned by housing associations with 1,000 properties or more by local authority in Final Report 83

91 Table 4.4: shared ownership and shared equity units in 2001 and properties owned by larger RSLs in the West Midlands, 2009 Local Authority : % of total % change since 2001 Birmingham 3,438 3, Lichfield Tamworth Solihull Central 1 4,115 4, North Warwickshire Coventry Nuneaton and Bedworth Rugby Central 2 1,430 1, Cannock Chase Dudley Sandwell South Staffordshire Telford and Wrekin UA Walsall Wolverhampton Central 3 3,598 2, Bromsgrove Malvern Hills Redditch Stratford-on-Avon Warwick Worcester City Wychavon Wyre Forest South 1,980 2, East Staffordshire Newcastle-under-Lyme Stafford Staffordshire Moorlands Stoke-on-Trent UA 1, North 2, Herefordshire UA Shropshire UA West 1,270 1, Total 14,486 13, (Source: KS18 Tenure, 2001 Census data and DataSpring from RSR Returns) 4.29 Key findings: There were a total of 13,768 Shared Ownership units owned by RSLs with more than 1,000 owned/managed units in the West Midlands at 31 March Despite shared ownership developments between 2001 and 2009, the 2009 total is lower than the 2001 Census data figure of 14,486 units. This Final Report 84

92 may be partly due to the number of households who have staircased out, and partly due to the exclusion of RSLs with less than 1,000 units. Local authorities with 500 or more shared ownership/equity units in 2009 are: Birmingham 3,943 Coventry 813 Herefordshire 743 Dudley 734 Sandwell 690 Solihull 513 Walsall 595 Warwick 500 Local authorities with less than 100 shared ownership units in 2009 are: Bridgnorth 47 Newcastle-under-Lyme 91 North Shropshire 97 Oswestry 53 Staffordshire Moorlands 68 Compared on this basis: there has been considerable growth in shared ownership/equity since 2001 in Central One and South HMAs; but falls in stock in Central 3 and North HMAs. The local authority which has seen the largest increase in shared ownership units since 2001 Census is Birmingham (+505). The local authority which has seen the largest fall in shared ownership units since 2001 Census is Stoke-on-Trent (-925). What has been the Trend in All Intermediate Housing Sales Since 2001? 4.30 The following table widens the focus to include all intermediate housing sales for the period 2001 to Final Report 85

93 Table 4.5: sales type from 2001/2002 to the end of the first quarter of 2009/2010 in the West Midlands Type New-build Re-sale Other Totals No. % No. % No. % No. % DIY Shared Ownership Shared Ownership 2, , , Shared Ownership for the Elderly Leasehold Schemes for the Elderly Other Shared Ownership Voluntary Purchase Grant Right to Acquire/Buy , , Outright sales (new build or converted) Rent to Mortgage Preserved Right to Buy , , Starter Home Initiative Home Ownership for People With Long Term Disabilities New Build HomeBuy , , Open Market HomeBuy Other HomeBuy Schemes Total 3, , , , (Source: CORE Sales Tenant Services Authority) 4.31 Key findings: There were 15,068 intermediate housing sales in the West Midlands between 2001 and the end of the first quarter of More than half (51.4%) of these were Right to Buy/Acquire sales (including Preserved Right to Buy). Almost one third (32.9%) were shared ownership sales (including those for the elderly, DIYSO, and other shared ownership). 11.6% were various types of HomeBuy schemes. 3% were outright sales, 0.9% were leasehold schemes for the elderly, and 0.3% were home ownership for people with long term disabilities. The remainder were Voluntary Purchase Grant, Starter Home Initiative and Rent to Mortgage. What is the Price Range of Properties Sold in the Intermediate Housing Sector Since 2001? 4.32 The following table focuses on the purchase price of properties between 2001 and Final Report 86

94 Table 4.6: CORE sales data from 2001/2002 to end of first quarter of 2009/2010 Purchase Price No. % Under 70,000 6, ,000 to 79,999 1, ,000 to 89,999 1, ,000 to 99,999 1, ,000 to 109, ,000 to 119, ,000 to 129, ,000 to 139, ,000 to 149, ,000 to 159, ,000 to 169, ,000 to 179, ,000 to 189, ,000 to 199, ,000 plus Total 15, (Source: CORE Sales Tenant Services Authority) 4.33 Key findings: Nearly two fifths (39.9%) of CORE Sales between 2001/02 and the end of the first quarter of 2009/10 were under 70,000. Just over one fifth (22.8%) were sold for between 70,000 and 99,999, therefore more than three fifths (62.7%) were sold for under 100,000. More than one third (36.4%) were sold for between 100,000 and 199,999, and a small percentage (0.9%) were sold for 200,000. Detailed Trends in the Intermediate Housing Sector, 2006 to This sub-section focuses on the last three years for which data is available to provide a profile of the recent development of the intermediate housing sector in the region. What types of products were provided between 2006 and 2009? 4.35 The following table identifies the relative balance between new and re-sales for the period 2006 to Re-sales apply to shared ownership, Leasehold Scheme for the Elderly (LSE), some HomeBuy schemes and Home Ownership for People with Long Term Disabilities. Final Report 87

95 Table 4.7: CORE sales for the West Midlands 3 years data 1/4/2006 to 31/3/ re-sales and other Re-sale No. % Yes No 2, Not applicable 1, Totals 4, (Source: CORE data) 4.36 Key findings: About one in six (15.8%) of CORE sales were re-sales between 2006 and 2009 which is indicative of the development of the extent to which re-sale properties are being traded; and half (50.1%) of CORE sales were by implication new-build and a further 34.2% were classed as not applicable such as initial Right to Buy/Acquire sales The following table summarises all sales by scheme type for the period 2006 to Table 4.8: all sales (new-build, initial and re-sales) by scheme type for the West Midlands, 1/4/2006 to 31/3/2009 Type No % Shared Ownership 2, Shared Ownership for the Elderly Leasehold Schemes for the Elderly Any other Shared Ownership Right to Acquire Outright sales (new build or converted) Preserved Right to Buy Home Ownership for People with Long Term Disabilities New Build HomeBuy Open Market HomeBuy Other HomeBuy schemes Total 4, (Source: CORE data) 4.38 Key findings: More than half of all sales (53.6%) were shared ownership (including Shared Ownership for the Elderly and other shared ownership schemes). Just over one fifth (21.2%) were Right to Buy/Acquire schemes (including Preserved Right to Buy). Final Report 88

96 16.0% were HomeBuy sales. 6.9% were Outright Sales. 1.8% were LSE Schemes The following table considers scheme type by type of sales for the period 2006 to Table 4.9: type of scheme for the West Midlands, 1/4/2006 to 31/3/2009 New Build Re-sale Initial Type No. % No. % No. % Shared Ownership 1, Shared Ownership for the Elderly Leasehold Schemes for the Elderly Any other Shared Ownership Right to Acquire/Buy Outright sales (new build or converted) Preserved Right to Buy Home Ownership for People with Long Term Disabilities New Build HomeBuy Open Market HomeBuy Other shared equity HomeBuy schemes Total 2, , (Source: CORE data) 4.40 Key findings: Of new build sales, more than three quarters (78%) were shared ownership (including schemes for the elderly and other shared ownership); one fifth (20.1%) were HomeBuy and 1.1% were Homeownership for People with Disabilities Almost all re-sales, were shared ownership (including schemes for the elderly and other shared ownership). What Types of Properties were Sold Between 2006 and 2009, and Who were the Main Providers? 4.41 The following table summarises the type of properties for all sales (new-build, re-sale and initial sales) for the period 2006 to Final Report 89

97 Table 4.10: properties sold for the West Midlands, 1/4/2006 to 31/3/2009 by property type Property Type No. % Flat/Maisonette 1, Bedsit House 2, Bungalow Other Total 4, (Source: CORE data) 4.42 Key findings: Nearly two thirds (65.4%) were houses; almost one third (32.5%) were flats/maisonettes; and 1.8% were bungalows and 0.2% were other property types The following table summarises the bed size of all properties sold for the period Table 4.11: CORE Sales for the West Midlands 3 years data 1/4/2006 to 31/3/ number of bedrooms Bedrooms No. % One Two 2, Three 1, Four Five Six Total 4, (Source: CORE data) 4.44 Key findings: More than half (54.7%) of CORE sales were of two bed properties. More than one third (35.4%) were of three bed properties. 7.4% were of one bed properties. 2.4% were of four plus bed properties The following is a key table as it identifies CORE new-build sales by both property type and bed size for the three years to 31 March Final Report 90

98 Table 4.12: property type by number of bedrooms for new build 1/4/2006 to 31/3/2009 No Bedrooms Property 1 Bed 2 Beds 3 Beds 4 Beds 5 Beds 6 Beds Total Type N No. % No. % No. % No. % No. % o. % No. % Flat/ Maisonette House , Bungalow Other Total no , , Total % 4.1% 65.0% 27.5% 3.0% 0.3% 0.1% 100% (Source: CORE data) 4.46 Key findings: 58% of properties sold were houses or bungalows and 42% were flats/maisonettes; 69% were one or mainly two bed; 28% three bed and 3% were four bed or larger The following table summarises the beds required by approved HomeBuy applicants at November 2009 and comparison is made with the pattern of new-build sales between 2006 and Table 4.13: beds required by approved HomeBuy applicants, West Midlands, November 2009 Beds required Coventry & Warks Herefords & Worcs. Staffs. & Shrops. Central West Midlands Total no. Total % Studio , Other Totals ,074 2, % (Source: HomeBuy data) 4.48 Key findings: 8% of HomeBuy applicants required one bed properties which compares with 4% of sales; nearly half required two bed properties which compares with 65% of sales; Final Report 91

99 39% required three bed properties which compares with 28% of sales; and 4% required four bed properties or larger - which compares with 3% of sales. The closest fit between registered requirement and sales is for four bed properties or larger; the proportionate requirement for two bed properties was lower than of sales pattern and the reverse for three bed properties The following table summarises the purchase price of properties sold for the period 2006 to Table 4.14: purchase price, CORE sales for the West Midlands, 1/4/2006 to 31/3/2009 Purchase Price No. % Under 70, ,000 to 79, ,000 to 89, ,000 to 99, ,000 to 109, ,000 to 119, ,000 to 129, ,000 to 139, ,000 to 149, ,000 to 159, ,000 to 169, ,000 to 179, ,000 to 189, ,000 to 199, ,000 plus Total 4, (Source: CORE data) 4.50 Key findings: 4.6% of CORE sales between 2006 and 2009 were for properties priced at under 70,000. This compares with 39.9% for the longer period from 2001/02 to the end of the first quarter of Nearly one fifth (19.8%) were sold for between 70,000 and 99,999, and therefore nearly one quarter (24.4%) were sold for under 100,000. This compares with 62.7% for the longer period from 2001/02 to the end of the first quarter of Nearly three quarters (73.3%) were sold for between 100,000 and 199,999 between 2006 and This compares with 36.4% for the longer period from 2001/01 to the end of the first quarter of Final Report 92

100 2.3% were sold for 200,000 or more between 2006 and This compares with 0.9% for the longer period from 2001/02 to the end of the first quarter of Of the 4,410 intermediate housing sales recorded, fifteen RSLs accounted for more than three quarters; Bromford Carinthia had the highest number of CORE sales (620) and Waterloo and Mercian Housing Associations sold more than 300. Full details are provided at Appendix Three. Where has there been Most Activity Since 2006? 4.52 The following table focuses on the more recent period and identifies the number of sales (new sales and re-sales) by local authority for the period 2006 to Table 4.15: the location of properties sold in the West Midlands, 1/4/2006 to 31/3/2009 Local Authority No. % Birmingham Walsall Coventry Telford and Wrekin Herefordshire East Staffordshire Worcester Stratford-on-Avon Dudley Rugby Warwick Wyre Forest Shropshire Bromsgrove Newcastle-under-Lyme Sandwell Stafford Solihull Lichfield Wolverhampton Nuneaton & Bedworth Malvern Hills Redditch Stoke-on-Trent Cannock Chase Wychavon Tamworth North Warwickshire South Staffordshire Staffordshire Moorlands Totals 4, (Source: CORE data) Final Report 93

101 4.53 Key findings: Between 2006 and 2009, more than one fifth (21.9%) of West Midlands CORE sales were in Birmingham (949 sales). The number and proportion are much higher than for other local authorities. 7.3% of sales were in Walsall and 7.0% were in Coventry (more than 300 but less than 400 sales). Telford and Wrekin had 5.5% of sales (between 200 and 300). None of the remaining local authorities had more than 4% of total sales, and all had less than 190 sales each. Local authorities with less than 50 sales were: Wychavon Tamworth North Warwickshire South Staffordshire Staffordshire Moorlands 4.54 The following table focuses exclusively on new sales by local authority for the period 2006 to Final Report 94

102 Table 4.16: location of new properties sold in the West Midlands, 1/4/2006 to 31/3/2009 Local Authority No. % Birmingham Coventry Walsall Telford & Wrekin East Staffordshire Herefordshire Rugby Worcester Wyre Forest Newcastle-under-Lyme Stratford-on-Avon Warwick Bromsgrove Dudley Stafford Shropshire Sandwell Solihull Lichfield Nuneaton & Bedworth Wolverhampton Redditch Malvern Hills Cannock Chase North Warwickshire Tamworth Stoke-on-Trent Wychavon South Staffordshire Staffordshire Moorlands Totals 3, (Source: CORE data) 4.55 Key findings CORE sales 2006 to 2009: The table above excludes the re-sales but includes other categories such as shared ownership, HomeBuy and Right to Buy/Acquire. Birmingham had by far the highest proportion of sales in the West Midlands: 21.3% or 791 sales. Coventry had 7.9% of sales, Walsall had 7.7% and Telford and Wrekin 6.2%, each between 200 and 300 sales. The remaining local authorities each had less than 5% or 200 sales. Final Report 95

103 Local authorities with less than 50 sales each were: Malvern Hills Cannock Chase North Warwickshire Tamworth Stoke-on-Trent Wychavon South Staffordshire Staffordshire Moorlands 4.56 The following maps show the location and numbers of CORE sales (excluding re-sales) between 2006 and Final Report 96

104 Final Report 97

105 Final Report 98

106 Who Lives and Who Wants to Live in the Intermediate Housing Sector? 4.57 Where possible, this section reviews those living in intermediate housing purchasers compared with approved HomeBuy applicants A note in relation to CORE data and the use of Person 1 and Person 2: the Tenant Services Authority (TSA) collects CORE lettings data for each person in a household up to six people with Person 1 being the main householder. Separate tables have been provided for Person 1 and Person 2 only. It is possible to cross-reference this information but the tables would become more complex, for example, a two way table showing Person 1 by Person 2 Economic Status or Age, etc. Household types 4.59 The following table summarises those household types living in intermediate housing by HMA and local authority. Final Report 99

107 Table 4.17: types of household in the shared ownership sector in the West Midlands local authorities Single Person Couples Families with Dependent Children Pensioners Other Area No. % No. % No. % No. % No. % Total SO H/holds Birmingham , ,438 Lichfield Tamworth Solihull Central 1 1, , ,118 North Warwickshire Coventry Rugby Nuneaton & Bedworth Central ,427 South Staffordshire Cannock Chase Wolverhampton Sandwell Dudley Walsall Telford and Wrekin Central , ,599 Worcester Wychavon Wyre Forest Bromsgrove Malvern Hills Final Report 100

108 Single Person Couples Families with Dependent Children Pensioners Other Area No. % No. % No. % No. % No. % Total SO H/holds Stratford-on-Avon Redditch Warwick South ,982 East Staffordshire Newcastle-under-Lyme Stafford Staffordshire Moorlands Stoke-on-Trent ,147 North ,092 Herefordshire Shropshire West ,270 West Midlands 3, , , , , ,486 England 31, , , , ,693 (Source: T08 Theme Table on Households, 2001 Census data, NOMIS website, Final Report 101

109 4.60 Key findings: Of those living in shared ownership in the West Midlands in 2001, 24.4% were single person households (excluding one person pensioners) living. This was slightly higher than the national percentage of 23.4%. One person households were over-represented in the shared ownership sector in the West Midlands compared to the overall percentage of one person households in the West Midlands (14.5%) and England (15.7%). The local authority with the highest percentage of its shared ownership households being one person households was Stafford (31.9%) and the local authority with the lowest percentage was Wyre Forest (12.4%). 14.0% of households in the shared ownership sector in the West Midlands were couples which was close to the national percentage of 14.4%. Couples were under-represented in the shared ownership sector in the West Midlands compared to the percentage for overall households in the West Midlands (17.5%) and England (17.8%). The local authority with the highest percentage of its shared ownership households being couples was Worcester (20.8%) and the local authority with the lowest percentage was East Staffordshire (9.7%). 16.3% of shared ownership households in the West Midlands were pensioner households. This was higher than the national percentage of 14.3%. Pensioner households were under-represented in the shared ownership sector in the West Midlands compared to the overall percentage of pensioner households in the West Midlands (23.8%) and England (23.7%). The local authority with the highest percentage of its shared ownership households being pensioner households was Rugby (29.2) and the local authority with the lowest percentage was Stratford-on-Avon (7.7%). More than one third (35.3%) of shared ownership households in the West Midlands had dependent children which is very close to the national percentage of 35.5%. Households with dependent children were over-represented in the shared ownership sector in the West Midlands compared to the overall percentage of households with dependent children in the West Midlands (30.7%) and England (29.4%). Final Report 102

110 The local authority with the highest percentage of shared ownership households having dependent children was Telford and Wrekin (46.4%); and the local authority with the lowest percentage was Stafford (19.1%). 14% of shared ownership households in the West Midlands were lone parent households. The local authority with the highest percentage of its shared ownership households being lone parent households was Coventry (19.4%); however, the local authority with the highest numbers of lone parent households in shared ownership accommodation was Birmingham (556 households). Age range 4.61 The following table summarises the age of Person 1 purchasers for the three years 2006 to Table 4.18: age in bands, Person 1, CORE sales data for West Midlands 1/4/2006 to 31/3/2009 compared with 2001 Census West Midlands and England Age CORE Sales Age West Midlands Age England Age Person 1 No. % No. % No. % 18 to 24 years , ,130, to 29 years , ,268, to 44 years 1, ,151, ,127, to 59 years ,005, ,279, to 64 years , ,391, years plus , ,808, Totals 3, ,034, ,005, (Source: CORE Sales Tenant Services Authority and 2001 Census data) 4.62 Key findings: Just over four fifths (81.5%) of Persons 1 in CORE sales households were under 45 years. This was an over-representation when compared with the percentage in both the West Midlands (47.5%) and England (48.8%) at the time of the 2001 Census. Almost one fifth (19.8%) of Persons 1 in CORE sales households were 18 to 24 years olds. This was higher than the percentage of 18 to 24 year olds in both the West Midlands (10.9%) and England (10.9%). Nearly one quarter (24.3%) of Persons 1 in CORE sale households were 25 to 29 year olds. This was higher than the percentage of 25 to 29 year olds in both the West Midlands (8.1%) and England (8.6%). Final Report 103

111 37.4% of Persons 1 in CORE sales households were 30 to 44 year olds. This was higher than the percentage of 30 to 44 year olds in both the West Midlands (28.5%) and England (29.3%). 11% of Persons 1 in CORE sales households were 45 to 59 years old. This was lower than the percentage of 45 to 59 year olds in both the West Midlands (24.9%) and England (24.4%). 2.1% of Persons 1 in CORE sales households were 60 o 64 years old. This was lower than the percentage of 60 to 64 year olds in both the West Midlands (6.6%) and England (6.3%). 5.3% of Persons 1 in CORE sales households were 65 plus years of age. This was lower than the percentage of 65 plus year olds in both the West Midlands (20.8%) and England (20.5%) The following table summarises the age of Person 2 of purchasers for the three years 2006 to Table 4.19: age in bands, Person 2, CORE sales data for West Midlands 1/4/2006 to 31/3/2009 compared with 2001 Census West Midlands and England Age CORE Sales Age West Midlands Age England Age Person 2 No. % No. % No. % 18 to 24 years , ,130, to 29 years , ,268, to 44 years ,151, ,127, to 59 years ,005, ,279, to 64 years , ,391, years plus , ,808, Totals 1, ,034, ,005, (Source: CORE Sales Tenant Services Authority and 2001 Census data) 4.64 Key findings: The majority (87.6%) of Persons 2 in CORE sales households were aged under 45. This was an over-representation when compared to both the West Midlands (47.5%) and England (48.8%) at the time of the 2001 Census. More than one third (35.2%) of CORE sales to Persons 2 in CORE sales households were 18 to 24 year olds. This was higher than the percentage in this age band in both the West Midlands (10.9%) and England (10.9%) at the time of the 2001 Census. Final Report 104

112 Nearly one quarter (24.2%) of Persons 2 in CORE sales households to 25 to 29 year olds. This was higher than the percentage of people in this age band in both the West Midlands (8.1%) and England (8.6%). 28.2% of Persons 2 in CORE sales households were 30 to 44 year olds. This was higher than the percentage in this age band in both the West Midlands (28.5%) and England (29.3%) at the time of the 2001 Census. 7.1% of Persons 2 in CORE sales households were 45 to 59 years old. This was lower than the percentage in both the West Midlands (24.9%) and England (24.4%) at the time of the 2001 Census. 2.0% of Persons 2 in CORE sales households were 60 to 64 year olds. This was lower than the percentage of 60 to 64 year olds in both the West Midlands (6.6%) and (6.3%) at the time of the 2001 Census. 3.3% of Persons 2 in CORE sales households were 65 plus years of age. This was lower than the percentage of 65 plus year olds in both the West Midlands (20.8%) and England (20.5%) at the time of the 2001 Census The following table summarises the age of approved HomeBuy applicants at November Table 4.20: age in bands, approved applicants, West Midlands, November 2009 Age (lead applicant) Coventry & Warks Herefords & Worcs. Staffs. & Shrops. Central West Midlands Total no. Total % , Totals ,030 2, % (Source: HomeBuy data) 4.66 Key findings: The majority (98.4%) of HomeBuy applicants in 2009 in the West Midlands were less than 50 years of age. More than one quarter (28.6%) of HomeBuy applicants were aged 18 to 29. Almost half (47.2%) were aged 30 to 39 years. More than one fifth (22.6%) were aged 40 to 49 years. Final Report 105

113 1.7% were aged 50 to 59 and no applicants were aged 60 plus. Ethnic origin 4.67 The following table summarises the ethnic origin of Person 1 for the three years 2006 to Table 4.21: ethnic origin, Person 1, CORE sales data for West Midlands 1/4/2006 to 31/3/2009 compared with 2001 Census West Midlands and England Ethnic Origin CORE sales Ethnic Origin West Midlands Ethnic Origin England Ethnic Origin of Person 1 as defined by Purchaser No. % No. % No. % White British 2, ,537, ,747, White Irish , , White Other , ,308, Mixed White & Black Caribbean , , Mixed White & Black African , , Mixed White & Asian , , Mixed Other , , Asian or Asian British Indian , ,028, Asian or Asian British Pakistani , , Asian or Asian British Bangladeshi , , Asian or Asian British Other , , Black or Black British Caribbean , , Black or Black British African , , Black or Black British Other , , Chinese or Other Ethnic Group Chinese , , Chinese or Other Ethnic Group Other , , Refused Totals 3, ,267, (Source: CORE Sales Tenant Services Authority and 2001 Census data) 4.68 Key findings: 49,138, % of Persons 1 in CORE sales households were White. This was lower than the percentage of White households in both the West Midlands (88.8%) and England (91.0%) at the time of the 2001 Census Final Report 106

114 1.8% of Persons 1 in CORE sales households were Mixed. This was slightly higher than the percentage of Mixed households in both the West Midlands (1.4%) and England (1.4%) at the time of the 2001 Census. 3.0% of Persons 1 in CORE sales households were Asian. This was lower than the percentage of Asian households in both the West Midlands (7.3%) and England (4.6%) at the time of the 2001 Census. 4.2% of Persons 1 in CORE sales households were Black. This was higher than the percentage of Black households in both the West Midlands (2.0%) and England (2.3%) at the time of the 2001 Census. 0.4% of Persons 1 in CORE sales households were Chinese or Other Ethnic Groups. This was lower than the percentage of Chinese or Other Ethnic Groups in both the West Midlands (0.6%) and England (0.8%) at the time of the 2001 Census The following table summarises the ethnicity of approved HomeBuy applicants at November Table 4.22: ethnicity, approved applicants, West Midlands, November 2009 Ethnicity Coventry Herefords Staffs. & Central West Total Total & Warks & Worcs. Shrops. Midlands no. % White British , White Irish White Other White sub total , Mixed heritage Asian Indian Asian Pakistani Asian Bangladeshi Asian Other Asian sub-total Black Caribbean Black African Black Other Black sub-total Chinese Other EM Chinese/Other subtotal Refused sub-total Total ,030 2, % (Source: HomeBuy data) 4.70 Key findings: 79.3% of HomeBuy applicants were White. Final Report 107

115 7.5% of HomeBuy applicants were Asian, especially Asian Pakistani. 8.7% of HomeBuy applicants were Black, especially Black Caribbean. 1.4% of HomeBuy applicants were Chinese/Other Economic status 4.71 The following table summarises the economic status of Person 1 of the household for the three years 2006 to Economic status is applicable to a person, not a household and people within the same household may have a different economic status. Table 4.23: CORE sales for the West Midlands 3 years data 1/4/2006 to 31/3/ economic status of Person 1 Economic Status of Person 1 No. % Full time work (30 hours or more per week) 2, Part time work (less than 30 hours per week) Government training/new Deal Job Seeker Retired Not seeking work Full time student Unable to work because of long term sickness or disability A child under Other Adult Totals 3, (Source: CORE data) 4.72 Key findings: The majority (90%) of Persons 1 in CORE sales households were working. 85.2% of Persons 1 in CORE sales households were working full-time and 4.8% were working part time. 6.5% of Persons 1 in CORE sales households were retired. 0.4% of Persons 1 in CORE sales households were Other (Adults). A small percentage of Persons 1 in CORE sales households were students (0.3%). A small percentage of Persons 1 in CORE sales households were Job Seekers (0.2%). Final Report 108

116 4.73 The following table summarises the economic status of Person 2 of the household for the three years 2006 to Table 4.24: CORE sales for the West Midlands 3 years data 1/4/2006 to 31/3/ economic status of Person 2 Economic Status of Person 2 No. % Full time work (30 hours or more per week) Part time work (less than 30 hours per week) Government training/new Deal Job Seeker Retired Not seeking work Full time student Unable to work because of long term sickness or disability Child under Other Adult Totals 1, (Source: CORE data) 4.74 Key findings: The economic status of Person 2 was more varied than that of Person 1 in CORE sales households More than half (52.6%) of Persons 2 in CORE sales households were working full-time and 9.8% were working part time. 16.1% of Persons 2 in CORE sales households were a child under 16 which implies lone parent households. 6.5% of Persons 2 in CORE sales households were not seeking work. 4.5% of Persons 2 in CORE sales households were students. 4.3% of Persons 2 in CORE sales households were Other (Adults). 4.2% were of Persons 2 in CORE sales households were retired. A small percentage of Persons 2 in CORE sales households were Job Seekers (1.1%). Income and savings 4.75 The following table summarises the gross annual income of single income purchasers for the three years 2006 to Final Report 109

117 Table 4.25: CORE sales for the West Midlands 3 years data 1/4/2006 to 31/3/ gross annual income single purchaser Gross Annual Income No. % Under 5, ,000 to 9, ,000 to 14, ,000 to 19, ,000 to 24, ,000 to 29, ,000 to 34, ,000 to 39, ,000 to 44, ,000 to 49, ,000 to 54, ,000 plus Total 1, (Source: CORE data) 4.76 Key findings: A single purchaser is data for households where the mortgage was based on one person s income. 96.2% of single purchasers had an income of less than 30,000. Just over four fifths (84.4%) of single purchasers had an income of less than 25,000. More than half (56.6%) had an income of less than 20, % had an income of more than 30, The following table summarises the gross annual income of joint income purchasers for the three years Final Report 110

118 Table 4.26: gross annual income of joint income purchasers for the West Midlands, 1/4/2006 to 31/3/2009 Gross Annual Income No. % Under 5, ,000 to 9, ,000 to 14, ,000 to 19, ,000 to 24, ,000 to 29, ,000 to 34, ,000 to 39, ,000 to 44, ,000 to 49, ,000 to 54, ,000 plus Total (Source: CORE data) 4.78 Key findings: Joint Income Purchasers is where the mortgage has been based on the income of two persons. 91.8% had a joint income of less than 40,000. Almost four fifths (79.2%) had a joint income of less than 35, % had a joint income of less than 30, % had a joint income of less than 25, % had a joint income of more than 40, The following table summarises the total savings before deposit of purchasers for the three years Final Report 111

119 Table 4.27: CORE sales for the West Midlands 3 years data 1/4/2006 to 31/3/ total savings of purchasers before any deposit is paid Savings No. % 1-9,999 1, ,000-19, ,000-29, ,000-39, ,000-49, ,000-59, ,000-69, ,000-79, ,000-89, ,000-99, , , , , , , ,000 plus Not known Total 3, (Source: CORE data) 4.80 Key findings: 45.8% had less than 10,000 in savings. 10.1% had between 10,000 and less than 20, % had more than 20,000 in savings The following table summarises the income band of approved HomeBuy applicants at November Table 4.28: income in bands, approved applicants, West Midlands, November 2009 Income band Coventry & Warks Herefords & Worcs. Staffs. & Shrops. Central West Midlands Total No. Total % Under 20k ,001-35k ,001-50k ,001-60k Totals ,030 2, % (Source: HomeBuy data) 4.82 Key findings: The majority (99.1%) had an income of less than 50,001. Final Report 112

120 More than three quarters (76.8%) had an income of less than 35,001. Almost one third (32.2%) had an income of less than 20,001. Previous tenure 4.83 The following table summarises the previous tenure of Person 1 for the three years 2006 to Table 4.29: previous tenure of Person 1, CORE sales for the West Midlands, 1/4/2006 to 31/3/2009 Tenure No. % Local Authority tenant Housing Association/RSL tenant Private tenant Tied home/renting with job Owner Occupier Living with family/friends 1, Temporary accommodation Other Totals 3, (Source: CORE data) 4.84 Key findings: The highest percentage (39.3%) lived with friends or family prior to purchasing a property. The second highest percentage (29.9%) were private tenants prior to purchasing a property. 17% previously lived in social housing. 12% were previously owner occupiers; this is likely to include those whose relationship has broken down and have used equity held in a previous property. 0.7% were in a tied home or renting with a job, 0.7% were Other and 0.4% were in temporary accommodation. Final Report 113

121 4.85 The following table identifies whether any purchasers had previously been an owner occupier for the three years 2006 to Table 4.30: have any purchasers previously owned a property, CORE sales for the West Midlands, 1/4/2006 to 31/3/2009 Previously Owned Property No. % Yes No 2, Don t know Totals 3, (Source: CORE data) 4.86 Key findings: Just over two thirds (67.3%) of buyers between 2006 and 2009 were first time buyers The following table summarises the current tenure/housing circumstances of approved HomeBuy applicants at November Table 4.31: current tenure/housing circumstances, approved applicants, West Midlands, November 2009 Current tenure/ Housing Coventry & Warks Herefords & Worcs. Staffs. & Shrops. Central West Midlands Total No. Total % Social rented Private rented Owner occupier Living with family /friends Other Totals ,030 2, % (Source: HomeBuy data) 4.88 Key findings: The highest percentage of HomeBuy applicants (34.1%) or just over one third currently lived with friends or family. The second highest percentage of HomeBuy applicants (32.6%) or just under one third currently lived in private rented property. 7.3% of HomeBuy applicants currently lived in social housing. 5.8% of HomeBuy applicants were owner occupiers. One fifth (20.2%) of HomeBuy applicants were Other. Final Report 114

122 Previous location 4.89 The following table shows the previous local authority of CORE sales households for local authorities where there were 50 or more households. Table 4.32: main previous locations of Person 1, CORE sales for the West Midlands, 1/4/2006 to 31/3/2009 Previous Local Authority No. % Birmingham Walsall Warwick East Staffordshire Herefordshire Dudley Stratford-on-Avon Coventry Rugby Worcester Stafford Solihull Wyre Forest Sandwell Bromsgrove Wolverhampton Redditch Lichfield Cannock Chase Shrewsbury & Atcham Overall total 2, (Source: CORE data) 4.90 Key findings: 29.3% of CORE sales households from local authorities with 50 or more households came from Birmingham. 6.9% of CORE sales households came from Walsall, 5.4% from East Staffordshire, 5.4% from Warwick and 5.3% Herefordshire. Less than 5% of CORE sales households came from each of the remaining local authorities. Final Report 115

123 Approved HomeBuy applicants: additional profiling 4.91 HomeBuy data enables further profiling of approved applicants in relation to: gender; a household member with a disability; and a Key Worker household member The following table summarises the gender of approved HomeBuy applicants at November Table 4.33: gender of approved HomeBuy applicants, West Midlands, November 2009 Gender Coventry & Warks Herefords & Worcs. Staffs. & Shrops. Central West Midlands Total No. Total % Male , Female , Totals ,030 2, % (Source: HomeBuy data) 4.93 Key findings: Just over half (51.1%) of HomeBuy applicants were female and just under half (48.9%) were males The following table summarises whether the household of an approved HomeBuy applicant included a disabled person at November Table 4.34: disabled person in household of approved HomeBuy applicants, West Midlands, November 2009 Coventry & Warks Herefords & Worcs. Staffs. & Shrops. Central West Midlands Total No. Total % (Source: HomeBuy data) 4.95 Key findings HomeBuy applicants 2009: 3.5% of HomeBuy applicants were disabled The following table summarises whether the household of an approved HomeBuy applicant included a Key Worker at November Final Report 116

124 Table 4.35: Key Worker in household of approved HomeBuy applicants, West Midlands, November 2009 Coventry & Warks Herefords & Worcs. Staffs. & Shrops. Central West Midlands Total No. Total % (Source: HomeBuy data) 4.97 Key findings: 14.5% of HomeBuy applicants were Key Workers. Final Report 117

125 5. AFFORDABILITY AND THE IMPACT OF CHANGING ECONOMIC CONDITIONS EXECUTIVE SUMMARY A matrix has been constructed, taking account of the latest NHPAU guidance, which assesses the national, regional and archetype level affordability of open market, intermediate and private rented housing and for a range of property types. Modelling has been undertaken of the impact of improving economic conditions which identifies that, based on the costs of housing they are currently paying, householders in the private rented sector in the West Midlands are more likely to be able to afford the ongoing costs of open market home ownership than householders in the intermediate sector. In the circumstances of worsening economic conditions, the projections suggest that half of intermediate homeowners will experience housing costs that exceed the CLG s affordability threshold of 25% of gross household income. If difficulties necessitate a move then it would be less likely to be to private renting which is tyically as expensive as open market purchase. Introduction 5.1 This section deals with two key themes: 1. the affordability of open market, intermediate and private rented housing; and 2. the impact of either improving or worsening economic conditions on households currently within the private rented, open market and intermediate housing sectors. Modelling Affordability 5.2 There is no agreed national methodology for assessing affordability, but at the beginning of February 2010 the National Housing and Planning Advice Unit (NHPAU) published a document on housing affordability: Housing Affordability: a fuller picture. This document sets out a pragmatic approach to assessing the affordability of open market, intermediate and private rented housing, and forms the basis of the framework we have adopted in this report. 5.3 The approach involves using national, regional and local archetype property types and prices and local incomes to model current affordability and access for a range properties and tenures. Final Report 118

126 Incomes 5.4 The modelling has been carried out for two income levels: a median level income level; and a lower quartile income. 5.5 The latter is used as the government s preferred indicator of affordability; the former is recommended in the above mentioned NHPAU report to construct gross household incomes. 5.6 Actual incomes were drawn from the most recent Annual Survey of Hours and Earnings 2009 (ASHE) which records national, regional and district level incomes. Property Prices and Rents 5.7 The property prices and rents used in the modelling are the average prices from local sales and private rents achieved between October 2009 and February The sales were also cross-referenced against district level property sales from the Land Registry from January to December Land Registry tables were used to develop the regional and national prices. 5.8 The 15 th percentile property price has been included because NHPAU research by Wilcox and Bramley (forthcoming) 3 suggests that the lower quartile price paid by first time buyers approximately equates to the 15 th percentile on the house price distribution. This is then considered as a proxy for the first time buyer entry level property price. This has been taken from the CLG Live Table 580. Mortgages and Deposits 5.9 Current access to mortgages for first time buyers and shared ownership/equity products is still restricted and much more so than before the recession and associated changes in the financial markets. Mortgage loan-tovalue (LTV) ratios have plummeted from, in some cases, over 100 per cent of the loan required to between 70 and 80 per cent. The LTV issue appears to be easing slowly with some mortgages recently offering 85 per cent. The NHPAU report assumes a gradual return to 90 per cent LTV from 75 per cent between 2012 and A figure of 80 per cent has been used in the affordability calculations. This obviously assumes a deposit of 20 per cent Mortgage interest rates available range between 4 and 6 per cent. The NHPAU report assumes a rate rise of 0.25 per cent per quarter until reaching 3 S. Wilcox & G. Bramley, Evaluating requirements for market and affordable housing, forthcoming Final Report 119

127 6.25 per cent. A figure of 5.5 per cent has been used in the affordability calculations. Shared Ownership Rent and Annual Service Charges 5.11 In the affordability calculations we have used the HCA target rent rate of 2.75 per cent for the RSL owned equity share of shared ownership properties. A figure of 800 per annum has been used for service charges where appropriate. This is in line with figures reported through consumer interviews conducted for this project and has been cross referenced against CORE sales reports. The Affordability Matrix 5.12 This matrix identifies, for each of the archetype areas under study, whether households on median and lower quartile incomes can afford a range of properties within the CLG affordability threshold of 25 per cent of gross household income The properties include the full range of one and two bed flats and one to four bed houses. Also included is the 15 th percentile price as a proxy for the first time buyer entry level price The tenures considered include: shared ownership at 25 per cent and 50 per cent shares; shared equity at 70 per cent equity; private rent; and open market home ownership The latter has been included both to identify households who, given different economic circumstances or policy interventions, might be able to afford full home ownership and to examine how interactions between the private rented and shared ownership sectors relate to open market home ownership A matrix has been provided which, for each of the two income levels considered, provides an assessment of affordability and access to similar properties and tenures. This has been provided for each archetype area in the context of the West Midlands region as a whole and for England. The associated tables compare regional and national property prices and rents to the local archetype incomes, and provide an indication of how households 4 NHPAU analysis identifies the median income represents 58%/59% of the gross household income (GHI). Thus the GHI can be constructed by multiplying the income figure by Final Report 120

128 affordability in the archetype areas compares to the region and nationally, and therefore their potential mobility. Assumptions Applied 5.17 A number of assumptions have been applied to inform the affordability calculations below as follows: single income is equivalent to 58% of gross household income (GHI); the CLG housing cost affordability threshold is 25% of GHI; a mortgage interest rate of 5.5%; the mortgage term is 25 years; a deposit of 20%; a shared ownership rent rate is 2.75%; there is no rent charged on the un-owned share in shared equity; and the annual service charges are 800. Traffic Lights 5.18 A traffic light system has been used to identify levels of affordability as follows: Green = affordable within the CLG threshold; Amber = within 5% of the CLG threshold; and Red = greater than 5% over the CLG threshold. Affordability Matrix Modelling Assumptions 5.19 All sales calculations in these matrices assume a 20 per cent deposit on the householders equity share has been paid. For example, for a 25 per cent share of a shared ownership property the deposit would be 20 per cent of 25 per cent of the full price of the property. Each table in the affordability matrix has a combination of 25 potential property/tenure types. See Appendix Four for detailed matrices for all archetypes, West Midlands and national comparisons. Final Report 121

129 The matrix applied 5.20 The following figure provides an example of the full affordability matrix model. Based on median and lower quartile gross household incomes and archetype property prices and private sector rents for Birmingham Ladywood, the West Midlands and England, three tables are provided which identify affordability for each area. Please note that each table uses the same gross household incomes (in this case incomes for Birmingham) to compare against the appropriate archetype, regional and national property prices and rents levels Through both the traffic light system and, within each cell, a figure identifying the actual percentage of gross household income that housing costs represent is provided. The percentage figure indicates how close the household is to attaining the CLG s 25 per cent threshold of affordability for that particular property and tenure. For example, in the matrix below, the top left cell in the Birmingham Ladywood table is coloured amber and shows that the housing costs of to access a one bed 100 per cent home ownership flat represents per cent of a Birmingham lower quartile gross household income for The amber designation indicates that this property and tenure is within 1.34 per cent of being affordable for this household on this is gross household income and according to the CLG criteria. Final Report 122

130 AFFORDABILITY MATRIX INPUTS (1) Single lower quartile income 2009 Birmingham - Ladywood (2) Gross household income (3) CLG Housing cost affordability threshold Mortgage Interest Rate Mortgage Years Deposit % Shared Ownership Rent Rate Annual Service Charge 12, % 25% 5.50% % 2.75% ,999 5, Birmingham - Ladywood Properties Annual Hsg costs including rent and service charges Home Ownership Shared Ownership Shared Equity Private Rent Market Price PRS Rent 100% 25% 50% 70% 1 bed flat 98, % 19.44% 22.95% 22.07% 34.07% 2 bed flat 168, % 30.71% 36.73% 35.23% 45.80% 2 bed house 104, % 20.51% 24.26% 23.33% 44.38% 3 bed house 139, % 26.00% 30.98% 29.74% 52.57% 4 bed house 216,059 1, % 38.37% 46.09% 44.17% 73.79% All properties 15th percentile 86, % 17.46% 20.53% 19.77% West Midlands Average Prices - Birmingham Incomes Properties Annual Hsg costs including rent and service charges Home Ownership Shared Ownership Shared Equity Private Rent Market Price PRS Rent 100% 25% 50% 70% 1 bed flat 92, % 18.54% 21.86% 21.03% 29.22% 2 bed flat 118, % 22.72% 26.96% 25.90% 35.49% 2 bed house 123, % 23.42% 27.82% 26.72% 35.93% 3 bed house 179, % 32.54% 38.97% 37.37% 42.91% 4 bed house 236, % 41.67% 50.13% 48.02% 54.64% England Average Prices - Birmingham Incomes Properties Annual Hsg costs including rent and service charges Home Ownership Shared Ownership Shared Equity Private Rent Market Price PRS Rent 100% 25% 50% 70% 1 bed flat 123, % 23.56% 27.99% 26.88% 36.86% 2 bed flat 150, % 27.79% 33.16% 31.83% 42.75% 2 bed house 152, % 28.07% 33.51% 32.15% 43.29% 3 bed house 201, % 36.03% 43.23% 41.44% 51.53% 4 bed house 251,027 1, % 43.99% 52.96% 50.73% 68.60% (1) - Income sourced from ASHE Table 8.7a - Feb 2009 (2) - Median Single Income = 58% of Gross Household Income -Housing affordability: a fuller picture NHPAU Feb 2010 (3) - CLG SHMA affordability guidance up to 25% of gross income (CLG 2007) Outcomes 5.21 The results of the affordability calculations is provided in each of the archetype areas. These include the archetype affordability tables extracted from the full matrix for that archetype area. Each of these has a combination of 25 potential property/tenure types. It also shows affordability results for a 15 th percentile property in that area. For detailed affordability matrices for all archetypes, including West Midlands and national comparisons see Appendix Four. Final Report 123

131 Modelling the Impact of Changing Economic Conditions 5.22 This sub-section models the potential impact of either improving or declining economic conditions on households currently within the private rented, open market and intermediate housing sectors. Assumptions 5.23 The model developed incorporates a number of assumptions as follows: Because property prices were falling and, until fairly recently, LTV levels for mortgages were 90 per cent plus; households that have bought intermediate properties within the last four years are those that are more likely to start experiencing difficulties if economic conditions worsen. Information on intermediate sales is based on CORE reported sales for the West Midlands 2006 to 2009 (4,140) excluding intermediate rent. Information on bed size breakdown is based on CORE reported sales for the West Midlands 2006 to Average property prices for each bed size is based on Land Registry and Find a Property.com online data 5. Median annual income for the West Midlands is based on ASHE Table 8.7a Gross Annual Pay Gross household income for joint incomes is based on the research of Wilcox and Bramley (forthcoming) 6. The research suggests that for joint incomes the single median income represents between 58 per cent and 59 per cent of the gross household income. The shared ownership sales are recorded as one figure. This has been split down into half of sales being the householder buying a 25 per cent share and half buying a 50 per cent share. All shared equity sales are assumed to be the householder having bought a 70 per cent share. One bed flat sales have been split into two-thirds single income and onethird joint income households. 5 See operty+online&mkwid=kjehedgw&pcrid= &gclid=cjup5oo8ukecfvkx2aodcr6fdg 6 Cited in the NHPAU report Housing Affordability: a fuller picture, February Final Report 124

132 Two bed flat and house sales have been split into one-third single income and two-thirds joint income households. The test of affordability is based on the CLG s preferred measure that housing costs should not exceed 25 per cent of gross household income. Calculations have been projected forward to 2013 with mortgage interest rate rises based on data in the Housing Affordability NHPAU report. RSL shared ownership rent rates have also been increased in line with the mortgage interest rates. Modelling the Impact of Improving Economic Conditions 5.24 The following charts identify the levels of housing costs against gross household incomes for shared ownership, shared equity, open market home ownership and private renting. The data used has been drawn from the affordability calculations carried out for this report (see Appendix Four. Affordability Matrices). The calculations cover a range of bed sizes from one bed to four or more beds and include average property prices and median incomes for the West Midlands Whilst these charts do not identify the precise numbers of households in the private rented and intermediate housing sectors who might change tenures in the event of improving economic conditions, they do show: the absolute affordability relationship of these tenures to the CLG s affordability threshold; the relative affordability relationship between these tenures; and the relative affordability of each option for three different income levels, the West Midlands median annual income for 2009 (taken from ASHE Table 8.7a); this income increased by 10 per cent and this income increased by 15 per cent. The three charts model each income option. Final Report 125

133 West Midlands Housing Costs as a percentage of Gross Household Income for 2009 Single and Joint Median Annual Incomes - by Tenure and Bedsize 40.00% 39.04% Housing Costs as a percentage of Gross Household Income 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 39.09% 32.19% 31.81% CLG Affordability 24.98% 20.92% 17.01% 39.03% 29.70% 28.53% 30.17% 29.18% 25.02% 27.96% 27.37% 24.07% 24.26% 23.16% 20.42% 22.69% 21.76% 21.32% 18.95% 16.19% 15.56% 13.63% 14.47% 10.79% 12.72% 12.24% 25% 50% 70% 100% 1 bed-single income 1 bed-joint income 2 bed-single income 2 bed-joint income 3 bed-joint income 4 bed-joint income Private Rent Shared Ownership Shared Equity Home Ownership Tenure Final Report 126

134 40.00% West Midlands Housing Costs as a percentage of Gross Household Income for 2009 Single and Joint Median Annual Incomes increased by 10% - by Tenure and Bedsize Housing Costs as a percentage of Gross Household Income 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 35.54% 31.81% 29.26% CLG Affordability 24.98% 20.92% 17.01% 29.18% 27.96% 24.26% 27.00% 25.94% 22.75% 21.89% 21.06% 22.69% 18.57% 21.76% 18.95% 16.19% 15.56% 13.63% 10.79% 12.72% 12.24% 39.03% 31.85% 30.17% 24.88% 21.32% 14.47% 1 bed-single income 1 bed-joint income 2 bed-single income 2 bed-joint income 3 bed-joint income 4 bed-joint income 25% 50% 70% 100% Private Rent Shared Ownership Shared Equity Home Ownership Tenure Final Report 127

135 40.00% West Midlands Housing Costs as a percentage of Gross Household Income for 2009 Single and Joint Median Annual Incomes increased by 15% - by Tenure and Bedsize Housing Costs as a percentage of Gross Household Income 35.00% 30.00% 25.00% 20.00% 15.00% 34.00% 30.43% 27.99% CLG Affordability 23.90% 20.01% 16.27% 23.21% 21.76% 17.76% 18.12% 13.04% 27.91% 26.74% 25.82% 24.81% 20.93% 20.14% 21.70% 20.81% 15.49% 14.88% 37.33% 30.47% 28.86% 23.80% 20.39% 1 bed-single income 1 bed-joint income 2 bed-single income 2 bed-joint income 3 bed-joint income 4 bed-joint income 10.00% 10.33% 12.17% 11.71% 13.84% 25% 50% 70% 100% Private Rent Shared Ownership Shared Equity Home Ownership Tenure Final Report 128

136 Modelling Improving Economic Conditions: conclusions 5.26 The above charts identify that: private renting is in all cases a more expensive option than any of the shared ownership or shared equity options. This suggests that householders in the PRS, with the requisite deposit, could currently afford to access intermediate products now and would be in an even stronger position to do so if economic conditions improve. However, given that they are paying more for their housing now than they would for an equivalent intermediate product suggests that they may have problems saving for a deposit. This particularly applies to the dwellings and tenures where housing costs are greater than the CLG Threshold: the one and two bed single income and four bed joint income households; for both the 10 per cent and 15 per cent increases in household income, shared ownership purchasers with 50 per cent shares of two and four bed properties could potentially afford one and two bed open market home ownership properties at the CLG level of no more than 25 per cent of gross household income; for both the 10 per cent and 15 per cent increases in household income, shared ownership purchasers with 70 per cent shares of two and four bed properties could potentially afford one and two bed open market home ownership properties at the CLG level of no more than 25 per cent of gross household income; and based on the costs of housing they are currently paying, the charts suggest that householders in the private rented sector in the West Midlands are more likely to be able to afford the ongoing costs of open market home ownership than householders in the intermediate sector. However, given that they are paying more for their housing than they would for an equivalent intermediate product suggests that they would be less able to save for a deposit. Modelling the Impact of Worsening Economic Conditions ,410 intermediate property sales were recorded in CORE for the West Midlands between 2006 and Of these, it is projected that between 2010 and 2013, 2,168 householders will experience housing costs that exceed the CLG s threshold of 25 per cent of gross household income The chart below shows projected numbers of intermediate households with CORE recorded purchased properties between 2006 and 2009 that will experience housing costs greater than 25 per cent of gross household income. The chart shows the number of households by bed size, flat or house and tenure for each year from 2010 to Final Report 129

137 600 Projected numbers of SharedEquity and Shared Ownership households who purchased between 2006 and 2009 with housing costs greater than 25% above the ASHE West Midlands Median Incomes for SE-70%-2 bed flat-single income SO-25%-2 bed flat-single income SO-50%-2 bed house-single income SO-25%-2 bed house-single income SE-70%-3 bed house-joint income SO-50%-3 bed house-joint income SO-25%-3 bed house-joint income SE-70%-4+ bed house-joint income SO-50%-4+ bed house-joint income SO-25%-4+ bed house-joint income Total = 2168 Purchased between = 4410 Balance under25% = 2242 = 50.84% Final Report 130

138 5.29 The following charts give further detailed breakdowns for each tenure, a 70 per cent shared equity purchase; 25 per cent and 50 per cent shared ownership purchases. 300 Projected numbers of Shared Equity households who purchased between 2006 and 2009 with housing costs greater than 25% above the ASHE West Midlands Median Incomes for bed flat-single income 2 bed flat-single income 2 bed house-single income 3 bed house-joint income 4+ bed house-joint income 150 Total = Final Report 131

139 600 Projected numbers of Shared Ownership households who purchased 50% equity between 2006 and 2009 with housing costs greater than 25% above the ASHE West Midlands Median Incomes for bed flat-single income 2 bed flat-single income 2 bed house-single income 3 bed house-joint income 4+ bed house-joint income Total = Final Report 132

140 600 Projected numbers of Shared Ownership households who purchased 25% equity between 2006 and 2009 with housing costs greater than 25% above the ASHE West Midlands Median Incomes for bed flat-single income 2 bed house-single income bed house-joint income 4+ bed house-joint income 300 Total = Final Report 133

141 Modelling Worsening Economic Conditions: conclusions 5.30 Based on the assumptions above, the projections suggest that between 2010 and 2013, approximately 49 per cent of intermediate homeowners will experience housing costs that exceed the CLG s affordability threshold of 25 per cent of gross household income. This comprises of 1,705 shared ownersip householders and 463 shared equity households. What is more difficult to answer, without further study, is how many of these households want or need to change tenure at this national indicator point. In fact, research in areas outside the West Midlands, shows that householders are willing to pay in excess of 50 per cent of household income on housing costs The real potential for households falling back into rented tenure can not be established until the level of household costs-to-income can be established for the West Midlands. That said, work on affordability for the archetypes indicates that if households in the intermediate sector in the West Midlands experience difficulties that necessitate that they move then it would be less likely to be to private renting. For most of the archetypes studied, private renting is as expensive as Open Market 100% Home Ownership purchase (see Appendix Four for detailed Affordability Matrices). Final Report 134

142 6. THE PRIVATE RENTED AND INTERMEDIATE HOUSING SECTORS: ARCHETYPE CASE STUDIES EXECUTIVE SUMMARY The Private Rented Sector: the main messages The private rented sector is operating as a holding ground for households unable to access either shared or full ownership. There is movement within the private rented market but less movement out into shared or full ownership. There is very little movement back into private renting, it is avoided except where no other option exists. The private rented market is expected to shrink in size as accidental landlords exit the market over the next three to five years and if the owner occupied market becomes more accessible to higher earning tenants again. This will restrict choice for tenants, potentially drive up prices and increase pressure on either the social rented or, where affordable, the intermediate housing markets. There is little evidence that former asylum seeker accommodation has impacted on the private rented sector. Landlords are quite cautious about stepping into new areas, such as housing vulnerable tenants. Local Housing allowance (LHA) direct to tenants is a major disincentive to landlords to take tenants on benefits as landlords fear tenants will not spend the money on rent and must wait for eight weeks arrears before they can apply for rent direct to them. Most landlords are not looking for short lets, but often let for six months in the first instance to see how the tenancy is conducted. Landlords need to know they will receive support from the council, such as rent guarantees and indemnity against damage to the property, if they house vulnerable tenants. There is a need for greater cohesion and coordination in the work of the local authority outside of the enforcement role to understand, engage and influence the private rented market, both in terms of tenants and landlords. The Private Rented Sector: the policy implications The LHA system of payment direct to tenants and reduced rate for under-25s will not support a wider range of clients in PRS. There may be a role for local Final Report 135

143 authorities to offer guarantees and/or top-up payments. Local authority on-going support for vulnerable households is essential to encourage a wider range of landlords to house them. The local authority, housing associations and the Homes and Communities Agency should work to ensure that there are measures and funding in place to improve accessibility to the intermediate housing market that could be utilised to meet any increased demand if it arises; Any market shrinkage also has implications for supply in terms of private rented properties - there is only limited activity currently that secures privately rented accommodation for those in housing need (for example, private sector leasing). The potential for this and for increasing activity around bringing empty properties back into use should be explored as the market may need to respond to a downturn in property availability; Tenants on LHA are more likely to be accepted by landlords if the local authority can provide both financial and practical support, for example, rent guarantee, deposit or rent in advance schemes under a broader criteria; maximised use of discretionary benefit powers; floating support or tenancy training; automatic referrals to welfare benefits advisors to secure take up, etc; There may be potential in the community and voluntary sector for the provision of support services to vulnerable tenants in order to encourage landlords to offer them accommodation this would need further exploration. The market shrinking may require local authorities to incentivise landlords to increase their portfolios or to invest further in bringing empty properties back into use in order to utilise them for meeting housing need. There is a good level of activity designed to engage private landlords and secure accommodation (for example, private sector leasing) options for expanding this should be explored. The Intermediate Housing Sector: the main messages The main barriers to accessing the intermediate housing sector are financial due to current lending practices and the amount of money required in deposit. Lenders are viewed as reticent to fund mortgage products in this market, which in itself creates barriers but also drives up costs and reduces affordability as this is designated a high risk market; A better understanding by lenders of intermediate housing sector is needed the current market is limited to a few lenders who are familiar with the product, giving clients little opportunity to shop around. Better marketing of intermediate housing sector products to estate agents and Final Report 136

144 potential clients is required; this may be best achieved by local campaigns when properties are being developed or funds are available locally for HomeBuy. There are low levels of knowledge and awareness of schemes among potential applicants, suggesting the market could be underperforming. However, this must be balanced with the finite nature of the funding for schemes that means not all demand could be met. Information for consumers needs to be clear, consistent and comprehensive with messages clarified at each stage of the process officers within local authorities and housing associations need to recognise that for applicants the process is new, complex and uncertain. Better advice needs to be given on ownership responsibilities by financial advisers to ensure that clients understand fully the responsibilities of home ownership. More effective use could be made by housing associations of the full range of products that are available (especially Rent to Buy). The Intermediate Housing Sector: policy implications Information, publicity and marketing are all reported as failing to reach potential applicants, or that applicants are coming forward with unrealistic expectations of what schemes can offer. A concerted marketing campaign by national, regional and local bodies would help to give out a consistent message about the intermediate housing sector; the marketing and publicity for this market sector needs better co-ordination, clarity, coverage and consistency. There may be a role here for the HomeBuy Agent working with housing association and local authority partners to agree a common brand and approach. Intermediate housing sector products need to reflect home-owners aspirations, not what is easy to build - more research required on whether most intermediate housing sector clients want apartments or houses. At present and despite stating their preference for the type of property they are looking for, potential clients, have no input into decisions about what is built. Increased funding is required to enable housing associations to offer the full range of intermediate housing options such as Rent to Buy to a broader range of applicants. The alternative is to establish a more flexible approach to the use of resources within housing associations; a step that would require negotiation with the Homes and Communities Agency. Housing associations and grant funding structures may need to change to recognise the higher costs of larger properties and the difficulties faced by single people in accessing the amount of mortgage required. Final Report 137

145 Discussions with lenders at a higher, strategic level could benefit the intermediate housing sector regionally but this would need to be suitably targeted and delivered if any change were to be realised. Local discussions can do little to influence the overall policy of lending. S106 agreements are a barrier to the success of schemes in rural areas as lenders are reluctant to provide funding where they cannot secure an option for 100 per cent ownership upon repossession. Introduction 6.1 To enable in-depth analysis of the role and potential of the private rented and intermediate housing (shared ownership/intermediate rent) sectors, detailed research was undertaken in five archetype areas selected on the basis of: representing a type of housing sub-market evident across the region; the availability of data on the role of each sector; and the support available to enable access to data and contacts for fieldwork. 6.2 The following archetypes were selected: Major Urban Area (Inner): the Birmingham Ladywood ward; Major Urban Area (Outer): the Soho and Victoria, Smethwick and St Pauls wards, Smethwick; Urban Regeneration Zone/HMRA Pathfinder: the Berryhill and Hanley East, Burslem South and Hanley West and Shelton wards, Stoke-on-Trent; Market/county town: Ledbury, Herefordshire; Rural area: the local authority area of North Warwickshire 6.3 The following activities were undertaken in each area: a data based analysis of the profile of the private rented and intermediate housing sectors; and an analysis of affordability in each area. 6.4 These archetype case studies have provided the opportunity for detailed consultation with key actors operating in the private rented and intermediate housing sectors focusing on the following themes: Final Report 138

146 the role and performance of the sectors; the interactions between the sectors; the potential of the sectors; and how that potential might be achieved or developed, especially in relation to the role of local authorities. 6.5 In each case study area, we have undertaken telephone and face to face interviews with: three private landlords; ten consumers; three lettings agents; the local authority with reference to housing options, private sector and enabling teams; one support provider including asylum support teams (as appropriate); two housing associations; and one lender. 6.6 Through this consultation, we have also given specific consideration to the position of asylum seekers, refugees and economic migrants. 6.7 Each case study opens with an executive summary; an explanation of the rationale for the choice of location; key data profiling the private rented and intermediate housing sectors and the application of the affordability matrix. 6.8 The chapter closes with a summary of the main messages and policy implications for each sector. 6.9 In view of the detail provided and their resulting length, ach case study has been presented as a separate chapter. Final Report 139

147 7. THE BIRMINGHAM LADYWOOD WARD CASE STUDY EXECUTIVE SUMMARY The Private Rented Sector: the main messages LHA direct to tenants is a major disincentive to landlords to take tenants on benefits as landlords fear tenants will not spend the money on rent and must wait for eight weeks arrears before they can apply for rent direct to them; Most landlords are not looking for short lets, but often let for six months in the first instance to see how the tenancy is conducted; Landlords are quite cautious about stepping into new areas, like housing vulnerable tenants; The student and young professional market in Birmingham is vast and could be seen as an easy clientele for landlords to target; There s little hard information about former asylum seeker properties except from lettings agents who previously held NASS contracts; and Data in relation to migrant workers locations are distorted by the fact that the Workers Registration Scheme (WRS) uses agencies postcodes, not the actual location of the workers. The Private Rented Sector: the policy implications The LHA system of payment direct to tenants and reduced rate for under-26s will not support wider range of clients in the private rented sector. There may be a role for local authorities to offer guarantees and/or top-up payments; Local authority on-going support for vulnerable households is essential to encourage a wider range of landlords to house them; and The sector may actually decline as accidental landlords withdraw and existing ones have little incentive to increase their portfolios. The Intermediate Housing Sector: the main messages The main exclusions from the IHS are financial in that applicants must be able to find a deposit and fund a mortgage; better marketing of IHS products is required by national, regional and local bodies to enable potential clients to learn about developments in their area; Final Report 140

148 for some private tenants, the IHS would be a cheaper option than renting; and better understanding by lenders of IHS is needed the current market is limited to a few lenders who are familiar with the product, giving clients little opportunity to shop around. The Intermediate Housing Sector: policy Implications A concerted marketing campaign by national, regional and local bodies is required to enable lenders and potential clients to learn about developments in their area; this would also give out a consistent message about IHS; better understanding of IHS products by estate agents is required through targeted information so they can better inform clients; and IHS products need to reflect home-owners aspirations, not what is easy to build - more research needed on whether most IHS clients want apartments or houses - at present, potential clients, despite stating their preference for the type of property they are looking for, have no actual input into decisions about what is built. What are the Interactions Between the Private Rented Sector and the Intermediate Housing sectors? RSLs see households moving from the private rented sector motivated by a desire to own their own home and to move to a better location and a more affordable property. More people might move if the sector was better promoted and special mortgage products were developed for shared ownership. Products can be targeted at the same market, offering similar properties and can be comparable in price, especially if the purchaser buys a smaller share. In the current economic climate, RSLs consider there is a risk of shared owners reverting to the private rented sector, particularly if people lose their jobs. Introduction 7.1 This archetype case study was selected due to: the locally high level of private renting % of households were privately renting at the time of the 2001 Census compared with 7.8% in Birmingham and 6.4% in the West Midlands; the high level of flats (more than half) in the private rented sector and living rent free; high overcrowding in the private rented sector (one fifth); Final Report 141

149 5.8% were rented from Other Renting which includes some privately rented households, which was higher than for Birmingham (4.0%) and the West Midlands; and the locally high level of shared ownership - 1.2% of households were shared owners which was higher than for Birmingham (0.9%) and the West Midlands (0.7%). Final Report 142

150 Final Report 143

151 7.2 The following maps identify the distribution of private renting and shared ownership in Birmingham overlaid at the time of the 2001 Census with more recent ward boundaries overlaid: Final Report 144

152 Final Report 145

153 The Private Rented and Intermediate Housing Sectors in Ladywood: key data 7.3 The Ladywood case study statistics are based on the current Ladywood Ward boundary which was not the boundary at the time of the 2001 Census. The following table profiles tenure for the case study area. Table 7.1: tenure Ladywood case study area Owner occupied: Owns outright Owner occupied: Owns with a mortgage or loan Owner occupied: Shared ownership Rented from: Council (local authority) Rented from: Housing Association / Registered Social Landlord Rented from: Private landlord or letting agency Area Rented from: Other All Households No. % No. % No. % No. % No % No. % No. % No. % Ladywood Case Study Area , , , , Birmingham 102, , , , , , , West Midlands 651, , , , , , , England 5,969, ,950, , ,702, ,238, ,798, , (Source: KS18 Tenure, 2001 Census data) 7.4 Key findings: 12.5% of households were privately renting with a landlord or lettings agency at the time of the 2001 Census. This was higher than for Birmingham (7.8%), the West Midlands (6.4%) and England (8.8%); 5.8% were rented from Other which includes some privately rented households. This was higher than for Birmingham (4.0%), the West Midlands (3.5%) and England (3.2%); and 1.2% of households were shared owners. This was higher than for Birmingham (0.9%), the West Midlands (0.7%) and England (0.7%). Final Report 146

154 7.5 The following table profiles household type in the private rented sector for the case study area. Table 7.2: types of household in the private rented sector or living rent free Ladywood case study area Single Person Couples Families with Dependent Children Pensioners Other Total Households Area No. % No. % No. % No. % No. % No. % Ladywood Case Study Area , Birmingham 12, , , , , , West Midlands Private Renting 55, , , , , , England Private Renting 673, , , , , ,456, West Midlands All Households 312, , , , , ,153, England All Households 3,210, ,633, ,022, ,848, ,736, ,451, (Source: CAS056 Tenure and Amenities by Household Composition & T08 Theme Table on Households, 2001 Census data) Note: Household Type Private Rented Sector and living rent free in Ladywood Statistics at the small area level combined private renting with living rent free, therefore the comparative data also includes living rent free. 7.6 Key findings: There were a high percentage of single person households (excluding pensioners) (45.6%) in the Ladywood area compared to only 27.4% in Birmingham, 26.3% in the West Midlands and 27.4% in England for those households in privately rented or rent free accommodation. Single person households were over-represented in the private rented sector and living rent free in Ladywood at 45.6% compared to all households in all tenure types in the West Midlands (14.5%) and in England (15.7%). Final Report 147

155 13.1% of households in the PRS and living rent free were couples in Ladywood, compared to 10.3% in Birmingham. There were a higher percentage of couples for the West Midlands (13.7%) and England (16.1%) in the PRS and living rent free. Couples were under-represented in the PRS and living rent free in Ladywood (13.1%) compared to all couple households for all tenures in the West Midlands (17.5%) and England (17.8%). There were a much lower percentage of families with dependant children in the PRS and living rent free in Ladywood (12.1%) than in Birmingham (24.4%), the West Midlands (24.6%) and England (22.5%). Families with dependent children were under-represented in the PRS and living rent free in Ladywood (12.1%) compared to all families with dependent children for all tenures in the West Midlands (30.7%) and England (29.4%). There were a lower percentage of pensioners in the PRS and living rent free in Ladywood (10.2%) than in Birmingham (16.6%), the West Midlands (19.4%) and England (15.6%). Pensioners were under-represented in the PRS and living rent free in Ladywood (10.2%) compared to all families with dependent children for all tenures in the West Midlands (23.8%) and England (23.7%). Almost one fifth (19.0%) of households in the PRS and living rent free in Ladywood were Other households compared to just over one fifth (21.3%) in Birmingham, 16.1% in the West Midlands and 18.4% in England. Other households were over-represented in the PRS and living rent free in Ladywood (19.0%) compared to all Other households in all tenures for the West Midlands (13.5%) and England (13.4%). 7.7 The following table profiles accommodation type in the private rented sector for the case study area. Final Report 148

156 Table 7.3: accommodation type private renting and living rent free in unshared dwellings Ladywood case study area Area House or bungalow - Detached House or bungalow - Semi detached House or bungalow - Terraced (including end terrace) Flat, maisonette or apartment - In a purpose built block of flats or tenement Flat, maisonette or apartment - Part of a converted or shared house (includes bedsits) Flat, maisonette or apartment - In a commercial building Caravan or other mobile or temporary structure : Private rented - Private landlord or letting agency Total Unshared Dwellings No. % No. % No. % No. % No. % No. % No. % No. % Ladywood Case Study ,492 Area Birmingham 2, , , , , , , West 28, , , , , , , ,027 Midlands England 274, , , , , , ,415 2,419, (Source: CAS049 Dwelling Type and Accommodation Type by Tenure, 2001 Census) Note: Statistics at the small area level combined private renting with living rent free, therefore the comparative data also includes living rent free. 7.8 Key findings: There was a lower percentage (3.5%) of detached houses or bungalows in the PRS and living rent free in Ladywood than in Birmingham (6.5%), the West Midlands (13.5%) and England (11.3%). There was a lower percentage (6.7%) of semi detached houses or bungalows in the PRS and living rent free in Ladywood than in Birmingham (21.0%), the West Midlands (25.8%), and England (19.5%). There was a lower percentage (16.3%) of terraced houses or bungalows (including end terraces) in the PRS and living rent free in Ladywood than in Birmingham (32.5%), the West Midlands (28.4%), and England (26.1%). Final Report 149

157 More than half (51.3%) of Ladywood s PRS and living rent free accommodation was in purpose built flats, maisonettes or apartments. This was much higher than in Birmingham (22.5%), the West Midlands (16.4%) and England (20.6%). A higher percentage (16.3%) of Ladywood s PRS and living rent free was in flats, maisonettes or apartments that were converted or part of a shared house, than in Birmingham (12.4%), the West Midlands (9.3%), and England (15.7%). 5.9% were flats, maisonettes or apartments in commercial buildings compared to 5.0% in Birmingham, 6.2% in the West Midlands and 6.1% in England. There were no caravans or other mobile structures in Ladywood s PRS or living rent free unshared dwellings. 7.9 The following table profiles overcrowding in the private rented sector for the case study area. Table 7.4: occupancy rating for households privately renting or living rent free Ladywood case study area Overcrowding Minus 1 or Less All Household Private Renting or Living Rent Free Area Zero Plus No. % No. % No. % Ladywood Case Study Area 1, , Birmingham 38, , , West Midlands 186, , , England 2,053, , ,456, (Source: CAS053 Occupancy Rating by Tenure and Household Composition, 2001 Census data) Final Report 150

158 7.10 Key findings: Just over one fifth (20.3%) of the PRS and living rent free households in Ladywood were overcrowded with an occupancy rating of minus one or less. This was higher than in Birmingham (17.1%), the West Midlands (11.9%) and England (16.4%) The following map shows overcrowding in the private rented sector in Birmingham at the time of the 2001 Census with more recent ward boundaries overlaid. Final Report 151

159 Affordability Matrix Modelling 7.12 The following matrix identifies the range of properties considered and their market prices, and indicates the resulting levels of affordability through both the traffic light system and, within each cell, a figure that identifies the actual percentage of the gross household income which housing costs represent. This actual percentage figure indicates how close the household is to attaining the CLG 25 per cent threshold of affordability for that particular property and tenure In the affordability matrices below, the lower quartile and median single income figures for Birmingham have been sourced from the ASHE Table 8.7a from February The gross household incomes have been calculated based on research published in the NHPAU report from February 2010: Housing Affordability: a fuller picture. This report calculated that single household incomes represent 58% of joint gross household incomes. The actual figures used are all based on two income households and are: lower quartile single income 12,790; joint gross household income 21,999; median single income 20,198; joint gross household income 34, The following table relates to a lower quartile income household. Birmingham - Ladywood LQ Properties Annual Hsg costs including rent and service charges Home Ownership Shared Ownership Shared Equity Private Rent Market Price PRS Rent 100% 25% 50% 70% 1 bed flat 98, % 19.44% 22.95% 22.07% 34.07% 2 bed flat 168, % 30.71% 36.73% 35.23% 45.80% 2 bed house 104, % 20.51% 24.26% 23.33% 44.38% 3 bed house 139, % 26.00% 30.98% 29.74% 52.57% 4 bed house 216,059 1, % 38.37% 46.09% 44.17% 73.79% 15th percentile 86, % 17.46% 20.53% 19.77% 7.15 Matrix modelling in the above table identifies that a lower quartile household: has limited local access to shared ownership and shared equity one bed flats and two bed houses with housing costs within the 25 per cent threshold of GHI.; could access shared ownership and shared equity at the proxy first time buyer entry level property price the 15 th percentile figure; has no access to private rented or market priced properties; Final Report 152

160 might be able to afford a full market priced one bed flat/entry level property (showing as amber with housing costs of 26.34% and 26.68% % and 1.68% above the 25 per cent threshold respectively) given slightly more favourable economic circumstances From the full affordability matrix (see Appendix Four) figures for the West Midlands are similar to the above table although the situation for two bed flats is better than for the local archetype; and figures for national prices show only one potential property below 25 per cent of GHI a 25% share of a one bed flat. Four other LCHO properties show up amber within 5% of the CLG 25 per cent threshold The following matrix relates to a median income household. Birmingham - Ladywood - Median Properties Annual Hsg costs including rent and service charges Home Ownership Shared Ownership Shared Equity Private Rent Market Price PRS Rent 100% 25% 50% 70% 1 bed flat 98, % 12.31% 14.53% 13.98% 21.58% 2 bed flat 168, % 19.45% 23.26% 22.31% 29.00% 2 bed house 104, % 12.99% 15.36% 14.77% 28.11% 3 bed house 139, % 16.47% 19.61% 18.83% 33.29% 4 bed house 216,059 1, % 24.30% 29.19% 27.97% 46.72% 15th percentile 86, % 11.06% 13.00% 12.52% 7.17 Matrix modelling identifies: a much better potential access to most properties locally with only three and four bed private rent and four bed market housing in the red above the CLG threshold; and a further six properties show amber with two in each of the market housing and private rent From the full affordability matrix (see Appendix Four): both the West Midland and National figures are much improved on the lower quartile income with five red/two amber and six red/seven amber respectively; and there is a definite relationship and similar patterns of affordability between the costs of living in market housing and private renting in this area. Final Report 153

161 Stakeholder Consultation: the private rented sector What is the Role of the Private Rented Sector and How is it Performing? Landlords 7.19 The lettings agents interviewed, who operated predominantly in Ladywood and adjacent areas, acted for a range of landlords from individual investors to landlords with over 200 properties, together with a recent influx of accidental landlords - owner occupiers who had been unable to sell but had to move. None was anticipating major changes in the private rented market in the next one to three years; two thought landlords would continue to purchase cheap properties which would help to offset the withdrawal of accidental landlords The landlords interviewed had been in business for between two and thirty years, and were locally based with properties in the adjacent areas of Selly Oak and Edgbaston; one also had properties in London. They owned between five and thirty properties and were not thinking about increasing their portfolio of properties, deposits of 30 per cent were too high; better returns on investment could be obtained elsewhere; interest rates were too high; rents too low and there was too much red tape. Tenants 7.21 The private rented sector, according to Birmingham City Council (BCC), plays an important role in the city s housing market for the entire demographic, from the very poor to the well off. It also accommodates around 20,000 students. Demand has increased in the last twelve months, although some landlords are now reluctant to take LHA tenants because this goes direct to the tenant. It should continue to play its part in the market as it fills a need. In fact, the Council needs the private rented sector to perform. In a city the size of Birmingham, it is an important part of the overall housing market for many people, particularly students and young mobile workers The private rented sector in the Ladywood area is, according to the lettings agents interviewed, composed of young professionals, students and some families who are renting temporarily before buying another property, which was the main change mentioned by one agent All three landlords operated shared housing; one let only to students; one to young graduates on their first or second job; the third also let family accommodation. Two had rigid no pets/no smoking clauses, largely because of shared accommodation. Because of the nature of their clientele, neither took tenants on LHA and neither was looking to diversify. The third landlord also operated a no pets/no smoking but did take tenants on LHA if they could provide a month s rent in advance plus a deposit equivalent to one month s rent. Final Report 154

162 7.24 The decision whether to take tenants on LHA rested very much with the landlord, according to lettings agents. Concern in getting the rent is the main worry for landlords and the LHA system, with rent being paid direct to the tenant, has not helped. Property turnover and availability 7.25 The lettings agents interviewed were relatively large operations, with between 40 and 250 rooms or properties currently available to let. Their occupancy rates varied between 75% and 100%, with tenants staying between six months and eighteen months. Two offered a range of properties from studio flats to three bed houses; the third offered one bed flats to ten bed houses let as HMOs to students and professionals There was a view that starting with a six month tenancy to see how things work is best, even though most landlords are happy to let for longer periods. However, the difficulties of regaining possession if things go wrong mean the agents recommend a six month tenancy to start with Two of the landlords interviewed are responding to a niche demand in the housing market with occupancy rates of between 95 and 100%. Tenants stayed for between twelve months and three years. Both landlords were happy to let for a longer period, one saying they did not restrict the rental period and the other citing the need for guaranteed rental. The landlord who let to families as well as students started with a six month tenancy but was happy to renew if tenants looked after the property; one tenant had been in their home for 22 years. Movement through the market 7.28 There is obviously a demand in the housing market for private renting; this is demonstrated by high occupancy rates and the mobile clientele of students and young professionals in a major city. Some families are seeking to rent in the short term, pending purchase of another property. There are numerous accidental landlords who may withdraw from the rented market as and when the sales market picks up One of the lettings agents had not noticed any consequences of the reduction in asylum seeker accommodation and had no properties let to migrant workers. Two had formerly held a NASS contract; one indicated the properties involved were now let to professionals and they had not been in good condition when they came back. The third said they had reverted to being family homes. This agent was aware of former asylum seeker accommodation being let to migrant workers in Edgbaston; they themselves housed about 50 migrant workers, but this was decreasing. The other agent had only one or two properties let to migrant workers. None of the landlords Final Report 155

163 interviewed were able to comment on the reduction in asylum seeker accommodation though one thought it might have depressed rents and another thought some landlords had had property returned to them with the change in NASS contracts The City Council s view was that asylum seeker accommodation is demand led - if NASS want more accommodation, the Wardlow Centre source it for them. There has been a small reduction in the NASS contract over the last five years. Some former asylum seeker accommodation may be let to migrant workers, but there s no hard evidence Migrant workers from the EU have levelled off and are likely to reduce but migrant workers from the Asian subcontinent are still increasing. The WRS data is misleading for the location of migrant workers as it uses the postcodes for the agencies, not where workers are living. The migrant worker population has had an impact in sustaining rental values and growth in the size of private rented sector. Some traditional private rental markets as a result have experienced change, for instance, parts of Selly Oak private rented sub market was previously dominated by student lettings are now diversifying into provision catering for migrant workers and other newcomers from abroad The Council is aware that there is overcrowding in the PRS in some communities; gangmasters have been mentioned but there is no hard evidence. When the house is re-let, a Prohibition Order can be served, stating how many occupants are allowed. Barriers to accessing the market 7.33 Barriers to entry into the private rented sector generally include lack of deposit and rent in advance; some landlords are reluctant to take tenants on benefits now that LHA is paid direct to the tenant and some won t take tenants if they can t communicate with them. BCC is seeking to develop a credit unionbacked bond scheme to help those with financial difficulties As to letting to a wider range of households, such as young or vulnerable people, lettings agents were quite clear that the current system of LHA going direct to the tenant was a hindrance: Landlords need a better rent guarantee The bond scheme can be exploited by a dishonest tenant. The reduced rate of benefit for under-26s was mentioned as a problem. One agent thought there should be some compensation for the landlord if they adapted their property for a disabled person As to letting to a wider range of households, such as young or vulnerable people, none of the landlords was interested in widening their range, although Final Report 156

164 one had previously housed homeless households for the City Council. Of the others, one cited potential difficulties with such tenants and the other said they had no experience in that area The most common tenancy restrictions are no pets/no smoking clauses; pets are not such a problem in a rented house, although lettings agents say it does depend on the landlord. Many will include a requirement to have carpets cleaned. It seems clear that restrictive tenancy clauses are a minor factor when compared with restrictive practices in letting to tenants with limited financial means or other vulnerabilities. What is the Potential of the Private Rented Sector and How Might this be Achieved? 7.38 The private rented sector in Birmingham is already accommodating a wide range of clients. The City Council say it plays an important role in the city s housing market for the entire range of people, and household types. The main challenge in Ladywood is ensuring that range of consumers includes vulnerable and benefit dependent-households The private rented sector could be accessed by a wider range of clients, provided the necessary support was in place for accredited landlords. This would include: getting a rent bond scheme up and running - the City Council are working on this but it has not yet come to fruition; rent and damage guarantees from the local authority, so that landlords housing vulnerable tenants would be indemnified by the Council against loss of rent or damage to their property; on-going tenancy support for vulnerable tenants to enable them to maintain their tenancy; marketing of the private rented sector to potential clients for example, by giving housing register applicants information on the PRS and the accreditation scheme it is a positive step that accredited landlords will be able to advertise vacancies on the new choice-based lettings scheme; and informing lettings agents as to what support the Council can offer so they can inform both clients and landlords, via written material, personal contact and the Council s website. The Role of the Local Authority 7.40 BCC is trying to encourage professional landlords and is part of the Midland Landlord Accreditation Scheme, which is also used by 14 universities in the Final Report 157

165 Midlands. Accredited landlords will be part of Birmingham s choice-based lettings scheme which is currently being rolled out BCC engages with the city s landlords in several ways, it holds a monthly Landlords Steering Group, a group of 12 landlords which discusses landlord issues with the Council, and a twice yearly landlord forum, attended by 200 people on the last occasion, the mailing list is 7,000. There is also a twice yearly newsletter and notes on the Council s website of items of interest to landlords BCC is aware that it needs to do more to support individual tenants and landlords who may house them. In particular, it is trying to develop a rent bond scheme linked to a credit union which will both enable tenants to borrow for the rent deposit and later be encouraged to save. This will need promotion to landlords if it is to succeed. The Council needs to assist landlords with LHA issues - Sandwell, for example, are to provide a dedicated hotline for accredited landlords No Tenancy Support Officers exist for private tenants; such staff could provide on-going minimum support for former Supporting People clients to enable them to maintain their tenancies and to give landlords the confidence to house them. Stakeholder Consultation: the intermediate housing sector What is the Role of the Intermediate Housing Sector and How is it Performing? 7.44 The RSLs interviewed identified a variety of lower income households currently accessing the IHS, including families, singles and couples. Households dependent on benefit are excluded Applicants would generally need to pay a deposit and have the financial capacity to support a mortgage. Deposits required depended on the lender and the scheme they varied between 10 and 25 per cent, but lenders seemed to be valuing new-build schemes in relation to second hand values The lender interviewed confirmed that a deposit is required. Generally, they asked for a 10 per cent of the share purchased as a deposit, but do value new build at second hand values. The interest rate charged was 6 per cent. Most shared ownership mortgage requests are approved as the buyer is already appraised of the scheme and costs involved. Properties 7.47 The RSLs interviewed had LCHO property in Birmingham and both had developed new build shared ownership. One only developed that product and Final Report 158

166 the other, because of difficulties selling the shared ownership properties, a small amount of intermediate renting and Try Before you Buy homes One RSL identified a shortage of city centre apartments in Birmingham, together with three and four bedroom properties, whilst the other identified an oversupply of the same type of property. The latter indicated a shortage of two, three and four bedroom properties. Movement in the market 7.49 The RSLs identified several factors which lead private renters to move into the IHS. These include a wish to move to a different/ better location, the price of the property and affordability when compared to the cost of renting. Others include the aspiration to own their own home, making an investment in the property, seeing renting as dead money ; and acquiring something to leave to their children The City Council could not suggest any reasons why private renters might move to the IHS and suggested we asked the HomeBuy Agent. Barriers to access 7.51 The main barriers to accessing the IHS are financial, and benefit-dependent households are excluded. Both RSLs were able to offer affordable entry levels for shared ownership, one by lowering the initial proportion purchased to reflect the amount of disposable income, the other by ensuring property is not sold to people whose income does not cover the 25 per cent However, the problem may be wider than that and reflects the more general position of the economy. According to the lender interviewed, applications for shared ownership mortgages had fallen, along with applications for ordinary mortgages. Their general impression is that re-possessions have increased. Generally, IHS is a good way for first time buyers to start out; however, some more recent purchasers have found themselves in negative equity. This uncertain market is reflected in the fact that the lender interviewed had not had a request for a shared ownership mortgage since July. In the past three years they have approved around 20 such mortgages and had two to three repossessions The lender was happy to lend on shared ownership schemes generally, but would shy away from those which restricted resale to a particular category, for example, over 55s. Local connection requirements, restricting who could purchase the property, had never been a problem for them The RSLs confirmed that long established lenders who were familiar with the IHS products were most prevalent and likely to lend. However, lenders didn t Final Report 159

167 like any restrictions on resale; Section 106 agreements that included local lettings policies were an example As far as the City Council is aware, the S106 agreement does not unduly influence whether a lender will provide a mortgage on a shared ownership scheme as it merely requires a certain mix of dwellings to be delivered A revised shared ownership lease is to be introduced in a bid to encourage more lenders to the market. The HCA, working with Communities and Local Government, Council of Mortgage Lenders and the National Housing Federation, has drafted the updated document, which covers homes sold through the New Build Homebuy product 7. What is the Potential of the Intermediate Housing Sector? 7.57 The restricted market for lenders is perceived as holding back the development of the IHS and the development of a wider range of products which might enable a wider range of clients to access it. This is one reason behind the HCA s developing a new lease for IHS schemes in partnership with, among others, the Council of Mortgage Lenders. How Might its Potential be Achieved? 7.58 Whilst the IHS could be targeted to a wider range of clients, it is dubious whether this is advisable in the current economic circumstances. At best, it would be encouraging marginal home owners who would be at greater risk of mortgage default. To make this work, such groups would need a financial safety net to ensure their continued ability to sustain their property We have carried out six consumer interviews in Ladywood, four of whom have become Low Cost Home Ownership (LCHO) owners recently and two who are hoping to access LCHO. Their views on the process are set out below. Consumer Consultation Applicants: finding out about LCHO 7.60 Both found out about LCHO in different ways one from the internet and one from a friend. Both cited financial reasons for their decision to apply, with one amplifying this by saying, To try to get a house As to the positives and negatives of LCHO, one said the cost was more manageable than buying privately. The other cited security and enabling people to get on the property ladder. The negatives were that a person didn t own all the property and may experience difficulty selling their share, according to one, whilst the other could not think of any negatives. 7 HomeBuy Direct Buyers Guide, March 2010, see: Final Report 160

168 The application and assessment process 7.62 Both had found the application process easy, one had found the financial issues well explained and the other less so. Neither were told how properties were allocated nor how long they would have to wait for a home. Current and future home 7.63 One of respondents was currently living with parents in a privately rented house. The other was renting a flat privately. Both were in two bed properties; they had been living there for 18 months and 15 years. The one in private renting paid a monthly rental of 410. The one living with parents paid 200 per month One respondent was looking to purchase a three bed house; the other a one bed property, with no preference for type. Neither had been offered a property. Respondent details 7.65 Both respondents were in employment; one worked in the public sector and one for a bank. One had household income in the 5,000-9,999 range and one in the above 25,000 band. Their households comprised one single adult households and one with one adult and two children. One respondent described their ethnicity as Black British African and one as Black British Caribbean. Current LCHO Owners Finding out about LCHO 7.66 All four found out about LCHO in different ways one from their mortgage broker, one from the developer s on site marketing suite, one saw signs outside a new build site and one found out from a friend. Two decided to go for LCHO because they could not save enough for a deposit, one because they considered it better value than renting and one because they needed help to purchase a property Three found it easy to register an interest and one did not, but gave no reasons. No-one encountered any difficulties getting a LCHO property, although one commented that the process seemed slow and difficult to align with getting out of private renting All said they still thought the main benefit they expected - helping first time buyers without deposits on to the housing ladder in two cases, and better value for money than renting, building an asset in the third case and Final Report 161

169 accessing the perks of a new build scheme in the fourth still applied now they were owners and they perceived this as the main positive effect. Three could think of no negatives; the other cited the limited choice of properties. The application and assessment process 7.69 Three said the process was explained very well; the fourth thought the verbal explanation was less good than the written material. All thought the financial implications were well explained and three had had an interview with an independent financial adviser; the fourth respondent was offered this but declined to take it up. No-one was told how properties were allocated; two were told how long they would have to wait but two were not, but one commented it was quick. Present and previous home 7.70 Previously, three had been in the private rented sector and one had been living with parents for 12 years in an owner-occupied terraced house. Of the others, one had been in a shared flat for four years; one had been renting a two bedroom house for six years; and one renting a one bedroom flat for two years Two had been looking to buy a two bedroom house, but only one had succeeded the other was not offered a two bedroom house and had purchased a two bedroom flat. The other two respondents were looking for and purchased a two bedroom flat Purchase prices ranged from 102,000 to 160,000, depending on size and type of property. Three had bought a 70 per cent share and, as they had only purchased within the last few months, none had bought a larger share. The fourth had purchased 100 per cent of the property. Monthly outgoings on mortgage, rent and service charges ranged from 434 to 700, and all respondents said they could afford this As to future plans, three respondents said they were looking to stay long term, medium to long term or a few years in their new home and the fourth was intending to live there for five to ten years. Three would seek to move into market owner occupation as their next step whilst one favoured another LCHO home. Respondent details 7.74 All the respondents were in employment; two worked in the public sector; one was a trainee solicitor and one a software engineer. One had household income in the 20,000-25,000 band; two above 25,000; and one did not say. Their households included one with three adults, one with two adults and Final Report 162

170 two single adult households. Two respondents described their ethnicity as White British and two as Asian British Pakistani. Final Report 163

171 8. THE SOHO AND VICTORIA, SMETHWICK AND ST PAULS WARDS, SMETHWICK, SANDWELL CASE STUDY EXECUTIVE SUMMARY The Private Rented Sector: the main messages The Local Housing Allowance (LHA) direct to tenants is a major disincentive to landlords to take tenants on benefits, although many still do; Most landlords are not looking for short lets, but often let for six months in the first instance to see how the tenancy is conducted; Landlords need to know they will receive support from the Council, such as rent guarantees and indemnity against damage to the property, if they house vulnerable tenants; Former asylum seeker accommodation has not impacted on the private rented sector in Sandwell; and The incidence of migrant workers in the private rented sector in Sandwell may be declining as jobs disappear. The Private Rented Sector: policy implications The LHA system of payment direct to tenants and reduced rate for under-26s will not support a wider range of clients in the private rented sector. There may be a role for local authorities to offer guarantees and/or top-up payments so that LHA covers the full rent; Local authority on-going support for vulnerable households as detailed above, is essential to encourage a wider range of landlords to house them; and The sector may actually decline as accidental landlords withdraw and existing ones have little incentive to increase their portfolios. The Intermediate Housing Sector: the main messages The main exclusions from the intermediate housing sector are financial, through not being able to fund a mortgage or a deposit, and for non-uk residents; Better marketing of IHS products to estate agents and potential clients is required; this may be best done by local campaigns when properties are being developed or funds are available locally for HomeBuy; Better advice given on ownership responsibilities by financial advisers to ensure Final Report 164

172 that clients understand fully the responsibilities of home ownership; and Better understanding by lenders of IHS products is needed there are still a very limited number of lenders in the field. The Intermediate Housing Sector: the policy implications The need for concerted marketing campaign to lenders and potential clients, giving out a consistent message; and Developing a better understanding of LCHO products among estate agents so they can better inform clients. These two issues are probably best tackled initially at national level by the HCA, the CML and the estate agents national body. This could then be followed up at regional level and locally when specific schemes are being developed. What are the Interactions Between the Private Rented and Intermediate Housing Sectors? RSLs see households moving from the private rented sector motivated by a desire to own their own home and to move to a more affordable property. Demand is high but deposits can put the product out of reach for the target clientele; sometimes an RSL will think a client can afford to buy but the lender says they are too great a risk. In the current economic climate, there is a risk of shared owners reverting to the private rented sector, particularly if people lose their jobs. And lenders criteria can also mean people can t move from the private rented sector. Introduction 8.1 This case study was selected due to: the locally high level of private renting 7.7% of households at the time of the 2001 Census compared with 4.6% in Sandwell and 6.4% in the West Midlands; the higher percentage of families with dependent children in the private rented sector; and the high level of terraced houses (almost half) in the private rented sector. Final Report 165

173 Final Report 166

174 8.2 The following maps show the distribution of the private rented sector and shared ownership in Sandwell at the time of the 2001 Census with more recent ward boundaries overlaid. Final Report 167

175 Final Report 168

176 The Private Rented and Intermediate Housing Sectors in Soho & Victoria, Smethwick and St Pauls: key data 8.3 The following table profiles tenure for the case study area. Table 8.1: tenure Sandwell case study area Owner occupied: Owns outright Owner occupied: Owns with a mortgage or loan Owner occupied: Shared ownership Rented from: Council (local authority) Rented from: Housing Association / Registered Social Landlord Rented from: Private landlord or letting agency Area Rented from: Other All Households No. % No. % No. % No. % No. % No. % No. % No. % Sandwell Case Study Area 3, , , , , , Sandwell 29, , , , , , , West Midlands 651, , , , , , , ,153, England 5,969, ,950, , ,702, ,238, ,798, , ,451, (Source: KS18 Tenure, 2001 Census data) 8.4 Key findings: 7.7% of households were privately renting with a landlord or lettings agency at the time of the 2001 Census in the Sandwell case study area. This was higher than for Sandwell (4.6%) and the West Midlands (6.4%) and lower than for England (8.8%). 5.2% were rented from Other in the Sandwell case study area which includes some privately rented households. This was higher than for Sandwell (4.7%), the West Midlands (3.5%) and England (3.2%). Final Report 169

177 0.7% of households were shared owners in the Sandwell case study area. This was the same as for Sandwell (0.7%), the West Midlands (0.7%) and England (0.7%). 8.5 The following table profiles household type in the private rented sector for the case study area. Table 8.2: types of household in the private rented sector and living rent free Sandwell case study area Single Person Couples Families with Dependent Children Pensioners Other Total Households Area No. % No. % No. % No. % No. % No. % Sandwell Case Study Area , Sandwell , , , , West Midlands Private Renting 55, , , , , England Private Renting 673, , , , , ,456, West Midlands All Households 312, , , , , ,153, England All Households 3,210, ,633, ,022, ,848, ,736, ,451, (Source: CAS056 Tenure and Amenities by Household Composition & T08 Theme Table on Households, 2001 Census data) Note: Household Type Private Rented Sector and living rent free in Sandwell Statistics at the small area level combined private renting with living rent free, therefore the comparative data also includes living rent free. 8.6 Key findings: The percentage of single person households (excluding pensioners) (17.7%) in the Sandwell case study area was lower than in Sandwell (21.4%), the West Midlands (26.3%) and England (27.4%) for those households in privately rented or rent free accommodation. Single person households were over-represented in the private rented sector and living rent free in the Sandwell case study area at 17.7% compared to all households in all tenure types in the West Midlands (14.5%) and in England (15.7%). Final Report 170

178 9.7% of households in the PRS and living rent free were couples in the Sandwell case study area, compared to 9.9% in Sandwell. There were a higher percentage of couples for the West Midlands (13.7%) and England (16.1%) in the PRS and living rent free. Couples were under-represented in the PRS and living rent free in the Sandwell case study area (9.7%) compared to all couple households for all tenures in the West Midlands (17.5%) and England (17.8%). There were a higher percentage of families with dependant children in the PRS and living rent free in the Sandwell case study area (35.1%) than in Sandwell (29.1%), the West Midlands (24.6%) and England (22.5%). Families with dependent children were over-represented in the PRS and living rent free in the Sandwell case study area (35.1%) compared to all families with dependent children for all tenures in the West Midlands (30.7%) and England (29.4%). 19.8% of households in the PRS and living rent free in the Sandwell case study area were pensioners compared to Sandwell (26.6%), the West Midlands (19.4%) and England (15.6%). Pensioners were under-represented in the PRS and living rent free in the Sandwell case study area (19.8%) compared to all families with dependent children for all tenures in the West Midlands (23.8%) and England (23.7%). 17.8% of households in the PRS and living rent free in the Sandwell case study area were Other households compared to 13% in Sandwell, 16.1% in the West Midlands and 18.4% in England. Other households were over-represented in the PRS and living rent free in the Sandwell case study area (17.8%) compared to all Other households in all tenures for the West Midlands (13.5%) and England (13.4%). Final Report 171

179 8.7 The following table profiles accommodation type in the private rented sector for the case study area. Table 8.3: accommodation type private renting and living rent free in unshared dwellings Sandwell case study area Area House or bungalow - Detached House or bungalow - Semi detached House or bungalow - Terraced (including end terrace) Flat, maisonette or apartment - In a purpose built block of flats or tenement Flat, maisonette or apartment - Part of a converted or shared house (includes bedsits) Flat, maisonette or apartment - In a commercial building Caravan or other mobile or temporary structure : Private rented - Private landlord or letting agency ) Total Unshared Dwellings No. % No. % No. % No. % No. % No. % No. % No. % Sandwell Case ,836 Study Area Sandwell , , , , West 28, , , , , , , ,027 Midlands England 274, , , , , , , ,419, (Source: CAS049 Dwelling Type and Accommodation Type by Tenure, 2001 Census) Note: Statistics at the small area level combined private renting with living rent free, therefore the comparative data also includes living rent free. 8.8 Key findings: There was a lower percentage (5.7%) of detached houses or bungalows in the PRS and living rent free in the Sandwell case study area than in Sandwell (6.8%), the West Midlands (13.5%) and England (11.3%). More than one fifth (22.5%) were semi detached houses or bungalows in the PRS and living rent free in the Sandwell case study area compared to 30.7% in Sandwell, 25.8% in the West Midlands and 19.5% in England. Final Report 172

180 There was a much higher percentage (47.5%) of terraced houses or bungalows (including end terraces) in the PRS and living rent free in the Sandwell case study area than in Sandwell (29.1%), the West Midlands (28.4%), and England (26.1%). A lower percentage (15.7%) of Sandwell case study areas PRS and living rent free accommodation was in purpose built flats, maisonettes or apartments than in Sandwell (22.7%), the West Midlands (16.4%) and England (20.6%). A lower percentage (4.3%) of the Sandwell case study area PRS and living rent free was in flats, maisonettes or apartments that were converted or part of a shared house, than in Sandwell (4.5%), the West Midlands (9.3%), and England (15.7%). 3.9% were flats, maisonettes or apartments in commercial buildings in the Sandwell case study areas PRS and living rent free compared to 6.2% in Sandwell, 6.2% in the West Midlands and 6.1% in England. 0.3% were caravans or other mobile structures in Sandwell case study areas PRS or living rent free unshared dwellings compared to 0.1% in Sandwell, 0.5% in the West Midlands and 0.6% in England. Final Report 173

181 8.9 The following table profiles overcrowding in the private rented sector for the case study area. Table 8.4: occupancy rating for households privately renting or living rent free Sandwell case study area Area Overcrowding Minus 1 or Less All Household Private Renting or Living Rent Free Zero Plus No. % No. % No. % Sandwell Case Study Area 1, , Sandwell 9, , , West Midlands 186, , , England 2,053, , ,456, (Source: CAS053 Occupancy Rating by Tenure and Household Composition, 2001 Census data) 8.10 Key findings: 13.3% of the PRS and Living Rent Free households in Sandwell case study area were overcrowded with an occupancy rating of minus one or less. This was higher than in Sandwell (10.7%) and the West Midlands (11.9%) and lower than in England (16.4%). Final Report 174

182 8.11 The following map shows overcrowding in the private rented sector at the time of the 2001 Census with more recent ward boundaries overlaid. Final Report 175

183 Affordability Matrix Modelling: Sandwell 8.12 The following matrix identifies the range of properties considered and their market prices, and indicates the resulting levels of affordability through both the traffic light system and, within each cell, a figure that identifies the actual percentage of the gross household income which housing costs represent. This actual percentage figure indicates how close the household is to attaining the CLG 25 per cent threshold of affordability for that particular property and tenure In the affordability matrices below, the lower quartile and median single income figures for Sandwell have been sourced from the ASHE Table 8.7a from February The gross household incomes have been calculated based on research published in the NHPAU report from February 2010: Housing Affordability: a fuller picture. This report calculated that single household incomes represent 58% of joint gross household incomes. The actual figures used are all based on two income households and are: lower quartile single income 12,290; joint gross household income 21,139; median single income 18,848; joint gross household income 32, The following matrix relates to a lower quartile income household. Sandwell LQ Properties Annual Hsg costs including rent and service charges Home Ownership Shared Ownership Shared Equity Private Rent Market Price PRS Rent 100% 25% 50% 70% 1 bed flat 75, % 16.38% 19.19% 18.49% 28.25% 2 bed flat 88, % 18.64% 21.94% 21.12% 32.62% 2 bed house 112, % 22.55% 26.72% 25.68% 34.72% 3 bed house 138, % 27.02% 32.18% 30.89% 36.65% 4 bed house 222, % 41.00% 49.28% 47.22% 51.30% 15th percentile 82, % 17.50% 20.55% 19.79% 8.15 Matrix modelling in the above table identifies: local access to shared ownership, shared equity and one and two bed market flats nine green and three amber cells; no access to private rented properties; this household could access shared ownership and shared equity and almost access a market priced property (26.65%) at the proxy first time buyer entry level property price the 15 th percentile figure. Final Report 176

184 8.16 From the full affordability matrix (see Appendix Four): the West Midland figures are worse than for the local archetype with only 25 per cent shared ownership one and two bed properties really available; figures for the national prices show only one potential property below 25 per cent of GHI a 25 per cent share of a one bed flat; four other LCHO properties show up as amber within 5 per cent of the CLG 25% threshold The following matrix relates to a median income household. Sandwell - Median Properties Annual Hsg costs including rent and service charges Home Ownership Shared Ownership Shared Equity Private Rent Market Price PRS Rent 100% 25% 50% 70% 1 bed flat 75, % 10.68% 12.51% 12.06% 18.42% 2 bed flat 88, % 12.15% 14.30% 13.77% 21.27% 2 bed house 112, % 14.70% 17.42% 16.74% 22.64% 3 bed house 138, % 17.62% 20.98% 20.14% 23.90% 4 bed house 222, % 26.74% 32.13% 30.79% 33.45% 15th percentile 82, % 11.41% 13.40% 12.91% 8.18 Matrix modelling in the above table identifies: much better potential access to most properties locally with only one three bed and four bed properties in the red/amber levels; and this household could access all shared ownership and shared equity properties at the proxy first time buyer entry level property price the 15th percentile figure From the full affordability matrix (see Appendix Four): the West Midland figures show good potential access to all one to three bed properties but limited potential access to three and four bed properties with five in the red and four amber within 5 per cent of the CLG 25 per cent threshold; access to private rent properties is reasonable with affordability below the 25 per cent threshold for three and four bed properties as above; the national table shows less potential access than either the local or West Midlands tables with only one market and no private rent properties being affordable; as in most cases, potential access to the shared ownership and shared equity properties is best but even two of these four bed 50 per cent Final Report 177

185 shared ownership and four bed shared equity are showing red at 10 per cent above the 25 per cent threshold. Stakeholder Consultation: the private rented sector What is the Role of the Private Rented Sector and How is it Performing? Landlords 8.20 According to Sandwell MBC, the private rented sector in Sandwell has grown over the last three years as a result of owner occupiers being unable to sell their homes and becoming accidental landlords; many of whom let to benefit tenants. This sector view was confirmed by lettings agents, who acted for numerous accidental landlords. None were anticipating major changes in the supply or structure of the private rented market in the next one to three years. A common view was that; It all depends on the economy and this applied equally to whether accidental landlords would withdraw from the market and to whether there would be changes among established landlords The landlords interviewed were locally based, they had been established for at least ten years and had relatively small portfolios of between six and twenty-four properties in Sandwell or adjacent areas of Birmingham. Only one was thinking about increasing their portfolio of properties. Tenants 8.22 The private rented sector in Sandwell contains a wide variety of households, including professionals, students, people setting up home on their own, divorcees' down-sizing, single parents and people renting temporarily before buying another property. A range of properties is on offer in the PRS from one bed flats to four to five bed houses. Lettings agents reported an increase in families on LHA where people have lost their jobs and one had noticed an increase in local people seeking tenancies as EU migrant workers went home The decision whether to take tenants on LHA rested with the landlord all cited the fact that LHA was paid direct to the tenant for at least eight weeks as a deterrent to some landlords. Also mentioned by lettings agents as a disincentive was the reduced rate of benefit for under-26s and the ability of the local authority to claw back overpaid benefit from other properties if the landlord/lettings agent was receiving benefit for more than one property. Final Report 178

186 8.24 The difference in landlord attitudes was confirmed by landlord interviews with one landlord preferring tenants on LHA as he was able to receive rent direct; one never taking such tenants; and one saying: I try to avoid it, but I will take them with a guarantor, a deposit and rent in advance Sandwell MBC s view is that, when there is a surplus of properties, such as when the accidental landlords first became a feature of the local PRS scene, landlords were willing to take benefit dependent tenants; the change to Local Housing Allowance being paid direct to the tenant had meant landlords were now less keen to do so. To counter this and to assist tenants with financial difficulties, Sandwell offers a deposit guarantee scheme, a bond scheme and rent in advance. It also started in April 2010 a dedicated Housing Benefit phone line for accredited landlords. Property turnover and availability 8.26 Occupancy rates reported by lettings agents varied between 75 and 95 per cent, with tenants staying on average between six months and one to two years. There was a view that starting with a six month tenancy to see how things work out can be attractive to landlords, although one agent commented that the key was to keep tenants happy so that they stayed longer: It s a buyers market tenants have the upper hand Landlords interviewed also reported high occupancy rates the lowest quoted was 80 per cent, and this was because the landlord was having work done on some properties. Most tenants stayed for at least twelve months or, in the case of students, for the academic year. Landlords generally are happy to let for a longer period: three of my current tenants have been there for two, five and eight years respectively. Movement through the market 8.28 There is obviously a distinct demand in the housing market for private renting; this is demonstrated by high occupancy rates and the wide variety of households seeking either permanent or temporary rented homes. Some are seeking to rent in the short term, pending purchase of another property; others, such as young professionals, need flexibility to move for work. There was a view among lettings agents that it is tending towards a buyers market, with the impact on supply of more accidental landlords but that this will change as and when the sales market picks up. Final Report 179

187 8.29 The impression gained was that neither landlords nor lettings agents had an overall view of where tenants moved to when they left but that it was more likely to be to another privately rented property or to full owner-occupation. There was no evidence that people were leaving the PRS for the IHS None of the lettings agents had noticed any consequences of the reduction in asylum seeker, refugee or migrant worker accommodation. Two had properties let to migrant workers one less than 5 per cent of properties and one around 30 per cent - both reported this was decreasing as jobs decreased. Only one landlord was able to comment on the reduction in asylum seeker accommodation and they said the changes happened three to four years ago when HMOs let to asylum seekers went back to the student accommodation they had been ten years ago Sandwell is no longer involved in housing asylum seekers; it withdrew from the local authority consortium in 2006 and is now only concerned in the inspection of properties to be used to house asylum seekers. It estimates that the number of asylum seeker properties has not changed Sandwell has no specific data on migrant workers from the EU, but estimates that there is a smaller but more stable population, living mainly in West Bromwich and Oldbury. They live in all tenures, including social and private rented property and owner-occupation. Barriers to accessing the market 8.33 Barriers to entry into the private rented sector generally include lack of deposit and rent in advance, although Sandwell have schemes in place to help overcome this. Other problems include those landlords reluctant to take LHA; landlord prejudice against young or vulnerable tenants; and some tenancy restrictions. To help young and vulnerable households, the Council is proposing training potential tenants in their responsibilities. Sandwell MBC accepts that more tenancy support from the Council s needed to improve access for vulnerable households As to letting to a wider range of households, such as young or vulnerable people, lettings agents were quite clear that the current system of LHA going direct to the tenant was a hindrance: landlords are looking for security of income, care of the property and no nuisance to neighbours. Any support would have to underwrite this Two landlords confirmed this, citing problems with LHA going direct to the tenant and the need for either the landlord to be indemnified against damage or another body to manage vulnerable clients on the landlord s behalf. Only one landlord, who preferred to let to LHA clients, did not restrict who they let to, but relied on a face to face interview. Final Report 180

188 8.36 The most common tenancy restrictions are no pets/no smoking clauses, but whether such tenants are accepted depends on the landlord. Some will insist carpets are professionally cleaned and any damage made good when a pet owner leaves; others will permit smokers provided they indulge outside the house. The issue is not lifestyle but whether damage is caused to the property Landlords interviewed have no pets/no smoking clauses but only one landlord will not vary this because he lets rooms in shared houses. The others adopt a more flexible attitude to pets and smokers. Taken in the round, restrictive tenancy clauses could not be seen as a barrier, particularly when compared with financial barriers. What is the Potential of the Private Rented Sector and How Might this be Achieved? 8.38 In Sandwell, the PRS already includes a wide range of households and the main barriers to entry are financial. The sector could play a more important role for people who can t afford to buy or who don t want or can t access social housing by more landlords being included in the local choice-based lettings system The private rented sector could be accessed by a wider range of clients, provided the necessary support was in place for accredited landlords. Sandwell already has a number of measures in place to facilitate this but it does not overcome all barriers. Others would include: Promoting Sandwell s rent deposit schemes to landlords and agents; Rent and damage indemnities from the local authority to overcome fears of landlords that they will suffer financially if they house a wider range of tenants who may not have the life skills to maintain a tenancy; On-going support for vulnerable tenants; regular tenancy support can enable young and/or vulnerable households to learn how to maintain their tenancy; More positive marketing of the private rented sector to potential clients so residents seeking housing in Sandwell would be aware of the sector and Sandwell s role in ensuring its good standards; it is positive that accredited landlords can advertise vacancies on Sandwell s choice-based lettings scheme; and Final Report 181

189 Educating lettings agents as to what support the Council can offer so they can inform both clients and landlords. This could be done by personal contact, written material and Sandwell s website. The Role of the Local Authority 8.40 The Council needs the private rented sector to perform and is working hard to encourage good landlords. Bad landlords with poor properties and high rents may in fact work against the Council if they increase re-housing duties following eviction or re-housing due to the property s condition Sandwell wants good quality landlords and encourages them to become accredited landlords. This enables them to market properties through the choice-based lettings scheme Sandwell also engages with private landlords through a landlords' forum four times a year and a biannual magazine; it has landlord representatives on the Sandwell Strategic Housing Forum and consults regularly with landlords. It sees enforcement as a last resort. It also offers grants to landlords to improve their property. The Council considers these measures are all successful and the landlords interviewed were complimentary about Sandwell s attitude and assistance to them Any enhancement to the steps already taken, particularly measures such as on-going tenancy support, whilst likely to be cost-effective in the long term, will require additional costs at a time when councils are looking to reduce their revenue expenditure. The Intermediate Housing Sector (IHS) The Profile of the Intermediate Housing Sector 8.44 Over the last three years in Sandwell, the following intermediate housing properties have been developed: 42 shared ownership new build, including ten three to four bedroom units (no details on the others); 49 shared equity one and two bedroom units; and 23 HomeBuy Direct units The RSLs interviewed had low cost home ownership properties in Sandwell but one had not developed any recently. What is the Role of the Intermediate Housing Sector and How is it Performing? Final Report 182

190 8.46 The IHS in Sandwell enables some households to take a first step towards home ownership when they would be unable to afford the full market cost of an equivalent property. Applicants 8.47 A wide variety of households are currently accessing the IHS, including former council or housing association tenants; Key Workers; first time buyers; households earning less than 60,000 a year; previous homeowner who can t afford to buy again without help; divorcees; young families; over 50s; and applicants over 18. Obviously, they will need to be able to afford mortgage costs Applicants will generally need to furnish a deposit unless using HomeBuy Direct, where the applicant takes out a mortgage to cover at least 70 per cent of the purchase price; this is topped up with an equity loan covering up to 30 per cent of the price (15 per cent from the HCA and 15 per cent from the developer). Deposits required depended on the lender and the scheme; they varied between 10 per cent and 25 per cent of the purchase price. Properties 8.49 Property prices are relatively low in Sandwell and this may mean that RSLs find it more difficult to justify IHS development in the area. Indeed, one RSL which had not developed in Sandwell for ten years indicated they had to make a market case to their board for each IHS development; they were now concentrating on Coventry and Stratford Although both RSLs interviewed had developed IHS property in Sandwell in the past, neither identified a shortage of such homes in the area. One said the main shortages in the West Midlands were in high cost areas, such as Warwick and Stratford. Both had developed new build shared ownership housing, and one had also developed a small amount of low cost outright sale and Try Before you Buy homes The lender interviewed indicated that too many flats have been provided because the Homes and Communities Agency /Housing Corporation encouraged this. Movement in the market 8.52 Sandwell MBC identified a variety of reasons which lead private renters to move into the IHS. They include insecurity of tenure in the PRS; wanting to become a home owner and seeing a means of gaining a foothold into homeownership; investment purposes and building an asset; they may be Final Report 183

191 better off financially as costs can be less than the PRS; and a change in circumstances such as an increase in income or changes to family size These were backed up by the RSLs interviewed who thought people moved from the PRS when costs are high and could reduce them by moving to the IHS. Better value for money, in that they were buying an asset, and improved quality, were also mentioned. Barriers to access 8.54 According to the RSLs, households who are excluded include those families who would overcrowd the property; people who are not earning and are without savings; people with poor credit records; and non UK residents The primacy of financial issues was reinforced by the lender interviewed who said: Although we approve 90 per cent of applicants, we are quite disciplined in our choice of clients and reject applicants with a poor credit rating. We always insist on capital repayment mortgages and prefer to deal directly with the client, rather than through a financial adviser to ensure that the client fully understands the responsibilities of home ownership This seems to pay dividends. In the past three years they have completed 151 shared ownership mortgages to a value of 9,378,422; but there have only been three repossessions RSLs ability to offer affordable entry levels for shared ownership varies by area: sometimes incomes are low and this will make entry at 25 per cent impossible in some areas Sandwell see the main barriers to accessing the IHS as: the high cost of the rental element of shared ownership, usually 2.75 per cent of the outstanding equity; whilst only owning a certain percentage of the property, owners are often liable for a 100 per cent of the maintenance costs; the restricted number of lenders willing to provide a mortgage this was backed up by the RSLs, who indicated a nervousness among less familiar lenders; and Final Report 184

192 over the last 18 months, the need for a greater deposit although the lender interviewed asked for a 10 per cent deposit, the RSLs indicate it can be as high as 25 per cent None of those interviewed saw S106 agreements in general as a problem. The lender interviewed, whilst liking both shared ownership and shared equity as mortgageable products (with a preference for HomeBuy), was nervous of rural schemes with a restriction on staircasing. This was backed up by the RSLs, who indicated that lenders also dislike retentions, for example, for unfinished roads, or restrictions on staircasing in rural schemes. Sandwell MBC suggested potential problems could be overcome by putting in place a mortgage in release clause that is acceptable to the developer within the agreement. What is the Potential of the Intermediate Housing Sector? 8.60 In the view of the lender interviewed the IHS needs to be better understood by estate agents, who only promote it to marginal clients. This would give potential owners a better choice between full owner-occupation and a possibly less risky partial ownership to start with. However, being a pragmatist, he recognised that this would impact on agents fees and also that there were limited funds available for the IHS. How Might its Potential be Achieved? 8.61 Whilst the IHS could be targeted to a wider range of clients, it is dubious whether this is advisable in the current economic circumstances, unless it was at those who could afford to choose between that and full home ownership. At best, it would be encouraging marginal home owners who would be at greater risk of mortgage default. To make this work, such groups would need a financial safety net to ensure their continued ability to sustain their property Sandwell suggest the existing situation could be improved by: reducing the shared ownership rental to below 2 per cent of the outstanding equity; sharing pro rata the cost of maintenance between the purchaser and the leaseholder; engaging with the Council for Mortgage Lenders to promote IHS and increase the number of lenders; and developing schemes with the HCA and RSLs to provide equity loans. Consumer Consultation Final Report 185

193 8.63 We have carried out ten consumer interviews in Sandwell, five on the Sandwell housing register who are interested in Low Cost Home Ownership and five who have become owners recently. Their views on the process are set out below. Final Report 186

194 Applicants: finding out about LCHO 8.64 All had found out about LCHO in different ways two from the internet, one from an Orbit exhibition stand at their workplace, one from the press and one from her sister, who had bought a shared ownership home Two decided to apply for reasons related to their current accommodation, one after a relationship breakdown, plus the opening up of Rent to Buy to non-key Workers, and the other needing to move. A third could not afford market prices due to low income and a fourth decided it was more affordable for a single parent. The fifth decided not to apply in the end As to the positives and negatives of LCHO, one was too new to the process to feel able to comment and the one who rejected the option could not give any positives. Of the others, one commented that Rent to Buy allows time to save a deposit for a mortgage, whilst shared ownership enabled equity to be built up. Two others said it enabled people to get on the property ladder with a low income and no deposit. The application and assessment process 8.67 One respondent was only part way through the registration process; the one who decided not to pursue the option had found it easy to register an interest Of the three who had formally registered an interest, all had found this easy. One had found the application process and financial issues well explained, one less so and one was still working their way through the financial issues. One had been told how properties were allocated, the other two had not. None were told how long they would have to wait for a home. Current and future home 8.69 Two of the five respondents were currently living with parents, one in a local authority home and the other in owner occupied property. Of the others, one was renting privately, a property owned by their ex-partner, and two were renting from he council. Three were in three bed semi-detached properties, one in a three bed maisonette and one in a one bed flat; they had been living there for one, five, seven, seventeen and twenty-four years. Only the one in private renting paid a significant monthly rental of 700. The council tenants paid a monthly rental of around 250 and 280, dependent on the size of the property. Those living with parents paid token amounts All four active respondents were looking to purchase a house, two wanting three bedrooms, one two bedrooms and one four bedrooms. All said they were able to afford the property they wanted but only two had been offered it. One had since accepted a transfer from the local authority and one was now buying a property on the open market. Final Report 187

195 Respondent details 8.71 All the five respondents were in employment; two worked in the public sector, two in the private sector and one for a housing association. One had household income in the under 15,000 range, two in the 15,000 to 19,000 range, one in the 20,000 to 25,000 band and one above 25,000. Their households included one all-adult household, one single adult household, two single adult households with one child and one single adult household with four children. One respondent described their ethnicity as White British and four as Black British Caribbean. Current LCHO owners: finding out about LCHO 8.72 All five found out about LCHO in different ways one from the council, one from the local press, one from estate agents, one from friends and one from their partner. Three decided to go for LCHO because they could not save enough for a deposit, one because it wasn t much more expensive than renting and one because they could not afford the same standard of property in any other way All found it easy to register an interest and no-one encountered any difficulties getting a LCHO property, with two commenting that it went through very quickly All said they still thought the main benefit they expected - helping first time buyers without deposits on to the housing ladder and more general financial benefits still applied now they were owners and they perceived this as the main positive effect. Two could think of no negatives; of the others, one cited leasehold tenure rather than freehold, the second that nothing could be changed without landlord consent and sub-letting was not permitted until the property was 100 per cent owned and the third that interest became payable after five years. The application and assessment process 8.75 All said the process was explained well or very well, with two respondents complimenting the written material. All thought the financial implications were well explained and all had had an interview with an independent financial adviser. No-one was told how properties were allocated and four were not told how long they would have to wait, but all commented that they did not have to wait long; one respondent already had a property earmarked when they applied. The fifth was told two months. Present and previous home Final Report 188

196 8.76 Previously, one respondent had been renting a three bedroom house privately for a year; one had been privately renting a four bed house for two and a half years; one had been renting a one bedroom flat from the council for nine years; one had been living with parents for two years in a four bed owner occupied house; and one had living with parents for nine years in an owneroccupied three bedroom house All had been looking to buy a house, and three had succeeded two had bought a four bedroom property and one a three bed. Of the others, both had been looking for a two bedroom house but, after being offered a two bedroom house, one had purchased a two bedroom maisonette in their preferred location. The other was not offered a two bedroom house and had purchased a one bedroom coach house Purchase prices ranged from 90,000 to 200,000, depending on size. Four had bought a 70 per cent share and, as they had only purchased within the last few months, had not bought a larger share. One had bought outright. Monthly outgoings on mortgage, rent and service charges ranged from 400 to 1,040, and all respondents said they could afford this As to future plans, three respondents said they were looking to stay long term in their new home; one for a minimum of ten years and the fifth for three to four years. Four would seek to move into market owner occupation as their next step; the fifth indicated it would depend on prevailing circumstances. Respondent details 8.80 All the respondents were in employment and four worked in the public sector and one in the private sector. Two had household income 20,000 to 25,000 band and two above 25,000. The fifth was unsure of their partner s income but gave theirs as in the 15,000 to 19,000 range. Their households included one with three adults and two children; one with two adults; one with two adults and three children; and two single adult households. One respondent described their ethnicity as White British; one as Black British African, one as Black British Caribbean; one as mixed, White and Black Caribbean and one as Other - Filipino. Final Report 189

197 9. BERRYHILL AND HANLEY EAST, BURSLEM SOUTH AND HANLEY WEST AND SHELTON WARDS, STOKE-ON-TRENT CASE STUDY EXECUTIVE SUMMARY The Private Rented Sector: the main messages LHA direct to tenants is a disincentive to landlords to take tenants on benefits, although many in Stoke-on-Trent will do; most landlords are not looking for short lets, but often let for six months in the first instance to see how the tenancy is conducted; landlords need to know they will receive financial and tenancy support from the Council if they house vulnerable tenants; there is no evidence that former asylum seeker accommodation has impacted on the PRS in Stoke-on-Trent; and the incidence of migrant workers in the private rented sector in Stoke-on-Trent is declining as jobs disappear. The Private Rented Sector: the policy implications The LHA system of payment direct to tenants and reduced rate for under-25s will not support a wider range of clients in PRS. There may be a role for local authorities to offer guarantees and/or top-up payments; local authority on-going support for vulnerable households is essential to encourage a wider range of landlords to house them; and the sector may actually decline as accidental landlords withdraw and existing ones have little incentive to increase their portfolios; this may be less of a problem in Stoke-on-Trent where properties are fairly plentiful. The Intermediate Housing Sector: the main messages It is difficult to make LCHO work in Stoke-on-Trent with its low property prices; The main exclusions from LCHO are financial, including services charges in apartments; better marketing of LCHO products is required; and better understanding by lenders of LCHO is needed the current market is Final Report 190

198 extremely limited in Stoke-on-Trent. The Intermediate Housing Sector: policy implications A concerted marketing campaign to lenders and potential clients is required, providing consistent messages; A better understanding of LCHO products is required by estate agents so they can better inform clients; and more grant funding is required to make shared equity/ownership work in low cost areas. What are the Interactions Between the Private Rented and Intermediate Housing Sectors? The general view is that there is no overlap. However, if market rents rose, then shared ownership may become more financially attractive. There is also the trade-off between short term rental needs and longer term home ownership. There is a danger that people may fall back into private renting through a lack of other options, although intermediate market rent and rent to HomeBuy have considerable potential. Lack of residential development has constrained supply with no Section 106 planning gain of affordable housing due to developments being mothballed. Introduction 9.1 This case study was selected due to: the locally high level of private renting % of households were privately renting at the time of the 2001 Census compared with 6.7% in Stoke-on-Trent and 6.4% in the West Midlands; 4.7% were rented from Other which includes some privately rented households which was higher than for Stoke-on-Trent (3.7%) and the West Midlands; the high level of terraced housing (nearly two thirds) in the private rented sector; the locally high level of shared ownership - 1.6% of households were shared owners which was higher than for Stoke-on-Trent (1.1%) and the West Midlands (0.7%). Final Report 191

199 Final Report 192

200 9.2 The following maps show the distribution of the private rented sector and shared ownership at the time of the 2001 Census with more recent ward boundaries overlaid. Final Report 193

201 Final Report 194

202 The Private Rented and Intermediate Housing Sectors in Berryhill and Hanley East, Burslem South and Hanley West and Shelton Wards, Stoke-on-Trent: key data 9.3 The following table profiles tenure for the case study area. Table 9.1: tenure Stoke-on-Trent case study area Area Stoke- on- Trent Case Study Area Stokeon-Trent West Midlands Owner occupied: Owns outright Owner occupied: Owns with a mortgage or loan Owner occupied: Shared ownership Rented from: Council (local authority) Rented from: Housing Association / Registered Social Landlord Rented from: Private landlord or letting agency Rented from: Other All Households No. % No. % No. % No. % No. % No % No. % No. % 3, , , , , , , , , , , , , , , , , , , , , ,153, England 5,969, ,950, , ,702, ,238, ,798, , ,451, (Source: KS18 Tenure, 2001 Census data) 9.4 Key findings: 13.5% of households were privately renting with a landlord or lettings agency at the time of the 2001 Census in the Stoke-on-Trent case study area. This was higher than for Stoke-on-Trent (6.7%), the West Midlands (6.4%) and England (8.8%). Final Report 195

203 4.7% were rented from Other in the Stoke-on-Trent case study area which includes some privately rented households. This was higher than for Stoke-on-Trent (3.7%), the West Midlands (3.5%) and England (3.2%). 1.6% of households were shared owners in the Stoke-on-Trent case study area. This was higher than for Stoke-on-Trent (1.1%), the West Midlands (0.7%) and England (0.7%). 9.5 The following table profiles household type in the private rented sector for the case study area. Table 9.2: types of household in the private rented sector and living rent free Stoke-on-Trent case study area Single Person Couples Families with Dependent Children Pensioners Other Total Households Area No. % No. % No. % No. % No. % No. % Stoke-on-Trent Case Study Area , Stoke-on-Trent 2, , , , West Midlands Private Renting 55, , , , England Private Renting 673, , , , ,456, West Midlands All Households 312, , , , ,153, England All Households 3,210, ,633, ,022, ,736, ,451, (Source: CAS056 Tenure and Amenities by Household Composition & T08 Theme Table on Households, 2001 Census data) Note: Household Type Private Rented Sector and living rent free in Stoke-on-Trent Statistics at the small area level combined private renting with living rent free, therefore the comparative data also includes living rent free. 9.6 Key findings: There were 27.3% single person households (excluding pensioners) in the Stoke-on-Trent case study area compared to 27.0 % in Stoke-on-Trent, 26.3% in the West Midlands and 27.4% in England for those households in privately rented or rent free accommodation. Final Report 196

204 Single person households were over-represented in the private rented sector and living rent free in Stoke-on-Trent case study area at 27.3% compared to all households in all tenure types in the West Midlands (14.5%) and in England (15.7%). 9.7% of households in the PRS and living rent free were couples in the Stoke-on-Trent case study area, compared to 10.3% in Stoke-on-Trent. There were a higher percentage of couples for the West Midlands (13.7%) and England (16.1%) in the PRS and living rent free. Couples were under-represented in the PRS and living rent free in the Stoke-on-Trent case study area (9.7%) compared to all couple households for all tenures in the West Midlands (17.5%) and England (17.8%). There were a lower percentage of families with dependant children in the PRS and living rent free in Stoke-on-Trent case study area (14.4%) than in Stoke-on-Trent (24.6%), the West Midlands (24.6%) and England (22.5%). Families with dependent children were under-represented in the PRS and living rent free in Stoke-on-Trent case study area (14.4%) compared to all families with dependent children for all tenures in the West Midlands (30.7%) and England (29.4%). There were a lower percentage of pensioners in the PRS and living rent free in the Stoke-on-Trent case study area (14.2%) than in Stoke-on-Trent (19.8%), the West Midlands (19.4%) and England (15.6%). Pensioners were under-represented in the PRS and living rent free in the Stoke-on-Trent case study area (14.2%) compared to all families with dependent children for all tenures in the West Midlands (23.8%) and England (23.7%). More than one third (34.3%) of households in the PRS and living rent free in the Stoke-on-Trent case study area were Other households compared to 18.3% in Stoke-on-Trent, 16.1% in the West Midlands and 18.4% in England. Other households were over-represented in the PRS and living rent free in the Stoke-on-Trent case study area (34.3%) compared to all Other households in all tenures for the West Midlands (13.5%) and England (13.4%). Final Report 197

205 9.7 The following table profiles accommodation type in the private rented sector for the case study area. Table 9.3: accommodation type private renting and living rent free in unshared dwellings Stoke-on-Trent case study area Area House or bungalow - Detached House or bungalow - Semi detached House or bungalow - Terraced (including end terrace) Flat, maisonette or apartment - In a purpose built block of flats or tenement Flat, maisonette or apartment - Part of a converted or shared house (includes bed-sits) Flat, maisonette or apartment - In a commercial building Caravan or other mobile or temporary structure : Private rented - Private landlord or letting agency ) Total Unshared Dwellings No. % No. % No. % No. % No. % No. % No. % No. % Stoke-on-Trent Case Study Area , , Stoke-on-Trent , , , , West Midlands 28, , , , , , , , England 274, , , , , , , ,419, (Source: CAS049 Dwelling Type and Accommodation Type by Tenure, 2001 Census) Note: Statistics at the small area level combined private renting with living rent free, therefore the comparative data also includes living rent free. 9.8 Key findings: There was a lower percentage (2.8%) of detached houses or bungalows in the PRS and living rent free in the Stoke-on- Trent case study area than in Stoke-on-Trent (5.1%), the West Midlands (13.5%) and England (11.3%). There was a lower percentage (12.7%) of semi detached houses or bungalows in the PRS and living rent free in the Stoke-on-Trent case study area than in Stoke-on-Trent (25.9%), the West Midlands (25.8%), and England (19.5%). Final Report 198

206 Nearly two thirds (64.8%) of terraced houses or bungalows (including end terraces) in the PRS and living rent free in the Stoke-on-Trent case study area. This was a much higher percentage than in Stoke-on-Trent (48.4%), the West Midlands (28.4%), and England (26.1%). 8.6% of the Stoke-on-Trent case study area PRS and living rent free accommodation was in purpose built flats, maisonettes or apartments compared to 9.6% in Stoke-on-Trent, 16.4% in the West Midlands and 20.6% in England. 7.2% of the Stoke-on-Trent case study area PRS and living rent free was in flats, maisonettes or apartments that were converted or part of a shared house, compared to 6.1% in Stoke-on-Trent, 9.3% in the West Midlands, and 15.7% in England. 4.0% were flats, maisonettes or apartments in commercial buildings in the Stoke-on-Trent case study area compared to 4.6% in Stoke-on-Trent, 6.2% in the West Midlands and 6.1% in England. There were no caravans or other mobile structures in the Stoke-on-Trent case study area PRS or living rent free unshared dwellings. Final Report 199

207 9.9 The following table profiles overcrowding in the private rented sector for the case study area. Table 9.4: occupancy rating for households privately renting or living rent free Stoke-on-Trent case study area Overcrowding Minus 1 or Less All Household Private Renting or Living Rent Free Area Zero Plus No. % No. % No. % Stoke-on-Trent Case Study Area 2, , Stoke-on-Trent 9, , West Midlands 186, , , England 2,053, , ,456, (Source: CAS053 Occupancy Rating by Tenure and Household Composition, 2001 Census data) 9.10 Key findings: 10.6% of the PRS and living rent free households in the Stoke-on-Trent case study area were overcrowded with an occupancy rating of minus one or less. This was higher than in Stoke-on-Trent (8.7%), but lower than in the West Midlands (11.9%) and England (16.4%). Final Report 200

208 9.11 The following map shows overcrowding in the private rented sector in Stokeon-Trent at the time of the 2001 Census with more recent ward boundaries overlaid. Final Report 201

209 Affordability Matrix Modelling 9.12 The following matrix identifies the range of properties considered and their market prices, and indicates the resulting levels of affordability through both the traffic light system and, within each cell, a figure that identifies the actual percentage of the gross household income which housing costs represent. This actual percentage figure indicates how close the household is to attaining the CLG 25 per cent threshold of affordability for that particular property and tenure In the affordability matrices below, the lower quartile and median single income figures for Stoke on Trent have been sourced from the ASHE Table 8.7a from February The gross household incomes have been calculated based on research published in the NHPAU report from February 2010: Housing Affordability: a fuller picture. This report calculated that single household incomes represent 58% of joint gross household incomes. The actual figures used are all based on two income households and are: lower quartile single income 12,246; joint gross household income 21,063; median single income 18,388; joint gross household income 31, The following matrix relates to a lower quartile income household. Stoke on Trent - LQ Properties Annual Hsg costs including rent and service charges Home Ownership Shared Ownership Shared Equity Private Rent Market Price PRS Rent 100% 25% 50% 70% 1 bed flat 68, % 15.25% 17.80% 17.16% 24.71% 2 bed flat 93, % 19.57% 23.08% 22.21% 29.72% 2 bed house 90, % 18.95% 22.32% 21.48% 27.10% 3 bed house 122, % 24.40% 28.99% 27.84% 32.91% 4 bed house 217, % 40.33% 48.45% 46.42% 43.11% 15th percentile 55, % 13.03% 15.09% 14.57% 9.15 Matrix modelling in the above table identifies: local access to market, LCHO and private rent properties is patchy with one to three bed shared ownership and shared equity being the most affordable; the affordability of market housing mirrors that of the private rented housing with only one 1 bed flat below the 25 per cent threshold, two 2 bed properties showing amber and the 3 and 4 beds showing red; this household could fairly easily access all properties at the proxy first time buyer entry level property price - the 15 th percentile figure. Final Report 202

210 9.16 From the full affordability matrix (see Appendix Four): the West Midlands table shows almost all properties in the red with only four (out of 25) affordable and a further five showing amber within 5 per cent of the CLG 25 per cent threshold; none of the market or private rent properties are affordable with the private rent showing as more expensive than 100 per cent home ownership for one to three bed properties; National prices show only one potential property below 25 per cent of GHI a 25 per cent share of a one bed flat. Four other LCHO properties show up as amber within 5 per cent of the CLG 25 per cent threshold The following matrix relates to a median income household. Stoke on Trent - Median Properties Annual Hsg costs including rent and service charges Home Ownership Shared Ownership Shared Equity Private Rent Market Price PRS Rent 100% 25% 50% 70% 1 bed flat 68, % 10.16% 11.85% 11.43% 16.45% 2 bed flat 93, % 13.03% 15.37% 14.79% 19.79% 2 bed house 90, % 12.62% 14.86% 14.30% 18.05% 3 bed house 122, % 16.25% 19.30% 18.54% 21.92% 4 bed house 217, % 26.86% 32.27% 30.92% 28.71% 15th percentile 55, % 8.68% 10.05% 9.71% 9.18 Matrix modelling in the above table identifies: much better potential access to most properties locally with only four bed properties showing either red or amber within 5 per cent of the CLG 25 per cent threshold; access is also good for market and private rent properties; at these income levels, this household could access all shared ownership and shared equity properties at the proxy first time buyer entry level property price - the 15 th percentile figure - with two of the shared ownership and shared equity housing costs below 10 per cent From the full affordability matrix (see Appendix Four): the West Midland figures show 15 potentially affordable properties with a further five amber within 5 per cent of the CLG 25 per cent threshold - and five red (out of a total of 25); the national figures show ten potentially affordable properties, five amber properties. There are also ten properties showing red - ranging from two bed market and private rent houses to all four bed properties. Final Report 203

211 Final Report 204

212 Stakeholder Consultation: the private rented sector What is the role of the Private Rented Sector and How is it Performing? Landlords 9.20 According to Stoke City Council (SCC), the PRS plays an important role in the local housing market and, overall, has increased by approximately 10 per cent in Stoke-on-Trent over the past three years. Given issues of affordability and the large waiting list for social housing, the Council considers the PRS needs to continue to play an important role in the city The lettings agents interviewed operated predominantly in Stoke-on-Trent or adjacent areas of the potteries. The landlords they acted for were mostly small or medium sized investors and numerous accidental landlords owner occupiers who had been unable to sell but had to move. One lettings agent was not anticipating major changes in the private rented market in the next one to three years; one thought there would be an increase in numbers renting because of the economy; and one commented: rents have fallen I hope they will rise when the sales market picks up any properties are withdrawn The landlords interviewed had all been in business for at least 14 years, but were not all locally based. Two landlords had properties Stoke-on-Trent and adjacent areas; one refused to say where their properties were and also would not say how many properties they owned. None were thinking about increasing their portfolio of properties in the current situation one wanted changes to the Corporation Tax structure; one grants that tied in with student occupancy; and one more reasonable lending rates which allow a return on investment. Tenants 9.23 The private rented sector in Stoke-on-Trent is composed of predominantly working families, with some singles and sharers. Some families are renting temporarily before buying another property; others just find renting a more affordable option. One lettings agent had noticed fewer EU migrant workers and, interestingly, fewer students this latter may reflect new purpose built student accommodation One of the landlords interviewed only let to students; one to students and single parent families; and one to families The decision whether to take tenants on LHA rested with the landlord one said their landlords would only do if they had a hard to let property. The main Final Report 205

213 concern was getting the rent. One said the council were very slow paying and one cited the ability of the local authority to claw back overpaid benefit Of the two landlords who commented, both took tenants on LHA and both interviewed prospective tenants, trusting their own judgement. One insisted on a guarantor for the rent; two did not ask for a deposit. Property turnover and availability 9.27 The lettings agents were relatively large operations, with between 35 and 50 properties currently available to let. Their occupancy rates varied between 85 and 90 per cent, with tenants staying between six months and eighteen months. Two offered a range of properties from one bed flats to four to five bed houses; the third offered mainly two bed terraced houses Of the three landlords interviewed, one refused to say how many properties they owned. One of the others was small, owning nine properties, whilst the other owned 140. They are responding to a distinct demand in the housing market with all reporting 100 per cent occupancy rates. Most tenants stayed for at least two years, or, in the case of students, one to two years. If tenants are happy, they don t move. Movement through the market 9.29 There is obviously a demand in the housing market for private renting; this is demonstrated by high occupancy rates and the incidence of families seeking either permanent or temporary rented homes. Some are seeking to rent in the short term, pending purchase of another property. There are numerous accidental landlords, who may withdraw from the rented market as and when the sales market picks up Stoke City Council is not involved in housing asylum seekers, except for checking the condition of potential properties. Asylum seekers are not eligible for assistance with housing except through NASS. The City Council is working with the CAB on assistance with re-housing when refugee status is obtained. They have no information on properties previously used to house asylum seekers Two of the lettings agents had not noticed any consequences of the reduction in asylum seeker accommodation; neither of them had properties let to migrant workers. The third had around 10 per cent of property let to migrant workers, down from 20 to 25 per cent. This agent thought the council had compulsory purchased the poorer former asylum seeker property and, of the remainder, some had been purchased by RSLs and some had gone to owneroccupation. Final Report 206

214 9.32 Only one landlord was able to comment on the reduction in asylum seeker accommodation; they thought the HMO legislation did not facilitate a change from asylum seeker accommodation to a family home. Barriers to accessing the market 9.33 In the opinion of the City Council, barriers to entry into the private rented sector generally include the lack of deposit and rent in advance, although SCC offer short term loans to help with this; some landlords are reluctant to take tenants on benefits, but many others will. Tenancy restrictions on pets can be an issue. For vulnerable households, it is also difficulties in the practicalities of day to day living and budgeting; this also applies to some young households, but is further compounded for under-26s by the restriction on benefit to single room rate Overcrowding is not a major problem in the PRS, according to the Council, although there are a few instances of overcrowding among EU Romany extended families in smaller properties. Anecdotal evidence suggests tenants at the bottom end of the market are reluctant to complain about poor conditions As to letting to a wider range of households, such as young or vulnerable people, lettings agents were quite clear that the current system of LHA going direct to the tenant was a hindrance: They need to change the benefit system if LHA goes to the tenant, the landlord has to chase the rent. Rent direct to the landlord gives them a guarantee As to letting to a wider range of households, such as young or vulnerable people, the landlord who let only to students was not interested in widening their range. One landlord already let to these households, but found the restricted benefit to under-26s a problem; both cited problems with LHA going direct to the tenant as a discouragement. One thought proper local authority support for vulnerable households was essential Letting for a longer period than six months was not popular for new tenants with lettings agents. There was a view that starting with a six month tenancy to see how things work is best, even though most landlords are happy to let for longer periods. One agent commented that a direct lease with the council for five years, with guarantees on rent and damage would be a major incentive Two landlords were happy to let for a longer period but one likes to start with a six month tenancy to see how things work out. The student landlord was not interested in long term tenancies. Final Report 207

215 9.39 The most common tenancy restrictions are no smoking clauses; pets are not such a problem in a rented market of predominantly houses; it does depend on the landlord. One landlord who let only to students had rigid no pets/no smoking clauses; one said he was unlikely to enforce such a clause if the rent was being paid; and the third had no such restrictive clauses It would seem that, compared with other factors, restrictive tenancy conditions do not prove a significant barrier to access to the PRS, except for shared houses. What is the Potential of the Private Rented Sector and How Might this be Achieved? 9.41 The PRS in Stoke-on-Trent is already housing a wide range of clients, probably due to a very buoyant market and a greater number of single family houses. It could be accessed by an even wider range of people, provided the necessary support was in place for accredited landlords. This would include: promoting the short term loan scheme to landlords and agents through the Landlords Forum and possibly replacing this with a grant for more vulnerable clients; rent and damage guarantees provided by the local authority where landlords are housing vulnerable tenants who might get into financial difficulties or damage the property; on-going support from the Council for vulnerable tenants to help them maintain their tenancy; more marketing of the PRS to potential clients; better communication between the Council s benefit section and landlords and their agents for example, a dedicated helpline for accredited landlords; and educating lettings agents through written material, personal contact and the Council s website as to what support the Council can offer so they can inform both clients and landlords. The Role of the Local Authority 9.42 The Council needs the PRS to perform well. If insufficient private rented property is available then problems of homelessness will arise; it must therefore work to overcome potential barriers to entry. Whilst the City Council is working with landlords to drive up standards, not all landlords are cooperatively. Final Report 208

216 9.43 To encourage good quality landlords, Stoke-on-Trent, with its Staffordshire neighbours, has an active landlord accreditation scheme and offers training and supports a Landlords Forum, together with providing grants to replace old kitchens and bathrooms and increase thermal comfort. Accredited landlords can also advertise in Stoke-on-Trent s choice-based lettings magazine Stoke-on-Trent offers match-funded grants of up to 10,000 for owners of long term empty properties to bring them back into use, but include a five year nomination right for the local authority. They also run a matching service for accredited landlords to buy long term empty properties and bring them back into use where owners are unable or unwilling to do so. The Intermediate Housing Sector Applicants 9.45 One RSL was of the view that the type of applicant reflects the type of property available. Historically, they have had a lot of flats, so applicants have been mostly singles and couples without children. However, they have developed a small number of two and three bed homes in Stoke-on-Trent, which has widened the client base to include young families. The other RSL indicated applicants included couples, singles and families who were priced out of the market Applicants will normally need the financial resources to provide a deposit and to support a mortgage. One RSL comments that lenders are asking for a 10 per cent deposit, or 15 per cent for a good interest rate; the other indicated that 15 per cent was required for houses and 20 per cent for flats The lender interviewed will only lend on shared equity schemes because they give 100 per cent of the first charge to the lender, whereas shared ownership schemes do not. This was reflected in larger deposits because of the lender s increased risk. For shared equity, his organisation asks for 5 per cent of the 70 per cent they are offering a mortgage on. They offer a two year tracker mortgage or five year fixed rate deal, with reductions for existing customers. Properties 9.48 As noted by the City Council, property prices are low in Stoke-on-Trent, making it difficult for new build IHS to compete cost-wise with second hand open market property. This may well account for small numbers being developed; they could not identify any over or under supply of IHS products. Final Report 209

217 Movement in the market 9.49 The City Council has not yet researched why households move from the PRS to the IHS and has no specific feedback from households on their reasons for choosing the IHS One RSL indicated that the main reason was to move into home ownership rather than renting, to own a home rather than pay dead rent money; the other cited affordability The lender considered that both shared equity and shared ownership offer people a start in home ownership which they would not otherwise have got. Barriers to access 9.52 The City Council was of the view that availability of mortgages is an issue that has increased significantly over the last eighteen months. There has always been a limited pool of mortgage providers willing to lend against shared ownership properties and the numbers have reduced dramatically in the current economic climate. In order to help address this issue the Council has started to have a dialogue with local lenders about how they can work with developing RSLs in the area to look at the availability of mortgage finance for the homes being developed One RSL was also of the view that mortgage availability was a problem. More flexibility with lenders on deposits and lending criteria was needed, for example, a 5 per cent deposit would help first time buyers. Lenders undervaluing new build property was also problematic. The desire to purchase has always been there but the recessionary financial climate has put hurdles in the way meaning it is difficult for potential purchasers to succeed. They also cited the need for rent levels which are much lower than 2.75 per cent. The other RSL had a different angle; current owner-occupiers are excluded unless they have sold their property, which can be problematic in the current climate The lender interviewed in many ways backed the view that mortgages were the main problem; their organisation had only been doing IHS mortgages for a few months and will only lend on shared equity schemes, citing the desire of lenders to have 100 per cent first charge on the property As far as the Council is aware the S106 does not unduly influence whether a lender will provide a mortgage on an IHS scheme, but some clauses in RSL leases have done. This is being addressed at national level by the HCA s new shared ownership lease. One of the RSLs thought restrictions on resale could affect lenders willingness to provide a mortgage. Final Report 210

218 What is the potential of the intermediate housing sector? 9.56 In a low cost area such as Stoke-on-Trent, it is difficult to make IHS both attractive and affordable to clients. The one lender interviewed will only lend on shared equity homes, where 30 per cent of the purchase price is covered by a grant and an interest free loan, thus reducing the deposit to 5 per cent of the 70 per cent. It is likely that this sort of scheme would work better in Stokeon-Trent than conventional shared ownership, particularly if existing properties were included. This could attract a wider range of clients but funding is limited. How might its potential be achieved? 9.57 According to the City Council, issues that have arisen in Stoke-on-Trent have included: affordability, lack of understanding of the product and lack of availability of mortgages. Overcoming these would assist the IHS to achieve its potential Affordability issues have most frequently arisen for shared ownership apartments where service charges have made the property unaffordable. Early discussion around service charges, etc to ensure affordability is the main method to overcome this problem Lack of understanding of the product is often a barrier to achieving occupation of IHS units. The actual product is difficult to explain to households and there is a significant degree of confusion regarding having to pay both a mortgage and rent for the property in a shared ownership scheme. This issue can be addressed through the marketing approach and having clearly presented information on how shared ownership works and what the costs involved are. Working closely with the HomeBuy Agent to ensure consistency of information and assistance with marketing the product can be beneficial This is backed up by the lender s view that IHS needs to be better promoted by more advertising of schemes and of lenders products. His experience was that people find out by chance about shared equity. Consumer Consultation Becoming a shared owner 9.61 The consultation identified that the decision to enter shared ownership was universally due to the inability to save for a deposit. There was also agreement that the prime benefit of the scheme was viewed at the outset and subsequently as being enabling first time buyers without deposits to get on the ladder. The stakeholder consultation (detailed elsewhere in this report) revealed that the Rent to Buy model has been used successfully to overcome Final Report 211

219 the issue of a lack of deposit and the response from consumers suggests there may be scope for the expansion of this model Although the reasons for accessing shared ownership show commonality, the means differ with respondents finding out about shared ownership through a variety of routes word of mouth, knowing someone else who has become a shared owner, through contact with a lender who has suggested it when a full mortgage has not been available Registering interest for shared ownership is reported as being easy with no barriers encountered to accessing a property. Subsequent to becoming a shared owner, some negatives have been identified high levels of service charge (on apartment accommodation) and not knowing how much the percentage equity will be in real terms when it has to be paid back in five years time. Both of these issues relate to the need to have clear and accurate information in order to enable potential shared owners to understand the level of financial commitment they are making. The application process 9.64 In terms of the process of making an application for shared ownership there were differences between the responses with some dissatisfaction expressed with how well the scheme was explained: it seemed as though they wanted to get me in and out as quick as possible This needs further exploration to identify how widespread this view is and the possible reasons but overall the response was positive. Where individuals did their own further research (for example, on line) this appears to have improved their understanding and, therefore, their perspective on how well it was explained The financial issues, a fundamental element of understanding and participating in the scheme, were again thought to be very well explained and all of the respondents were advised to seek the services of an independent financial advisor. However, there was some dissatisfaction with the approach of the independent financial adviser and the respondent again felt they were rushed through. Upon examining the individual responses this seems to reflect the experience of one individual, however, it does also illustrate that applicants have different needs in terms of their journey through the process The gap in the information for all participants was in terms of being given information about how properties are allocated and the process of identifying who is next in the queue but there were no indications that this was a problem for the respondents. All participants were made aware of how long the process could take and the potential length of time they would have to wait. Final Report 212

220 Profile of participants in the market 9.68 In terms of access routes, respondents entered shared ownership from a variety of originating accommodation - living with parents, the social rented sector and owner occupation with an ex partner. However, none had been resident in the former home for longer than five years, all were single with no dependents and employed with incomes of between 15,000 and 19, All of the respondents were seeking to purchase a house but none of them were successful in this and all ended up purchasing apartment accommodation. In terms of number of bedrooms, however, they all were successful in purchasing a property that met their aspirations / needs Full purchase prices were between 85,000 and 90,000 with shares of 70 per cent requiring the respondents to secure mortgages of between 59,500 and 63,000 which represents a multiplier of between 3.96 and 4.2 at the lower end of the salary band to between 2.97 and 3.15 at the higher end of the salary band. These figures illustrate how, on the salary and multiplier, a higher amount of mortgage required to purchase a house would not have been possible With respondents only in the market for approximately six months none had been in a position to staircase upwards, however, the majority expressed a desire to move to full ownership with only one considering taking their investment elsewhere and moving abroad. With none of the respondents securing their first choice property type there was a high level of desire to move in order to achieve their final aspiration of ownership. Final Report 213

221 10. THE LEDBURY WARD, HEREFORDSHIRE CASE STUDY EXECUTIVE SUMMARY The Private Rented Sector: the main messages There is an active private rented market of small landlords that has grown over the last three years but which could decline in the next three to five years as landlords exit the market; the decline in the market will restrict choice for tenants, potentially drive up prices and increase pressure on either the social rented or, where affordable, the intermediate housing markets; tenants on LHA are unlikely to be housed in the private sector currently as landlords are reluctant to accommodate them as a personal preference. This remains the most significant barrier to access for this market group; the private rented sector is operating as a holding ground for households unable to access either shared or full ownership; there is a need for greater cohesion and co-ordination in the work of the local authority outside of the enforcement role to understand, engage and influence the private rented market, both in terms of tenants and landlords; former asylum seeker accommodation has not impacted upon the private rented sector; and practices of landlords such as asking for large amounts of rent in advance and requirements to be twelve months resident in the UK prior to being granted a private tenancy are excluding migrant workers from participating in the market. The Private Rented Sector: the policy implications The market shrinking may require local authorities to incentivise landlords to increase their portfolios or to invest further in bringing empty properties back into use in order to utilise them for meeting housing need. There is a good level of activity designed to engage private landlords and secure accommodation (for example, private sector leasing) options for expanding this should be explored; tenants on LHA are more likely to be accepted by landlords if the local authority can provide support of both financial and practical means, for example, rent guarantee, deposit or rent in advance schemes under a broader criteria, maximised use of discretionary benefit powers, floating support or tenancy training, automatic referrals to welfare benefits advisors to secure take up, etc; and Final Report 214

222 there may be potential in the community and voluntary sector for the provision of support services to vulnerable tenants in order to encourage landlords to offer them accommodation this would need further exploration. The Intermediate Housing Sector: the main messages Single people and larger families in Ledbury are excluded from the intermediate market the former due to the difficulty in achieving the amount of mortgage required on one income, the latter due to the high prices of larger properties; household aspirations for large property and future family requirements places demand on larger family sized housing, even where a household may not have an assessed housing need. This may mean that assessments of need are falling short of future need. financial barriers exist with current lending practices and the amount of money required in deposit being significant factors; lenders are viewed as reticent to fund mortgage products in this market, which in itself creates barriers but also drives up costs and reduces affordability as this is designated a high risk market; shared ownership households are not awarded the same level of incentives by lenders despite the lack of evidence to suggest that repossessions or reverse staircasing are any the more prevalent in this sector than the traditional mortgage market; there are low levels of knowledge and awareness of schemes among potential applicants, suggesting the market could be underperforming. However, this must be balanced with the finite nature of the funding for schemes that means not all demand could be met; and greater use could be made by housing associations of the products that are available (especially Rent to Buy). The Intermediate Housing Sector: policy implications Housing associations and grant funding structures may need to change to recognise the higher costs of larger properties and the difficulties faced by single people in accessing the amount of mortgage required; the marketing and publicity for this market sector needs better co-ordination, clarity, coverage and consistency. There may be a role here for the HomeBuy Agent working with housing association and local authority partners to agree a common brand and approach; discussions with lenders at a higher, strategic level could benefit the intermediate Final Report 215

223 housing sector regionally but this would need to be suitably targeted and delivered if any change were to be realised. Local discussions can do little to influence the overall policy of lending organisations; and increased funding is required to enable housing associations to offer intermediate housing options to a broader range of applicants. The alternative is to establish a more flexible approach to the use of resources within housing associations, a step that would require negotiation with the Homes and Communities Agency. What are the Interactions Between the Private Rented and Intermediate Housing Sectors? The consultation suggests that there is very little interaction between the private and low cost home ownership sectors, they operate quite independently with the private rented market viewed as a holding ground until either part or full ownership can be achieved by a move. Young single and young couple households have been identified as a cross over group who may have difficulty in accessing either market in this area as rental and shared ownership costs can be too high it is an affluent area with high housing costs. The lack of interaction can however be influenced by the type of product used to enable access to the intermediate market the Rent to Buy scheme operated by one of the housing associations achieves this by offering reduced rents to enable tenants to save for a deposit that can then be used to secure a shared ownership mortgage on the property that they are renting. There is a perception that the current economic situation has increased the risk of households falling back into the private rented sector from the intermediate market, however the responses from housing associations have mitigated this to a degree. There is a disparity between the two markets in the effort employed to make the market accessible with resources heavily weighted to those in the intermediate market. Support, advice, options, flexibility and grant funding are all readily available to those accessing and currently within the intermediate housing sector but not to those in the private rented sector. Notwithstanding the different functions and operating practices that naturally exist in the separate markets, it does raise the issue that for those in the private rented sector they are left to fend for themselves to a greater degree. Final Report 216

224 Introduction 10.1 This case study was selected due to: the average level of private renting for the area, 8.9% of households were privately renting at the time of the 2001 Census compared with 9.1% in Herefordshire; the higher percentage of semi-detached houses in the private rented sector; and the locally high level of shared ownership, 2.3% of households were shared owners which was higher than for Herefordshire (0.9%) and the West Midlands (0.7%). Final Report 217

225 Final Report 218

226 10.2 The following maps show the distribution of the private rented sector and shared ownership at the time of the 2001 Census with more recent ward boundaries overlaid. Final Report 219

227 Final Report 220

228 The Private Rented and Intermediate Housing Sectors in the Ledbury Ward: key data 10.3 The following table profiles tenure for the case study area. Table 10.1: tenure Ledbury case study area Owner occupied: Owns outright Owner occupied: Owns with a mortgage or loan Owner occupied: Shared ownership Rented from: Council (local authority) Rented from: Housing Association / Registered Social Landlord Rented from: Private landlord or letting agency Area Rented from: Other All Households No. % No. % No. % No. % No. % No. % No. % No. % Ledbury Case Study Area 1, , , Herefordshire 26, , , , , , , West Midlands 651, , , , , , , ,153, England 5,969, ,950, , ,702, ,238, ,798, , ,451, (Source: KS18 Tenure, 2001 Census data) 10.4 Key findings: 8.9% of households were privately renting with a landlord or lettings agency at the time of the 2001 Census. This was lower than for Herefordshire (9.1%), but higher than for the West Midlands (6.4%) and England (8.8%). 3.2% were rented from Other which includes some privately rented households. This was lower than for Herefordshire (4.1%), the West Midlands (3.5%) and the same as for England (3.2%). 2.3% of households were shared owners. This was higher than for Herefordshire (0.9%), the West Midlands (0.7%) and England (0.7%) The following table profiles household type in the private rented sector for the case study area. Final Report 221

229 Table 10.2: types of household in the private rented sector and living rent free Ledbury case study area Single Person Couples Families with Dependent Children Pensioners Other Total Households Area No. % No. % No. % No. % No. % No. % Ledbury Case Study Area Herefordshire 2, , , , West Midlands Private Renting 55, , , , England Private Renting 673, , , , ,456, West Midlands All Households 312, , , , ,153, England All Households 3,210, ,633, ,022, ,736, ,451, (Source: CAS056 Tenure and Amenities by Household Composition & T08 Theme Table on Households, 2001 Census data) Note: Household Type Private Rented Sector and living rent free in Ledbury Statistics at the small area level combined private renting with living rent free, therefore the comparative data also includes living rent free Key findings: There were a higher percentage of single person households (excluding pensioners) (28.4%) in the Ledbury area compared to 24.7% in Herefordshire, 26.3% in the West Midlands and 27.4% in England for those households in privately rented or rent free accommodation. Single person households were over-represented in the private rented sector and living rent free in Ledbury at 28.4% compared to all households in all tenure types in the West Midlands (14.5%) and in England (15.7%). 19.2% of households in the PRS and living rent free were couples in Ledbury, compared to 18.3% in Herefordshire. This was higher than the percentage of couples for the West Midlands (13.7%) and England (16.1%) in the PRS and living rent free. Final Report 222

230 Couples were slightly over-represented in the PRS and living rent free in Ledbury (19.2%) compared to all couple households for all tenures in the West Midlands (17.5%) and England (17.8%). There were a lower percentage of families with dependant children in the PRS and living rent free in Ledbury (17.3%) than in Herefordshire (24.6%), the West Midlands (24.6%) and England (22.5%). Families with dependent children were under-represented in the PRS and living rent free in Ledbury (17.3%) compared to all families with dependent children for all tenures in the West Midlands (30.7%) and England (29.4%). There were a higher percentage of pensioners in the PRS and living rent free in Ledbury (24.4%) than in Herefordshire (20.4%), the West Midlands (19.4%) and England (15.6%). Pensioners were slightly over-represented in the PRS and living rent free in Ledbury (24.4%) compared to all families with dependent children for all tenures in the West Midlands (23.8%) and England (23.7%). Just over one tenth (10.7%) of households in the PRS and living rent free in Ledbury were Other households compared to 12.1% in Herefordshire, 16.1% in the West Midlands and 18.4% in England. Other households were under-represented in the PRS and living rent free in Ledbury (10.7%) compared to all Other households in all tenures for the West Midlands (13.5%) and England (13.4%). Final Report 223

231 10.7 The following table profiles accommodation type in the private rented sector for the case study area. Table 10.3: accommodation type private renting and living rent free in unshared dwellings Ledbury case study area Area House or bungalow - Detached House or bungalow - Semi detached House or bungalow - Terraced (including end terrace) Flat, maisonette or apartment - In a purpose built block of flats or tenement Flat, maisonette or apartment - Part of a converted or shared house (includes bedsits) Flat, maisonette or apartment - In a commercial building Caravan or other mobile or temporary structure : Private rented - Private landlord or letting agency ) Total Unshared Dwellings No. % No. % No. % No. % No. % No. % No. % No. % Ledbury Case Study Area Herefordshire 3, , , , West Midlands 28, , , , , , , , ,419,5 England 274, , , , , , , (Source: CAS049 Dwelling Type and Accommodation Type by Tenure, 2001 Census) Note: Statistics at the small area level combined private renting with living rent free, therefore the comparative data also includes living rent free Key findings: There was a lower percentage (22.3%) of detached houses or bungalows in the PRS and living rent free in Ledbury than in Herefordshire (34.1%); however, the percentages in the West Midlands (13.5%) and England (11.3%) were lower than in Ledbury. There was a higher percentage (29.7%) of semi detached houses or bungalows in the PRS and living rent free in Ledbury than in Herefordshire (24.5%), the West Midlands (25.8%), and England (19.5%). Final Report 224

232 There was a higher percentage (19.6%) of terraced houses or bungalows (including end terraces) in the PRS and living rent free in Ledbury than in Herefordshire (16.6%), however the percentages for the West Midlands (28.4%), and England (26.1%) were higher than in Ledbury. A small percentage (7.6%) of Ledbury's PRS and living rent free accommodation was in purpose built flats, maisonettes or apartments. This was lower than in Herefordshire (9.0%), the West Midlands (16.4%) and England (20.6%). 9.0% of Ledbury s PRS and living rent free were in flats, maisonettes or apartments that were converted or part of a shared house, compared to Herefordshire (8.9%), the West Midlands (9.3%), and England (15.7%). A higher percentage (11.9%) of Ledbury s PRS and living rent free were flats, maisonettes or apartments in commercial buildings compared to 5.5% in Herefordshire, 6.2% in the West Midlands and 6.1% in England. There were no caravans or other mobile structures in Ledbury s PRS or living rent free unshared dwellings The following table profiles overcrowding in the private rented sector for the case study area. Table 10.4: occupancy rating for households privately renting or living rent free Ledbury case study area Area Zero Plus Overcrowding Minus 1 or Less All Household Private Renting or Living Rent Free No. % No. % No. % Ledbury Case Study Area Herefordshire 8, , West Midlands 186, , , England 2,053, , ,456, (Source: CAS053 Occupancy Rating by Tenure and Household Composition, 2001 Census data) Final Report 225

233 10.10 Key findings: 11.2% of the PRS and living rent free households in Ledbury were overcrowded with an occupancy rating of minus one or less, compared to 9.1% in Herefordshire, 11.9% in the West Midlands and 16.4% in England The following map shows overcrowding in the private rented sector in Herefordshire at the time of the 2001 Census with more recent ward boundaries overlaid. Final Report 226

234 Affordability Matrix Modelling The following matrix identifies the range of properties considered and their market prices, and indicates the resulting levels of affordability through both the traffic light system and, within each cell, a figure that identifies the actual percentage of the gross household income which housing costs represent. This actual percentage figure indicates how close the household is to attaining the CLG 25 per cent threshold of affordability for that particular property and tenure In the affordability matrices below, the lower quartile and median single income figures for Ledbury have been sourced from the ASHE Table 8.7a from February The gross household incomes have been calculated based on research published in the NHPAU report from February 2010: Housing Affordability: a fuller picture. This report calculated that single household incomes represent 58% of joint gross household incomes. The actual figures used are all based on two income households and are: lower quartile single income 11,204; joint gross household income 19,271; median single income 17,406; joint gross household income 29, The following matrix relates to a lower quartile income household. Ledbury-LQ Properties Annual Hsg costs including rent and service charges Home Ownership Shared Ownership Shared Equity Private Rent Market Price PRS Rent 100% 25% 50% 70% 1 bed flat 109, % 24.24% 28.71% 27.60% 30.93% 2 bed flat 140, % 29.94% 35.68% 34.25% 36.47% 2 bed house 169, % 35.33% 42.26% 40.53% 40.83% 3 bed house 265, % 52.80% 63.62% 60.92% 54.22% 4 bed house 354, % 69.25% 83.73% 80.12% 58.20% 15th percentile 125, % 27.09% 32.19% 30.92% Matrix modelling in the above table identifies: this level of gross household income and this area show the worst levels of potential affordability out of all the archetype study areas; only one affordable property a 25 per cent share in one bed shared ownership flat and even that shows housing costs above 24 per cent of the gross household income; three amber properties within 5 per cent of the CLG 25 per cent threshold - all either one or two bed shared ownership or shared equity flats; Final Report 227

235 this household could not access any properties at the proxy first time buyer entry level property price the 15 th percentile figure From the full affordability matrix (see Appendix Four): the West Midlands figures are better than the local archetype, with three green and four amber properties within 5 per cent of the CLG 25 per cent threshold. The green properties are one bed shared ownership and shared equity flats and the amber are one bed market flat and two bed shared ownership and shared equity flats; the national prices table has the worst affordability figures of all in the study areas with 24 out of 25 red and one amber within 5 per cent of the CLG 25 per cent threshold; the amber property is a 25 per cent share of a one bed flat showing housing costs at 26.89% of gross household income The following matrix relates to a median income household. Ledbury-Median Properties Annual Hsg costs including rent and service charges Home Ownership Shared Ownership Shared Equity Private Rent Market Price PRS Rent 100% 25% 50% 70% 1 bed flat 109, % 15.60% 18.48% 17.76% 19.91% 2 bed flat 140, % 19.27% 22.97% 22.05% 23.47% 2 bed house 169, % 22.74% 27.20% 26.09% 26.28% 3 bed house 265, % 33.99% 40.95% 39.21% 34.90% 4 bed house 354, % 44.58% 53.90% 51.57% 37.46% 15th percentile 125, % 17.44% 20.72% 19.90% Matrix modelling in the above table identifies: better potential access to more properties locally, with ten green and eleven red properties across all tenures; with access to the proxy entry level properties has improved from zero to three green and one amber within 5 per cent of the CLG 25 per cent threshold; potential access to shared ownership and shared equity properties is worse locally than for both the West Midlands and national tables seven green properties locally, ten for the West Midlands and nine nationally From the full affordability matrix (see Appendix Four): the West Midland figures show greater potential access than locally with thirteen green and five amber within 5 per cent of the CLG 25 per cent threshold; Final Report 228

236 national figures are on a par with the local figures for similar tenures with ten green and nine locally. affordability of the private rent properties is very limited for both the West Midlands and national tables. Stakeholder Consultation: the private rented sector What is the Role of the Private Rented Sector and how is it Performing? Landlords The private rented sector in Ledbury is characterised by Buy to Let and investment landlords with small portfolios rather than larger commercial landlords with multiple properties. There has been a reported increase however in the number of accidental landlords who have either been unable to sell their property or have decided to delay selling and retained their property on a rental basis until the market conditions improve. It is predicted that during the next three to five years many of these landlords will sell their properties as the market allows, but that in the interim they will remain. Tenants Over the last five years landlords perceive that there has been an increase in the number of tenants from EU countries in the Ledbury area and some reports of an increasing number of benefit dependent applicants. Households are predominantly young singles/couples, young families, households following relationship breakdown and migrant workers. There has been an increase in the number of households in the 25 to 35 years age bracket who would have previously entered owner occupation but are now excluded due to increasingly restrictive mortgage lending practices Benefit dependent households are the least likely to be re-housed in the private rented sector as landlords have a perception that they will not pay rent if given the choice. They are viewed as higher risk tenants who are more likely to get into arrears, to damage property and require possession proceedings. However, there is some evidence that individual landlords exploit this area of the market to their benefit, exclusively housing tenants who are in receipt of LHA as they recognise this as a gap in the market. As one landlord said, the accidental landlords want the pretty tenants. It s more hard work [housing LHA tenants] but it is an increasing gap in the market with a large customer base. Final Report 229

237 10.23 The government, in its recently published document The Private Rented Sector: professionalism and quality consultation. Summary of responses and next steps 8 views this issue as surmountable as long as the right support is in place: Pioneering councils are already demonstrating that the private rented sector has scope when the right support for is provided for both tenant and landlord to prevent homelessness and to provide a suitable home for some of the most vulnerable members of society. Property turnover This is dependent on the property type with more choice in the market some landlords are finding that tenants will stay for a shorter period of time if a property is not ideal for them and move to alternative private rented accommodation. An example was given of a small two bed cottage style property with no garden - the lower rent reflected the lack of facilities but this also attracted more transient tenants who would use the property on an interim basis. Property availability The increase in landlord numbers and properties has improved choice for tenants generally, which has in turn kept rent levels stable and in some cases seen rents reduced. Lettings agents predict that, at current trends, the number of properties in the market will further increase over the coming twelve months to three years but then will reduce once the accidental landlords are able to sell. However, the increased availability of properties in this area has not increased the accessibility of the sector for social housing or benefit dependent tenants as landlords are reluctant to let to these household types. Movement through the market At the lower end, there are fewer tenants entering the market who are benefitdependent. Those who are entering the market do so either from the parental home, as a new resident to the area or from an existing privately rented property (often flat share or HMO) and are in the main full time employed. Predominantly, tenants who vacate private rented properties are reported to be moving within the private rented sector rather than on to ownership, whether shared or full. In part, this is dependent on the portfolio of the landlord and the household types they are letting to one landlord who lets almost exclusively to LHA recipients who remain in the sector, being without 8 CLG, February 2010, The Private Rented Sector: professionalism and quality consultation. Summary of responses and next steps, see: Final Report 230

238 the income necessary for ownership and generally unable to secure social rented property. Another has noted that smaller properties with fewer amenities attract first time renters or those with smaller income as they are cheaper and these households have been reported as upgrading within the rented market Movement into the intermediate housing market is reported as rare - this may link to outcomes elsewhere in this report regarding the low profile of the intermediate housing market rather than being a reflection on tenants ability to access low cost home ownership per se. In summary, the market is perceived as a holding ground where people who are unable to access social rented housing or unable to afford ownership remain housed, usually moving within the market for a number of years until they are able to move into full ownership. Barriers to accessing the market Although landlords and lettings agents consistently attach conditions to their tenancy agreements that restrict smoking, keeping pets and acceptance of children, there are varying levels of enforcement of these and alone they are not creating barriers to any particular tenant group in terms of access The most significant barrier is the perception of landlords if a tenant is judged to be a risk in terms of payment of rent or anti social behaviour they are unlikely to be housed easily in the private rented sector. The risk is judged on the basis of age, economic activity, lifestyle and current tenure with young, unemployed, social housing tenants / those leaving home, alcohol or drug misuse considered to be most risky. Where a previously employed tenant loses their job and becomes benefit dependent however they are not immediately considered to be the same risk. There are elements of prejudice that affect a person s chances in the private rented market here For those that are vulnerable, lifestyle factors are reported to be the main barrier and perceptions that they are inherently more risky as tenants: Behaviours of this group [vulnerable households] tend to be more anti social and rent arrears happen because they have little or no idea how to manage budgets or money and don t always have the ability or skills to manage the house For young people, their lack of renting history and often lower income are barriers to accessing the market, but again perception plays a part: Starting out in private renting it s hard to get references - they ve got nothing to prove they can be a reliable or good tenant so it s a risk for landlords. And they tend to be lower earners also which impacts their ability to access the Final Report 231

239 sector. Also there is a perception from landlords that young people are less likely to behave or look after the property Finances can be a barrier with some landlords now asking for increasing amounts of money up-front in order to secure a property with some reports of as much as six months rent in advance. This has been identified as a particular barrier to migrant workers who generally will not have the levels of savings required A further barrier in the Ledbury area is landlord referencing and pre-tenancy requirements regarding current address there have been examples cited of households from EU member states being turned down for tenancies as they are unable to meet a requirement for being twelve months resident in the UK previously. In August 2008 Herefordshire Council Research Team identified migrant workers as a low proportion of all those in housing need in terms of the housing register 9. What is the Potential of the Private Rented Sector and How Might this be Achieved? There is potential for the private rented market to increase accessibility to housing for a broader range of tenants at the lower end of the market, thus relieving some pressure on social housing waiting lists, and to release tenants at the higher end into intermediate ownership. However, this would require work to improve the perception that landlords have regarding LHA tenants. It would also, in some cases, require greater support and guidance for LHA tenants in order for them to maintain a private rented tenancy At the higher end of the market, in order to enable people to move into the intermediate market, partners (such as the local authority and housing associations) would need to undertake a comprehensive and co-ordinated approach to marketing and publicity. There would also need to be funding in place to meet the additional demand this would create (see below for further analysis of funding in the intermediate market). There is however, potential for this approach to be controversial with landlords who may see this as a threat to their business and would require sensitivity ultimately however, the choice is that of the tenant. Similarly, there would need to be a greater understanding of the tenants accommodated in the higher end of the private rented market if they are predominantly executive style renters who have a main and sole residence elsewhere then this work would be pointless. There are also implications for resources at a time when services and budgets are being cut or changed, both in terms of tenancy support and services viewed as non essential for example, the annual landlord fair run by the local authority, a key opportunity for information and education for landlords, will 9 Information on seasonal & migrant workers in Herefordshire: A review of available data August _August_08.pdf Final Report 232

240 not be run this year. There are some areas where resources are already in place however for example, welfare benefits take-up: Tenants also need to be getting all the benefits they are entitled to so that they can afford the rent This raises the important point of ability to pay something that may be overlooked by landlords who often assume that LHA covers rent and thus the property is affordable, without consideration of other households expenses and the overall income of the household. Some tenants may be set up to fail from the start of the tenancy with no checks or balances. The Role of the Local Authority The term engaging private landlords has mixed use within the local authority. From an enforcement perspective it reflects a need for compliance on the landlords part. From a housing need perspective it reflects a need to foster positive relationships in order to secure accommodation for waiting list applicants and persuade landlords to help. From a Housing Benefit perspective it reflects a need for information. These conflicting roles make it difficult for the local authority to have a positive impact when it comes to influencing landlords to increase the number of LHA recipients that they might let to as landlords do not distinguish between departments and are often without incentive to engage positively with the local authority. As one landlord stated: Local authorities need to engage with landlords more, and not engage as in enforce. A lot of work is needed to improve relationships - on one hand they are coming in and waving the stick of enforcement and then they want help with re-housing. The private sector has choices and landlords won t be told what to do. The public sector is too hostile and aggressive A common theme of the consultation is that local authorities need to have greater cohesion in their work with private sector landlords and that more work is required to understand the role and potential of this sector and not just from an enforcement perspective Herefordshire Council run a landlords focus group and a newsletter and there is an accreditation scheme for landlords that has been extended recently to incorporate tenants. This is designed to improve future options and accessibility of the sector for tenants - the accredited landlord and the Council provide them with references should they choose to move on. However, this is limited to tenants whose landlord is part of the accreditation scheme first. There is also a private sector leasing scheme that is linked to the accreditation scheme so any property must meet the minimum standards for accreditation. Options for training for landlords are also being explored with Final Report 233

241 the National Landlord Association as resources to achieve this in house are limited This activity is positive, however, there is a need for a more co-ordinated and strategic understanding of the market in terms of numbers and types of landlords, portfolios, activity, profile of tenants, geographical trends and patterns, rents etc so that the local authority can better engage and influence in order to meet housing objectives. More needs to be made of the opportunity to garner this information from the links with private landlords through the activities of the local authority and, internally, from the relationships between teams such as housing options, private sector and Housing Benefit so that the collective knowledge extends further than that of enforcement Currently the choice-based lettings scheme does not include private rented properties. A rent deposit scheme operates through the Council which provides a deposit and up to six months rent in advance, however this is restricted with the following eligibility criteria: households must be currently or threatened with homelessness; applicants must be registered with the choice-based lettings scheme; any savings must be under 1,000; the applicant must have no other accommodation available to live in; and the applicant must show a local connection or live or work in the area There is also potential for the market to offer access into intermediate ownership to a greater degree than currently this is discussed further in the section below on Interactions between the private rented and intermediate housing sectors. Stakeholder Consultation: the intermediate housing sector What is the Role of the Intermediate Housing Sector and How is it Performing? The intermediate housing market provides a gateway into ownership for households unable to access a full mortgage and the deposit that this would require. Applicants Applicants are accessing the low cost home ownership market from private renting, living with parents and from the owner occupied sector. There are Final Report 234

242 increasing numbers of people who, following relationship breakdown, have capital to invest from a previously owned property which is insufficient to secure a full mortgage. However, single people without previous equity struggle to access the market as the deposit and mortgage are harder to secure on one income. Larger families are also identified as excluded in the Ledbury area as, by definition, they require a larger property, a larger mortgage and a larger deposit which renders is unaffordable as an option There is a perception within the financial community that there has been a stable/static number of applications for shared ownership and that this remains relatively low as a percentage of total mortgage applications. However, data is unavailable to substantiate this. Properties The housing associations identify that there is a shortage of properties in the Ledbury area for shared ownership, in part due to the lack of new build over the last two years, and that there is demand for two and three bed family housing. The requirement for larger homes is supported by the findings of the consumer consultation where three bed properties were sought, and not always by families with current need for three bedrooms or couples with future requirements in mind larger homes are also sought by single people or couples who have adult children who return from time to time. This indicates that aspirations and considerations for future family size play a part in considering future demand and provision, which cannot be assessed only on current housing need (as in an assessed bedroom requirement for the current situation). Movement in the market The main reasons cited for accessing this market are aspiration (for ownership) security of tenure and value for money (i.e. paying the same amount in mortgage as they would in rent). As one respondent noted: people don t want to pay dead money to a landlord when it could be going on a mortgage The other primary reason is to enable households to remain in ownership (albeit in part) rather than going back into private renting or social renting following relationship breakdown. There is reluctance to relinquish ownership status once it has been achieved, especially when the costs of renting are not low enough to be of cost benefit. I was private renting and it was costing more. (shared owner, Ledbury) Currently however, movement upwards in the market is slow with households unable to secure the funds to purchase further shares in the property a 12.5 Final Report 235

243 per cent minimum share requirement is hampering their ability to do this. Nevertheless, it is the potential for the future that is attracting people into the market, knowing that they are on the ladder. Once there, they are happy to remain Some of the longer established households have managed to staircase into further ownership however, for some the direction of travel is downwards and the housing associations report that they are receiving some requests to staircase down and have the association buy back shares. This is a recent development, evidenced by the association having to create policy in response. Barriers to access The housing associations, local authority and independent financial advisor all cite a lack of information and education as a barrier with applicants either being unrealistic about what the schemes can offer or not understanding that they are eligible. As one respondent stated, People are often finding out [about shared ownership] by accident when they go for other options advice However, the most significant barrier is financial, due to a combination of the following: Deposits of as much as 15 to 20 per cent are often required to secure a mortgage but even at lower percentages of 5 to 10 per cent are unaffordable to applicants; loan to value ratios are not enough to secure a property; interest rates are higher as lenders view shared ownership mortgages as risky; restrictive S106 agreements either local connection or (more commonly) restriction on staircasing often result in the lender requiring a larger deposit, increasing the interest rate or refusing to lend; restrictions from lenders, for example, deposit must come from applicant directly, not a third party or relative can hinder an ability to secure funding; lender policies on affordability classify some rents as un-affordable once combined with mortgage payments; market conditions meaning lack of new build have reduced the availability of products; and Final Report 236

244 house price ceilings set by housing associations are not high enough and applicants are unable to find a property within the price range Households are further excluded by being unable to participate in lender offers - in order to secure business some lenders are offering lower interest rates and on a fixed term to households able to provide a higher amount of deposit. This is effectively pricing out of the market shared ownership households who by definition are unable to increase the deposit amount. Independent financial advisors see that incentives are not as readily available to households in the shared ownership sector. What is the Potential of the Intermediate Housing Sector? The market has the potential to attract and retain more households than it does currently, particularly households who are currently excluded due to a lack of deposit or those that find a change in circumstances impacts on their ability to make payments There is also potential for the market to reach new households, which could release properties in both the private rented and social rented sectors. The consultation so far identifies that potential applicants are often unaware that the intermediate market exists as an option - lenders report that often a client approaches them looking for mortgage options and it is the lender that suggests shared ownership when it becomes apparent they are unable to afford or do not qualify for a full mortgage. As one housing association commented: Honestly nobody knows about it a lot of the time. It s not publicised as an option, it is difficult to get deposits and people don t use the schemes such as Rent to Buy model which would help people to save Overall there is the potential for the market to expand, both in terms of attracting and retaining households and in increasing the number of products / options available. How might it be achieved? In terms of attracting and retaining more households, housing associations would need to offer a broader range of products as a matter of course so that they can meet individual household needs to a greater degree and maximise the opportunities for applicants to be successful. There is evidence of this through the RSLs approaches which has seen tenure flexibility, conversion of units from shared ownership to Rent to Buy, reduced shares for sale and a concurrent reduction on the percent rental charge on the unsold equity (for example, one RSL has reduced its rental charge from 3 per cent on the unsold equity to 1.5 per cent) all employed as means of enabling households to retain their position in the market. Rent to Buy in particular appears to be Final Report 237

245 under utilised as a product and yet it is one that overcomes a major barrier to ownership the lack of a deposit. Schemes where the developer pays the deposit on an interest free loan basis have also been successful in tackling this barrier In order to reach new households a co-ordinated and consistent approach to publicity, marketing and information would be needed, which would also need to be carefully designed so as to manage peoples expectations the funding resources are not infinite and not everyone would be eligible or able to participate. Currently there is uncertainty regarding who is advertising and promoting certain schemes: I m not sure if people know about the scheme so it may be that the Council aren t publicising it. (housing association respondent) The role of lenders has also been identified as an area for further work in terms of both their own perceptions of schemes as well as their promotion and publicity in providing access to schemes with one housing association stating: There is more work to be done with lenders - they have quite a negative view and a targeted approach is needed to raise the profile and improve it. They [lenders] need to push the boat out to a wider audience and let people know what they offer a lot of the time people don t know it s on offer. (independent financial advisor, Ledbury) In addition to publicity and awareness raising, there is a need to level the playing field between shared owners and full owners in terms of the incentives and offers that are provided by lenders. Lenders are reducing fixed rate products to be more in line with flexible rates in order to secure customers. They are competing for business and offering free legal costs and valuations to help incentivise customers but this isn t the case for shared owners. (independent financial advisor, Ledbury) The issue of administration charges was also raised during the consultation with lenders quoted as charging as much as 1,000 for arranging mortgages and carrying out the administration sometimes without the mortgage guaranteed This consultation has however also identified that fostering positive relationships with lenders can be difficult due to the centralising of many lenders mortgage functions where historically housing associations and local authorities may have enjoyed more personal, local contact. This makes it difficult to exert any influence over lenders or to negotiate better deals at a local level and would require dialogue at a higher strategic level in order to effect positive change. Final Report 238

246 10.63 Increased funding would improve the range and availability of products available, which would also improve access to the sector and maximise its potential. Increased funding, or accessing other funding opportunities, would also create the ability to offer incentives, for example, paying legal costs, help towards moving costs, however, there seems to be less need to incentivise households and more of a need to use funding to expand the number of schemes in operation. There is evidence of capacity for this expansion, with reports of high demand for products: There are always more applications than the budget stretches to but we only have funding for 22 units across the whole county [of Herefordshire] (housing association respondent) This particular countywide allocation has resulted in only six completions in Ledbury itself of DIY Shared Ownership (where the property is secured in the open market) in the last three years. Final Report 239

247 11. NORTH WARWICKSHIRE BOROUGH COUNCIL AREA CASE STUDY EXECUTIVE SUMMARY The Private Rented Sector: the main messages There is a varied and active private rented market in North Warwickshire but, similarly to Ledbury, this is predicted to shrink in size as landlords exit the market over the next three to five years; the market houses a broad range of tenants which is reportedly increasing as social renting and owner occupation remain inaccessible. However, property availability has also increased meaning tenants have choice and competition in the market has kept rents stable; the tenant base is also predicted to shrink as the owner occupied market is expected to become more accessible to higher earning tenants post recession; migrant workers are not excluded from the market as in other areas; LHA recipients remain excluded to a degree however, due to landlords personal preferences and experiences; there have not been any impacts from the loss of asylum seeker accommodation; and there is movement within the market but less movement out into shared or full ownership, the private rented sector operating as a holding ground similar to that within Ledbury. The Private Rented Sector: the policy implications If the market does decrease in terms of property availability there is no guarantee that the tenant base will also this could lead to an increase in demand that drives up prices and an increase in demand for social rented housing. The local authority, housing associations and the Homes and Communities Agency should work to ensure that there are measures and funding in place to improve accessibility to the intermediate housing market that could be utilised to meet any increased demand if it arises; any market shrinkage also has implications for supply in terms of private rented properties - there is no activity currently that secures privately rented accommodation for those in housing need (for example, private sector leasing). The potential for this and for increasing activity around bringing empty properties back into use should be explored as the market may need to respond to a downturn in property availability; Final Report 240

248 tenants on LHA are more likely to be accepted by landlords if the local authority can provide support of both financial and practical means, for example, rent guarantee, deposit or rent in advance schemes under a broader criteria, maximised use of discretionary benefit powers, floating support or tenancy training, automatic referrals to welfare benefits advisors to secure take up, etc; and There may be potential in the community and voluntary sector for the provision of support services to vulnerable tenants in order to encourage landlords to offer them accommodation this would need further exploration. The Intermediate Housing Sector: the main messages Levels of demand for intermediate housing, on the basis of enquiries, are high; There is a growing sector in this market of applicants who are seeking intermediate housing following relationship breakdown. However, entrants to the market are predominantly living with parents or privately renting; Information, publicity and marketing are all reported as failing to reach potential applicants, or that applicants are coming forward with unrealistic expectations of what schemes can offer; Section 106 agreements are a barrier to the success of schemes in rural areas as lenders are reluctant to provide funding where they cannot secure an option for 100 per cent ownership upon repossession; Housing associations are actively engaged in attracting and retaining shared owners through offering flexible options and maximising the use of resources to do this; and However, financial barriers exist with current lending practices, lender reluctance and the amount of money required in deposit being significant factors. Although locally, lenders are looking to engage with housing associations to improve access to the market. The Intermediate Housing Sector: policy implications Opportunities for increasing funding to enable the expansion of successful schemes such as Rent to Buy should be explored with the Homes and Communities Agency; similar to other areas, the marketing and publicity for this market sector needs better co-ordination, clarity, coverage and consistency with a potential role here for the HomeBuy Agent working with housing association and local authority partners to agree a common brand and approach; Final Report 241

249 discussions with local lenders at a higher, strategic level could benefit the intermediate housing sector in North Warwickshire where there are already active lenders who are not constrained by large national organisations with corporate policy; and recent changes have been made to clauses governing Section 106 issues by the Homes and Communities Agency. What are the Interactions Between Private Rented and Intermediate Housing Sectors? Thus far, the consultation suggests that the most common area of interaction in North Warwickshire is through the use of Rent to Buy products, but that outside of individual offers of this there is very little interaction between the private and low cost home ownership markets. Young single and young couple households have been identified as a cross over group who may be eligible for both markets, requiring similar savings and deposits for each. There is a recognition that ability to access mortgages is preventing a cross over for this group: I think generally these people aren t going into shared ownership because of the lack of mortgage availability so they are waiting it out in private rented and hopefully pulling a deposit together. Try Before You Buy is popular because of this people just don t have the means [to go straight into shared ownership]. (Try Before You Buy being the Rent to Buy scheme). There is a perception that the current economic situation has increased the risk of households falling back into the private rented sector from the intermediate market, however the responses from housing associations have mitigated this to a degree. One association has had over twelve examples of using measures to support shared owners, in some cases buying back shares but in others assisted re-sale where the association meets the costs of negative equity and markets the property rather than allowing repossession. Introduction 11.1 This area was selected as a case study as: 6.3% of households were privately renting at the time of the 2001 Census which is almost identical to the West Midlands (6.4%); Higher percentage of detached and semi detached houses than in comparative areas in the private rented sector and living rent free; and Final Report 242

250 0.7% of households were shared owners, the same as for the West Midlands. Final Report 243

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252 11.2 The following maps show the distribution of the private rented sector and shared ownership in North Warwickshire at the time of the 2001 Census with more recent ward boundaries overlaid. Final Report 245

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254 The Private Rented and Intermediate Housing Sectors in North Warwickshire: key data 11.3 The following table profiles tenure for the case study area. Table 11.1: tenure North Warwickshire area Owner occupied: Owns outright Owner occupied: Owns with a mortgage or loan Owner occupied: Shared ownership Rented from: Council (local authority) Rented from: Housing Association / Registered Social Landlord Rented from: Private landlord or letting agency Area Rented from: Other All Households No. % No. % No. % No. % No. % No. % No. % No. % North Warwickshire 7, , , , West Midlands 651, , , , , , , ,153, England 5,969, ,950, , ,702, ,238, ,798, , ,451, (Source: KS18 Tenure, 2001 Census data) 11.4 Key findings: 6.3% of households were privately renting with a landlord or lettings agency at the time of the 2001 Census. This was close to the West Midlands (6.4%) but lower than for and England (8.8%). 2.7% were rented from Other which includes some privately rented households. This was lower than for the West Midlands (3.5%) and England (3.2%). 0.7% of households were shared owners which is the same as for the West Midlands (0.7%) and England (0.7%) The following table profiles household type in the private rented sector for the case study area. Final Report 247

255 Table 11.2: types of household in the private rented sector and living rent free North Warwickshire Single Person Couples Families with Dependent Children Pensioners Other Total Households Area No. % No. % No. % No. % No. % No. % North Warwickshire , West Midlands Private Renting 55, , , , , England Private Renting 673, , , , , ,456, West Midlands All Households 312, , , , , ,153, England All Households 3,210, ,633, ,022, ,848, ,736, ,451, (Source: CAS056 Tenure and Amenities by Household Composition & T08 Theme Table on Households, 2001 Census data) Note: Household Type Private Rented Sector and living rent free in North Warwickshire Statistics at the small area level combined private renting with living rent free, therefore the comparative data also includes living rent free Key findings: 27.1% of households in the PRS and living rent free were single person households excluding pensioners in North Warwickshire compared with 26.3% in the West Midlands and 27.4% in England. 17.2% of households in the PRS and living rent free were couples in North Warwickshire which was higher than the percentage of couples for the West Midlands (13.7%) and England (16.1%). 27.2% of households in the PRS and living rent free were families with dependant children which was higher than the percentages for the West Midlands (24.6%) and England (22.5%). There were a lower percentage of pensioners in the PRS and living rent free in North Warwickshire (17.3%) than in the West Midlands (19.4%) and England (15.6%). Final Report 248

256 Other households were under-represented in the PRS and living rent free in North Warwickshire (11.4%) compared to all Other households in all tenures for the West Midlands (13.5%) and England (13.4%) The following table profiles accommodation type in the private rented sector for the case study area. Table 11.3: accommodation type private renting and living rent free in unshared dwellings North Warwickshire Area House or bungalow - Detached House or bungalow - Semi detached House or bungalow - Terraced (including end terrace) Flat, maisonette or apartment - In a purpose built block of flats or tenement Flat, maisonette or apartment - Part of a converted or shared house (includes bed-sits) Flat, maisonette or apartment - In a commercial building Caravan or other mobile or temporary structure : Private rented - Private landlord or letting agency Total Unshared Dwellings No. % No. % No. % No. % No. % No. % No. % No. % North Warwickshire , West Midlands 28, , , , , , , , England 274, , , , , , , ,419, (Source: CAS049 Dwelling Type and Accommodation Type by Tenure, 2001 Census) Note: Statistics at the small area level combined private renting with living rent free, therefore the comparative data also includes living rent free Key findings: There was a higher percentage (17%) of detached houses or bungalows in the PRS and living rent free in North Warwickshire than in the West Midlands (13.5%) and England (11.3%). Final Report 249

257 There was a higher percentage (35%) of semi detached houses or bungalows in the PRS and living rent free in North Warwickshire than in the West Midlands (25.8%), and England (19.5%). There was a lower percentage (24.9%) of terraced houses or bungalows (including end terraces) in the PRS and living rent free in North Warwickshire than in the West Midlands (28.4%), and England (26.1%). A small percentage (7.9%) of North Warwickshire s PRS and living rent free accommodation was in purpose built flats, maisonettes or apartments which was lower than in the West Midlands (16.4%) and England (20.6%). 7.6% of North Warwickshire s PRS and living rent free were in flats, maisonettes or apartments that were converted or part of a shared house, compared to the West Midlands (9.3%), and England (15.7%). A higher percentage (6.7%) of North Warwickshire s PRS and living rent free were flats, maisonettes or apartments in commercial buildings compared to 6.2% in the West Midlands and 6.1% in England. 0.9% of North Warwickshire s PRS and living rent free were in caravans or other mobile structures compared to 0.5% in the West Midlands and 0.6% in England The following table profiles overcrowding in the private rented sector for the case study area. Final Report 250

258 Table 11.4: occupancy rating for households privately renting or living rent free North Warwickshire Area Overcrowding Minus 1 or Less All Household Private Renting or Living Rent Free No. % No. % North Warwickshire , West Midlands 25, , England 403, ,456, (Source: CAS053 Occupancy Rating by Tenure and Household Composition, 2001 Census data) Key findings: 6% of the PRS and living rent free households in North Warwickshire were overcrowded with an occupancy rating of minus one or less, compared to 11.9% in the West Midlands and 16.4% in England. Final Report 251

259 11.11 The following map shows overcrowding in the private rented sector in North Warwickshire at the time of the 2001 Census with more recent ward boundaries overlaid. Final Report 252