Housing Sector pressures highlighted

[Kintyre Forum News]

Argyll and Bute’s housing sector will face substantial pressures as a result of core funding cuts over the next few years.

That’s the message in a briefing paper on key Argyll and Bute housing issues, to be discussed by the council’s Executive next week.

The report highlights several areas in which there will be a significant reduction in resources, and outlines the effect these reductions are likely to have.

It warns that the magnitude of the funding cuts and uncertainty over investment levels in future years are likely to pose a serious threat to the delivery of the area’s Local Housing Strategy, and to have a substantial wider impact on the council and its partners.

Councillor George Freeman, Argyll and Bute’s spokesperson for Housing and Communities, said the situation was potentially grave.

“Continued reductions in capital investment in housing development across Argyll and Bute will seriously impact on the council’s ability to deliver the number of houses required to meet the high level of housing needs which exist in our communities,” he explained.

“These pressures, which are linked to the current economic recession, and the proposed changes to welfare benefits will also impair the council’s ability to meet the Government’s 2012 targets on homelessness.

“We are already experiencing increased demands for welfare rights and homelessness services across the authority.”

The Scottish Government’s Affordable Housing Investment Programme (AHIP) is the main source of funding for the development of accommodation for social renting and low cost or shared ownership, which is delivered by the council in partnership with local housing associations and other developers.

In 2010/11, this investment reduced by 45%, with the potential threat of a further significant reduction next year.

In 2007/08, the AHIP funding stood at £21.883million. As a consequence, a record 212 new affordable homes were completed that year, with a further 183 units approved.

This year, by contrast, the core AHIP funding has been set at just under £7million. This comes at a time when the updated Housing Needs and Demand Assessment for Argyll and Bute has identified a potential requirement for about 440 new affordable homes each year for the next 10 years.

Another area of significant pressure is the level of Housing Association Grant (HAG). HAG is provided by the Scottish Government to housing associations to acquire land or buildings and to build, convert or improve housing for rent or low cost home ownership.

The rural target for public subsidy per unit of new properties build by housing associations delivered via HAG previously stood at £107,000 per unit.

However, in an effort to deliver more housing for less cost to the public purse and increased private sector borrowing, the Scottish Government reviewed the allowances. The rural target now stands at £68,000.

Councillor Freeman said: “In Argyll and Bute we clearly face particular pressures as a result of the specific local circumstances and geographical context of the area. We often, for instance, experience significant site configuration and infrastructure costs, as well as transport and supply difficulties for our isolated rural communities and remote islands.

“The current funding regime is likely, at best, to make the delivery of such projects very difficult and may in some circumstances make delivery impossible.”

He went on to say that local housing associations believe that in order to make projects stack up financially, it could be necessary either to reduce scheme costs by 10-40% or to increase rent levels by anything from 20-70%.

“This would obviously breach affordability criteria in our local communities,” Councillor Freeman added.

There are other significant imbalances and increasing pressures within the local housing system in Argyll and Bute. These include:

The social rented sector declining by some 10% between 2004 and 2009 despite record investment levels

Waiting lists increasing by almost 15% over the same period to some 3,500

900 new households falling into housing need each year

Average house prices continuing to outstrip local household incomes, leading to severe affordability constraints

Homeless applications increasing by 7% between 2008/09 and 2009/10

Annual housing association turnover reducing by about 6% between 2004 and 2009

A significant proportion of the social rented sector stock (over 55%) failing to meet the Scottish Housing Quality Standard

Housing and support for the elderly and other vulnerable households with special needs not being fully addressed

Almost 1000 households in Argyll and Bute are currently overcrowded

A huge proportion of ineffective stock throughout Argyll and Bute - the second highest level in Scotland. There are almost 4,200 vacant, second or holiday homes (9% of the total stock) in the area, which are therefore unavailable to meet local need.

Councillor Freeman said: “The council has a duty to assess the need and demand for all types of housing and housing support within its area and to prepare, implement and monitor a strategy to address the identified need.

“There is no doubt that the double-whammy of substantial reductions in core funding coupled with increased housing demand will have major implications for the council and its development partners, and will pose serious threats to the delivery of our targets and objectives. "