Consultation Response
Consultation: Priorities for the Local Government and Housing Committee
Response from CLA Cymru
DATE 17/09/2021
|
CLA Cymru Director: Nigel Hollett |
Adviser: Emily Church |
|
|
|
|
|
|
|
|
|
Collectively, our members manage around a third of all rural private rented sector housing. They provide housing for local people, with respondents to a recent member survey letting nearly a quarter of their homes below market rent, to support local people, especially retired and low-income tenants. In addition, our research suggests that on average, tenants stay at a property 7.6 years, with 30% of tenants staying 10 or more years.
CLA Cymru welcomes the opportunity to submit evidence to the Local Government and Housing Committee request for priorities. We argue the following areas should be key areas of focus for the committee.
The availability and affordability of housing in rural areas has continued to decline, which has consequently effected employment opportunities, availability of skilled labour, business growth and the sustainability of rural services and amenities.
Sustainable development is a key priority for Welsh Government’s as evidenced by its commitment to net zero greenhouse gas emissions however this adds pressure to the ambitious house building targets. Evidence suggests that the carbon cost of new construction is usually greater than the carbon cost of refurbishing an existing property, yet our tax system encourages new builds. With VAT being charged at zero rate on the construction and first sale or lease of a new building, this incentivises demolition of existing buildings and building new ones instead of effective refurbishments
It is paramount that there is adequate supply of housing within these rural areas for the economy to thrive, and there needs to be a sufficient supply in the right place and of the right nature. It’s well known that landowners have played a pivotal role in providing housing to help sustain their communities and wish to continue to do so. However, it is felt that among our members and the wider collective of rural occupiers, they are discouraged by the existing tax regime and complexity of the planning system.
CLA Priority: We ask that Welsh Government engages with UK Government to encourages the repair and renovation of existing buildings to provide new accommodation by reducing VAT levels to zero – as currently takes place on new builds.
This proposal would encourage the re-use of existing buildings, providing more homes to help meet government targets and deliver wider development to stimulate the economy. This would also encourage homeowners wanting to improve the energy efficiency of their homes.
Furthermore, tax rules associated with land-pooling are highly complex, which is entirely disadvantageous to private landowners entering into and/or leaving land-pooling arrangements. A view from our members is that they are attracted to the concept but are discouraged by the current tax rules. We consider it important that Welsh Government puts a mechanism in place which, from the tax perspective, achieves neutrality between different types of arrangements. This will facilitate the efficient delivery of land for housing developments to meet Government targets for new homes.
Sustainable communities are places where people want to live and work, now and in the future. They meet social needs, promote economic success, and protect and enhance the environment. Communities must have the opportunity to grow and develop in order to continue to be sustainable. The Taylor Review (2008) sums it up well: ‘sustainable development is about action, not just maintaining the status quo, and it’s about more than just the environment, it has to address environmental, social and economic issues together.’ However, local plan policies continue to overlook the need for proportional development in smaller rural settlements.
This is an outcome of local authorities undertaking sustainability assessments and placing settlements in a hierarchy according to their services. Housing is then allocated to those towards the top of the hierarchy, such as in market towns and large villages, ignoring the needs of smaller villages and hamlets.
The assumption that a lack of services means that smaller rural communities are unsustainable for new homes is damaging, actively diminishing the sustainability of these settlements. If sustainability was at the heart of planning decision making, then these settlements would be able to grow to ‘meet social needs, promote economic success and protect and enhance environmental objectives’.
Local planning authorities are required to calculate the housing need for their authority and ensure that they have a five-year land supply. As outlined above, sites are allocated towards the top of the hierarchy, resulting in significant expansions to market towns and larger villages, and little opportunity for smaller settlements. To ensure that the housing needs of rural communities is met within the community, local planning authorities should be required to conduct housing needs assessments in settlements where there are not allocated housing in their local plans.
The uncertainty and high cost of the planning system is a barrier for many rural landowners. Permitted development rights would remove the uncertainty and encourage more rural landowners to provide critically needed affordable housing for rent aimed at the local community.
A revision of existing permitted development rights could allow the construction of between 1 to 9 affordable dwellings for rent on a rural exception site. Prior approval would be required and would need to be the subject of carefully thought-through criteria. There would also need to be a condition that the housing must be built, retained, and managed by the landowner for the benefit of the local community.
Rural exception sites are a very important mechanism for delivering affordable rural homes on land which would otherwise not gain planning permission. However, the rural exception site policy continues to be underutilised due to high upfront costs for the landowner including the inheritance tax burden if the landowner wants to retain and manage the affordable rented provision in-house. To mitigate the uncertainty of the planning system and encourage more rural exception sites to be brought forward, permitted development rights for new-build affordable housing for discounted rent on rural exception sites should be introduced.
CLA Priorities: CLA ask that local planning authorities should be mandated to undertake a Housing Needs Assessment across all rural settlements without a housing allocation so that identified local need can be met at a local level. Furthermore, permitted development rights should be introduced for new-build affordable housing for discounted rent on rural exception sites.
For many rural jobs, a key component is that it includes accommodation that is either provided or arranged by the employer, so it is essential for a landlord to be able to gain vacant possession of the said property when needs be. The ability for employers to provide this benefit within a job role allows recruitment and retainment of good employees within rural businesses. This has a crucial role to play for the rural economy as this brings investment into the area and valuable workers.
With the permanent introduction of a 6 months’ notice period with the Rent Homes Act amendment bill, CLA believes it needs to be clear what the possible impacts would be on the rural private rented sector. This increase would render it very difficult for a farmer in respect of when housing employees if a farm worker retires and has a statutory right to remain in their property. However, to continue running the farm, that farmer needs to employ another farm worker and provide them with accommodation. They therefore need to regain possession of one of their other properties, which is most likely to be achieved by serving a section 21 notice (or the replacement notice under RHW). If the notice is six months, then either the farmer won’t be able to recruit a farm worker for six months, or the farm worker won’t have anywhere to live for the first six months.
The rural economy is also dependant on many other employees who are housed by their employers but who would not fall within the service occupancy provisions. This goes far beyond agricultural employees and may include bakers, hotel staff, gardeners, fishery staff and brewers to name but a few. It is paramount that an employer is able to offer accommodation to effectively recruit and retain staff to run their rural business.
In principle, the CLA supports an increased notice period but that is wholly dependent on the ability to effectively regain possession of a property through the court system when required, due to a breach of tenancy or on estate management grounds.
The CLA and its members are of the opinion that Welsh Government needs to ensure the 2016 Act must not be enacted until the Welsh court system is properly resourced. The main concern for our members is that they will not be confident that in an extenuating circumstance, such as anti-social behaviour, they would be able to get their property back in a time and cost-effective manner. Ultimately, they will not continue to let their property in the private rented sector.
CLA Priority: Given the lack of properties in the private rented sector in rural Wales, it is critical that an employer has the ability to regain possession of a property required for housing an employee. Whilst still recognising the importance of security, this should be pursuant to a two-month notice period through the same mechanism that take service occupancies outside certain provisions.
As homes are responsible for 17% of UK greenhouse gas emissions, the CLA appreciates that rural homes have an important part to play in reducing carbon emissions and helping the Government reach their 2050 target. However, these proposals continue to build on a policy designed for urban, modern homes which expects private landlords to pay for improvements which directly benefit the tenant and more widely benefit society in terms of carbon emissions.
Rural homes pose a distinct challenge to decarbonisation: they are significantly less likely to be heated by mains-gas and are more likely to be older, larger and detached than urban homes. It is less effective and at worst harmful to try and improve the energy efficiency of rural homes to an EPC rating of C, in the same way as urban homes.
As they stand, these proposals would have a serious impact on the rural private rented sector, with landlords likely to leave the market by selling or changing the use of their homes to fall outside the scope of MEES, due to the high costs involved with reaching an EPC rating of C.
A main concern for CLA members is the lack of funding available for the alterations deemed necessary. The introduction of a funding scheme will prevent essential rented housing being sold due to property owners either not having the capital to fund the alterations themselves or it is seen unviable. Furthermore, improving the energy efficiency of homes is labour intensive and it is important that rural areas have access to the right funding and skills in order to create employment opportunities.
CLA priority: With the lack in funding, the Welsh Government needs to establish a funding scheme that is similar to the Homes Upgrade Grant and Clean Heat Grant in England.