Delivering effective housing solutions

Co-ownership Housing Association hosted a round table discussion on all aspects of housing in Northern Ireland.

We do not build enough new homes in Northern Ireland, what is getting in the way of that and what needs to be done?

Anita Conway

Although we are meeting our targets in the social housing sector, there are not enough homes being built in Northern Ireland. The key issue is availability of land. Land in the right location that can be developed at a price that makes it affordable.

Mark Graham

A lack of land supply in the right places is a major factor. The planning system seems to be taking longer in some cases now that it has moved to the councils and more importantly there are no current area plans with zoning for housing. There is also no joined up approach to infrastructure. The statutory agencies need to do more to support the supply of housing in Northern Ireland.

Derek Wilson

In the mortgage finance world, there is a distinct difference between Northern Ireland and the rest of the UK. In Great Britain, there is almost a fear of new build homes and there is a belief that they carry a premium that is not sustainable and lenders tend to reduce the level of finance available to 80 to 85 per cent LTV. Whereas in Northern Ireland the demand is such that lenders will lend up to 95 per cent of a new build because new build homes are rising in price and value faster than other properties. The conundrum of the lack of suitable homes has been addressed by the Housing Supply Forum but it is a difficult problem to crack.

Ian Snowden

The availability of land where people want to live is a key issue and that is a market driven process. There is also the issue of people being able to make a profit building new homes at a price people can afford to buy them at. The Housing Supply Forum suggested it was not possible to make money supplying houses at current market rates when the report was written in 2014-2015. A lot of that is driven by land prices. My father is a farmer and he sold a site for a single house, a quarter of an acre, for £75,000 – that is a ludicrous sum of money to spend on what is a small patch of land. Unless we address the issue of land prices, it is going to be difficult to build houses that people can afford to buy. Overall, our housing market is designed to deal with conditions in the post-war years of secure employment. The planning system was designed for these conditions as well. We are now in a different world in terms of employment and the economic context.

Paddy Gray

I agree with both the planning and land issue, but coming at it from a different perspective; it is about building in the right areas for the right people with the type of housing people want. We need to change mindsets of people if they are looking for a semi-detached house in a nice area – that’s not going to happen. We also have to ask, is social housing being rationed properly and is housing need being identified properly? What I have found in many studies is that it is not. If there is a change in mindset people may move further than they are willing to go at present. It is the same in the private sector, where there is a lot of latent demand. It is about the public and private sectors coming together to determine the amount and type of houses to build. That may include modular housing – I myself grew up in a prefab house that can be assembled quickly and it still exists today over 60 years later. The housing list is also not a reflection of true housing need. We need to address the whole problem out both qualitatively and quantitively.     

Conor Mulligan

There are three things holding housebuilding back in Northern Ireland. The first is planning. Northern Ireland is the slowest part of the UK for planning. It is not the planners fault, it is the wait they give to government consultees, such as NIEA, Rivers Agency and Roads Service. In other parts of the UK the wait isn’t as long and we have just got planning permission for a large scheme in England in seven weeks. Here we have several hundred houses in the system for several years.

The second area is the lack of finance availability, particularly for the smaller companies. Many of the larger UK banks will not permit investment in Northern Ireland because of the planning system delays referred to above. The third reason is that infrastructure, particularly in Belfast, is 20 years behind the times. The investment has not been made and that has passed on to new house buyers in the form of a PFI where they pay for it through their mortgage. Which is akin to building a new bridge and only charging new car drivers to pass over it. The burden of infrastructure shouldn’t be borne by new house buyers but by the taxpayer in general.

We build 250 houses a year and I would gladly increase, and am trying very hard to double that but we can’t because of the reasons I have outlined. 

   
How can the private, social and public sectors work together to deliver more housing?

Mark Graham

In Northern Ireland, private developers and housing associations think of developments in very different ways. They have very different mindsets. When we looked at how housing associations worked with developers across the water it was much more of a partnership approach than here. They were all working with the shared assumption of wanting to build more houses and then finding a financially viable way of achieving that. How can we make that happen in Northern Ireland?

Anita Conway

In Great Britain, they approach procurement and development very differently from us. They see it as a long-term partnership and they will share the procurement risk. We don’t have that flexibility and if you have a mixed tenure development, including social, you are tied to those procurement rules. It also makes the relationships with the private sector more adversarial and very contractual and so there is no long-term view taken. To address this, we have been looking at a joint venture arrangement that would meet the procurement requirements and build the potential for a longer-term relationship.

Paddy Gray

I am on the board of a housing association in Dublin and they have been urged by government to take that partnership approach. The government has introduced PPPs, buying tranches of properties from the private sector and selling them on to housing associations. The developers are not necessarily from Ireland who are showing an interest. We should also drop the distinction between social and private and just look to build houses.

Conor Mulligan

We have experience of delivering social housing both here and in England. One of the main differences is that in England they seem to put transferees into new developments rather than picking people from the top of the housing waiting list, who often have more complex needs. Here we have very strict rules – for obvious reasons – whereby we must take those at the top of the list. The perception of all those involved in England is very much, ‘we will make this work’. In Northern Ireland because 95 per cent of social housing has been segregated there is a certain perception, or indeed misperception, of social housing and it is much more difficult to get mixed tenure developments. With such mixed developments, we will need to get the first one right – indeed the first ten right – and then that perception or misperception will melt away and investors will gain confidence.

Mark Graham

In Great Britain, primarily driven by Section 106 agreements, people just build houses and mixed tenure in assumed areas whereas in Northern Ireland social housing and private housing developments operate separately.

Derek Wilson

There is also the opportunity to make available under-utilised publicly owned land, which would help address the land issue and could be combined with financial incentives and speeded up planning.

Ian Snowden

The public sector certainly has land assets which it doesn’t need. We need a public sector land register to help identify those sites that are no longer required – but in a way that encourages house building. In England, the public land scheme for housing hasn’t seen great house building rates on such sites. Although many parts of government say they want more houses, their actions and behaviour don’t support that.

On the public private partnership issue, there is going to be an infrastructure crunch in Belfast that will soon stop house building until more investment is made.

What are the barriers to home ownership and what more can we do to increase the levels of home ownership?

Derek Wilson

There is a myth of the lack of availability of mortgage finance. It is no more or less stringent in terms of applying for a mortgage than it ever was. The Council of Mortgage Lenders’ data for Q4 2016 showed that the affordability in Northern Ireland is the best of any UK region at an average two and a half times income for a first-time buyer and less than that for a home mover. These very favourable conditions should support home ownership. It is not all doom and gloom.

Conor Mulligan

I agree that obtaining a mortgage is not the issue. There are still legacy issues and still negative equity. Although whilst mortgages are more affordable than ever, young people are often unwilling to take on the debt despite relatively low interest rates. What is missing in Northern Ireland is the full term fixed interest mortgage that is the norm in the US. That would solve this problem overnight. Also, apart from co-ownership there are no government schemes to encourage home ownership in Northern Ireland.

Derek Wilson

Despite all the positives, the average age of first time buyers is increasing. It is now 30 and 38 for home movers. As regards government initiatives, co-ownership works in Northern Ireland because of its uniqueness and there is a critical mass for lenders which makes it an attractive proposition. Having one scheme makes it more cost effective for lenders as it reduces complexity and costs in terms of legal agreements.

Mark Graham

Another factor is the changing pattern of employment with many people in their 20s in temporary employment, which can make it difficult to access a mortgage. The Millennial generation are much poorer than my generation at the same age. It is as much the nature of contemporary employment practices and the economy as it is a supply problem.  

Paddy Gray

I would like to turn it around and ask, why are we obsessed with home ownership? At the end of the day it is a good thing but we should have a flexible housing market to reflect changing times. I recently asked my students how many wanted to own their own home and 50 per cent said yes. 20 years ago that would have been 100 per cent.  There is a different mindset with ‘generation rent’.

Mark Graham

Is it a case of people don’t want to own their own home or do they believe that cannot own their own home? I wonder if the younger generation just assume they cannot achieve home ownership. If they live in the private rented sector they already pay more than a mortgage.

Anita Conway

By 2020, only 25 per cent of under 30s will be able to own their own home and if the bank of mum and dad were not there it would be considerably less. Are we building the right mix of homes that will allow people to move – to allow downsizing and right sizing to free up first time homes.

Ian Snowden

Inherent in the question is the suggestion that there is an optimum level of home ownership. The actual number of homes owners has increased, it is the percentage share of all households that has decreased due to the huge increase in the private rented sector. We assume that the model that saw home ownership grow in the 1980s and 1990s is still suitable for today. It is a much different world than it was when I was in my 20s. Twenty-year-olds no longer want to be saddled with a mortgage and they probably have £40,000 of student loan debt and might not want to settle in one location. We need to provide people with what they want rather than make assumptions about what they want.

Most people agree that mixed tenure is a good thing, why do we find it so difficult in Northern Ireland?

Ian Snowden

Because nobody knows what it looks like in practice. It can be difficult to persuade people it can be successful if they have no reference point. There are several issues, not least the segregation of social housing. There are also attitudes and assumptions based on Housing Executive estates. People think if they are moving into a mixed tenure development they are moving into a Housing Executive estate. We need good examples created from scratch and we might be able to do that on some of the former military sites such as St Patrick’s in Ballymena.  

Anita Conway

Fold developed a scheme in Annadale [Belfast] 10 years ago with Carvil Group. There are 50 social apartments dotted throughout the development and there is no issue. That has worked. We now have to consult when developing any type of housing. We recently went to purchase a scheme of 12 apartments and four had already been sold privately. We were going to buy the rest but when they were consulted people were going to pull out of their sales. They thought that people in social housing would have lots of issues and their presence would adversely impact property prices. We have since bought five units in a development in Eglinton and there were similar concerns but we were able to develop those new homes and there have been no issues. We are now able to use these development as an example of how mixed tenure can work.      

Conor Mulligan

Everyone says that if it can happen in England then why can’t it happen here? We should do what they do in England, which is don’t consult everywhere we try to accommodate social housing in a scheme and secondly, if it is an isolated scheme with mostly private ownership we should put transferees in to it. If we do those two things I believe it could work in Northern Ireland.

Paddy Gray

It brings us back to the waiting list and how social housing allocations work in Northern Ireland. We did research into choice-based lettings recommended transfers going into new build rather than just those from the top of the waiting list. It is also about proportionality between private and social. Developer contributions of 20 per cent which have operated in Great Britain and the Republic of Ireland would also help greatly. It is also about things like signage on developments which immediately say we are social housing tenants. If you want to integrate schemes you don’t want to be identifying the different income groups.

Mark Graham

It is having the courage to do it somewhere and be prepared to be flexible – but that is difficult under the current social housing allocation system. If there could be some flexibility, there would be more support for mixed tenure. There is also a case to not advertise it as that is almost telling the community we think there will be issues. Let’s just get on with it.

What role does the private rented sector play and can we ever make it a tenure of choice?

Paddy Gray

The private rented sector has become reasonably vibrant. There are around 70,000 housing benefit tenants in the sector which is an indicator of low income tenants who would probably be in social housing had the houses been available for them. Many are being signposted into the private rented sector by the Housing Executive and others but they don’t get the same benefits as social tenants such as the right to buy, the good repair service, good management services or the security of tenure. If we are to have a level playing field for rented housing, we need to either have the same advantages for those in private rented or no advantages for social tenants. There is an opportunity for housing associations to work with the private rented sector as they have done in England where housing associations have bought up private rental companies to increase their pool of houses. We need to work in partnership in the rented sector rather than having separate private and social.

Mark Graham

It is the Cinderella sector; least understood and least talked about. In many places in Northern Ireland social and private rents aren’t that different from social housing rents.

Anita Conway

The LHA (local housing allowance) is going to be a significant issue because there are rents, particularly west of the Bann, that are too low to sustain investment. Fold are looking at developing some private rented homes, more at the high end and perhaps cross subsidise those between the high end and social housing/affordable private rented. There are a huge number of people at the bottom of the social housing waiting list that are never going to get housed but they would pay a reasonable rent and we could try and facilitate that by providing affordable homes.

Derek Wilson

The Northern Ireland private rented sector is often described as a cottage industry. The domination of relatively unsophisticated landlords brings its own dangers. The head winds facing buy-to-let landlords are increasing and make it a vulnerable sector and with the vast majority of landlords owning only one or two properties – very often they are accidental landlords – that brings increased vulnerability, particularly given the legacy issues prevalent in the sector.

Conor Mulligan

The private rental sector saved us here. From 2006 to now there is an extra 50,000 units in that sector and only for that we would have had a real problem. As regards the level playing field, the private rented will be paying up to pays 40 per cent tax on its rental income. Housing associations and the Housing Executive pay no tax. It is very hard therefore to expect that sector to provide the same level playing field if that amount of its income is deducted. We could see the private rented sector vanish as quickly as it appeared. A lot of those properties will be bought up and will not be available for the next generation to rent.

Anita Conway

The social rented can’t buy any portfolios from the private landlords to use as social homes because if we buy them we will be making people homeless as we have to allocate the units to those on the housing list.

Ian Snowden

There are going to be issues in particular pockets, such as specialist student accommodation in Belfast. There could be a move out of the Holylands, which has happened in other cities. If something isn’t done we will end up with HMOs [Houses in Multiple Occupation] filled with students being replaced with HMOs filled with tenants on housing benefit.

From a tenant’s perspective, it is the quality of the accommodation that makes a ‘tenancy of choice’. Some private rented accommodation is very good and some of it is appalling. There are issues with security of tenure and length of leases. In 2000 there was a housing strategy to grow the private rented sector, whereas now the tenor of the discussion is that it is now too big.   

Choose one issue that needs to be addressed for more houses to be built in Northern Ireland.

Conor Mulligan

The planning system and a lot of planners would agree with me. It is the system not the planners themselves and we have a system in Northern Ireland that gold plates a lot of the regulations and European Directives and it slows down our supply line dramatically.

Paddy Gray

We need a more joined up approach so that we build the right houses in the right areas for the right households. We shouldn’t separate social and private housing; we need to give people choice and movement.

Ian Snowden

Something that would help everyone predict what is going to happen in the market better would greatly help. In the planning process a developer cannot predict what outcome and what the cost will be. On the land issue, we don’t know what way land prices will go. We also face the uncertainty of Brexit. If we could find some way to break the cycle of all these uncertainties and give a much more predictable path into the future on prices, cost, planning and infrastructure it would be a great help. The Executive could help with setting long-term plans for infrastructure as opposed to single year budgets.

Derek Wilson

Review and implement the recommendations of the Housing Supply Forum which includes addressing the planning issue. We seem to have periodic reviews and then nothing happens. I understand circumstances change but it is over a year now since publication and we should start to implement the nine recommendations.

Mark Graham

Public leadership to say we will build more houses. I don’t think this is something the private sector, or the social sector or government can achieve by itself. If we are going to build on brownfield sites, then we need support on infrastructure and we need to build more houses and not worry if they are private, rented or social – that’s a secondary issue.

Anita Conway

I would echo what Mark has just said. In the Fresh Start Agreement housing hardly got a mention at all and yet every single one of us must live in a house. Housing needs to get further up the political agenda and not just social housing but all forms of tenure. For our sector, if we could get an improved perception of what social housing is that would help enormously.

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Participants

Anita Conway is Director of Development with Fold Group, having joined Fold in 2011. Prior to joining Fold, Anita worked in the private construction sector as a Commercial Director working throughout Europe. Anita has extensive experience in residential, hospitality and commercial property development. Before working in the private sector, Anita gained over 15 years’ experience working in several housing associations within the property development and housing management field.

Mark Graham is Chief Executive of Co-Ownership Housing Association. He joined Co-ownership in 2015 as Executive Director, Property and Development, before taking up his current role in 2016. He had previously held several senior management positions in the Northern Ireland Housing Executive, latterly managing the Northern Ireland social housing development programme and having also led major change initiatives. He has also a strong interest in housing policy and organisational governance.

Paddy Gray is Emeritus Professor of Housing at the Built Environment Research Institute at Ulster University and was previously President of the Chartered Institute of Housing. He was awarded a Distinguished Community Fellowship at the University of Ulster in 2004 for outstanding work in the community and, in 2006, was appointed Visiting Professor of Real Estate at Spiru Haret University, Romania. In 2011, Paddy was awarded an honorary Fellowship of RICS and in 2014 was named as Belfast Ambassador of the Year. He is also a Visiting Professor at Jiangxi University, China. In 2017 he was voted first of the top 50 housing power players in the UK by a poll taken by 24 Housing Magazine.

Conor Mulligan is Managing Director at Lagan Homes. Conor has over 25 years’ experience in the housebuilding industry, joining Lagan Homes in 1993 as a site engineer and becoming MD in 2002. He has overseen the company’s expansion to one of Northern Ireland’s largest and most successful private housing development companies. Conor is a member of the CIH, the CIOB and sits on the CEF’s Private Housing Committee. He is also a board member of HELM Housing Association.

Ian Snowden is Head of the Housing Policy and Performance Division in the Department for Communities. He had previously worked in the Department for Social Development (DSD) since 2001 in a variety of posts in the Resources and Social Policy Group and the Urban Regeneration and Community Development Group. Before taking up the Deputy Secretary post at DSD, he had been Director of the Department’s North West Development Office since June 2012, where he was responsible for urban regeneration.

Derek Wilson is Head of Mortgage Strategy and Distribution at First Trust Bank. A graduate of Queen’s University, Belfast, Derek Wilson has over 36 years’ experience in financial services, specialising in mortgage finance.  He is currently Head of Mortgage Strategy and Distribution for First Trust Bank, Chairman of the Council of Mortgage Lenders for NI and a Board Member of the Northern Ireland Housing Executive.  He was a member of the NI Housing Supply Forum and Housing Rights Service’s “Preventing Possession Partnership”.