Background
In March 2023, Homes for the South West (H4SW), in collaboration with the University of the West of England (UWE), published a report on housing affordability and affordable housing need in the South West
[1]. This found that the South-West is the fourth least affordable region in England for all property types (after London, South East and the East of England). In 2021, median house prices were approximately ten times greater than the median earnings (up from four times greater in 1997).
Factors affecting housing affordability include high house prices. The South-West has the fourth highest median house prices of any English region (after London, South East and the East of England). Demand for new housing has exceeded supply. Developable land is scarce – due, in part to the South West’s high quality, protected natural environment – and subject to market premium prices that undermine the viability of affordable housing.
At the same time, the South-West has the sixth lowest median individual earnings of any English region (exceeding only the North West, North East and Yorkshire and the Humber). This reflects a labour market characterised by seasonal, low paid work in agriculture (rural communities) or tourism (coastal communities), a particular feature of the South-West Coastal LPIP footprint.
Second homes and holiday lets also impact on housing affordability, particularly in coastal areas. This has an inflationary effect on local property prices and an adverse effect on school rolls and the sustainability of local business during ‘out of season’ periods. In Cornwall the proportion of second homes in 2018 was estimated to be as high as 25% to 40% in tourist “hotspots” (e.g., Padstow and Polzeath, and Fowey, St Mawes, Looe and Torpoint) and, typically, 10% in other coastal areas.
Other factors affecting housing affordability include migration, the in-flow of retirees, people working from home and those commuting to London and the South-East introducing people with greater purchasing power than locals into the housing market. Less significant than in other regions, Right to Buy has also depleted the total affordable housing stock in the South-West. Between 1997 and 2021, some 33,220 local authority-owned homes were sold through Right to Buy, whereas local authorities in the South-West delivered only 2,320 new homes.
Local authority profiles for the SWC LPIP area
H4SW and UWE produced local authority profiles on the affordability ratio (calculated by dividing median house price by median individual earnings per year); the difference between housing supply (the number of new permanent dwellings) and demand (the number of new household formations), adjusted for affordability; future housing need (projected requirement for new homes between 2022–39 as an average annual and total); and estimated future affordable housing need (projected requirement for affordable homes between 2022–39 as a total). More indicators are available in the report.
These have been replicated here for the SWC LPIP. Unfortunately, no data are provided for what was West Somerset.
|
Affordability ratio |
Difference between supply and demand |
Future housing need 2022-2039 Average annual |
Future housing need 2022-2039 Average total |
Estimated future affordable housing need 2022–2039
|
Cornwall |
11.0 |
19771 |
1951 |
35115 |
53193 |
Plymouth |
7.3 |
4820 |
541 |
9739 |
12205 |
Torbay |
8.9 |
3682 |
437 |
7865 |
10678 |
South Hams |
12.6 |
2305 |
206 |
3715 |
5949 |
Teignbridge |
11.4 |
2775 |
490 |
8811 |
13452 |
Torridge |
10.3 |
3465 |
271 |
4880 |
7054 |
North Devon |
10.5 |
775 |
225 |
4048 |
5909 |
East Devon |
10.9 |
4691 |
622 |
11194 |
16536 |
Consequences of a lack of housing affordability
The lack of affordable housing has a complex range of consequences, from the rise of homelessness (whether through sofa surfing or rough sleeping) and associated barriers to accessing education, work and other services; the negative impact on basic needs, households entering into low quality housing or cutting back on other needs such as diet); to income segregation, a lack of social diversity with, according to some researchers, negative impacts on creativity, innovation and economic productivity. High housing costs in the South-West, for example, have been associated with the out-migration of young people, with consequences for the labour market.
Policy approaches
All the local authorities in the SWC LPIP have an affordable housing policy in an adopted local development plan document, the Core Strategy or Local Plan, though there are concerns as to whether definitions of affordable housing are actually affordable. Supplementary Planning Documents (SPDs) tend to be more prescriptive and provide an opportunity for more flexibility in terms of interpretation and delivery. Neighbourhood Plans also allow for the inclusion of affordable housing, often with local connection requirements. Community-led housing projects, while small in aggregate terms, costly and time consuming, tend to be valued, e.g. for their ability to provide homes for young people in the places they have grown up, reversing the trend towards unsustainable retirement villages where the cleaners, the gardeners etc. come in from a long way out of the village.
In a stakeholder survey administered by H4SW and UWE, housing associations, local authorities and smaller housebuilders all highlighted the importance of building relationships, collaboration and partnership working in delivering affordable homes. Among housing associations, there was a particular interest in working with Small and Medium sized Enterprises (SMEs), which were broadly seen as focused on a delivering a higher quality product (building a local reputation) and more closely aligned with the ethos of housing. Housing associations also talked about productive partnerships with particular landowners (including local authorities and public bodies) with shared interests in the legacy of development: “we want to work with people who want to create something more than just housing – a great place.”
Local authorities also reflected on the housing crisis as a corporate priority for the council and the deployment of multi-disciplinary teams (including housing, planning, transport) to expedite the delivery of additional stock. This was linked to the ‘enabling’ (and ‘de-risking’) role they see themselves taking at all stages of the development process.
In addition to joint ventures with SME housebuilders, the H4SW/UWE report highlights the importance of working with partners to deliver sustainable homes. For example, the Centre for Sustainable Energy in Bristol is undertaking pilots of different home standards, such as Passivhaus, EPCs and modular homes with different developers to learn what provides the most effective environmental performance. SWC LPIP partners could similarly work with their local universities to learn and share good practice.
Other innovative approaches that have been proposed in the wider literature include the more effective use of empty properties, community self-build projects, providing more age-friendly developments to release housing stock, and designing intergenerational, communal and co-housing residences (a model tried out in both Denmark and the Netherlands).
It would also be useful to review some of the policy instruments that local authorities have in relation to second homes, a key factor determining housing availability. The Levelling-up and Regeneration Bill, which is currently in the House of Lords, would enable Councils to charge second home owners a double Council Tax rate, although this will not be implemented for some time there is the question of how local authorities have been applying (or not applying) Council Tax discounts on second home owners and whether the removal of such discounts (which used to be quite high) has affected second home purchasing at all.
Another angle that should be looked at is around housing quality and improvements to the rental sector. There is evidence that people in private rented accommodation have worse health than those in both owner-occupied and social housing. This may be due to the poor quality of many homes in the private rented sector as well as the limited security in terms of private tenancies (albeit this will hopefully be addressed at least in part by the proposed abolition of Section 21 ‘no fault’ evictions in the Renters Reform Bill). A study around the health impacts of tenancy insecurity, and the impact of any future changes to landlord regulation, on tenant health could be useful.
(1) Danielle Sinnett, Zaky Fouad, Katie McClymont, Hannah Hickman, Cat Loveday, Stephen Hall, Rebecca Windemer and Jessica Lamond (2023). Housing affordability in the South West of England. Homes for the South West (H4SW) and the University of the West of England (UWE).
https://homesforthesouthwest.co.uk/home/affordability-report/.