By Loz Kaye (@LozKaye)
Housing is a political concern that touches everybody. Homelessness was the hot topic of the Greater Manchester mayoral election. Planning battles dominate the local media currently. Towers spring up and heritage buildings crumble.
It has been very difficult to get a handle on a very complex picture, particularly in the rapidly transforming Manchester city core- essentially the area circled by the Mancunian Way and Great Ancoats street, but increasingly including Ancoats and New Islington.
This is why Dr Jonathan Silver's recent report "From Homes to Assets - Housing financialisation in Greater Manchester" is hugely welcome. And it is as explosive as it is welcome. It raises many worrying concerns about the loss of affordable housing and the impact of finance in the centre of the city-region.
There are many notable findings, but particularly striking is the dropping of the 20% affordable housing requirements that has been the guideline for housing development. Surveying 79 sites straddling Salford and Manchester a total of 5,125 affordable units should have been expected.
In Manchester 0% of the sites delivered under the guidelines, with a loss of an estimated 2,956 units.
The question is whether this matters in relation to the city as a whole. Manchester, and Greater Manchester, is bigger than just the city core. There is a wide variety of housing stock, we shouldn't forget that at one time Wythenshawe was the largest council housing estate in Europe.
Nevertheless, how the city centre is transforming is both unsustainable for residents in the heart of Manchester and will have an impact beyond the Mancunian Way.
A lot hinges on the definition of affordable. Sensibly, Manchester does relate its official definition of affordability to actual income, pegged to a maximum of 30% of gross household income. An affordable mortgage is currently set at £125,000 calculated as a multiplier of 4.5 to the average household income of £27,500.
Dr Silver found that the average cost of a new one bedroom apartment in Manchester city core was £192,818. This does not fit the overall Manchester definition of affordable. But significantly, even if you take in to consideration the higher average household income just over £35,000 p.a. local to the city centre, this will still not be affordable according to the council's definition.
The housing costs in the city core are not supported by Manchester's current economy.
However, it is the city core that is supposed to be the focus of the projected growth in population for Manchester. The overall population growth is forecast to be 95,000 to a total of 630,000 residents by 2026. The Local Government Boundary Commission projects 35% of the growth over the next 5 years to be in just 3 wards - Piccadily, Deansgate and Ancoats and Beswick, which cover the city core area. This is a looming crisis if the mismatch between housing costs and the economy is not addressed.
Part of the confusion around the subject of affordable housing in Manchester is that there are two sets of policy targets. There is the planning system 20% affordable housing guidance, then there is Manchester's Housing Affordability Policy Framework (HAPF) to provide 1,000 to 2,000 affordable homes each year in the city.
In practical terms, the commitment to 20% of affordable units in any development is dead, even if this has not been explicitly stated. You could argue this might not matter though if the Housing Affordability Policy Framework is able to deliver. Again, this has been implied by councillors, if not explicitly stated. There are a number of problems with this point of view.
Firstly, this essentially makes the city core an affordability 'no go' zone. This is conceded in private, but I doubt anyone from the council would find it comfortable to say this publicly. This is not just because it is economically unsustainable, but also because it will create very sharp social division at the heart of Manchester. Existing inequalities will become entrenched in the built environment.
But also, there are significant challenges for the Housing Affordability Policy Framework to deliver on its targets. After all, the missing 2,956 affordable units represent up to 3 years of HAPF, but relate to just a snapshot of the central residential pipeline.
There are 2 major strands of funding for the Housing Affordability Policy Framework. One is the Shared Ownership and Affordable Homes Programme from Homes England, projected to deliver 1,900 new homes by 2021. The other is the Housing Affordability Fund (HAF) projected to deliver 2,500 new and existing affordable homes over 5 years from 2018.
Significantly, the stated outcomes of these two strands are over 7 financial years. This leaves a shortfall of up to 9,600 units in relation to the stated targets. So the shortfall will have to be made up by other means- therefore the inability to get developers to commit to affordable housing through the planning system becomes a major risk factor.
But the way the Housing Affordability Fund itself is structured is under threat by the decisions made on city centre planning. The chief source of income for the programme is intended to be contributions made by developers under Section 106 of the Town and Country Planning Act 1990. This is a mechanism for financially offsetting the impact of a developement that would not otherwise be acceptable.
However, of the 53 Manchester developments that Dr Silver examined only 8% had a Section 106 agreement. This brought in a total of £834,000. For context, the notional value of HAF is £2 million annually. This means the ability of HAF to deliver must be under question.
So not only does the financialisation of housing in the city centre impact central residents, it threatens to undo the entire framework on housing affordability in Manchester.
There are many policy tools that could be used to address the looming crisis of affordability from across the political spectrum. But the first step is to acknowledge there is a crisis at all, and it is one of our own making.
27 February 2018