Affordable Homes inSafer, GreenerCommunities

Housing Policy Paper

Policy Paper 69

Contents

Executive Summary 4

Introduction 8

Low Cost Home Ownership 92.0 First time buyers 102.1 Existing home owners 122.2 Leaseholders 13

More affordable homes to rent 153.1 Council tenants 153.2 Housing association tenants 163.3 Homeless People 18

Warmer homes and safer, greener communities 204.1 Energy conservation and sustainable homes 204.2 Open spaces 214.3 Safer communities 22

Tackling the industry’s skills and land shortages 245.1 Reducing the skills shortage 245.2 Raising design standards 245.3 Re-using land and property 245.4 Improving land supply: community land trusts and community land auctions 25

Executive Summary

Decent homes, decent communities, and the opportunity to own your own home. Liberal Democrathousing policy aims to make these aspirations a reality.

But there is no single policy that can make this happen, because every area has its own housing needs.In this paper we propose a menu of policies and options to help each local community meet those needs.

In many areas, the lack of affordable homes is the most pressing problem, so we propose new ideas forbuilding houses that are within the reach of ordinary people. Other areas have seen a collapse of thelocal housing market, with homes falling into disrepair. These communities will benefit from newsystems for promoting investment to bring them back to life.

People also want more than bricks and mortar from their home. They want to live in safe, clean andfriendly communities. So Liberal Democrats will give local people more say in running theirneighbourhoods and put the environment at the heart of housing policy.

Low cost home ownership

Owning a home has become an impossible dream for many people. Too few homes are being built inmany areas, pushing up house prices and locking hundreds of thousands of families and young peopleout of the housing market altogether.

First time buyers

First time buyers will benefit under Liberal Democrat plans for low cost home ownership. Byinvesting in more shared equity schemes and with our new model of mutual home ownership, we willmake it easier for people to own their first home. Our policies would create an intermediate housingmarket, bridging the gap between the rented sector and the open housing market.

• Shared equity schemes, where people part buy and part rent, have been starved of funds byLabour. Liberal Democrats will direct more of the housing budget to shared equity and useplanning guidance to encourage councils, housing associations and developers to consider sharedequity. We would also promote our “golden share” model, where the homes remain affordablebecause the council or housing association can set limits on who buys them, targeting help towardsthose in need, and limiting price rises.

• Mutual home ownership is a totally new concept, primarily aimed at helping young peoplestarting out. Rather than buying the home right out, people would buy shares in a mutual homeownership trust that owned their home. Mutual homes will also be affordable because the land onwhich the homes are built would be owned by a separate Community Land Trust. By permanentlyexcluding the land cost from the house price, affordability is locked in. Sites would primarilycome from surplus land now owned by the Government.

• First time buyers in rural and coastal areas would benefit from our plans to give localauthorities more freedom to address the problems sometimes caused by second home owners.Local people can be priced out of the housing market and lose crucial services when many localproperties are bought as occasional holiday homes. Liberal Democrats will allow councils to usebusiness rates and the planning system to tackle these problems.

Existing home owners

• Existing home owners would benefit from our plans to invest in energy conservation and by ourplans to abolish Labour’s proposed Home Information Packs which will increase the cost of selling

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a home. Home owners will also benefit from our proposals to improve people’s say in how theirimmediate neighbourhood is run through community and parish councils.

• Council tax revaluation threatens many home owners with huge rises in bills from April 2007.Liberal Democrats would stop revaluation and use the money saved to replace council tax with alocal income tax. The change would protect home owners currently facing tax rises from therevaluation, and make local taxation affordable for home owners on low and modest incomes.

• Home owners in low demand areas would benefit from our proposals to encourage housinginvestment. Our bottom-up approach to community renewal, with solutions agreed by residents,owners and elected councils, will guarantee home owners a voice in regeneration projects. And asthe quality of community life and confidence in the area are restored, house prices will rise. Rundown or deprived communities will also benefit the most from our proposals for warmer homesand safer, greener communities set out in Section 3.

Leaseholders of local authorities

• Leaseholders of local authorities would benefit from a new requirement for councils to providequick and independent arbitration of bills for capital works and service charges. Many people whobought their home under the right-to-buy scheme get poor treatment from the council freeholderand we will legislate to raise standards.

Leaseholders

• Leaseholders would be given more powers under a Liberal Democrat government. We wouldmake it easier and cheaper for leaseholders to transfer to commonhold, or to buy the freehold oftheir homes. We would also abolish forfeiture - the right of a freeholder to force a tenant out oftheir home for sometimes minor breaches of contract. We would give freeholders similar rights tomortgage lenders to reclaim money or compensation owed to them.

More affordable homes to rent

Tenants of councils, housing associations and private sector landlords too often receive poor qualityservices for the rent they pay. Worse still, Britain’s homeless situation remains acute, with recordnumbers of families in temporary accommodation. Such problems require new approaches to socialhousing and to creating a strong market of quality private sector homes for rent.

Council tenants

• Council tenants will be protected by our proposals to end Labour’s unfair subsidies for councilhousing stock transfer, giving them the right to remain council tenants. Tenants often want tokeep the council as landlord, but have been denied funding for making this choice. We will creategreater freedoms for councils to invest in upgrading their housing stock. Tenants who do want tomove away from council ownership will be granted a new option of transferring to a mutualhousing association.

• Two more rights will be given to council tenants - the right to manage their estate andneighbourhood and the right to invest in their property. Under the right to manage, tenants will beable to set up estate boards to deal with all day-to-day management issues. The Decent HomesStandard will be reformed to become a menu of investment choices, where tenants choose theinvestment priority for their home and immediate environment. The right to invest will allowtenants to build up equity in their homes, which can be used to purchase a home of their own inthe future. Councils could also grant housing equity to tenants where the tenant has contributed‘sweat equity’ in their property or for the community.

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• Liberal Democrats will retain the right to buy, allowing councils to vary the discountsaccording to their local needs.

Housing association tenants

• Housing association tenants will be afforded more say in decisions about their home and localneighbourhood. Like council tenants, housing association tenants will be given a new right toinvest, so they can more easily save for a home of their own.

• We will abolish the Housing Corporation, and give its remaining regulatory functions to theAudit Commission and its financing role to existing regional housing boards. This will save moneyand cut the regulatory burden on associations.

Private tenants

• Private tenants are already set to benefit from new tenant protections campaigned for by theLiberal Democrats and introduced in the Housing Act 2004. Together with the promise of a newtax incentive for investment in private rented accommodation, change is underway.

• The government has failed to work closely with private sector landlords. We will drive qualityimprovements in the private rented sector by working with private landlords and theirrepresentative bodies to develop better training and more professionalism. Liberal Democrats willalso make improved administration of housing benefit a priority.

Homelessness

• Homelessness will be reduced through the provision of more affordable homes and specialisedaccommodation. As a matter of urgency we will tackle the scandal of empty homes, since emptybuildings offer an efficient, affordable and environmentally friendly way of increasing housingsupply quickly.

• We believe government figures on the homeless underestimate the size of the problem. There arelarge numbers of hidden homeless in the UK, with people living in insecure accommodation, onfriends’ floors, in shared rooms or unregistered hostels. We support a homelessness census todiscover the real extent of the problems we face.

Warmer homes and safer, greener communities

Liberal Democrats will make sustainable housing a key policy for tackling global climate change. Wewill set a target of one million sustainable homes by 2012.

• Liberal Democrats will cut the average pensioner household’s fuel bill by £100, byencouraging pensioners to choose to use their winter fuel allowance to improve their home’senergy efficiency. Using one year’s allowance in this way can bring permanently lower bills.

• We will reduce VAT on renovations and repairs to buildings to encourage their re-use, andreduce VAT on energy saving materials. Building regulations will be automatically upgraded everythree years to force up energy efficiency. We will ensure all new buildings are built to an eco-standard and reform planning laws so an authority can require developers to create sustainablebuildings.

• Communities will be made safer by extra police and new ways of tackling anti-social behaviour,which undermines people’s sense of security and can ruin communities. A vital weapon againstanti-social behaviour, developed by Liberal Democrats, is the Acceptable Behaviour Contract(ABC), which we will promote as a cost-effective way of tackling anti social behaviour.

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• Community justice panels will be set up for people accused of anti-social behaviour andvandalism. Representatives of the community would require individuals to repay the people andcommunities they have wronged, with community work like cleaning up graffiti. If they refuse,they will face the courts and a criminal record. Liberal Democrats would also introduce a newsystem of specialised mediation and housing courts to make better use of legal resources andspeed up justice.

• Vulnerable people housed in the community need more support and choice. Liberal Democratswould reform the Supporting People programme to reduce the bureaucracy and direct more of theresources to frontline specialised accommodation, like foyers.

Tackling the industry’s skills and land shortages

• The skills shortage in the construction industry increases construction costs and delaysdevelopment. We would engage actively with the property industry to find ways to build the extrahomes we need at affordable prices and to higher environmental standards. Liberal Democrats willdevelop flexible and “fast track” courses, find ways to attract more women into the sector and workwith professional bodies to meet skill shortages in areas like planning, design and projectmanagement.

• Liberal Democrats will push for high quality design in all new house building, and work with theindustry to continue the improvements of recent years. To make sure land is used efficiently, wewill reform business rates and cut bills for small business, thereby encouraging regenerationthrough the re-use of local shopping parades and vacant land.

• We propose two more solutions to increasing land supply: first, better use of publicly-owned landthrough Community Land Trusts, and second, piloting reform of the planning system, with ouridea for Community Land Auctions.

• In our pilot scheme, councils could initiate community land auctions. All land owners will beinvited to send in sealed bids, with details of their land and sale price. The council will consider,with consultation, which land offered, if any, was suitable for development. The council wouldapply for planning permission. Any granting of permission would dramatically increase the land’svalue, allowing the council then to buy the land at the sealed bid price, before immediately sellingit on at the post-planning permission price, using the profit for community benefits.

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1.1.1 Everybody wants a decent home.Everybody wants to live in a community that isclean and safe. Most people want to own theirown home. Liberal Democrat policy will helpthese aspirations to become a reality, foreveryone.

1.1.2 Housing policy has to cater for a widevariety of needs, because every community has itsown housing problems. For many, the biggesthousing problem is the lack of affordable homes -with high house prices and high rents making itimpossible for people to find somewhere decentto live. Other communities are so run down,people don’t want to live there, and housing ischeap or even worthless.

1.1.3 All communities have some families orpeople that they cannot find homes for, who arethen forced into shelters or temporaryaccommodation. And thousands of families areliving in poor quality or overcrowded homes. Thishas to end.

1.1.4 The other key challenge facing allcommunities is reducing the impact we and ourhomes have on the environment, from the way webuild houses in the first place to cutting theirconsumption of energy, water and other naturalresources.

This policy paper seeks to address our country’shousing crisis, with three basic objectives:

• to build more affordable homes,• to help every local community meet its

specific housing needs • to make all homes more sustainable

1.1.5 There are some issues that cannot beaddressed here. The effect of interest rate rises onthe housing market, the future of house priceinflation and regional economic policy: these arestructural economic issues that are not within theremit of this work. Instead, this paper focuses onthe homes themselves - building them, improvingthem and making them available for the peoplewho need them most.

1.1.6 No one knows how many people are inhousing need in the UK. Crude figures can beobtained. Over 100,000 families are living intemporary accommodation and more than amillion public sector homes are in need of repair.

1.1.7 But we know almost nothing about theproblems of quality or overcrowding in the privaterented or owner occupied sectors. And we don’tknow how many people are stuck in friends’ ortheir parents’ homes because they cannot affordtheir own place to live.

1.1.8 What we do know is that we need to buildmore homes in Britain. We need more affordablehomes. We need to consider energy efficiency andthe environment, and we need to think not justabout houses, but about the communities theyform and the people who need them.

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Introduction

2.0 First time buyers

2.0.1 High house prices are wreckingcommunities and families and underminingpublic services. Many young people cannot getonto the housing ladder. Many would-be first timebuyers simply cannot buy in the area where theywere brought up, or near their jobs. Employersfrom private companies to hospitals, schools andpolice forces find it difficult to recruit staffbecause of high housing costs.

2.0.2 Labour has made this problem worse.Housebuilding has fallen to record lows underthis Government and flagship policies like JohnPrescott’s Starter Homes Initiative haveexacerbated spiralling house prices by fuellingdemand without improving supply. By failing tounderstand that Britain’s housing problem stemsfrom the lack of new houses and not demand,Prescott has developed a housing policy for thefew, and not the many.

2.0.3 Labour’s policy has been led by Whitehalltargets and plans. Liberal Democrats support apolicy based more on the market coupled withlocal community decision-making.

2.0.4 To promote low cost home ownership forfirst time buyers, Liberal Democrats will createan intermediate housing market using planningpowers and spare public sector land, bridging thegap between the rented sector and the openhousing market.

Shared equity and �golden share� homes

2.0.5 Various kinds of shared equity schemesexist in many parts of the country. Butgovernments have never made them a priority forinvestment. This is a huge mistake. Not only dothey spread public subsidy further because peopleinvest their own money too, but they can helpcreate more balanced communities. Moreover,shared equity schemes generate funds that can berecycled to create more housing.

2.0.6 Liberal Democrats will therefore directmore of the housing budget to shared equityschemes, including cash saved from abolishingLabour’s failed Starter Homes Initiative. We will

issue planning guidance to encourage councils,associations and developers to consider the sharedequity route.

2.0.7 Golden Share homes are a particular formof shared equity, arising from an innovative use ofthe planning system and have already been pilotedby Liberal Democrats on South ShropshireDistrict Council.

2.0.8 Using a section 106 planning agreement,a local authority agrees with a developer for landto be used for affordable housing, in which thelocal authority has a “golden share”. Such housesare sold at the build cost, not on the open market.A restricted market is created with conditions onwho can purchase the house: key workers orpeople already living in the area for example. Allpotential purchasers demonstrate their incomemakes it impossible to purchase housing on theopen market. If the purchaser of a golden sharehome subsequently moves, the maximum price atwhich the home can be sold is based on theoriginal price plus a percentage related to averagelocal house price increases. The new purchasermust qualify to buy the house under the samerules applied before. By guaranteeing suchconditions through their “golden share” thecouncil locks in affordability and, crucially,sustains this intermediate housing market forthose in need.

2.0.9 The concept of intermediate housingmarkets can be applied in many contexts. It hasadvantages for rural areas, but also could helpaddress problems faced by key workers inLondon. It will only work if local authorities aregiven the freedom that previous Governmentshave always denied them, but that will be offeredfor the first time by a Liberal Democratgovernment.

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Low Cost Home Ownership

Mutual homes

2.0.10 Mutual homes could become the starterhome of first choice for young people. By buyingshares in a trust that owns the home, and not thehome itself, a buyer has much greater flexibilityon the initial payments needed to build up theirfirst stake in a home.

2.0.11 Rather than simply paying rent to alandlord, in our mutual home concept the tenant’spayments work as their first step on the propertyladder. The shares they buy in the Mutual HomeOwnership Trust increase with value as houseprices rise. When they wish to move - to buy a

home on the open market, for example - they cansell their shares back to the mutual, using theproceeds as equity for their new home.

2.0.12 The model works because it is based ontwo trusts: a Community Land Trust (CLT), whichowns the land on which the homes are built, and aMutual Home Ownership Trust (MHOT), whichowns and manages the homes. With the land trustproviding the land on long leases, at peppercornor low rents, the individual or family is onlypaying the mutual home ownership trust for thebuilding and maintenance of the homes.

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Golden Shares: The South Shropshire Experience

In South Shropshire, market pressures from tourists and retirement have pushed up local propertyprices, causing a shortage of affordable housing. The district council therefore created the concept of“golden shares” in affordable housing, to help local families to find homes in the area. It is a keystrategy in dealing with a predicted need for more than 1,400 affordable homes in the area over thenext seven years.

Golden shares promote affordability in three ways:

• Developments are brought forward through planning gain. The council takes a ‘golden share’ of1% so that the property cannot be sold on the open market.

• Such a property can only be sold on to people with local needs. If no one comes forward, it mustbe offered to a registered social landlord or to the District Council to acquire. If neither wantsto buy, the house may be sold on the open market but the gain is split half and half between theowner and the council. The council’s money is re-invested in affordable housing.

• Golden Share planning restrictions keep land prices low and ensure only a builder’s profit isbuilt into the price, not that of a developer.

The policy has been delivered through a number of measures:

• A joint venture has been set up between a building society, builders, a housing association andthe local authority.

• The policy is proactively driven to overcome landowner/developer resistance.

• Single plot schemes for individuals have not proved a problem.

• Compulsory purchase powers will be used as a last resort to release land.

A definition of someone with local needs has been established. Such a person needs to fulfil threeof the following criteria: born locally; schooled locally; lives or works locally; parents/children livinglocally or have the support of the town/parish council. They must also be unable to afford openmarket housing.

South Shropshire’s experiment shows the potential for a new intermediate tier of housing. It aims todeliver a tier of affordable homes based on local rather than external market need. It preventsenforced migration and encourages the extended family and its support network. It helps maintainthe sustainability of settlements and helps keep shops, schools and other community services alive.

2.0.13 Community Land Trusts are crucial,because they hold the public land subsidy thatmakes the homes affordable. CLTs are non-profitmaking companies existing to hold land, inperpetuity, for the benefit of the local community.A top priority for an incoming Liberal DemocratGovernment would be the early identification ofland for new CLTs and guidance for councils onsetting them up. Councils would be required to setup and publish a register of all publicly-ownedland in their area.

2.0.14 The Ministry of Defence, the HealthDepartment and English Partnerships would berequired to provide land for 100,000 new homeswithin our first 12 months. The first wave ofCLTs would come directly from reformingEnglish Partnerships.

2.0.15 Mutual Home Ownership Trusts wouldorganise the building and management of thehomes. Formed by housing associations, localpeople or councils, they would exist to deliver ourmutual home concept, using the cheap landprovided by CLTs.

2.0.16 A MHOT would take a long lease fromthe CLT, normally 99 years, and a communalmortgage on a commercial basis. It wouldcontract out the construction and manage thehomes together with the shareholdinghouseholders.

2.0.17 The individual or family wanting amutual home would normally be expected toprovide a deposit or a small equity share,normally around 5% of the build cost of theirhome. The monthly rent would be calculatedbased on a percentage of salary - the financialmodelling suggests 30% of salary would normallybe sufficient. That monthly payment would be inthe form of rent, but would contribute to therepayment of the communal mortgage, a sinkingfund and other costs. It would also earn theindividual extra shares in the trust.

2.0.18 When the householder wants to move,they sell their equity, based on an agreed resaleformula. The formula would be linked to the localhousing market, so people would see their equitystake rise in line with local house prices.Maximum flexibility for re-sale could be achievedby allowing the householder to sell their shareseither to a new tenant/owner, to an existing tenantowner or back to the trust, which would use

standard re-financing methods. Banks andbuilding societies would lend money to MHOTs,as they have security on both the land value in thelong lease and the future stream of rent payments.

2.0.19 These proposals are based largely on amodel proposed by CDS Co-operatives and theNew Economics Foundation. They themselveshave based their ideas on schemes that operatesuccessfully in the USA and Scandinavia.1

2.0.20 Several examples of the mutual homeownership model are already being pursued inBritain. In Scotland, Community Land Trusts aregrowing, spurred on by the Community LandUnit and the Land Reform (Scotland) Act 2003.Even the ODPM has flirted with the idea. Yet thekey to making mutual homes work on a largescale is the provision of public land as subsidy,through new Community Land Trusts, asproposed only by the Liberal Democrats.

Reducing pressures from second homeownership

2.0.21 Housing markets in some areas aredistorted by high proportions of second homeownership. This tends to happen in areas popularwith tourists, especially in rural and coastalcommunities.

2.0.22 Such tourism can bring benefits, like jobsand additional sources of income, but there can beserious disadvantages when the proportion ofsecond homes becomes too high. Local houseprices can spiral to London levels, so locals, onincomes significantly below national averages,are effectively excluded from their owncommunity’s housing market. Local services likepost offices, GPs and village schools can all belost, as they are rarely used by weekenders orsummer holidaymakers.

2.0.23 Getting the balance right betweenattracting tourists and meeting community needswill be difficult and can only be done locally. SoLiberal Democrats would give councils greaterfreedoms to use planning powers, business ratesand right-to-buy rules to strike that balance.

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1 See especially “Common Ground - for Mutual HomeOwnership”, published 2003

2.0.24 Councils would be allowed to makeowners apply for a change of planning use beforea main residence became a holiday home incertain areas. Liberal Democrats will returnbusiness rates to local control as part of ourreforms of local government finance, and allowcouncils to levy business rates on second homes.Councils will also be able to vary the discountsavailable under Right to Buy to fit in with localhousing conditions.

Planning Reforms

2.0.25 Reforming the planning system is anessential part of any housing policy, and a keyplank of Liberal Democrats’ drive to give powerback to local communities.

2.0.26 Two years ago, we published detailedproposals for reforming the planning system inPlanning for the Twenty-First Century. Our aim isto decentralise the system, speed up the planningprocess, increase sustainability and givecommunities a much greater say over land use intheir area.

2.0.27 Since then, the Government has passed itsown planning reforms, in the Planning andCompulsory Purchase Act. Regrettably, this Acthas centralised planning even more, takingpowers away from elected county councils, givingthem to unelected regional planning bodies.Liberal Democrats led the fight against thatdecision.

2.0.28 In this paper, therefore, we reconfirm ourcommitment to decentralising the planningsystem. We will give county councils back theirplanning powers. We will reduce the interferenceby Whitehall and the Secretary of State. We willgive communities more say in the process ofdrawing up a local development plan, especiallythrough the creation of the Local CommunityPlan.

2.0.29 Our planning reforms also include:

• A statutory requirement for pre-applicationconsultation on larger developments, toreduce unnecessary friction and delay;

• Support for the use of section 106agreements to provide affordable housing,especially in shared equity and “goldenshare” schemes;

• Support for the planning profession, to

improve the numbers and skills of plannersin local authorities;

• Support for the wider use of “exceptionsites”, particularly in rural areas, to meet theaffordable housing needs of suchcommunities.

2.0.30 We also want to trial new ways ofplanning, to try to bring together the interests ofexisting communities and residents with those ofpeople without homes and in poor housing.

2.0.31 This can be done through new approachesto section 106 agreements or to more profoundreforms to the planning system, that enable thelocal community to capture the uplift in landvalues created by councils granting planningpermission. We therefore propose to pilot twonew ideas, allowing local authorities to bid tobecome pilots. These are:

• Using section 106, to require developers tofund improvements in the energy efficiencyof individual homes adjacent and close totheir proposed development;

• Using a new system of community landauctions, to decide which land obtainsplanning permission for homes. This isexplained in detail in section 5.4 below.

2.1 Existing home owners

Ending council tax revaluation andreplacing council tax

2.1.1 Council tax revaluation will hithomeowners from April 2007. House prices haverisen hugely since the last valuation at 1991values, so we know there will be large shifts incouncil tax.

2.1.2 The Government has so far refused to sayhow the revaluation will work. All we know is thatcouncil tax revaluation will, as an exercise cost,around £200 million, and that there are likely tobe millions of losers - as well, of course, aswinners.

2.1.3 The only information we have comesfrom Wales, where the revaluation has happenedand will take effect in April 2005, and fromresearch commissioned for the government’sBalance of Funding Review. In Wales, a third ofhomes have gone up one or more council taxbands, while only 8% of have dropped a band. The

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Balance of Funding research showed householdsin London, the South East and South West willsuffer most, especially people in modest homes inbands C to E.

2.1.4 Liberal Democrats would end council taxrevaluation immediately. We would legislate toreplace council tax with a local income tax. Wewould save the costs of the revaluation exerciseand use that money instead to set up ourreplacement system of local income tax.

Abolishing compulsory HomeInformation Packs (HIPs)

2.1.5 Home owners wanting to sell their homesare about to face a nasty shock with Labour’s new‘poll tax’ on selling your home: the homeinformation pack, or HIP, which the governmentwants to be compulsory.

2.1.6 A HIP will contain everything from theland registry search to a home condition report -the information currently compiled by a buyerand their solicitor at the point of sale. Yet underthe Housing Act 2004, it will become illegal tomarket your home without first preparing a HIP.

2.1.7 HIPs will reduce the number of propertiescoming on the market and make housing even lessaffordable. HIPs will slow down the process ofselling a house, and increase costs. And manybuyers and lending institutions may well insist ontheir own surveys and reports, making the HIPpointless.

2.1.8 Liberal Democrats opposed HIPs inParliament and we will stop them becoming acompulsory requirement, removing this costlyregulatory threat to home owners and the housingmarket.

2.1.9 The energy efficiency audit introduced aspart of HIP legislation would be completed as partof the standard survey at the point of sale.

Investment in energy efficiency

2.1.10 Home owners would benefit significantlyfrom the Liberal Democrat commitment toincrease the energy efficiency of homes.Reducing the use of heating, water and power willmake homes cheaper to run, and are also a keypart of our environmental policy. Section 3 setsout our sustainable homes policies in more detail.

Home owners in low demand andregeneration areas

2.1.11 There are many towns and cities,particularly in the North of England, whereaffordable housing is not the problem. There arecommunities where housing is extremely cheap,or even worthless, because the housing markethas collapsed or is on the brink of doing so.Typically, though not exclusively, these are areaswith substantial amounts of traditional terracedhousing, often in a state of disrepair. The needs ofthese communities are different from elsewhereand require different solutions.

2.1.12 Labour has introduced Housing MarketRenewal strategies for some of thesecommunities, including its Pathfinder projects.With implementation timescales of 15 years,these projects are at a relatively early stage, andinvolve a number of ideas, from wholesaledemolition to huge extra spending in a few areas.

2.1.13 But few pathfinder projects have engagedwith local people in their areas. Early analysisfrom the Audit Commission suggests that valuefor money is not being considered sufficiently,and cost-effective community solutions are beingoverlooked in favour of more grandiose schemes.

2.1.14 The Liberal Democrat approach would bedifferent. It is vital that policies and programmesfor the future of such neighbourhoods aredeveloped and agreed at the local level byresidents, owners and elected councils, rather thanbeing imposed from above. Appropriate solutionswill vary considerably from place to place, butmust include community-driven projects thatimprove quality of life, attract local employmentand restore confidence in the locality.

2.1.15 We would seek to encourage a widergroup of investors, from the voluntary and privatesectors, to become involved. In some low demandareas, house prices will need to increase to createsustainable and affordable housing provision, andpolicies need to encourage this process.

2.1.16 Our approach would benefit not only theareas most affected by housing market collapse,but those with traditional terraced and similarhousing which are not in immediate need ofaction, but require a degree of support toguarantee a sustainable future.

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2.1.17 Communities in all these areas will alsobenefit significantly from the proposals forwarmer homes and safer, greener communities setout in section 3 below.

2.2 Leaseholders

2.2.1 Homeowners with a leasehold can face acompletely different set of issues fromfreeholders. This section therefore briefly sets outour ideas for them, depending on whether theirfreeholder is the local authority or a privateindividual or firm.

Leaseholders of local authorities

2.2.2 Home owners who are leaseholders oftheir local council can experience real problems.

2.2.3 Normally, they are residents who boughttheir property under the right-to-buy legislation.Too many councils do not take their continuingresponsibilities as freeholders seriously, withservice charges badly assessed and repairs leftuncompleted or bills poorly explained.

2.2.4 Liberal Democrats would legislate tostrengthen the protections of such leaseholders,and give them the right to quick and independentarbitration for capital works and service charges.

Leasehold reform

2.2.5 The Commonhold and Leasehold ReformAct 2002 is beginning to improve the rights ofthose leaseholders afflicted by unreasonable andexploitative behaviour by some freeholders.However, it is regrettable that the Government hasdelayed in bringing in some of the Act’sprovisions. Moreover, it is increasingly clear thatthe reforms have left a number of problemsunresolved.

2.2.6 Liberal Democrats would thereforeintroduce further reforms of Britain’s system ofleaseholds.

2.2.7 We would make it easier for leaseholders,or homeowners with a share of a freehold, totransfer to the new commonhold tenure. Underthe current rules, every party with an interest in ablock of flats, including all leaseholders, theirmortgage lenders and the landlord must agree totransferring to commonhold.

2.2.8 We would allow the transfer tocommonhold without the consent of the landlord,and with a 75% or more majority of leaseholders.If a leaseholder did not want to join thecommonhold, those transferring would acquirethe commonhold of his flat and he would becomea tenant of the commonhold.

2.2.9 Enfranchisement, where leaseholderspurchase the freehold from their landlord, wouldalso be easier under a Liberal Democratgovernment. The existing rules require theleaseholders to pay the freeholder half the‘marriage value’ - the difference in value betweena freehold with vacant possession and a freeholdwith a long lease. We would abolish this payment.

2.2.10 Forfeiture, under which a freeholder canforce a leaseholder out of their property forsometimes minor breaches of contract - likebuilding an extension without consent or refusalto pay excessive service charges - has no place inmodern housing legislation. It has been limited bythe government, but would be abolished by theLiberal Democrats and replaced by sanctionssimilar to those available to mortgage lenders.Money or compensation due to a freeholderwould be paid out of the sale of the leasehold; theleaseholder would pay only the money owed, notthe entire value of their home.

2.2.11 Liberal Democrats will also investigateremaining allegations of abuses of insurancepremiums and service charges by somefreeholders, and then legislate to end them.

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3.0.1 Tenants of councils, housing associationsand private sector landlords too often receive poorquality services for the rent they pay. Britain’shomeless situation remains acute, with recordnumbers of families in temporaryaccommodation. Such problems require newapproaches to social housing and a newpartnership approach to stimulate an expansion insocial rented housing as well as a quality privaterented sector.

3.0.2 Liberal Democrats’ housing policies arebased on a menu approach. We want to givecommunities and local housing authorities a rangeof measures to choose from, so they areempowered to tackle the specific problems oftheir area - whether the issue is the need to repairthe council housing stock, or to provide morepermanent housing for families in temporaryaccommodation.

3.1 Council tenants

3.1.1 Council housing has had a mixed history,with some instances of real progress and others ofterrible quality and worse management. But thecurrent trend to ignore or underplay councilhousing as an important option for localcommunities is a mistake.

3.1.2 Decisions over the future of councilhousing should be taken in the context of localhousing needs and the wishes of local tenants. Wereject the principle of national policies thatunnecessarily restrict or expand the right to buy.The decision on stock transfer should not be takenwithin a national financial regime that has beenprejudicially structured against council housing.And national standards such as the Decent HomesStandard are too rigid and do not take account ofthe priorities of local council house tenants.

Stock transfer - right to remain a counciltenant

3.1.3 Liberal Democrats will enablecommunities to remain tenants of the council, byending Labour’s unfair subsidies for councilhousing stock transfer: many tenants prefer tokeep the council as landlord, but have been bribedinto stock transfer because money for improving

homes is not available without it. LiberalDemocrats will give councils greater freedom forcapital investment in housing.

3.1.4 Unlike the Government, we believe thereshould be a so-called ‘fourth option’, where thecouncil can retain ownership and strategicmanagement and still be granted money forimprovements. But our fourth - and further -options would not be a return to the old days ofcouncil housing without reform. If tenants votedto remain council tenants, they could choose to doso within other models, including ALMOs andtenants’ co-operatives. They could also vote toexercise a new right: the council tenants’ right tomanage. (see below).

3.1.5 For tenants keen to change the council astheir landlord we will also create a new option oftransfer to a mutual housing association, wheretenants can become owners of the housingassociation managing their property. (see below).

The council tenant�s right to manage

3.1.6 Liberal Democrats will give all counciltenants the option for a right to manage.

3.1.7 The right to manage will allow tenants toset up estate boards to deal with all day-to-daymanagement issues, while the council retainsstrategic management. The estate board will havedirect control over local issues that directly affectthe environment in which the people live.

3.1.8 An estate board would have its owndevolved budget. The current national DecentHomes Standard would be reformed into a menuof standards, and tenants, through their estateboards, would decide which standards theywanted to adopt first. So rather than all tenantsbeing forced to have their kitchens modernised,they could opt to prioritise something else - suchas a lift repair, window replacement, a newchildren’s playground or a CCTV system.

3.1.9 The council’s strategic powers would befocused on strategic finance, though under theright to manage, estate boards would beconsulted. The council would retain control overallocations.

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More affordable homes to rent

The council tenant�s right to invest and�sweat equity”

3.1.10 Liberal Democrats would introduce theright to invest to allow council tenants to buyequity in their homes, which can then be used topurchase a home of their own in the future.

3.1.11 Tenants exercising the right to investwould effectively be entering a shared equityarrangement with the local authority. The tenantwill continue to pay rent to the council but willhave the opportunity to purchase shares in theirhome from the council over time. The tenantwould see a proportionate rent reduction, andbegin to build up an asset.

3.1.12 The right to invest could lead to thecouncil tenant eventually buying the property,under the right-to-buy, but for many tenants itwould act as a savings vehicle, giving them astake in the rising value of property. We wouldintroduce guidance on how a council coulddevelop this idea, including arrangements forequity withdrawal, valuations and so on.

3.1.13 Councils could also grant housing equityto tenants where the tenant has contributed ‘sweatequity’ to their property or even to the localcommunity. Liberal Democrats would pilot with arange of local authorities different ideas forgranting ‘sweat equity’, from agreed andinspected DIY schemes to community activitiessuch as getting rid of graffiti and helping withcommunity projects.

The right to buy

3.1.14 Liberal Democrats will retain the right tobuy, allowing councils to vary the discountsaccording to local needs.

3.1.15 Under our proposals, councils could givelarger or smaller discounts than currently allowed,depending on their circumstances. Prudentialguidelines would have to be met, to ensure anyhistoric debt was properly serviced. Yet a councilmight wish to introduce much larger discountsthan currently available, in order to develop moremixed housing communities and to regenerate anarea. Equally, councils could reduce the existingdiscounts, if the loss of social housing wascausing problems locally.

3.2 Housing association tenants

3.2.1 Britain now has over four million housingassociation tenants and over 1,400 associations.Liberal Democrats welcome this expansion, andthe diversity it has brought to social housingprovision.

3.2.2 But tenants, in general, want improvedservice quality and a greater say in how theirassociation operates.

3.2.3 Associations are finding it hard to playtheir important role in the supply of affordablehomes because of the enormous regulatoryburden they face. They are under pressure torestructure and consolidate, in particular becauseof major efficiency demands from Whitehall,which continues to impose excessive centralcontrols on their financial regime.

3.2.4 Liberal Democrats will increase theaccountability of housing associations to theirtenants, whilst reducing some of the instabilityand regulation the associations face.

Tenant involvement in housingassociations, and the right to invest

3.2.5 Housing associations will be required tooffer their tenants much more involvement in thedecision making process about their home and thelocal neighbourhoods.

3.2.6 Liberal Democrats want to see RSLsconsidering a much wider range of options forinvolving their tenants, from local estate boards,as proposed above for councils, to actualconversion into fully-fledged mutualorganisations. RSLs need to find new ways ofempowering their tenants, including vulnerabletenants. This should be linked in with theSupporting People programme and RSLsappropriately rewarded.

3.2.7 Like council tenants, housing associationtenants will also be given a new right to invest, sothey can more easily save for a home of their own.This will provide associations with an extrasource of capital. However, the right to invest willnot be extended to a full right to buy, as thatwould seriously undermine the finances of manyRSLs.

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Increased stability and reducedregulations for associations

3.2.8 A more stable financial regime for RSLswill require a number of reforms. We wouldhighlight four areas of immediate policysignificance.

3.2.9 First, housing benefit policy changesmust always consider the need for RSLs to be sureof their revenue streams. Ever-changing rules leadto more mistakes and more arrears. The keypriority for housing benefit reform should bemore efficient administration.

3.2.10 Second, government proposals to payhousing benefit to the tenant rather than direct tothe landlord fail to appreciate the likely impact onRSLs and many vulnerable tenants. If driventhrough, this will cause more arrears, underminefinancial planning and could increasehomelessness. A Liberal Democrat governmentwould reverse the proposals.

3.2.11 Third, the Conservative proposal toextend the right to buy to housing associationtenants would be a serious mistake. It couldseriously damage the financial position of manyRSLs, undermine their ability to borrow for futureinvestment and could cost the taxpayer nearly £1billion a year in discounts.

3.2.12 Finally, the Government’s currentefficiency review is driven purely by costanalysis, with no quality measures. LiberalDemocrats would measure efficiency morebroadly, using it as a lever to improve tenantsatisfaction across the sector.

3.2.13 RSLs face a confusing and burdensomeset of regulation and inspection regimes, withinspection from the Audit Commission andcorporate governance regulation by the HousingCorporation. Liberal Democrats would abolishthe Housing Corporation and consolidate allregulation and inspection of associations with theAudit Commission.

3.2.14 The Housing Corporation’s role ininvestment would be transferred to the newregional housing boards. Other residual functionsof the Corporation, including the allocation ofgrant support to regional housing boards, wouldbe subsumed back within our proposedDepartment of the Nations and Regions, which

will replace ODPM and parts of otherdepartments in our rationalisation plans forWhitehall.

Mutual housing associations

3.2.15 Liberal Democrats would add to thesocial housing sector with a new type of landlord,a mutual housing association.

3.2.16 Mutual housing associations will aim,within their governance structure, to maximisetenant involvement and control. Professionalhousing experts would take executive decisions,as with standard RSLs, but be more accountableto tenants. Mutuals would have a duty toencourage and train local tenants to participateand to use the extra power that direct ownershipoffers.

Private tenants

3.2.17 The private sector has an important roleto play in providing homes for rent and improvingquality. Change has been initiated by the HousingAct 2004, with tenant protections lobbied for andwon by the Liberal Democrats.

3.2.18 All tenants will benefit from the newTenants’ Deposit Scheme, which helps tenantsand landlords in disputes over rental deposits.Tenants of houses in multiple occupation and ofhomes covered by the new selective licensingregime will also see new protections.

3.2.19 But the government has failed to engagepositively with private landlords. Because thereare so many and so varied landlords, organisationsrepresenting good landlords have struggled.

3.2.20 But self-help within the private sector is akey way to lever up quality and investment andLiberal Democrats would act to support thefurther development of landlord associations, inreturn for their co-operation in developingtraining, good practice support and accreditationsystems. By focusing on improving the quality oflandlords, we believe we can avoid many of thepotential disadvantages of further regulation.

3.2.21 Liberal Democrats regard letting propertyas a business in its own right, not as a cottageindustry. We would review all aspects of the taxand regulatory system to see what changes couldbe made to stimulate the sector further, without

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jeopardising the legitimate rights of tenants. Wewould, for example, consider taxing income fromrents as trading income instead of as present asinvestment income. We would amend the currentabsurd regulation that first-time landlords canreclaim tax on renovations, but only if they let theproperty first and then renovate it.

3.2.22 Liberal Democrats welcome the analysisbehind the Government’s proposed “real estateinvestment trusts” (REITs). Policy should aim toattracting more investment capital into the rentedsector. However, we are concerned that theGovernment may design REITs poorly, failing tomake them a viable investment vehicle andwasting the opportunity they offer.

3.2.23 Liberal Democrats would encourageREITs, when set up, to create developmentsmodelled on proposals like the Joseph RowntreeFoundation’s CASPARs - City-centre Apartmentsfor Single People at Affordable Rents. REITs, aslarge scale residential investors, could help meetthe affordable housing needs of single adults, agroup of people often overlooked by past housingpolicies.

3.2.24 Liberal Democrats would also encouragethe development of private renting housing byenabling developers to offer cheap private rentedhousing as part of their affordable housingprovision quota. All such housing would haverents set at affordable levels for an indefiniteperiod, regardless of changes in tenants. In thismodel, the developer becomes landlord, andmeets the affordable housing obligationeffectively by providing rent subsidy.

3.2.25 We would change the rules allowinginvestors to put residential property into selfinvested personal pension schemes (SIPPs).Policies throughout this paper aim to discourageholiday homes which remain empty to thedetriment of local communities, and givingbuyers tax breaks to invest in these homes onlyexacerbates the problems they create. ResidentialSIPPs also encourage investment in the alreadyfragile buy to let sector.

3.2.26 REITs would offer investors a more stableopportunity for tax efficient investment inproperty without pushing up house prices.

3.3 Homeless People

3.3.1 Homelessness remains a huge blight onour society. Street homelessness appears to havefallen, but the number of families living intemporary accommodation is at record levels.The instability of temporary accommodation,together with low standards and overcrowding,can seriously harm people’s health and family life.

3.3.2 The Homelessness Act 2002 was a majorstep forward, requiring local authorities to havestrategies to help homeless people and to preventhomelessness happening in the first place. It hasbrought forward a range of new, innovativesolutions at grassroots. But to really drive forwardchange, we need to find new ways for hospitals,social service departments, probation servicesand other organisations working with people inhousing need, to work together.

3.3.3 We will not be able to fully solve theproblem of homelessness until we understand thefull scale of the problem. But there is an army of‘hidden homeless’ not counted in governmentstatistics. They are mainly single people, livingtemporarily in the homes of friends or relatives,on floors or settees. They may have shelter for thenight but are generally without somewhere theycan call home. Liberal Democrats thereforesupport a homelessness census to capture thesheer scale of hidden homelessness and to betterinform policy.

3.3.4 The top priority for tacklinghomelessness is the provision of more affordablehomes, as set out throughout this paper, andspecialised accommodation, from hostels toyoung people’s foyer-style accommodation.

Boosting affordable housing by re-usingempty properties

3.3.5 The homelessness crisis is so acute,Liberal Democrats would also implement aprogramme designed to boost the supply ofaffordable housing more rapidly than constructionprogrammes can, by reusing empty homes andother buildings.

3.3.6 We will give extra support to councilswith the most severe homelessness problems,helping them to re-use empty homes.

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3.3.7 First, we will encourage councils to usethe new compulsory leasing powers in theHousing Act 2004, successfully campaigned forby Liberal Democrats. These Empty DwellingManagement Orders will give councils, withcertain safeguards, the power to lease out emptyhomes, where the owner has refused support,advice and inducements to let out the empty homehimself.

3.3.8 Second, we will ensure a local authoritycan benefit financially if it chooses to levy fulllocal taxes on the owner of an empty property.Under current rules, the extra revenue goes to theTreasury, reducing the incentive for councils tomonitor long term empty properties.

3.3.9 Third, we will support councils inauditing all public sector property in their area,whether owned by the council or another publicsector body. Where public sector homes areempty, the council will be empowered and fundedto use such properties for homeless families.

Voluntary re-location, employment andschooling packages

3.3.10 There is also much more scope for linkinghigh demand areas, with many families in

housing need, to low demand areas, with emptyproperties. Local authority-run schemes such asLAWN already help families voluntarily relocate- largely from areas in London and the South East,to areas in the Midlands and the North, assistingwith employment, schooling and relocation costs.

3.3.11 Liberal Democrats would fund a majorexpansion of voluntary relocation schemes, usingmoney saved from the high costs of temporaryaccommodation and housing benefit.

3.3.12 National government should assist withmuch greater co-ordination across localauthorities. Such co-ordination needs to bringtogether information on housing, jobopportunities and school places. Individuals andfamilies should be helped with funding to travel tovisit the housing, education and employmentpackages on offer.

3.3.13 While regional policy is outside the scopeof this paper, it is clear that any complete strategyfor tackling Britain’s housing and homelessnessproblems must address regional imbalances,which relocation could help achieve.

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4.0.1 The environment is at the heart of allLiberal Democrat policy thinking - and nowheremore so than housing. From increasing the energyand water efficiency of Britain’s housing stock tobuilding communities with access to green space,improving the environment is essential to ourhousing vision.

4.0.2 Liberal Democrats have led the way inParliament with Private Members’ Bills, mostrecently Andrew Stunnell’s Sustainable andSecure Buildings Bill, which empowersgovernment to use building regulations to makebuildings safe and energy efficient. We welcomethe new tax relief for landlords’ capitalexpenditure on loft and cavity wall insulation, andthe national Code for Sustainable Buildings.

4.0.3 But there is still much to be done. Someof our ideas have already been set out in previouspolicy papers - A Strategy for Sustainability(April 2004) and Conserving the Future (October2003) - and this section builds on those proposals.

4.0.4 Sustainable homes need to be insustainable communities - with open spaces, safestreets and a clean local environment.Neighbourhoods matter: nationwide researchshows that when people are choosing a new home,for sale or rent, in public or private sectors, thelast thing they look at is the property itself. Theylook first at the local neighbourhood - if the streetlights work, if there is rubbish in the streets, ifthey would feel safe at the bus stop.

4.0.5 Our policy for sustainable homesexplores the connections between theseneighbourhood issues and housing, with ideas onplanning, regeneration, neighbourhoodmanagement and tackling anti-social behaviour.

4.1 Energy conservation andsustainable homes

A million new sustainable homes

4.1.1 We need to build hundreds of thousandsmore homes over the next decade: we need tomake sure they are genuinely sustainable. Weaccept much of the analysis behind the proposalfrom WWF of a goal, by 2012, of one million

sustainable homes, including refurbished and newbuild, and consider this a realistic target.

4.1.2 Sustainable homes are more affordablehomes - as they are much cheaper to live in. Byenabling large savings on the energy and waterbills for people, the small upfront capital costs ofmaking homes more sustainable can be more thanoffset over a few years.

4.1.3 Our plans for reaching a million moresustainable homes by 2012 include:

• Zero-rate of VAT for new homes meetingthe EcoHomes “Very Good” standard(with other new homes paying VAT at ournew harmonised lower VAT rate for repairsand conversion);

• Reduced VAT on all energy savingmaterials, from 17.5% down to 5%;

• Assistance to banks and building societiesto produce ‘green mortgages’, that couldcapitalise the longer term financial benefit ofbuying a more sustainable home;

• Fast-tracking new building regulations onenergy and water efficiency, that have nowbeen widely consulted upon;

• Introducing an automatic system ofupgrading regulations on energyperformance in new buildings every threeyears, to the level of the top-performing 25%of new buildings;

• Reform planning guidance, especiallyPlanning Policy Statement 1, to enableplanners to require sustainable buildings,not merely encourage or promote them.

Saving energy, water and money in yourhome

4.1.4 One of the biggest challenges is toimprove the energy and water efficiency ofexisting homes. Liberal Democrats want toincentivise homeowners, social housing providersand landlords to invest heavily in sustainability.

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Warmer homes and safer, greener communities

4.1.5 Some progress is being made. Thanks tothe European Parliament, the Energy Performanceof Buildings Directive will, from January 2006,require a building energy performance certificatewhen homes and other buildings are constructed,sold or rented. This information will helpeveryone understand the potential in theirproperties for generating energy savings.

4.1.6 However, Britain has a long way to go.Four million households suffer from fuel povertyand fuel poverty is still the prime cause of some35,000 winter deaths in England every year, andimposes huge costs on the NHS. We must domore.

4.1.7 To encourage people to invest, we will:

• Cut the average pensioner household’senergy bills by at least £100 a year - with anew package of energy saving measures,including insulation and more efficientlighting. Pensioners will be encouraged, butnot obliged, to choose such a package, ratherthan one year’s winter fuel payment. Usingone year’s allowance in this way can bringpermanently lower bills;

• Help more low income and vulnerablehouseholds with grants for insulation andheating improvement packages, byboosting funding of the Warm Front scheme;

• Substantially raise the woefully lowthermal standards in the government’sDecent Home Standard, at least to BuildingRegulations level, in our reforms of theDecent Home Standard to ensure council andhousing association tenants benefit fromwarmer homes and lower bills;

• Consider extending the new tax incentivesfor landlords to invest in energy savingsfor their tenants, once the new £1,500allowance has operated for 2 years;

• Enable every home, where practical, togenerate its own power, by removing allbarriers to technologies such as microcombined heat and power units, solar powerand micro wind turbines, and requiring allnew and replacement electricity meters tooperate “two ways”, so homes could sellpower back to the grid;

• Help energy suppliers to assist residentialcustomers save energy, by allowingsuppliers to market and sell energy efficientappliances, including light bulbs, throughtheir billing arrangements.

4.2 Open spaces

4.2.1 Improving access to green space is alsokey to a healthy environment for people. Higherhouse prices near parks and commons are a clearindicator that people prefer to live in homes andcommunities where they can see and walk ingreen space.

4.2.2 The government’s green space initiatives,mostly implemented through the Commission forArchitecture and the Built Environment arewelcome, but they are not enough. Nearly 150school playing fields have been lost since thegovernment ‘tightened up’ regulations over sell-offs in 1998. Too many parks and public spacesare inaccessible or so neglected they have becomeno-go areas.

4.2.3 A Liberal Democrat government wouldencourage the development of new parks andopen spaces by giving councils the right to insiston a minimum percentage of green space in largerdevelopments. We would also help localcommunities to reclaim under used and neglectedgreen space, allowing the local community tomanage them.

4.2.4 We would require councils to compile andpublish a register of ownership and managementof public green spaces, so local people can directsuggestions, complaints or requests to the rightperson in order to help bring neglected parks andgardens back into use. Too much green space, inparticular small plots of land, is neglected becauseno-one knows who owns it.

4.2.5 The growing trend for private developersto provide open space as part of large scaleschemes should be encouraged, but must not beallowed to lead to social exclusion withdevelopers’ security staff refusing public access.

4.2.6 Where private roads and open spacesreplace public ones, we would institute apresumption in favour of retaining full publicaccess. Communities would be represented on thecommittees that manage these spaces.

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4.3 Safer communities

4.3.1 Even thriving communities can find thechallenges of keeping the streets clean andcombating anti-social behaviour difficult. Forsome communities, the challenges have provedtoo difficult. The Government’s National Strategyfor Neighbourhood Renewal identify at least3,000 communities as dysfunctional, where basicservices have broken down and where the notionof a clean, safe and green community seems adistant dream.

4.3.2 Liberal Democrats believe sustainablecommunities will only be achieved when localpeople are empowered, through their councils,tenant associations and local community groups.That requires public bodies to listen to people, sothey provide the services that locals want, in theway they want. We need to adapt services to suitthe users: if people want services delivered at aneighbourhood level, “joined up” and notdispersed, then the public sector should aim toprovide that.

Neighbourhood Management

4.3.3 The concept of neighbourhoodmanagement is inherently Liberal Democrat.

4.3.4 Towns and cities controlled by LiberalDemocrats are meeting local needs from thebottom up, and beginning to make a realdifference to some of these dysfunctionalcommunities. In Liverpool the Council hasrestructured seven of its key front line servicesand reconfigured them as a neighbourhoodservices unit with more than 450 mainstreampermanent staff.

4.3.5 And the council does not always managethese services itself. In Toxteth the PLUS HousingGroup has established a subsidiary, INCLUDE,which controls the work of 70 staff from theassociation, the council and a variety of publicand private sector bodies. That organisation isdriving up resident satisfaction, house prices andefficiency and driving down costs, housing voidrates and crime.

4.3.6 However, there is no single way toachieve neighbourhood management. For someareas, it will require new neighbourhoodgovernance, with new parish or town councils orboosting the powers of existing bodies. We would

fund the National Association of Local Councilsto promote the idea of town and parish councils incommunities without them.

4.3.7 For other areas better neighbourhoodmanagement will really mean a restructuring ofservices with a customer led focus. Housingassociations and other service providers outsidethe local authority will need to be involved indeveloping this new neighbourhood managementagenda, which sees housing within the widercommunity setting.

4.3.8 Our policies for community regenerationwould work through the local democraticstructures, not round them.

Anti-social behaviour

4.3.9 Anti-social behaviour makes people feelless safe. All too often both private and publicsector housing is dogged by anti-social behaviour,and communities feel powerless to control thebehaviour of a minority of residents.

4.3.10 While the Government has tried toaddress this issue, many of its ideas have beenpoorly thought through and too often have beendriven by the desire for headlines. To makecommunities safer, above all we need morepolice. But Liberal Democrats have a range ofextra measures to tackle the anti-social behaviourproblem, including our ASBO-plus ideas and theAcceptable Behaviour Contracts pioneered inLiberal Democrat-run Islington.

4.3.11 Liberal Democrats would promote thetake-up of Acceptable Behaviour Contracts acrossthe country, as they are showing themselves to beone of the most cost-effective and successful waysof tackling anti social behaviour. Those causingthe anti social behaviour are forced to takeresponsibility for their own actions, and face theconsequences if they do not. ABCs are flexible intheir terms and their involvement of otheragencies. No Court action is required, keepingcosts down, and the results are impressive: oneestate in Somerset saw an 85% drop in police callouts after the use of ABCs.

4.3.12 Liberal Democrats will introducecommunity justice panels for people accused ofanti-social behaviour and vandalism.Representatives of the community would requireindividuals to repay the people and communities

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they have wronged, by doing work such ascleaning up graffiti. If they refuse, they will facethe courts and a criminal record.

Housing courts

4.3.13 Linked to the need to combat anti-socialbehaviour, but also to the myriad of other legaldisputes arising from housing, Liberal Democratswould introduce a new system of specialisedmediation and housing courts, after consultationwith the magistrates and judges.

4.3.14 Mediation and housing courts would be abetter use of scarce legal resources and shouldlead to faster justice.

4.3.15 At the moment, many housing cases areheard in the county court before a district judge inan adversarial system. The myriad of differenttypes of tenancies clouds the issues and increasesthe complexity of non rent-arrears cases. The bulkof the cases involve rent arrears partially causedby Housing Benefit problems. Frequently, as longas the rent is paid, neither the landlord nor thetenant wants the tenant to lose their home, and thecases are straightforward: to place them in frontof a highly trained experienced district judge is aninefficient use of resources.

4.3.16 Equally, the current way the courts dealwith housing issues such as anti-social behaviour,disrepair, succession and non rent possessioncases is inefficient. This is partly due to the delaysin listing cases experienced in many parts of thecountry, but also because such cases areunnecessarily complex due to the different typesof tenancies in existence.

4.3.17 Where mediation between landlord andtenant has broken down, housing courts chairedby housing specialists would help solvedifferences and disagreements. They wouldrelieve pressure on the over strained court system,speed up the process for landlords and tenants,reduce the potential for delaying tactics on thepart of both the tenant and landlord and becheaper to run. Coupled with the LawCommission’s proposals to simplify tenancies, webelieve these reforms would play a major part in arange of matters related to housing andsustainable communities.

Supporting People

4.3.18 Vulnerable people housed in thecommunity need more support and choice.Liberal Democrats would reform the SupportingPeople programme to reduce the bureaucracy anddirect more of the resources to front linespecialised accommodation, like foyers and otherhostels.

4.3.19 A key issue with the Supporting Peopleprogramme is the cost - £1.8bn in 2003-4. TheGovernment is now trying to cut this back, and itis predicted to fall in absolute terms over the nexttwo years. This is despite the fact that the numbersof vulnerable people remain high. LiberalDemocrat policies for boosting the supply ofaffordable housing and providing free personalcare for the elderly will however reduce some ofthe strain on Supporting People, and shouldrelease some resources.

4.3.20 Another method for releasing resourcesfor such vulnerable people is the reduction of thebureaucracy associated with the “SupportingPeople” programme. Our proposals to streamlinethe inspection regimes for local authorities willcut some bureaucracy: currently SupportingPeople is monitored twice, by the CareCommission and the Audit Commission, and wewill end this duplication. We would alsoencourage local authorities to work together onjoint agreements with service providers, whooften find themselves with an assortment ofcontracts for the same services. We wouldparticularly seek to reduce the inspection burdenon smaller providers.

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5.0.1 To build the extra homes we need ataffordable prices and to higher environmentalstandards, government needs to engage activelywith the property industry. Liberal Democratsrecognise we can only achieve our ambitiousgoals in housing by understanding the challengesfaced by all parts of the industry.

5.1 Reducing the skills shortage

5.1.1 Skill shortages remain acute across theconstruction sector. From craft based skills likeplumbing and bricklaying to professional skillslike architecture, town planning and projectmanagement, employers have consistentlyreported problems recruiting. The ConstructionIndustry Training Board estimates the industryneeds about 80,000 recruits every year to meet thecountry’s construction needs from housebuildingto major infrastructure projects.

5.1.2 The Government has taken a number ofinitiatives in recent years to address the problem.With 38 Centres of Vocational Excellencespecialising in construction training and modernapprenticeships, the number of course and placeshas increased significantly.

5.1.3 But the skill shortage remains. We willdramatically expand these training initiatives,with flexible and fast track courses to help attractyoung people and women. There is a vital need toincrease skills and numbers of the professionals inthe sector, and we will work with the professionalbodies to help recruitment in planning,architectural design and project managers.

5.2 Raising design standards

5.2.1 Liberal Democrats will push for highquality design in all new house building, andwork with the industry to continue theimprovements of recent years.

5.2.2 High design standards are needed topursue our sustainability agenda, but also toensure the needs of people through their lives aremet. Despite the extra upfront costs of designingin the EcoHomes “very good” standard orLifetime Homes standards, they are excellentvalue over the life of the building.

5.2.3 Much progress has been made recently indesign, with building regulations on accessibility,the work of the Commission for Architecture andthe Built Environment and the new Code forSustainable Buildings. Liberal Democrats willwork with industry to make sure such newregulations and codes are actually used.

5.2.4 Innovations in off site construction couldhave a major part to play in boosting affordabilityand efficiency, but some caution is required toensure that off site methods can meet newbuilding regulations and genuinely have wholelifetime cost advantages.

5.3 Re-using land and property

5.3.1 Liberal Democrats support the move tore-use land wherever possible and appropriate.There remain huge areas of previously developedland, contaminated or otherwise, that should be apriority for re-use.

5.3.2 We support the use of incentives such astax credits to assist the cleaning of polluted land,but would go much further, reforming the taxsystem to encourage regeneration and re-use andrepair of existing buildings.

5.3.3 Liberal Democrats would reformbusiness rates and cut rate bills for smallbusinesses, to encourage regeneration and re-useof local shopping parades and vacant land. Ourproposals for de-nationalising business rates andintroducing a rates allowance would help councilsand local small businesses to re-open closedbusinesses, especially shops on local shoppingparades. This will not only boost local jobs andregeneration, it will help make many isolatedestates and communities with the problem ofempty homes more attractive to live in. Moreover,since our reform proposals for business rateswould also see the rates becoming based on landvalues, not property values, this would extend thelocal business rate tax base to empty land zonedin the local planning for commercial use. Thiswould cut tax bills for existing local businesses,as the tax base is widened, and provide a newincentive for landowners not to speculate onvacant land but to put it to use.

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Tackling the Industry�s Skills and Land Shortages

5.3.4 Liberal Democrats would cut the 17.5%VAT charged on the repair, modernisation andconversion of existing buildings for residentialuse. This would stimulate the private sector toinvest in providing new homes from existingbuildings. VAT at 17.5% acts as a hugedisincentive for the recycling of buildings, and isespecially perverse as new build on greenfieldland is zero-rated for VAT. We would pay for thistax cut by harmonising the VAT rates for newgreenfield development with a new lower VATrate for repair, modernisation and conversion.

5.4 Improving land supply: community land trusts and community land auctions

5.4.1 To build more affordable homes in areasof high housing need, more land is needed. Tomake those houses affordable, the industry needscheaper land, since it is increasingly the price ofland that is pushing up house prices and rents.

5.4.2 Liberal Democrats propose two solutions:first, better use of publicly-owned land, andsecond, piloting reform of the planning system, tosee how best to unlock more privately-owned landat affordable prices.

Community land trusts (CLTs)

5.4.3 The concept of Community Land Trusts(CLTs) was discussed in chapter 2, in relation toour proposal for building mutual homes, thoughCLTs could have wider implications for land useand housebuilding.

5.4.4 Community Land Trusts (CLTs) are non-profit making companies that exist to hold land, inperpetuity, for the benefit of the local community.They have been used for a variety of objectives,from local economic regeneration to providingmore affordable homes. Since CLTs exist already,the policy challenge is how to increase theirnumber. Self-evidently, this requires land to basenew trusts on.

5.4.5 We see CLTs as vehicles primarily forholding public land subsidies, from transfers ofsurplus land from Government departments andagencies. But CLT land could come from avariety of sources, including land procuredthrough section 106 planning agreements, landdonated by private individuals and foundations orbought by local authorities, through our proposed

community land auctions described below.

5.4.6 A Liberal Democrat government wouldmake it a priority to identify land for new CLTsand issue guidance for councils and privatefoundations on how they can provide land for thetrusts. Councils would be encouraged toundertake an audit of all publicly-owned land intheir area, and to publish the register. TheMinistry of Defence, the Department of Healthand English Partnerships would, together, beexpected to provide land for 100,000 new homeswithin the first 12 months of taking office.

5.4.7 By driving the provision of land this way,a Liberal Democrat government would be able tofast-track new build and refurbishment, makingan early contribution to tackling the affordablehousing shortage. Unlike the problems created bythe Right to Buy process, when public subsidieswere effectively lost in a one-off give-away, theCLT structure would ensure that affordable homesbuilt on the Trust’s lands remained in theaffordable sector, as part of the new intermediatemarket for home ownership described in chapter2.

Community land auctions (CLAs)

5.4.8 As discussed above (“Planning reforms,section 2.0.25), Liberal Democrats want to bringtogether the interests of communities andresidents, with those of people without homes andin poor housing - in short, we want to turn“nimbys” into “imbys”. To some extent thisalready happens though the current planningsystem’s “section 106” agreements, but webelieve that much more can be done.

5.4.9 Liberal Democrats have developedcommunity land auctions (CLAs), as a way oftackling this more effectively. The aim is to ensureexisting residents and communities gain muchmore from appropriate local developments and,by making planning less confrontational to speedthe process up. Since CLAs would represent asignificant reform of the local planning system,we would pilot it before taking the decision as towhether to expand it nationwide.

5.4.10 Under this reform, local authorities couldinitiate community land auctions from time totime. All land owners would be invited to state theprice - if any - at which they would be happy tosell their land. By bidding, they give the council

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the right to buy the land at that price, for a presetlength of time, say a year. The council wouldconsider, with full public consultation, which landoffered, if any, was suitable for development, ascurrently happens with the local plan. The councilwould then apply for planning permission.Planning permission dramatically increases theland’s value - by as much as £2.75m per hectare -allowing the council, after planning permission isgranted, to buy the land at the sealed bid price,before immediately selling it on at the post-planning permission price, or transferring it to anRSL, mutual housing organisation or othersimilar organisation.

5.4.11 At current building levels and land prices,we estimate councils would raise over £10bn ayear from community land auctions - to use forhousing, local services, or halving local taxes.The prospect of much better local services ormuch lower local taxes gives local communities areason to support, rather than oppose newhousing. This in turn helps both the industry, andthose who are in need of housing.

5.4.12 It is important to understand that CLAswould not force councils to accept developmentwhere they do not want it. Councils would notsimply accept the lowest priced land that they areoffered, but instead take into account all elementsrelevant to good community planning policy - thelocation, propensity to flooding, infrastructure,effect on other communities, and so on.Community planning policy remains at the heartof this system, just as it is today.

5.4.13 Those offering land would be able to offerland with conditions. We would expect the mostcommon condition would be that the land is notauctioned to developers after planningpermission, but retained by the current owner.This would allow farmers - and others - to buildhousing for their family, and staff.

5.4.14 The auctions will be designed to make itas easy for a landowner to offer their land as for ahomeowner to put their house on the market - allthey will be required to do is to state a price atwhich they are happy to sell. The ease of offeringland under CLAs, and the profits that landownerscan make, mean that we are confident that thecommunity will be offered a very large amount ofland, both green field and brown field. At present,the average value of agricultural land is £6,000 ahectare, that of industrial land is £600,000 a

hectare, whereas land for residential use is valuedat over £2.75m. So the owner of 4 hectares ofindustrial land, who puts in a successful offer of£1m per hectare would make a windfall gain of£1.6m, and the 90 hectare farmer whose land isbought at £40,000 a hectare makes a £3 millionpound profit. These sums are large enough tomake a lot of landowners more than willing tooffer their land to the community for housing.Even allowing for significant windfall gains suchas these, the community remains the biggestbeneficiary - gains £7m and £240m respectively.

5.4.15 Community Land Auctions would replaceSection 106 agreement for future developments,since the gain that is captured for the communityby a section 106 agreement would beencompassed in the more open process of theauction. This increases certainty for the industry,since it gets rid of the time consuming currentsystem of haggling over section 106 agreements.CLAs will also reduce the opportunities forcorruption, since all land available, and the priceswanted for it, and the conditions imposed, wouldbe open to inspection by all members of thecommunity.

5.4.16 Liberal Democrats believe CLAs couldoffer a major new way forward for housing andplanning. Using a market-mechanism of auctionsto maximise the community’s share in the value ofgranting planning permission, whilst building onwhat is best in the current system of communityled planning, we believe that we can free up theplanning system and increase land supply foraffordable housing.

5.4.17 Local authorities would be asked to bid topilot CLAs in their communities, and we wouldstudy and consult on the results and the planningreforms needed before making a decision toproceed further.

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This paper has been approved for debate by the Federal Conference by the Federal Policy Committeeunder the terms of Article 5.4 of the Federal Constitution. Within the policy-making procedure of theLiberal Democrats, the Federal Party determines the policy of the Party in those areas which mightreasonably be expected to fall within the remit of the federal institutions in the context of a federalUnited Kingdom. The Party in England, the Scottish Liberal Democrats, the Welsh Liberal Democratsand the Northern Ireland Local Party determine the policy of the Party on all other issues, except thatany or all of them may confer this power upon the Federal Party in any specified area or areas. Ifapproved by Conference, this paper will form the policy of the Federal Party, except in appropriateareas where any national party policy would take precedence.

Many of the policy papers published by the Liberal Democrats imply modifications to existinggovernment public expenditure priorities. We recognise that it may not be possible to achieve all theseproposals in the lifetime of one Parliament. We intend to publish a costings programme, setting out ourpriorities across all policy areas, closer to the next general election.

Working Group on Housing

Cllr Richard Kemp (chair) Martin KingJames Allie Angela LawrencePaul Andrews Dr Tim LeunigJames Blanchard Baroness Diana MaddockDavid Borchard John MedwayDuncan Clark David MortonJonathan Coates Paul OlfordBrian Copping Maureen RobinsonEdward Davey MP Terry StacyTim DumperSuzanne Fletcher StaffEmily GassonMatthew Green MP Dr Jonathan Wallace (Policy Unit)Baroness Sally Hamwee Rob Banks (LGA Liberal Democrat Office)Matthew Harris Polly MacKenzie

(Liberal Democrat Resource Centre)

Note: Membership of the Working Group should not be taken to indicate that every membernecessarily agrees with every statement or every proposal in this Paper.

Comments on the paper are welcome and should be addressed to:Policy Unit, Liberal Democrats, 4 Cowley Street, London SW1P 3NB

ISBN: 1 85187 730 4 © November 2004

Further copies of this paper may be obtained, price £4 + £1 p&p from:Liberal Democrat Image, 11 High Street, Aldershot, Hampshire, GU11 1BHTel: 01252 408 282 Email: libdemimage@ldimage.demon.co.ukPrinted by Contract Printing, 1 St James Road, St James Industrial Estate, Corby, NN18 8AL.

Cover design by Helen Banks

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