Deputy First Minister Nicola Sturgeon
Statement on Housing
Scottish Parliament
Wednesday, June 25, 2008
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Presiding Officer, last October in Firm Foundations the Government set out its vision for the future of housing in Scotland.
A vision of more houses of all tenures, built to higher environmental and design standards, meeting the needs of those on lower incomes and contributing to the creation of sustainable, mixed communities.
Our proposals were ambitious and radical - they had to be if they were to tackle the problems that afflict housing in Scotland - problems that result in too many people failing to find homes that meet their needs and that they can afford.
Firm Foundations generated a huge amount of interest and - I am pleased to say - a great deal of support for many of our key proposals.
Given the critical role of local government in taking forward so much of our agenda, I am particularly pleased by the extent to which CoSLA and the Government agree on the priorities for action, such as increasing supply across all tenures, creating mixed communities and joint working between councils.
In this statement, I want to set out the Government's plans for building on that support in the coming months, and working with our partners in local government and across housing to translate our vision into delivery on the ground for the people of Scotland.
Improving supply
Firm Foundations recognised that improved supply is the key to achieving our vision for the sustainable economic growth of Scotland. And our proposal - to set ourselves as a country the goal of raising the rate of house-building 35,000 new houses a year by the middle of the next decade - was strongly supported by stakeholders.
In proposing this goal we recognised that the challenge of making the supply of houses more responsive to demand was a long-term one, requiring both reform of the planning system and a change of cultural attitudes towards the building of houses.
Over recent months it has become very clear that developments in the credit markets will have a significant adverse effect on house-building over the short to medium term. The situation is fluid and as a government we will need to be flexible in our response. But the root cause of the situation is not reduced demand for housing, but reduced liquidity in the market.
The underlying long-term requirement for higher levels of housing remains. People continue to need homes that they can afford.
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Accordingly, I am confirming our commitment to the goal. We will work to ensure that house-building is best placed to grow again once market conditions recover.
Today, as part of our drive to improve the operation and responsiveness of Scotland's housing system, we are publishing, jointly with COSLA, new guidance which enhances the role of Local Housing Strategies. Next month, we expect to publish the revised Scottish Planning Policy on Housing. Together these create a stronger national framework for housing and planning to ensure the right number of houses can be built in the right places.
The credit crunch
I said a moment ago that the credit crunch will not deflect us from the long-term goal of increasing the supply of new housing. And yet we cannot ignore the impact that it may have on some households over the short to medium term.
I can confirm that the Scottish Government will press the UK Government to do all possible to restore normality to the operation of credit markets and improve its financial regulatory arrangements to encourage more responsible lending. And we will press the UK government to make good its promise to reform the Income Support for Mortgage Interest scheme, so that it can provide help to a wider range of people.
As a Government, we recognise the significant effort and sacrifice that people have made to buy their own home. For this reason, over the coming months I want to take some direct action.
I want to encourage anyone facing difficulties in paying their mortgage to take action as soon as possible, and to get advice on their options, both from their mortgage lender and from independent agencies.
We will also provide additional specific support and training for money advisors. And later this year we will produce revised standards for money and housing advice and will consult on a new lighter-touch accreditation scheme. Together, these measures will help us to ensure that homeowners are able to obtain high quality advice, without charge, that will help them to make the best choice possible in their circumstances. To make sure people don't slip through the net we will put forward legislation that will make sure that lenders intending repossession notify local authorities.
I can also announce today that we intend to launch a homeowners' support fund - to help those who cannot obtain help from elsewhere remain in their homes. This new fund will include and build on the existing "mortgage to rent" scheme.
To support the fund, we will increase, in the first instance, the resources currently available to the "mortgage to rent" scheme.
Over the next two years we will make available £25 million to help homeowners facing repossession of their homes.
In developing this approach we will work with lenders and social landlords to extend the options available to homeowners facing repossession beyond the single option currently available under "mortgage to rent". We want specifically to include the option of shared equity and shared ownership which would allow people to retain ownership of their homes, instead of having to give up home ownership completely.
Where first-time buyers who have bought their homes as part of the Government's shared equity schemes find themselves in difficulties in meeting mortgage payments, we will explore with social landlords how they might be allowed to adjust their stake in accordance with household circumstances, rather than give it up altogether or face repossession.
These measures demonstrate that for those who have struggled to buy their own home, we understand the sacrifice they have made, and are targeting support wherever we can.
First Time Buyers
Last year we announced the Low-cost Initiative for First Time Buyers - LIFT. As part of this, we launched the revised Open Market Shared Equity Pilot scheme. We are committed to helping more people achieve their home ownership aspirations where that is sustainable for them.
We have taken on board the views expressed in responses to Firm Foundations. We have also assessed the changing credit situation, which has meant that first time buyers have to find ever larger deposits.
Following their recent assessment of the changed housing market, the Council of Mortgage Lenders has said that an expansion of the shared equity schemes would "help underpin confidence at this uncertain time".
So I can confirm today that we intend to expand our shared equity schemes, backed by investment of £¼ billion over the next three years.
It is our judgment that, in the current market climate, this approach offers more effective help to first time buyers that direct grants.
Home Report
It is also important in the current climate that first-time buyers and others have good information about the condition and value of houses before they make what for many is the biggest financial commitment of their lives.
We were very pleased that the regulations to introduce the Home Report into the Scottish housing market received strong support from across Parliament earlier this year. The surveying profession and others in the market are making good progress in their preparations for the new system which will come into force on December 1.
Private Rented Sector
An important feature of Firm Foundations was its recognition that not everyone is able, or wishes, to own their own home. Consequently, it gave equal weight to proposals on renting - both in the private and social sectors.
This included a review of the private rented sector, which is underway now, to ensure that the sector is capable of delivering the right types of housing in the right places to help meet housing need - and a consultation, launched earlier this week, on proposals to give local authorities more scope to use the private rented sector to house homeless people where that is appropriate.
At the same time, we are continuing our work to improve standards in the sector through measures like the mandatory private landlord registration scheme - which has an approval rate of 78 per cent compared to just 15 per cent in May 2007 and the new Repairing Standard, which came into force last September.
And in April, we launched the National Landlord Accreditation Scheme. Part funded by the Government, it promotes best practice in the sector through training and advice for landlords and agents.
Right to Buy
Turning to the social rented sector, responses to our proposal to end the Right to Buy for new social housing were almost universally positive - and I can confirm that we will legislate to implement it at the earliest opportunity.
But what really struck me about the responses were the impassioned pleas for us to consider further restrictions.
Social housing landlords have given us a clear message that they want to protect their stock, to help meet pressing housing need and assist them on the road to the 2012 homelessness target.
We will not take away existing Right to Buy entitlement. But having listened to respondents, we remain committed to reviewing the policy in line with our manifesto commitment.
Therefore, working with key stakeholders, to examine a range of options, we will conduct a short-term review over the Summer and draw up detailed proposals for public consultation.
Council house building
Support for our proposal to kick start a new generation of Council house building was also very strong.
In April, I announced £25 million of Government funding over the next three years to support the initiative. I have discussed with COSLA the principles that underpin how we will allocate the money. Our aim is to secure the maximum number of extra homes in the right places, for the minimum outlay per home.
To achieve this we will focus our investment on councils that are well placed to take forward new build programmes. These councils will have resources available from prudential borrowing and/or other sources, well-developed plans for building quality houses that meet local need and the infrastructure needed to manage these homes effectively. We will also focus our investment where there is housing need and where the homes will help the Council meet the 2012 homelessness target;
We are developing the detail behind these principles with COSLA to make the final process as transparent and non-bureaucratic as possible.
And - so that Councils just beginning to consider building new houses have time to develop their plans - we will allocate the £25 million in more than one tranche.
I recognise that there are some Councils with limited ability to borrow, because of high debt, and that this scheme will not benefit them. I believe it right, however, to concentrate our resources where they will have greatest impact. And we will, of course, continue to work with all Councils on ways to address their affordable housing need and the long term sustainability of their housing business.
Efficiency
Firm Foundations described the imperative of improving the efficiency of our investment in new social housing.
That is why, last month, we changed the assumptions which underpin awards of Housing Association Grant, to make them more realistic and at the same time secure better value for the taxpayer.
The next stage will be to reform the investment processes to permit a more strategic and competitive approach. There are a variety of ways in which this could be done, and we need to explore all the options before making a decision on the form the new system will take. We will therefore work with the SFHA, COSLA and other stakeholders to develop specific proposals on which we will consult in the Autumn.
Regulating social housing
Procuring new stock efficiently is critical to our aim of delivering more, better quality social housing. But, I want to be sure that, once built, the new stock - and all of the existing stock - is managed and maintained to deliver improving value for tenants and the taxpayer.
Local authorities and housing associations are responsible for delivering that value. To ensure that they do so, we have the Scottish Housing Regulator.
Firm Foundations proposed a series of reforms to modernise the powers and duties of the Regulator - making it more explicitly focussed on protecting and promoting the interests of current and future tenants, reducing the burden of regulation on landlords and concentrating its efforts on assessing and improving the value that landlords provide.
These attracted wide support and I can confirm that - in consultation with CoSLA, the SFHA, tenant groups and lenders - we will develop detailed proposals for ensuring that tenants and taxpayers receive the value they have a right to expect.
Just as importantly, given the vital role of private lenders in supporting the delivery of new social housing, the modernised Regulator will continue to perform the role of reassuring lenders by keeping governance and sustainability under constant review and by being empowered to act decisively whenever these are at risk.
Glasgow
Protecting and promoting the interests of tenants and taxpayers are also the twin aims at the heart of my approach to the challenging issues in Glasgow.
I promised a Review of the grant arrangements with Glasgow Housing Association and that is now underway. I am confident that the new arrangements will deliver transparency and accountability showing a clear link between the money Government is investing and the positive outcomes being delivered for tenants.
As part of that review I am looking at ways in which the arrangements can better support regeneration and I have asked the Council and GHA to bring forward proposals for those transformational regeneration areas which are ready to go. I expect to see progress soon.
I have been clear that I want to see Second Stage Transfer delivered where it can be sensibly achieved. I welcome the real progress which has been made over the last few months with 5 transfer business plans submitted and another 5 due this week.
And it gives me particular pleasure to announce today that 2 Housing Associations have set dates for SST ballots to take place.
Subject to agreement on the detailed proposals and the necessary approvals, both Parkhead and Casselton Housing Associations are aiming for ballots on 17 November.
I am delighted to say that each of these Housing Associations and the GHA are committed to ensuring that this date is met.
To now be working towards a date for the first ballots is a sign of real progress.
It will, at long last, give tenants in Glasgow the chance to have their say.
However, let me clear, I expect to see even more progress in the months ahead.
I have made it plain to GHA that I see it is a transitional organisation.
To that end, I expect to see more ballots and, in areas where transfer cannot sensibly be achieved now, a realistic proposal from GHA to empower tenants.
Conclusion
Presiding Officer, I have outlined a substantial programme of work that will deliver lasting improvements to all aspects of our housing system.
It is a challenging programme aimed at getting the fundamentals right over the medium to long term. It commands extensive support among stakeholders - and we have made a good start with them in taking it forward.
It is important that we pursue this programme consistently, while at the same time continuing to respond to the impact that the present credit crunch is having on households and the housing system as a whole.
I look forward to working closely with all stakeholders in developing and implementing all of our initiatives in the coming months.