1. Affordable Housing Needs in Scotland: Implications for Rural Areas Ed Ferrari The University of Sheffield Scottish Rural Housing Conference Dunkeld & Birnam, 26 February 2016

2. Outline Introduction to 2015 research project ‘Affordable Housing Needs in Scotland’ Summary of model results Implications for rural areas Policy implications All views are personal, not those of the funders.

3. INTRODUCTION

4. Commissioned by Shelter Scotland, SFHA and CIH in December 2014 Research throughout early 2015 Consultation on findings summer 2015 Final report September 2015

6. A ‘pan-Scotland’ assessment Complements, rather than challenges, the HNDA process Recognises that we cannot simply ‘add up all the HNDAs’ Different time periods and guidance Some use CHMA-provided data and tools; others don’t The more local you go, the more need you find… Definitions can be particularly contested in rural areas: Affordable housing (to whom?), ‘need’, local housing need, etc.

7. Aims To ‘provide Shelter Scotland and partners with robust evidence on total and affordable housing need in Scotland’ from which they can: Advise the Scottish Government and Parliament on the scale and nature of current and future housing need in Scotland Assess the extent to which housing spending decisions and plans by the Scottish Government will address total affordable housing need and specific aspects of affordable need.

8. Objectives Provide a review of HNDAs published in the latest HNDA refresh exercise Develop and provide a pan-Scotland assessment of total and affordable housing need based on the consistent use of data and methods Draw out policy and funding implications for housing supply for the immediate spending review period (2016-17 to 2018- 19) and, more generally, for the 10 year period through to 2026

9. SUMMARY OF MODEL

10. Methodology Stage 1: Scoping and Literature Review Stage 2: Review of HNDAs Stage 3: Key stakeholder interviews Stage 4: Pan-Scotland assessment of housing need Stage 5: Analysis and Reporting

11. Limitations Using secondary data or the CHMA tool cannot always truly reflect local contexts areas of declining population masked by data; policy conflicts (e.g. sustaining island communities) housing/areas that people simply won't move to pockets of divergent trends within council areas (e.g. self-containment, prices)

12. HNDAs vs. this research HNDAs: rich understanding of local housing demand and needs  Local Housing Strategies (LHS)  Strategic Housing Investment Plans (SHIPs).  Inform local policy, planning and spending priorities and monitor progress of those This research enables:  informed debate on the scale of housing need nationally  evaluation of SG spending plans in context

13. Typology of local areas Not a “urban” vs “rural” typology But some emerging geographic patterns Typology based on price growth and levels of “self containment” Some predominantly rural areas demonstrate higher levels of ‘containment’ than others – degree of housing market ‘openness’? 12341234

14. Aberdeenshire Angus Argyll & Bute Dumfries & Galloway East Ayrshire East Lothian Eilean Siar Fife Highland Moray North Ayrshire Orkney Perth and Kinross Scottish Borders Shetland South Ayrshire South Lanarkshire Stirling West Lothian

15. Basic model design

16. ‘Net positive needs’ approach We make the assumption that needs are inherently local to a council area, based on past studies of residential mobility.

17. Gross affordable housing requirement We make no assumption about the forward supply of new affordable housing (e.g. programmed expenditure) We discount social lets that occur as the result of new supply The result is a gross requirement, which must be set against actual delivery

18. Summary of backlog housing need (1)

19. Summary of backlog housing need (2)

20. Summary of Newly Arising Need

21. Summary of affordable housing supply

22. Summary of core model (per annum over 5 years)

23. Summary of scenarios

24. IMPLICATIONS FOR RURAL AREAS

25. Overall requirement (5 years) UrbanRuralScotland Positive affordable requirement p.a. 7,4884,52612,014 as % 62%38% Unadjusted affordable requirement p.a. 6,7613,55810,319 as % 66%34% Households 2014 (GROS2012 principal) 1,218,4401,201,7002,420,140 as % 50%

26. Backlog need UrbanRuralScotland Backlog need28,34027,58155,921 As %51%49% “Backlog” households unable to afford (%) 32%37%35% Backlog need90,72275,003165,725 As %55%45% Open Homeless cases 11,1799,16120,340 As %55%45%

27. Newly arising need UrbanRuralScotland Newly arising need 15,78710,67326,461 As %60%40% Household growth 2014-2019 0.92% p.a.0.62% p.a.0.77% p.a.

28. Affordable housing supply UrbanRuralScotland Net affordable supply 14,69412,63227,326 as %54%46% Supply of social relets 14,61512,56627,181 as %54%46% Right to Buy p.a.1,0739342,006 as %53%47% Owner-occupier turnover p.a. 6.2%5.0%5.7%

29. 5 year summary (p.a.)

30. Summary Across Scotland 12,000 new affordable homes are required per year. This is perhaps double the level of current commitments 4,500 new affordable homes per year are required in rural local authority areas – 60% of the expected number of new households The scale of increase in the affordable requirement is greater than that of the general requirement.

31. Summary The backlog of unmet need is particularly high in rural areas Affordability problems are more acute in rural areas, especially among those already in need Newly arising need is expected to be lower in rural areas … but this maybe highly “path dependent” and may reflect “circular projections”

32. POLICY IMPLICATIONS AND CONCLUSIONS

33. Policy implications Affordable housing programme to deliver 12,000 p.a. would cost £700 million p.a. Quantum is approximately double current spending commitments Assumes urban RSL benchmark – unit costs higher in rural areas Smaller providers find grant rates challenging: less capacity for cross-subsidy Greater targeting in use of subsidies Maximise cross-subsidy opportunities in local markets where this is more feasible Potential to draw in LCHO and MMR, especially areas with higher viability But ‘affordable needs’ exclude wider needs: regeneration, sustaining local communities… Need to maximise potential of s75 and rural exceptions One area where English experience better? Commuted sums or off-site ‘dilutes’ s75 more in rural areas

34. Conclusions High levels of affordable housing need across Scotland – c. 12,000 households p.a. Rural areas face specific challenges An acute affordability problem Defining and meeting ‘local’ needs An urban bias resulting from VFM, subsidy expectations, regeneration needs, etc. Delivery challenges

35. e.t.ferrari@sheffield.ac.uk @ed_ferrari