Open Intelligenc e
Background Statistics Briefing HIE 2017
Lead Author: Loz Kaye Publication Date: 6 December 2017
1.0 INTRODUCTION Housing is one of the most potent areas of political debate in Manchester currently. This ranges from concerns about gentrification, homelessness being the key issue in the mayoral campaign, and whether we can, or even should, build the kind of dense urban environment that bodies like The Centre for Cities advocate.
All of this can be emotive stuff. Much of our city’s narrative about itself is bound up in images of housing, from the estates of Wythenshawe, to the dominant presence of the Beetham Tower, to the legendary Coronation Street. As a balance, we have pulled together some of the key statistics relevant to housing and affordability in Manchester. This is a very difficult area to quantify, even when you are talking literal bricks and mortar, especially extrapolating in to the future. Nevertheless, these are the figures that are currently being worked from and produced by public bodies. This briefing is intended to be instructive, not exhaustive. We have chosen to present the figures with a minimum of comment and judgement. That will be for the Housing Ideas Exchange conference to explore. However, we do raise some obvious risk factors arising from the picture these figures present in the final section.
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1.0 Introduction
1.1 Key Figures •
Manchester’s current population is estimated at 539,000 making up 220,000 households
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By 2026 Manchester’s population is projected to increase by 95,000
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The Boundary Commission projects over 35% electorate growth focused on just 3 wards
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The average Manchester household income is £27.5K pa
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The Manchester council definition of an affordable mortgage is currently set at £125K
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Manchester Core Strategy sets requirement for 20% affordable housing on relevant sites
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The Manchester affordable homes target is 1,000 to 2,000 homes per year.
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Current key funding projects are set to deliver 4,400 affordable homes by 2023
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Current key funding leaves a shortfall of up to 9,600 affordable homes by 2023
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The council forecasts 14,000 homes to be built in Manchester between 2016 and 2021
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Without policy / market shift by 2021 Manchester will be over 10,000 homes short in supply
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The city will be consistently undersupplied by over 2,000 units each year up to 2024
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Shelter assessed a loss of 650 units to affordable housing in 2015-16
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Table of Contents
TABLE OF CONTENTS 1.0 Introduction
1
1.1 Key Figures..............................................................................................................................................................2
2.0 Context
5
2.1 Current Population................................................................................................................................................5 2.2 Future Population..................................................................................................................................................6 2.3 Ward Growth...........................................................................................................................................................6 2.4 Income......................................................................................................................................................................6
3.0 Affordability
7
3.1 Definition.................................................................................................................................................................7 3.2 Affordable Mortgage.............................................................................................................................................7 3.3 Affordable Rent......................................................................................................................................................8 3.4 Core Strategy..........................................................................................................................................................8 3.5 Affordable Homes Target.....................................................................................................................................8 3.6 Affordable Housing Funding................................................................................................................................8 3.7 Housing Affordability Zones................................................................................................................................9 3.8 Impact of viability Assessments........................................................................................................................10
4.0 Supply
11
4.1 Supply Forecast....................................................................................................................................................11 4.2 Housing Undersupply.........................................................................................................................................11
5.0 Risk Factors
12
5.1 Supply.....................................................................................................................................................................12 5.2 Shortfall in Affordable Housing........................................................................................................................12
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Table of Contents 5.3 Income Disparity..................................................................................................................................................12 5.4 Factoring in Need.................................................................................................................................................12 5.5 Section 106 Contributions..................................................................................................................................13 5.6 Growth Focused on City Core............................................................................................................................13
About this Document
14
About Open Intelligence Ltd...............................................................................................................................14 About the Author..................................................................................................................................................14 Loz Kaye:............................................................................................................................................................14
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2.0 Context
2.0 CONTEXT 2.1 Current Population The current population of Manchester is estimated at 539,000 making up 220,000 households (Source MCCFM W2015, Public Intelligence, PRI 2016) . This gives a current Manchester household size of 2.45 people. The number of people living in Manchester increased by over 80,000 between 2001 and 2011, a rise of nearly 20% the highest of any town or city in the UK.
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2.0 Context
2.2 Future Population Between 2016 and 2026 the population growth of the city is estimated to increase by 95,000 to a total of 630,000 residents. (Source Report on Housing Affordability to Executive 1 June 2016) . Working with the Manchester household size, 38,776 new households will be needed to accommodate this growth.
2.3 Ward Growth The Local Government Boundary Commission’s projections for growth give more detailed predictions. Between 2016 and 2022 the Commission predicts a growth in the electorate from 369,904 to 417,015. (Note the electorate is not the same as total population). This gives an increase of 47,111 over 5 years. Over 35% of this growth is concentrated in 3 wards Deansgate (6726), Piccadilly (5945) and Ancoats and Beswick (4545).
2.4 Income The average Manchester household income is ÂŁ27.5K . This is calculated using Experian, ASHE and Paycheck as sources. This average income includes all earned and other income such as benefits and pensions.
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3.0 Affordability
3.0 AFFORDABILITY 3.1 Definition The Manchester council definition of affordable housing is linked to income. It is set as a maximum of 30% of gross household income.
3.2 Affordable Mortgage The Manchester council definition of an affordable mortgage is currently set at ÂŁ125K . This is calculated as applying a multiplier of 4.5 to the average income of ÂŁ27.5K (see 2.4).
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3.0 Affordability
3.3 Affordable Rent Working from 3.1, a maximum average affordable Manchester rent is pegged at £687.50 pcm . 2015-16 rents increased by 6.3% in the South of the city, 1.6% in the North and 4.8% in the East. Price growth was most intense in the central apartment market, in the City Centre ward price growth exceeded £100 p/a.
3.4 Core Strategy Manchester’s affordable homes requirements are set out in the Core Strategy. It requires that on sites over 0.3 hectares or where 15 units or more are proposed the developer will deliver 20% of the development as affordable homes of which •
5% will be social housing including affordable rented housing
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15% will be ‘intermediate’ affordable housing
However section 106 agreements can amend this, subject to a financial viability assessment.
3.5 Affordable Homes Target Under the Housing Affordability Policy Framework the target is set to provide 1,000 to 2,000 affordable homes each year in Manchester. Over a 5 year period, this equates to 5,000 to 10,000 homes.
3.6 Affordable Housing Funding 3.61 The Shared Ownership and Affordable Homes Programme (SOAHP) The Shared Ownership and Affordable Homes Programme is the latest funding programme from Homes England, running from 2016 to 2021 . The projection is an allocation of over £45 million in grant funding to contribute to the delivery of 1900 new homes by 2021.
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3.0 Affordability
3.62 The Housing Affordability Fund The Housing Affordability Fund (HAF) is made up of 4 strands : •
Section 106 contributions, which are projected to be the chief source of income
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Right to Buy receipts
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Housing Revenue Account
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Housing Capital Programme
With an annual investment of £2 million HAF could deliver up to 2,500 new and existing affordable homes over 5 years. This programme is set to start in 2018. Broken down in to housing types this is projected to include delivering : •
Social rent (approximately 60% of market rent) 27 to 33 annually., so maximum 165 by 2023.
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Affordable rent (80% market rent) 55 annually, 275 by 2023.
3.7 Housing Affordability Zones The City Council is proposing to bring forward land as potential Housing Affordability Zones in 4 areas: •
Central estates in North Manchester
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Clayton
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Beswick
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Wythenshawe Town Centre
It is anticipated that up to 2,000 new homes could be delivered over 5 years.
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3.0 Affordability
3.8 Impact of viability Assessments Shelter’s report in to the impact of viability assessments on affordable housing delivery shows a loss of 650 affordable homes where Core Strategy would expect them to be delivered in the financial year 2015-16. Where viability assessments were used 0% of units were delivered to affordable housing, a loss of 472, where they were not used 11% of units were delivered to affordable housing, a loss of 178.
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4.0 Supply
4.0 SUPPLY 4.1 Supply Forecast From the planning pipeline and intelligence analysis the council forecasts 14,000 homes to be built in Manchester between 2016 and 2021. •
25% will be in Council Tax bands A and B
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64% will be in Council Tax bands C and D
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11% will be in Council Tax bands E - H
4.2 Housing Undersupply The city council’s Residential Absorption Rate Model predicts that the city will remain consistently undersupplied by more than 2,000 units every year up to 2024.
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5.0 Risk Factors
5.0 RISK FACTORS 5.1 Supply The current supply does not match the projected growth in population. If there is no significant market or policy shift during 2020-2021, on current delivery rates Manchester will be over 10,000 homes short.
5.2 Shortfall in Affordable Housing The two key funding strands identified in the Housing Affordability Policy Framework are set to deliver over 7 financial years. This leaves a shortfall of up to 9,600 affordable homes by 2023 in relation to the stated targets in the framework. The currently identified Housing Affordability Zones deliver 500 fewer units than the HAF aspiration.
5.3 Income Disparity Pegging housing affordability to a city wide average does not take in to account disparity across different wards. High incomes such as within Didsbury being over ÂŁ40K on average pull the overall figure higher, whereas Ardwick and Moss Side fall under ÂŁ20K on average. This is already flagged as a concern within Manchester Council.
5.4 Factoring in Need The current approach in the policy frameworks does not assess different types of need specifically. In particular all the figures in the housing affordability framework relate to people already in the housing market, they do not assess rigorously a point of entry for the homeless.
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5.0 Risk Factors
5.5 Section 106 Contributions The success of the Housing Affordability Fund is contingent on Section 106 contributions. Officers calculate they have pitched low the current projected ÂŁ2 million for HAF. However the current practice with viability assessments puts basing HAF on a risky footing.
5.6 Growth Focused on City Core The Local Government Boundary Commission predictions show an overwhelming focus of the growth in the city core, in just 3 wards. This area raised as a concern because of significant price rises, despite the increase in supply. The risk is that this growth will entirely skew the availability of housing in Manchester.
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ABOUT THIS DOCUMENT This briefing was prepared for the Housing Ideas Exchange 2017 in association with Manchester Imaginarium. The sources for the figures are – Manchester State of the City Report 2017, Report on Housing Affordability in Manchester June 2016, Housing Affordability in Manchester December 2016, Housing Affordability Plan November 2017, Local Government Boundary Commission for England Final recommendations published for Manchester, Shelter’s ‘Slipping Through the Loophole’.
About Open Intelligence Ltd Open Intelligence Ltd is a consultancy and think tank operating at the intersection of technology and politics. Particular interests are the Northern Powerhouse, transforming citizen participation in democracy and anticipating future trends. Open Intelligence was founded by Loz Kaye and Andy Halsall.
About the Author Loz Kaye: Loz Kaye is a political change maker. He regularly speaks and writes about technology, politics and security in the international media. He is currently on the Our Manchester Forum looking at city strategy. His campaigning on hate crime with the Manchester Lesbian and Gay Chorus is multi-award winning.