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Making a policy impact – Stakeholder engagement on an intermediate rent model for Northern Ireland

Knowledge Exchange Broker, Dr Joe Frey, gives an overview of the sixth Northern Ireland Knowledge Exchange (KE) Hub meeting which took place online on 16th November.

The focus of this KE Hub meeting was the Department for Communities’ proposals for an intermediate rent product for Northern Ireland and the CaCHE research report that underpinned them. The CaCHE report and the Department’s proposals had been published simultaneously on 18th October.

To coincide with this, Professor Ken Gibb has written a blog outlining the key findings and recommendations emerging from the CaCHE study and the opening presentation at the meeting allowed him to provide a much deeper insight into the data, analysis and stakeholder expertise on which these findings and recommendations were based. Maryann Dempsey (the Department’s policy lead on this Ministerial initiative) provided a comprehensive response that provided an insight into the rationale for introducing the new rental product as well as highlighting many of the issues that the Department still had to resolve in terms of the detail.

The stakeholder engagement began with one participant expressing doubt that any new intermediate rental product would actually increase the overall supply of housing and would simply transfer demand for other forms of private sector provision to the subsidised intermediate rental market. Increasing overall supply would be better served by other interventions such as improving the speed of planning applications and making more land available for housing. In addition, tax law that prevent landlords from offsetting loans was forcing a significant number to disinvest from the sector. This together with increasing interest from institutional investors is helping to drive NI rents upwards.

In the discussion that ensued following these observations a number of points emerged: firstly, that the intermediate rental product was never seen as a ‘silver bullet’ in terms of addressing the undersupply of (affordable) housing in Northern Ireland; secondly, that the relatively small number of dwellings that would be built under this scheme should not adversely affect the demand for open market housing; thirdly, however, although there is no direct public subsidy envisaged – the availability of Financial Transactions Capital (FTC) and potentially other ‘sweetners’ such as land at a reduced cost should lower development costs for dwellings let at intermediate rents, making them accessible to households who would previously have been unable to enter the private market and thereby effectively helping to increase overall demand and supply.

Generally, however, participants in the engagement session were supportive – both in terms of introducing the scheme and the broad principles that the Department’s consultation document has set out and recognised the CaCHE report as an important part of the evidence base that influenced the Department’s thinking. However, the discussion also noted a number of more specific concerns that in some cases highlighted issues yet to be resolved as well as more general advice.

One participant highlighted the difficulty of agreeing a pragmatic definition of ‘affordable’ – something that can vary considerably depending on household composition and circumstances. In light of this, the focus should be on ensuring that the new intermediate tenancies ensured greater levels of security and agency for tenants than is prevalent in market rentals.

The issue of land availability was addressed by a number of participants in the discussion. The significant challenges of accessing suitable sites for social housing, particularly in areas of high need, was highlighted. However, it was also noted that, in the context of Belfast, the Housing Monitor that will shortly be published as part of the Local Development Plan process will show that land has been zoned for 20,000 dwellings – a figure that is seen as more than sufficient for the foreseeable future. The challenge is more about ensuring that the dwellings built are affordable and in sustainable locations.

One participant highlighted the importance of recognising the considerable expertise that already existed among a number of social housing organisations in Northern Ireland in terms of delivering and managing privately rented properties via their subsidiaries, indicating that utilising this commercial expertise and organisational capacity would be more fruitful than launching a new intermediate rent delivery vehicle. Simplicity was seen as a key factor in ensuring the success of the scheme – particularly in terms of the process of allocation. The scheme should focus on affordability as the key criteria for accessing the scheme rather than, for example, key workers. In this context funding a sufficiently high proportion of development costs by means of FTC based loans to help ensure both affordability for tenants and viability for the landlord was important. This level of detail still remains to be decided but experience from leading intermediate rental schemes in Scotland would indicate that FTC’s cover around half of these costs.

Finally, one participant suggested that rents for the new product should simply be set at the Local Housing Allowance (LHA) rate for any particular location. However, the discussion clarified that although this may seem an attractive option it raises a number of issues, not least of which is the fact that in some locations housing association rents are higher than the LHA rate.

The discussion confirmed my own view that the new intermediate rent product should be seen as having the potential to make a small but significant component of a wider range of housing options designed to address the inter-related challenges of increasing the supply of housing and improving its affordability. Its introduction to Northern Ireland’s housing market is a much more complex process than I initially envisaged and a number of detailed decisions in relation to eligibility, allocation, geographically appropriate rental levels, capital funding, a delivery organisation(s) and construction standards still need to be taken. The Department has already begun a series of bilateral meetings with key stakeholders to help in this process, but hopefully the collective discussion that emerged from the Hub meeting will have provided some extra food for thought.

The meeting concluded with a well-illustrated presentation by Dr Neale Blair that provided an initial overview of a new CaCHE project that is now underway and will examine Planning Policy and Housing Markets on the Island of Ireland with a specific focus on the Dublin-Belfast Economic Corridor (DBEC). As in the case of the intermediate rent model study, we hope that the DBEC research will help to shape planning policy and practice.

Dr Joe Frey is a Knowledge Exchange Broker at the UK Collaborative Centre for Housing Evidence.

Views expressed by authors may not represent the views of CaCHE.

 
        

 

Date: November 25, 2021 11:47 am

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