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Chapter 3 - analysis of responses

Introduction

3.1 This chapter outlines the analysis of the responses. Where appropriate (e.g. where the consultation document poses a "yes/no" question), quantitative analysis of the responses has been undertaken. There are a number of contextual points that need to be taken into account when considering the analysis including:

• Not all respondents provided answers or comments to every question; therefore the response total relating to the quantitative analysis does not equate to the overall number of responses to the document (recorded at Table 1 above).
• The quantitative data analysis has been undertaken on the basis of the responses that gave a relatively clear positive or negative answer to the question.
• In addition, responses that were undecided, either in general terms or due to a lack of clarity in the question or proposal, have been included in the quantitative data analysis.
• The tables presented at the beginning of the analysis for each question provide information on the response rate and where appropriate more detailed statistics on the level of agreement with the proposition.
• It should be stressed that, in some instances throughout the analysis, a large number of positive responses were qualified, either by expressing additional concerns or by placing conditions on their support. Where these qualifications occur in numbers, they are highlighted in the report.
• Not all of the questions included in Firm Foundations are phrased in manner that allows quantitative analysis - they are not simply asking for a clear "Yes/No/Don't Know" answer. Quantitative analysis has not been undertaken for the issues/suggestions that emerge in these responses - as we cannot conclude that where a respondent has not covered an issue that they hold no view on the issue or that they consider the issue unimportant. However, the report does consider the general nature and extent of support for key issues raised in these questions.

3.2 We would also stress that not all respondents interpreted the consultation questions in the same way. In some cases, respondents provided their own interpretation of (or amendment to) the question before responding; in some cases respondents appear to have answered a slightly different question to that posed.

Question 1 - Do you agree that aiming to increase the rate of new housing supply in Scotland to at least 35,000 a year by the middle of the next decade is a sensible and realistic ambition, and that this will help set a necessary political context for acceleration in housing supply?

3.3 There were 260 responses to this question (67% of total respondents); 230 (89%) of the responses agreed with the proposition that increasing house building in Scotland would be realistic and sensible, while 17 (6%) disagreed and 13 (5%) were 'undecided'. This demonstrates a very strong degree of support for the overall proposition that housing supply needs to be increased. Homes for Scotland ( HFS) reflected the views of most house-builders in its support for the setting of higher targets for building and stated:

"The target of increasing the rate of new housing supply in Scotland to at least 35,000 a year by the middle of the next decade is achievable".

3.4 Among stakeholder groups, there was a strong degree of support from local government (97%), housing associations (91%), tenant and community groups (86%) as well as the private sector (94%) and professional/representative bodies (93%). However, one quarter of individual responses disagreed and 17% were 'undecided'.

Main themes

3.5 There was strong support for the proposition that there is a need to substantially increase house building in Scotland. However, this level of support does not apply to the full proposal that house building should be increased to at least 35,000 units per annum. Some respondents questioned the basis on which this national figure had been determined, with others suggesting that local targets, within a context of increased supply, would be more appropriate. The shortage of affordable housing was felt to be a major issue, and a number of respondents argued that the overall target should specify a target for affordable housing.

3.6 It was felt that the new build targets could only be achieved if delivery mechanisms were put in place (to deal with infrastructure issues, and so on). There was concern that there was insufficient capacity within the construction sector to deliver this level of new build.

Qualified support

3.7 While there was strong support for increasing supply many respondents who agreed with the general proposition included qualifications within their response. Where support was qualified, the following points were made:

• There was concern from some respondents that the case for the specific target of 35,000 had not been demonstrated.
• A substantial number of respondents - particularly those representing bodies concerned with or involved in social housing - considered that there should be a specific target for increased supply of social/affordable housing.
• Organisations concerned with the protection of the environment - while not challenging the case for more housing - were concerned that development should be carried out so as to minimise environmental impacts and avoid Greenfield development.
• There was a general concern that the target might be excessively ambitious - because the construction sector might face supply constraints, because of infrastructure constraints and because the planning system might be unable to deliver the required sites.
• Organisations concerned with the housing requirements of special needs groups argued that specific targets for housing for such groups should be included in any strategy.

3.8 There were some striking variations in the responses between different types of organisation. These are considered further below but we may state at this point that:

• Housing providers such as builders and housing associations were the strongest supporters of a (high) national target.
• Setting a target for increased development was also supported by representatives of lenders and by professional bodies.
• Local authorities and planners tended to be critical of the principle of a national target and to argue that housing land supply should be regulated and assessed through the system of structure and local plans.
• Some academic commentators were critical of the rationale for the 35,000 unit target.

3.9 There was limited comment on the degree to which the target would set the political context for increased supply. As noted, there was scepticism concerning the capacity of the system to "deliver", although housing providers appeared to hope that the target would be effective in increasing land supply.

3.10 The rationale for an increase in new build targets to 35,000 houses per annum was criticised by some academic commentators who argued that Firm Foundations did not provide clear evidence that such a level of provision was needed. There was specific criticism of the argument in Firm Foundations that the increase in Scottish house prices was related to stagnant growth in supply. One respondent from Edinburgh University's Geography Department argued that much of the recent price increase had been driven by the availability of cheap finance and the demand for housing as an asset rather than by an absolute physical shortage of living accommodation. Academics Glen Bramley and Hal Pawson commented that:

"We are concerned at the lack of a clear evidential basis for the 35,000 target and at the lack of any detail as to the proportion of this number to be accounted for affordable housing. In this respect the SGproposals are inferior to the Westminster green paper's coverage of this issue" and "we believe that there are still problems of lower demand and weaker markets in other parts of Scotland, and that a large quantitative increase in supply, spread indiscriminately across the country, would almost certainly worsen the chances of regenerating some of these areas".

3.11 Some - but not all - local authorities were relatively sceptical of the case for a national target and concerned over the implications for planning. COSLA argued that a centralised target was not appropriate. This position was exemplified by the response of one local authority which stated:

"The paper does not explain the basis of the 35,000 a year target (which represents an increase of 40% from current levels) or how this is to be distributed across Scotland. Based on population and household projections which are substantially higher than the Government's own projections issued by the General Register Office for Scotland ( GRO), the Glasgow and Clyde Valley Structure Plan includes provision for an increase of 20% in new housing supply and for a number of Community Growth Areas ( GGAs)". (Renfrewshire Council)

3.12 One private developer was concerned that the current system was inaccurate.

"The besetting sin of the U.K. planning system is that it has consistently under-estimated both housing need and demand".(Walker Group)

3.13 The views of the building industry were supported by other organisations involved in the Scottish housing market, including the Council of Mortgage Lenders, the Law Society of Scotland and the Royal Institution of Chartered Surveyors ( RICS), while the Royal Town Planning Institute ( RTPI) accepted the need for more house building but argued that more detail was needed in relation to targets. Scottish Water, the Scottish Council for Development and Industry, and Highlands and Islands Enterprise also supported a higher target for house building.

3.14 Housing Associations also generally supported the proposals for increased levels of building across the housing system. However, it was also the case that most housing associations considered that a shortage of affordable housing was a major issue and argued that the Firm Foundations paper should have set goals for levels of social rented/affordable housing provision. Specific reference was made to a need for 30,000 more affordable homes by 2011. One housing association stated that:

"At the root of Scotland's Housing crisis is the chronic undersupply of new homes, the failure to prolong the life of existing stock and lack of imagination in converting disused non-residential property into homes for the future".(Perthshire Housing Association)

3.15 A number of associations argued that increasing the supply of housing for sale would not in itself moderate prices sufficiently to enhance affordability for many. Shelter and other social housing representative groups argued similarly that building homes would not in itself increase affordability, the case for 35,000 homes per annum had not been made, and that more affordable homes were needed. The Chartered Institute of Housing supported the aim of increasing housing supply but argued for specific goals for affordable housing.

3.16 There was some adverse comment from housing associations and academics on the lack of discussion of the role of housing in regeneration. A few respondents were concerned that the focus on "numbers" might mean that regeneration was given less priority in housing development or even that increased house building rates could undermine demand in some areas and so adversely affect regeneration efforts.

3.17 As noted earlier, bodies with responsibilities for the environment - SEPA, SNH and the Sustainable Development Commission - emphasised that accelerated building should be implemented without compromising standards on environmental protection and sustainability.

Creating the political context for development

3.18 There was some concern among respondents that setting a target could be ineffective without vigorous supporting action. The contributions of two councils were fairly typical of these concerns which were widely shared - mainly but not only by local authorities. One authority commented:

"Even with the enhanced strategic framework an increase in the supply of housing will only be achieved if delivery issues such as infrastructure provision, land supply for affordable housing providers, access to public sector land and adequate funding levels are resolved".(East Lothian Council)

3.19 Another argued that the strategy would need to embrace:

"The planning system, the affordable housing investment programme, Transport Scotland, Scottish Water, and the Scottish Building Standards Agency".(Edinburgh City Council)

3.20 There was also some general concern that the construction industry would struggle to increase supply.

Question 2 - Do you agree that, to give practical effect to the ambition, local authorities should co-operate regionally in setting realistic housing targets for housing market areas, and in enabling the delivery of these targets? If so, what arrangements should be put in place to support and provide incentives for such co-operation between relevant local authorities?

3.21 There were 223 responses to this question (58% of total respondents); 181 (81%) of the responses agreed with the proposition that local authorities should co-operate in setting housing targets for housing market areas, while 29 (13%) disagreed and 13 (6%) were 'undecided'. Agreement with the proposition was spread across the stakeholder groups although around one-fifth of local government respondents disagreed along with a higher proportion of individuals (24%).

Main themes

3.22 The majority of respondents agreed with the proposition; it was considered that regional co-operation was necessary to focus planning and delivery around housing market areas. It was also felt that this could provide a valuable mechanism for driving delivery of the national new build target. A number of organisations stressed that mechanisms for joint working are already in place, around the local housing strategy and the structure plan.

3.23 Support was strongest from housing providers - especially private developers - and from public bodies such as the Scottish Environmental Protection Agency ( SEPA) and Scottish National Heritage ( SNH), and from professional bodies.

3.24 The respondents who disagreed generally argued that the local authority was the appropriate level for determining housing requirements - especially for social rented housing. The level of disagreement with the proposition was highest among local authorities - about one third either rejected or heavily qualified their support for the proposal.

Housing market areas and regional targets

3.25 Support for the proposal reflected an acceptance that housing market areas extend across local authority boundaries. Homes for Scotland argued that:

"Local authorities must co-operate regionally, both in the setting of housing targets for housing market areas and in the identification of action programmes to enable the delivery of these targets…The important role of City Regions must not be overlooked in the setting of regional housing targets".

3.26 It was also clear that developers believed that regional level targets should be a mechanism to drive the attainment of the national level target of 35,000 new homes per annum and that regional targets should be included in the National Planning Framework.

3.27 Housing Associations were also supportive of "cross authority" planning and had relatively few reservations on this point. Housing Associations were, however, somewhat more inclined than developers to argue that a good deal of "cross border" planning already goes on through structure plans and local housing market studies.

3.28 The main reservations expressed - by social housing organisations, representative groups and some individuals - concerned the possible loss of local perspective and community involvement in a cross local authority system. It was further argued by some respondents - for example, the Scottish Council for the Single Homeless and several local authorities - that "market areas" for social housing are much more geographically limited than for owner occupied housing and that the planning system needed to incorporate this much more local level of assessment of need for social housing. Shelter similarly argued that:

"We are disappointed that the Discussion Document does not emphasise the importance of good quality local needs assessment within local authority areas".

3.29 Local authorities did not in general argue against the principle of assessment of housing requirements at a market area level but did often argue that Firm Foundations failed to recognise that this was already established practice. The response from this authority was typical of this view:

"The introduction of new or additional requirements for local authorities in relation to the setting of housing targets is unnecessary. The current guidance in terms of Local Housing Strategies sets a clear requirement to ensure effective inter authority work where appropriate. In addition, the consultation document fails to recognise that for those areas covered by Structure Plans such targets are currently set".(South Lanarkshire Council)

3.30 The same point was made strongly by the Glasgow and Clyde Valley Structure Plan team and by most local authorities who responded in detail on this point.

A few local authorities argued that their housing markets were self-contained and that cross authority planning would be relevant only where it was clear that market boundaries extended across local authority boundaries.

3.31 Few respondents made very specific proposals for new arrangements for cross authority planning. However, local authorities, in particular, were concerned that the relationship between demand and need assessments in Local Housing Strategies and assessments used for land allocations through the statutory planning system was unclear. For example, one authority commented:

"Perhaps this is time to consider the need for a new model of how Planning and Housing work together?"(Clackmannanshire Council)

Incentives for co-operation

3.32 The issues of incentives and resources were addressed by a number of respondents. Local Authorities argued that increased joint working would require additional resources for professional support and management - a view which was accepted to some degree by Homes for Scotland.

3.33 Local Authorities were concerned that "cross border" planning which led to one authority accommodating increased demand should be matched by appropriate allocation of resources for infrastructure and services.

3.34 Private developers expressed support for "performance related" incentives in terms of allocation of resources in line with delivery of increased housing output. Reference was made by several respondents to England where the Housing and Planning Delivery Grant is an incentive to local authorities to deliver high output levels and to identify housing land. It was suggested that it may be worthwhile considering whether this approach could be appropriate in Scotland.

Question 3 - Is there a role for a specialist national function to provide expert support for local authorities in strategic planning for housing. What expertise do you think this function would require?

3.35 There were 217 responses to this question (56% of total respondents); 177 (82%) of the responses agreed with the proposition that there was a role for a specialist national function, while 25 (11%) disagreed, and 15 (7%) were 'undecided'.

Main themes

3.36 The majority of respondents supported the existence of some form of national function, although there was considerable divergence in views concerning the nature of such a function.

Views on the national body

3.37 Support for a national function was strongest among the private sector (96%). Tenant and community organisations, along with individuals, appeared less likely to agree with the proposition. There was also a significant degree of support from both local government (76%) and housing associations (85%). However, there was also a degree of ambivalence among local authorities with 14% disagreeing and 10% 'undecided'. For local authorities in particular, it appears that the issue of the role of a national function is far from resolved.

3.38 There was some tendency for respondents to see a national body or function as a means of getting their own specific concerns and issues addressed. Thus Shelter argued that a national body could (among other things) set and monitor targets for affordable housing provision, while SNH and the Sustainable Development Commission argued that such a body could encourage sustainable development.

3.39 Private sector respondents tended to see a national body or function as helping drive forward a higher rate of development by overcoming such perceived problems as lack of alignment of planning and housing policies, infrastructure constraints and "the intervention of Government Agencies concerned primarily with the protection of Scotland's environmental and cultural heritage".

3.40 Housing Associations saw some of the advantages of a national function in terms of advisory support to their ongoing activities, but were generally also of the view that a national body would help ensure that local authorities developed a strategic approach to planning and investment. A few associations argued against the creation of any new "bureaucracy".

3.41 Although three quarters of local authorities supported the creation of a central function, there was some disagreement and some uncertainty expressed. The most consistently articulated "supportive" view was that a central body could provide guidance and help with strategic research and planning. Several authorities made reference to the work of Communities Scotland and stated that this expertise should be maintained either by continuing the functions within the Scottish Government or by enabling local authorities to develop their capabilities. Thus one council commented:

"Support and guidance in terms of the LHS[local housing strategy] and SHIP[the strategic housing investment plan] were provided by Communities Scotland and we would hope that expertise will not be lost in the absorption of those functions into the main stream of the Scottish Government. It is up to the Scottish Government to ensure the continued development of those skills within its civil service".(East Ayrshire Council)

3.42 Six local authorities argued that no national function - beyond guidance and provision of financial resources to local authorities - was needed. A number of authorities were guardedly supportive but concerned over the definition of the new functions and overlap with local authority roles. Thus the Glasgow and Clyde Valley Structure Plan team warned against "reinventing" established methodologies and argued that it was important that existing "regional and local data, resources and methodologies are utilised". One council argued that:

"The remit of specialist support within the consultation paper is imprecise, and it could be that different local authorities will require different types of support".(City of Edinburgh Council)

Functions and Expertise

3.43 As noted, there was some divergence in views concerning the role and expertise of the new function. Respondents suggested that a national body might undertake research on issues such as factors determining housing choice or journey to work which would be relevant to development of housing policies. However, the most commonly cited role for a national function was as a provider of guidance and information on good practice in topics including:

• Housing market analysis
• Wider contextual market analysis
• Affordable housing provision
• Technical support (e.g. development planning, environmental issues, demographics/statistical analysis, GIS)
• Building Standards - especially low emissions housing
• Strategic infrastructure planning
• Master planning

3.44 The English National Housing Advisory Planning Unit was also identified by two expert respondents as a possible model.

Question 4: Even when land has planning permission there are still blockages that prevent new housing being built. What additional arrangements would, or could, accelerate development on land with planning permissions to help ensure that future housing supply targets are met?

3.45 There were 221 responses to this question (57% of all respondents). Generally respondents made the point that this particular question was also being considered by the Housing Supply Task Force and the review of SPP3, which they expected to come forward with proposals to deal with these issues.

Main themes

3.46 Respondents identified a range of measures that could accelerate development on land that already has planning permission. The main issue identified was infrastructure constraints; and it was suggested that much more could be done to plan housing allocations around serviced land and to make serviced land more readily available. There was a strong view (excepting developers) that landbanking among developers slowed development; solutions included imposing penalties on land-owners that do not develop land with planning permissions, reducing the time limits on consents, and selective compulsory purchase. Respondents also pointed to the delays that are caused by negotiation of Section 75 agreements; it was suggested that approaches need to be developed to simplify the Section 75 process.

Infrastructure

3.47 Almost every respondent took the view that the lack of co-ordination between the process of allocating sites for housing and the planning of infrastructure for those sites - particularly drainage and roads - was the major cause of blockages. Respondents pointed out that sites may be allocated without any exploration of the cost or feasibility of servicing them, and the fact that they have been allocated for development does not commit Scottish Water or Transport Scotland to provide the services needed.

3.48 Scottish Water expressed the view that some gap sites were too expensive to service. Some respondents gave detailed evidence about the lack of capacity and high costs of providing drainage infrastructure within the built up area of parts of Glasgow, conflicting with the broader Scottish Water view that it was generally more economical to utilise existing capacity. Rural drainage infrastructure was also recognised as a particular problem - particularly as the small numbers of new build typically involved in rural areas may render the unit price of providing the infrastructure prohibitive.

3.49 A more detailed point made by a couple of respondents was the very large number of secondary approvals needed for the design of local roads and drainage, which they felt could be integrated within a single planning consent. Overall the general point that most respondents made was that there was a lack of co-ordination and a lack of funding for new infrastructure, and a lack of capacity on the part of Scottish Water to respond.

Funding and delivery models

3.50 There was considerable support for a recyclable Infrastructure Fund or a delivery body which delivers serviced development land. The only body which opposed such a suggestion was COSLA, which felt that local authorities should be responsible. A possible role for the Scottish Futures Trust was mentioned. Several respondents advocated re-examination of the type of development model/vehicle used in the New Towns.

3.51 Upfront delivery of strategic infrastructure by Scottish Water and Transport Scotland, with costs recovered subsequently from the new developments that benefit - in effect, a retrospective tariff - was suggested by one respondent.

Landbanking and speeding up development

3.52 A large number of respondents - excluding housebuilders - made the point that when land prices are rising fast, rather than service the site, some developers may prefer to hold the site and capitalise on the appreciation. One local authority indicated that a high proportion of their land was in the ownership of one builder, who regulated the flow of development to maintain market prices.

3.53 Some respondents suggested various mechanisms that could be used to increase the speed at which land was brought forward including:

• The shortening of the time period of detailed planning consent from five to three years, which the Planning Act has introduced.
• Time limited zonings in Development Plans.
• A tax on allocated sites which were not developed - often a tax on the uplift in land value.
• The publication of developers' landbanks to assist local authorities when planning their LHS and Development Plan, as proposed in the Callcutt Review of House Building Delivery (2007).
• The greater use of Compulsory Purchase Orders ( CPOs) - particularly where key sites for affordable housing are involved.

3.54 CPOs were also advocated where private interests were retaining 'ransom strips' (that is, holding onto possibly small pieces of land within a development area, stopping the land assembly for the site, in order to extract as much value as possible from the developer). Differing views were expressed about whether change was needed to make the CPO process more straightforward. While it was recognised that there had been a period when CPOs were little used and a consequent lack of local authority experience and confidence, one authority that had made considerable use of CPOs in recent years believed that the powers were workable. Concerns were expressed however about the ability of the Scottish Government to process CPOs swiftly. Those who proposed a delivery body frequently suggested that it would require to have CPO powers.

3.55 It was argued in one response that because it was common for landowners or developers not to wish to proceed with the development immediately or in full, there was a strong case for allocating and giving permission on a much larger amount of land than would be required by a simple interpretation of the planning numbers.

Simplifying Section 75 negotiations

3.56 Many respondents were concerned about the multiplicity and unpredictability of Section 75 (s75) requirements. Some - particularly, but not exclusively developers and their advisors - argued that the totality of demands were excessive and a deterrent to progressing particular sites. The complexity of funding strategic infrastructure through a series of s75 agreements on individual sites was discussed. The attempts of The Highland Council to address these issues in the A96 Corridor Developer's Contribution Protocol were suggested as an exemplar of good practice, at least in allocating a share of costs, although issues of timing and delivery were believed to remain. Practice in the Aberdeenshire Council area was also thought an exemplar.

3.57 Respondents highlighted some of the difficulties of delivering affordable housing using s75 agreements. In particular, they noted that the local authority had little control over when the site was developed and when the affordable housing was developed on site (and hence when the affordable housing came on stream). The need for separate allocations was advocated, either within s75 sites or more generally. The valuation of sites for affordable housing still appeared to be a cause for concern, despite recent guidance.

3.58 One respondent drew attention to the January 2008 report by the CIH in Scotland entitled " All Pain, No Gain? Finding the Balance" and its recommendations which include a national dispute resolution system, good practice guidance, monitoring to ensure compliance and replacing s75 with a mandatory tariff. Another local authority argued that the protracted negotiations involved in securing affordable housing contributions being sought under the provisions of Planning Advice Note 74 ( PAN 74) might be resolved by preventing developers challenging the affordable housing policy and the housing needs assessment at Local Plan Inquiry, were Communities Scotland/Scottish Government to endorse the overall calculations and analysis.

Other themes

• Use of local authority land - one authority pointed out that it had approved a policy whereby the council dispose of any land or property suitable for development for affordable housing at affordable housing land value. Another stated that its local authority owned land is already being utilised, where appropriate, for the council's own new-build social housing programme. It argued that there were local authority areas with limited surplus public sector land, and that use of such land could not be considered a universal solution to housing problems.
• Several respondents drew attention to the impact of the loss of experienced staff by planning departments, generally to the private sector, as a result of uncompetitive salary structures.
• A couple of respondents suggested the introduction of project managers/ facilitators within planning departments charged with progressing applications.
• Delays in adopting development plans - some respondents argued that this was a fundamental obstacle to the granting of planning permission.
• According to a small number of housing associations, local residents' objections to affordable housing have emerged as a difficulty. Two housing associations made reference to the recent very noticeable increase in objections from local communities due to the stigmatisation of affordable housing and homeless people.
• Two west of Scotland local authorities argued for additional funding to support the development of difficult brownfield sites.

Question 5: We have proposed that much expanded or new, stand-alone settlements may be a valid solution. How should we best encourage the development of new, sustainable communities that are sympathetic to Scotland's landscape and environment?

3.59 There were 218 responses to this question (56% of all respondents).

Main themes

3.60 There was general support for the proposition that achieving high levels of new build would require much expanded or new settlements. There was stronger support for the expanded settlements solution, as it was considered this would enable the developments to draw on the depth of local infrastructure (both physical infrastructure such as water and drainage, and social infrastructure such as community, health and recreational facilities). New settlements in rural communities, where there is less opportunity to expand existing communities substantially, received particular support.

General support for expanded settlements - differing views on the case for new stand-alone settlements

3.61 Expanded settlements were more acceptable to respondents than new settlements. A proportion of the responses - particularly from public and environmental bodies and from respondents in Glasgow and the West of Scotland - were cautious or sceptical about the benefits of new stand-alone settlements, and emphasised the merits of building on the assets of existing communities for reasons of economy in the provision of services and sustainability. There was general scepticism about the likelihood of new settlements having the range and depth of services which existing settlements might offer, and concern that a focus on new settlements might divert resources away from the task of regeneration. Respondents also emphasised the need to make best use of the very considerable infrastructure invested in existing settlements, which may be underused in the case of settlements in decline. Most but not all local authorities accepted the need for expanded or new settlements. Most respondents felt that new settlements were only appropriate in areas where a large increase in supply is needed. Several respondents who made this distinction between new and expanded settlements felt that new settlements were only appropriate in areas where a large increase in supply was needed.

3.62 There was a strong theme within the responses - with particularly detailed arguments from the Scottish Environmental Protection Agency ( SEPA) and Scottish Water - of the desirability of making best use of existing infrastructure. Other responses, such as that from the Sustainable Development Commission, also related this to issues of ensuring the best use of existing brownfield or infill sites, as well as promoting the sustainability of services for existing communities (for example, public transport, town centres).

3.63 Private developers and house builders were rather more likely to favour new settlements, but they too emphasised the advantages of major settlement expansion. The developers who argued the case for new settlements did so on the grounds that it would be easier to incorporate eco-friendly technologies - for example, combined heat and power - on a larger scale in a new settlement.

3.64 Other points noted by respondents include:

• The need for regional level judgements on new settlements through the development planning system and linked to the overall spatial strategy for an area considering the relationship between existing settlements and proposed new developments.
• Some differences in opinion with regard to whether new settlements were more or less likely to meet with public opposition.
• The link to the overall increase in supply being proposed by the government and how this could be met without the substantial expansion of existing communities and/or the establishment of new ones.

More support for small stand-alone settlements from rural bodies

3.65 Organisations with a specific rural focus - including Highland and Islands Enterprise ( HIE) and landowner groups - were more likely to support new settlements. The Highland Housing Alliance found the concept:

"Extremely exciting, and does offer an opportunity to build on existing experience and learn from the 60s and 70s about how not to develop large housing projects without the necessary social and environmental infrastructure".

3.66 Arguments were presented by the Rural Housing Service and by HIE that new housing in rural areas should no longer automatically be assumed to be unsustainable - following the arguments in SPP15 that new technology makes it possible for people employed in knowledge based industries to work from very rural locations. They also suggested how new settlements and settlement expansion might be funded. The landowner group, the Scottish Rural and Property Business Association ( SRPBA), argued strongly for small-scale rural settlement expansion and growth. Some other rural landowners made similar points. The case for new housing development was couched in the language of environmental sustainability. For example the SRPBA stated:

"Encouraging affordable new builds in the countryside and imposing the use of renewable and clean energy technologies, such as community boilers and micro-turbines will show a commitment to building a sense of community and environmental well being".

3.67 The case was made for Community Land Trusts ( CLTs) as a mechanism particularly appropriate in rural areas:

"While we believe that there may be a role for central government in land assembly, we commend the role of community land trusts in delivering land for housing…….These sites are often released by landowners specifically for affordable housing and through rural housing burdens imposed by community trusts, housing built on this land can be retained as affordable in perpetuity".(Rural Housing Service)

Achieving sustainability, landscape quality and urban design

3.68 There were a number of responses to this, with the key drivers in developing solutions being identified as:

• landscape impact assessment
• masterplanning
• demonstration projects
• health impact assessment
• a plan led system
• transport and employment links

3.69 Landscape character and landscape capacity studies were strongly advocated by Scottish Natural Heritage ( SNH), but also by several developers and house builders. SNH argued that:

"Landscape character and landscape capacity studies should be a key element in development plan and development management processes. SNHhas been involved in several new settlement proposals in recent years. From our experience there is a strong need for a clear process of site identification through the study of several key issues such as transport, landscape capacity and a wide range of other environmental planning issues. In terms of achieving design quality and community cohesion in new settlements we see a key role for a well considered approach to master-planning that incorporates the key elements of national planning guidance and good practice and a process which ensures clear stakeholder participation."

3.70 Homes for Scotland and several individual house builders emphasised the need for design-led masterplans covering a wide area. Such master plans enable provision of infrastructure to be planned and co-ordinated, its costs shared equitably, and delivered in good time.

3.71 Several respondents emphasised the power of demonstration or exemplar projects (e.g. the Prince of Wales's Rural Housing Initiative) or standards with regard to the expansion of existing settlements or the creation of new ones. This would promote good practice both in the design and performance of housing as well as the overall contribution to sustainable development and communities. HIE supported this as a means of fostering innovation in respect of design, materials and construction. SNH emphasised the need for further sharing of good practice for developing sustainable new settlements in the context of the protection and enhancement of the natural heritage. Overall there appeared to be general support for a good practice and piloting approach with recognition that risks and resources to promote this would have to be shared across the public and private sectors.

3.72 The Scottish Government's proposals for a Scottish Sustainable Communities Initiative attracted only limited support.

3.73 Lothian NHS Board suggested that proposals for larger sites and new settlements should be subject to Health Impact Assessments ( HIAs) following the English example to undertake HIAs in areas of housing growth areas in south east and central England.

3.74 Several respondents alluded to the importance of a plan-led and sustainable approach to development. For example, SEPA believed the new national planning framework ( NPF2) should adopt a pro-active role in relation to identifying a spatial framework for new and expanded settlements, as did SNH which stated that it saw the planning system as the principal mechanism for delivering sustainable development, emphasising the national context to be set by NPF2 and SPP3. In terms of identifying areas for settlement expansion, both the Lothian Core Development Areas and the Glasgow and Clyde Valley Community Growth Areas were commended.

3.75 The need for effective transport links for new and expanded settlements was mentioned in many responses.

Question 6: How should different types of assistance within LIFT be targeted?

3.76 There were 178 responses to this question (46% of all respondents). The majority (54%) of respondents did not respond directly to this question.

Main themes

3.77 As proposed in Firm Foundations, the LIFT policy might comprise targeting of existing low cost home ownership programmes, geographic expansion of open market shared equity, the potential introduction of a £2,000 grant for first time buyers, the creation of a Housing Support Fund to attract private finance into shared equity housing, and the development of new mortgage products. Firm Foundations sought views on how these initiatives should be targeted.

3.78 In general, the responses were not precisely focused on the specific issue of targeting but tended to address the broader question of the benefits or merits of low cost home ownership initiatives. Most respondents were in favour of action to support low cost home ownership, though a small minority of respondents were of the view that this should not be subsidised.

General Response

3.79 Support for low cost home ownership initiatives was based on acceptance that affordability had become more problematic for many newer households in recent years. There was support for the view that assistance should be provided to people who were unable to access home ownership unaided, provided that those households were likely to be able to sustain home ownership in the longer term. Concern was expressed by a number of housing associations and by some academic commentators that inappropriately designed schemes might draw into home ownership households who were barely able to afford to buy ("marginal owners").

3.80 Housing associations, in particular, were concerned that expansion of support for low cost home ownership should not be at the expense of social rented housing investment - arguing that an expansion of affordable rented housing provision was a response to affordability problems.

3.81 One association's comments articulate the view put by several associations that support to home ownership could further stigmatise and marginalise social renting:

"The more that is done to subsidise such aspirations the more marginalised the social housing sector becomes… it [subsidy for home ownership] would remove people in employment from the social rented sector to be replaced with poorer benefit-dependent householders, thus achieving the opposite from the desired effect".(Perthshire Housing Association)

3.82 However, other associations took a different view, arguing that low cost home ownership initiatives should be used in a way which would reduce pressure on the social housing sector by "diverting" into home ownership households who would otherwise be in social housing. To that end, a number of housing association respondents called for the reintroduction of the Tenants Incentive Scheme which gave grant aid to households willing to move out of social housing and into the owner occupied sector.

3.83 The proposal to provide a £2,000 grant to new households met with almost no support and much opposition in the responses. (More detailed discussion of the £2,000 grant was undertaken in response to Question 8.)

3.84 More generally, there was concern expressed by housing associations that measures which increase access to housing for the recipients of assistance but which do not add directly to supply, e.g. open market shared equity would benefit few people.

3.85 The strongest support from associations was for shared equity schemes, possibly with lower equity stakes to broaden the range of potential owners. It was also suggested that such products would be used to enable older households to move out of larger houses. The mortgage to rent scheme was also favoured by many housing associations as a "safety net" for owners.

3.86 Local authorities were generally supportive of low cost home ownership - including open market shared equity. As with housing associations, local authorities called for a focus on first time buyers who could sustain home ownership and in areas where pressure on social housing could be reduced either by taking people off waiting lists or helping people to move out of social housing.

3.87 Private developers were supportive of shared equity initiatives. One developer argued for support to be extended to second time buyers to enable the market to be "freed up" for new entrants. Homes for Scotland argued that "lighter touch" regulation would enable the market supply of "starter homes" to be increased:

"Through the provision of low cost starter units which are successfully developed in England but which cannot be constructed in Scotland due to over zealous current Building Standards and Planning Policies"

3.88 Homes for Scotland further argued that greater flexibility was needed to enable shared equity to reach its full potential:

"Greater use has to be made of shared equity schemes and it is a matter of great regret that some housing types developed successfully by Scottish home builders and sold on the open market to first time buyers cannot benefit from 'Homestake' funding because they do not comply with 'Housing for Varying Needs' standards".

3.89 The Chartered Institute of Housing ( CIH), among other respondents, argued for greater local variation in schemes (i.e. shared equity) with regard to income and equity levels. However, the Council of Mortgage Lenders ( CML) pointed to the problems of complex schemes:

"Lender systems are becoming ever more automated and are not designed to deal with small schemes that benefit a relatively small number of people. Making a scheme so complicated that it has to be manually underwritten will mean that consumers do not have the best choice of mortgages since only a few lenders will choose to be involved. Even if they do they may not be able to offer the lowest price mortgages because of the extra work involved. There is a risk that if the Scottish Government were to allow LCHOschemes to proliferate, at best, borrowers will have a small number of lenders to choose from and, at worst, will not be able to find a mortgage at all. There is also a risk that borrowers will not get best advice if there are too many small schemes for advisers to be aware of"

3.90 With regard to the proposed Housing Support Fund, the CML stated:

"It is not clear if the Scottish Government are looking for the private sector to invest funds in the SHSFand for it to on lend by purchasing the equity stake, or if like the Open Market Homebuy scheme operating in England and Wales, they are looking for the lender to share the equity stake. The Open Market Homebuy scheme operating in England and Wales has proved it is difficult for lenders to price an individual equity loan product that can compete against deeply discounted best buy rates, and equity loans bring with them regulatory and systems challenges. Privately funded equity loans will always be the preserve of a small number of lenders (because the number of people helped in this way will always be small), which means that the choice of mortgage for the borrower will be restricted. We are not convinced that the development of fully privately funded shared equity loans is possible at this point in the market."

Question 7: How could the Government stimulate more innovative mortgage and related products and services to assist people in purchasing their first home?

3.91 There were 168 responses to this question (44% of all respondents). The majority (56%) of respondents did not answer this question. Those that did tended to focus on the merits of promoting home ownership, measures to support home ownership and, in a smaller number of cases, suggesting potential mortgage products.

Main themes

3.92 There was a strong view that a wide range of mortgage products is already available, especially for first-time buyers; indeed a number of respondents pointed to research by consultants Mercer Oliver Wyman, which suggests that the UK mortgage market is the most complete amongst the main countries of Europe in terms of product range.

3.93 Some respondents viewed this product range less favourably, arguing that products designed to ease people into home ownership could in fact be encouraging households that could not afford the true costs of home ownership to buy a property. Consequently, the case for improved information and advice to help potential owners understand the costs and risks of ownership was put forward by a range of respondents. It was also suggested that the government might encourage (or require) greater responsibility in lending practices; discouraging lenders from lending on high income multiples.

Stimulating innovative products

3.94 There were three approaches to developing new products suggested by a range of organisations:

• It was suggested that new approaches should be developed in consultation between the industry and government/local government. While the lenders understand the sector best - both in terms of existing products and the limitations of potential products - other organisations have an understanding of the impact of different products. For example, Clackmannanshire Council wanted to ensure that any new products took into account the growing evidence of debt issues among low income households in owner occupation.
• Conversely, a wide range of respondents suggested that responsibility for the development of such products lay with the industry, not government.
• Finally, there was a view (from the industry as well as representative and other bodies) that any product development would benefit from a clear understanding of the current position and of the gaps in service provision. However, CML did note that it was difficult to see what products could be developed that were little more than a variant of already available products.

New mortgage measures

3.95 A range of mortgage measures was suggested by respondents. These fall under two broad headings - government measures and mortgage products.

Government measures

• Improve the tax position for first-time buyers - a number of respondents suggested that mortgage interest tax relief should be re-introduced.
• Make provision for a local government loan scheme, whereby local authorities lend to key target groups at a preferential rate. It was also suggested that credit unions could have a role providing affordable mortgage finance.
• Ensure that prospective first-time buyers have access to good quality information and advice on buying a home.
• The Scottish market is probably too small to support local initiatives; the Scottish and UK governments would therefore have a role to play, working in association with the industry, to develop UK-wide products.

Products

• Longer term mortgages, to spread the cost of ownership over a much longer period - one suggestion was for a 60-year term.
• Long-term fixed rate mortgages - some suggestions were of 25-year fixed rate mortgages.
• Low cost mortgages - typically, discounted mortgages for first-time buyers, for at least the first few years of the mortgage.
• Flexible repayment - to better fit with working patterns and other responsibilities.
• Improved products for shared equity schemes - several respondents noted that households may experience difficulties accessing a loan for an equity share; and the CML observed that the Open Market Homebuy scheme operating in England and Wales demonstrated that it was difficult for lenders to price an individual equity loan product that could compete against the best general market rates.
• A product that would enable people with disabilities to have their benefits taken fully into account when considering buying.
• A product that would take account of the need for further borrowing to make repairs (to the property itself and/or to the common parts).

3.96 Finally, a substantial number of respondents mentioned the recent performance of the sub-prime market, and the impact on Northern Rock. Most respondents noted that this demonstrated that caution needs to be exercised when developing and promoting mortgage products for households at or below the margins of affordability. There are also potential implications for the industry itself - CML noted that:

"At a time when the market is still in the throes of financial turmoil, it is unlikely that there will be significant appetite for new and potentially risky forms of investment".

Question 8: Should the Government provide direct cash grants to first-time buyers?

3.97 There were 211 responses to this question (55% of total respondents); 46 (22%) of the responses agreed with the proposition that the Government should provide direct cash grants to first-time buyers, while 157 (74%) disagreed and 8 (4%) were 'undecided'. This broad split applies to most of the respondent groups. There was slightly higher support for the measure among private sector organisations and individuals, although the majority of respondents disagreed with the measure ³.

Main themes

3.98 The majority of respondents were opposed to the £2,000 grant. Further, almost half of those supporting the measure qualified their support, typically by suggesting that financial assistance should be targeted towards households experiencing affordability problems (not just first-time buyers). It was largely felt that the £2,000 grant would be insufficient to make a real difference to addressing affordability, and would likely lead to increased house prices. The cost of the scheme itself raised concerns - estimated at £70m in grant alone ⁴. It was considered that these resources could be used much more effectively by targeting households in need and introducing measures to recycle the funding.

Against the £2,000 grant

3.99 Those opposing the grant considered that the funding would not impact on the affordability of home ownership for first-time buyers; instead, the grant would simply lead to higher entry-level prices. First-time buyers tend to compete for properties with other first-time buyers. Were all first-time buyers to have an additional £2,000 this sum would be factored in the bid price; prospective owners on the margins of affordability would therefore continue to be out-bid by those with greater resources, and the principal beneficiaries of the grant would be the sellers.

3.100 There was a strong view that any support for home ownership should be targeted at those most in need. It was noted that, while (prospective) first-time buyers as a group have been experiencing particular difficulties affording housing, the level of difficulty varies between households, with some experiencing no financial barriers to entry. Further, it was noted that other groups also experience financial barriers (such as people with disabilities, low income households needing to move to larger accommodation, down-sizing older people), and it was felt that their needs would not be met under these proposals.

3.101 Critically, it was felt that the amount of grant being proposed would be too small to assist those currently unable to purchase to move into home ownership - £2,000 was felt to represent a very small proportion of the costs of entry-level housing. Nonetheless, there were general concerns around encouraging people to move into unsustainable home ownership. As stressed throughout this section, it was felt that caution was required when developing initiatives that promote home ownership for households on the margin of affordability - that people should not be set up to fail.

3.102 The cost of the scheme itself raised concerns. The key points raised were:

• Despite the grants themselves being fairly small, given that there are around 35,000 first-time buyers each year, the overall cost would be substantial (c. £70m).
• The cost of administering the grant would be significant, given that a large number of people would be eligible. These costs would increase if the terms on which the grant was issued were restricted - for example, if means-testing was required.
• No provisions were proposed for clawing back the grant (in some or all cases), so that it could be re-used to assist other households.

3.103 Overall, there was a clear view that the £2,000 grant would not address the root of the problem - it would not increase supply. A number of alternative uses for the funds were suggested. These included:

• Allocating the funding to local authorities and housing associations, to be used to increase the supply of affordable housing, typically the supply of affordable rented housing.
• Providing grants (or loans) for specific purposes, such as funding deposits, housing repairs, and to enable people with disabilities to access home ownership.
• Resurrecting the tenants' incentive scheme - grants to enable social housing tenants to buy in the open market (thus freeing up existing social rented housing).

In favour of the grant

3.104 Only a minority of the responses were in favour of the grant, and more than half of those in favour qualified their support, typically suggesting that financial assistance be targeted towards households experiencing affordability problems, not just first-time buyers.

3.105 Those in favour typically noted that it was important to support first-time buyers. Where responses were qualified, the issues raised tended to reflect those mentioned by respondents against the grant.

• The grant should only be developed if its application did not lead to increased house prices
• The grant should be targeted at those most in need
• There would need to be reassurances that the money was being used for house purchase - in some cases it was suggested the money should be used to finance the transactions costs
• The grant should be repaid - particularly where the property is sold-on quickly, but some respondents suggested the grant should be repaid in all cases (typically on re-sale)
• Measures should be put in place to minimise administration costs. Some respondents suggested local-administration (by local authorities) would be appropriate

Question 9: How can the private house-building sector play a bigger role in providing, without public subsidy, increased provision of affordable starter homes?

3.106 There were 208 responses to this question (54% of all respondents). Overall most respondents focused on ways in which the private sector might contribute to the objective of greater involvement of the private sector in delivering affordable starter homes.

Main themes

3.107 There was general agreement that there is scope for the private sector to play a greater role in delivering affordable housing. The principal mechanism advocated was making better use of the planning system; it was felt that there is greater potential to achieve affordable housing targets and to reduce (or eliminate) the subsidy paid. A range of other measures were also suggested, including the use of delivery mechanisms, such as joint ventures and Community Land Trusts; improving construction techniques; and developing smaller "starter" homes.

Improve the effectiveness of delivery of affordable housing through the planning system

3.108 Several respondents suggested that Scotland has not realised the potential to provide affordable housing through the planning system, or more generally, advocated the use of affordable/ housing planning policies. This was the single most common response. One respondent made the point that the majority of new social housing in England is now delivered through the use of Section 106 provisions, and that the potential to make greater use of the planning system in Scotland has not been fully realised.

3.109 This view was shared by housing associations and others in the sector, with one housing association stating that the potential for delivering unsubsidised housing through affordable housing policies has not yet been realised. Another respondent suggested that a more uniform application of this type of policy would raise the level of provision of affordable housing of all types.

3.110 Albyn Housing Society suggested that opportunities to use Section 75 were being missed. It noted that the 25% affordable housing quota had delivered significant additional affordable homes in some areas and, in special cases such as Aviemore and Cromarty, a quota of 50% had been successfully achieved.

3.111 Some social landlords advocated a national affordable housing policy applicable in all local authority areas, citing inconsistencies in the current approach at local level leading to a lack of delivery. One claimed that the private sector had failed to comply with affordable housing policies.

Joint Ventures, PFI and Community Land Trusts

3.112 A small number of respondents made reference to exploring innovative structures and mechanisms, in conjunction with the Scottish Government/Local Authorities/ RSLs on the one hand and private house builders on the other to see how affordable homes could be delivered with little or no public subsidy.

3.113 The Link Group pointed to a good practice example of a project in Oatlands, Glasgow, which it believed could be easily replicated. The social rented element was entirely funded by cross-subsidy from the receipts of the housing for sale. One of the housebuilders also advocated this type of joint venture model.

3.114 McLure Naismith referred to the potential to use PFI models developed in England and the English Community Land trust ( CLT) model. However, the latter might, they acknowledged, be difficult to apply directly because of restrictions on long leases in Scotland.

Use of innovative designs and materials

3.115 HIE made reference to experience in the USA, where movable starter homes have been designed; these can be physically lifted and moved to another area. A local authority suggested more innovative design / construction solutions that are adaptable so as to meet the household's needs over time - for example, a product could be designed that is able to offer off-the-shelf bolt-on extensions as a family grows or its needs change. The Association of Local Authority Chief Housing Officers ( ALACHO) advocated greater use of off-site and pre-fabricated construction and of other types of technical innovation. Homes for Scotland commended Redrow's Debut Homes product which, it was suggested, could not currently be offered in Scotland because of minimum space standards.

Smaller house types/ starter homes

3.116 A small number of respondents suggested that encouraging a greater focus on smaller house types or starter homes would be helpful.

Other solutions

3.117 Other points raised in response to this question included:

• The need to focus on ensuring that affordable homes remain affordable on re-sale, and that subsidies do not just benefit the original purchaser (the Scottish Estates Business Group, local authorities).
• The case for incentives or other mechanisms that encourage private housebuilders to develop shared equity schemes (Council of Mortgage Lenders).
• Private sector shared ownership schemes which require no public subsidy, e.g. transferring the margin between value and build cost to a housing association so that is not lost to the affordable housing system.
• Expansion of shared equity schemes (Rural Housing Service, a local authority and a housing association).
• Making more land available, simplifying the planning process and ensuring public authority land holdings are made available where appropriate (Royal Institute of Chartered Surveyors).
• Ensuring a balance between the provision of social rented housing and Low Cost Home Ownership. The Law Society of Scotland pointed out that many developers would prefer to provide more LCHO on s75 sites whereas local authorities may have identified a primary requirement for social rented housing. House builders also indicated that a mix with a higher proportion of low cost home ownership was more attractive to buyers.
• The resolution of conflicts about the amount of affordable housing needed by providing a more sound evidence base on the numbers and proportion of households who are unable to meet their housing needs without the provision of affordable housing of one type or another.
• Rural exceptions policies ( SRBG) - that is, a policy of permitting affordable housing in rural areas where conventional housing development would not be permitted.
• The wider potential of the Highland Housing Alliance model - The Highland Housing Alliance is a not-for-profit development company that has been set up to help build more new affordable and private houses for people in the Highlands. Its activities include the assembly of a land bank and use of private sector expertise to deliver affordable housing. ⁵
• A model s75 agreement. Drafting bespoke legal agreements to secure infrastructure, community benefits and affordable housing is often a significant cause of delay in the planning system. Since the issues are similar for most councils, a model agreement offers a way of reducing both the cost and time associated with finalising such agreements. The CLG has prepared such a model agreement for use in England under the equivalent Section of the Planning Act (s106).
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3.118 One housing association advocated the adoption of a national affordable housing policy, arguing that inconsistency of approach, levels of commitment, and negotiating skills is undermining current delivery.

3.119 Finally, a significant number of respondents, mainly in the housing association sector, could see no role for the private sector in delivering affordable housing, or thought the public sector a more appropriate provider.

Question 10: What issues do you consider should be taken into account when considering the increased use of private sector lets to house low income households and homeless households?

3.120 There were 206 responses to this question (53% of all respondents). However, in a number of additional cases, material relevant to this question was contained in the overview section provided by respondents.

Main themes

3.121 The proposals to increase the use of private rented sector ( PRS) housing for households in housing need were broadly supported. Given that there is unlikely to be sufficient social rented housing to address housing need, and in particular to meet obligations to house all unintentionally homeless households by 2012, greater use of PRS accommodation offered the opportunity both to enable local authorities to meet their obligations and to provide households with a greater range of housing options.

"We think that there is potential for further structured contributions from the private rented sector to house low income and homeless households, and welcome the government's consideration of using such provision, where it is of suitable quality."( ALACHO)

3.122 However, support was not universal. While local authorities and landlords were generally in favour of the proposals, opinion among housing associations (particularly Glasgow associations) and tenant and community groups was more mixed. The comments of this housing association sum up the views of those organisations not supporting the proposals.

"This [using the PRSto house low income and homeless households] would be a disaster for vulnerable homeless people and the communities in which they would live. There is no proper regulation in the private rented sector and the problem of poor standard accommodation and expensive rents would become worse. Do not use the private sector to plug the gap. Invest in local housing associations who are regulated and already provide homes for low income families." [Gardeen Housing Association]

3.123 As might be expected, none of the respondents was unconditionally in favour of the proposals. A range of issues that would need to be considered if the PRS were to provide acceptable and viable accommodation to supplement that provided in the social rented sector were identified.

The type of use made of the sector

3.124 Before turning to the factors that respondents feel should be addressed if the PRS is to be used, we would note that respondents were not always clear on the Government's intentions regarding the use of the PRS for homeless households - whether the proposals related to increased use as temporary accommodation, or whether there were plans to amend legislation to permit local authorities to use the PRS to discharge their duty to homeless households.

3.125 Opinion was mixed as to the course of action that should be taken. Some organisations, including the Chartered Institute of Housing, considered that the sector could play an important role in providing temporary accommodation but should not be regarded as a source of permanent housing. Others, including some local authorities, felt that the sector could also provide suitable permanent accommodation in appropriate cases. CoSLA noted:

"This inability to allow people to remain [in private rented sector housing] forces vulnerable people to move out of what may well be settled, stable and successful accommodation. Many people would elect to remain in their PRStenancies for long periods, or permanently, and their landlords would be happy for them to remain".

3.126 Respondents consistently argued that use of the sector to house homeless households permanently should be conditional - typically on ensuring that the housing used was well managed, in reasonable condition, and was affordable and secure.

3.127

Housing quality

3.127 Concerns were raised about the quality of housing that would be available to low income and homeless households. It was noted that there is a wide range of housing and house conditions across the sector, and that properties at the lower, more affordable end of the market would tend to be located in less attractive areas and be in poorer condition. Some respondents noted that the introduction of the Repairing Standard will have a positive impact on standards in the sector, and argued that further promotion of the provisions is required. However, Shelter suggested that some tenants who experience ongoing problems with poor repair in their properties were reluctant to take their case to the Private Rented Housing Panel because of concerns that the landlord would seek to bring their tenancy to an end.

3.128 Three main approaches to ensuring acceptable housing quality and management were suggested:

• The forthcoming national accreditation scheme was considered an important tool in ensuring the quality of housing provided to low income and homeless households. It was typically suggested that only housing covered by the national accreditation scheme should be used for homeless households; some respondents argued that payment of housing benefit should also be conditional on the landlord being part of an accreditation scheme.
• Some respondents argued that the Scottish Housing Quality Standard should be actively applied to PRS housing - for example, by restricting accreditation (and in one or two cases, payment of Housing Benefit) to properties that meet the standard. It was felt that this would serve to improve standards and result in parity with the social rented sector.
• There were mixed views as to whether grant funding should be made more available to PRS landlords to improve the physical condition of property. Some respondents argued that this would facilitate stock condition improvements. Others said that this was effectively using public sector monies to supplement the profits of private landlords.

Housing management

3.129 It was noted that the quality of housing management varies within the sector; and it was considered important that vulnerable households should benefit from good quality landlord services. Two specific issues were raised:

• It was stressed that homeless households should only be placed with "good landlords" - accreditation would serve to identify appropriate landlords and may result in an improvement of standards.
• Concerns were raised about landlords withholding deposits. It was suggested that a tenancy deposit scheme, similar to that recently launched in England and Wales, would provide tenants with reassurance that their deposit would be returned.

3.130 However, for many respondents (typically, but not exclusively, housing associations) a more fundamental response was required. These respondents considered that private landlords were not well-placed to provide comprehensive, high quality landlord services, and therefore suggested that stock could be managed by housing associations or leased to the local authority to be managed by a specialist managing agent.

Security of tenure

3.131 A key concern was the security of tenure of homeless households rehoused "permanently" to the PRS. Private lets are almost always short assured tenancies ( SAT) - largely because this gives flexibility to the landlord (and tenant), but increasingly also because of conditions attached to buy-to-let mortgages. The six-month tenancy that is afforded under a SAT was generally considered too short for homeless households - although there was recognition that some households would prefer the flexibility associated with an SAT.

Affordability

3.132 Private rented housing is generally more expensive than social rented sector alternatives. This raised a number of concerns among respondents

• High rent levels would deepen the benefit trap for tenants, discouraging people from moving into paid employment.
• Rents may be higher than the amount covered by Housing Benefit, which would either place a further financial burden on the household (and increase the likelihood of arrears) or would have to be covered by the local authority increasing the cost of the option.
• Deposits and a month's rent in advance are usually required - it would be unlikely that a homeless applicant would be able to afford these. Rent deposit guarantee schemes were suggested as going some way to addressing this, and it was suggested that more needed to be done to ensure these were available to those who need them.

3.133 A number of respondents (typically housing associations) raised the point that using housing benefit to cover high rents could be considered a subsidy to the sector, but without any control over how the money was used or any way of securing an on-going benefit from the funding.

Housing support

3.134 Some of the homeless households rehoused in the private sector would benefit from housing support, both with a view to improving tenancy sustainment and minimising disruption to neighbours. Respondents were concerned about how such support would be delivered: it was suggested that private landlords typically do not have the desire, skills or resources to provide housing support to vulnerable tenants; while changes to funding for housing support ⁶ were considered to limit the opportunities to extend local authority/voluntary sector housing support services to the private sector.

Stock capacity

3.135 As indicated in the ALACHO quotation at the start of this section, some respondents noted that structure and profile of the PRS varies across Scotland, with some areas having a thriving, diverse sector; while others have a much smaller sector. Some respondents considered that the sector may not be able to adjust to an increase in demand at the bottom end of the market in some areas - there may not be sufficient appropriate stock and/or there may not be landlords willing to work in/move into that market segment. In less tight markets, it may be possible to shift the focus of some of the providers, although there were concerns that this would impact on the supply for tenants in other parts of the market. Some respondents suggested that increased use of the private rented sector could only be undertaken in association with an overall increase in the housing stock - otherwise the people who had previously occupied the "affordable end" of the market would be squeezed out.

3.136 Concerns were expressed (particularly, but by no means exclusively, by private landlords) about the impact of moving to the Local Housing Allowance ( LHA) in 2008 ⁷, as follows:

• It was suggested that, rather than increasing choice for tenants, the decision to adopt large Broad Rental Market Areas would serve to limit housing opportunities: the more expensive housing in these areas would be out of the reach of tenants on benefit, and so tenants would be concentrated in particular areas where market rents are considerably lower
• Some suggested that these more affordable areas would often be in mixed tenure areas (ex-local authority stock now being rented privately). There was a view that concentrating vulnerable tenants in these areas would impact on community stability - especially if housing support was not delivered.
• It was also noted that the LHA might impact on landlords' willingness to rent their properties to households on benefit. Landlords will no longer be able to receive direct payments from the local authority on request from their tenants; landlords may become increasingly unwilling to accept tenants on benefit in case arrears build up, electing to move out of the sector altogether or move to a different part of the sector.

3.137 The Scottish Association of Landlords summarised the views of landlords and many other organisations: " Recent changes in legislation do nothing to encourage landlords to work in partnership with local authorities to meet the housing crisis."

Question 11: How should we ensure a balance between safeguarding tenants' rights and encouraging the private rented sector to achieve its full potential in Scotland's overall housing market?

3.138 There were 196 responses to this question (51% of all respondents). In a number of additional cases, material relevant to this question was contained either in an overview response or under question 10.

Main themes

3.139 Respondents considered both the rights of tenants and mechanisms to enable the sector to develop further. As would be expected, there were widely differing views around whether the current position favours tenants or landlords. For example, Shelter argued: " Since the 1988 Housing Act, landlords have had the balance of power. More recent changes, such as the Repairing Standard and the Private Rented Housing Panel, only modestly redress the balance". In contrast, the Scottish Association of Landlords ( SAL) argued: " SAL is concerned that now there is an imbalance of power where tenants have more rights than their landlords. For example… if private landlords want access to carry out essential repairs to their properties (as the Repairing Standard requires them to do) they are not allowed to apply to the panel".

3.140 There was nonetheless a general consensus that the Housing (Scotland) Act 2006 has significantly strengthened tenants' rights: landlords generally felt that the current position provided sufficient protection for tenants, whereas housing associations and tenant and community groups tended to consider that tenants' rights needed enhancing and that further regulation of the sector was required. Local authorities, voluntary organisations and the main housing representative bodies tended to appreciate both perspectives - the importance of providing good quality affordable accommodation in the private rented sector and the impact that further demands on the sector could have on housing supply.

Security of tenure

3.141 Given the proposals to increase the use of PRS, security of tenure was considered of great importance by social housing organisations. The six-month short assured tenancy ( SAT) was considered inadequate for vulnerable households being housed in the private sector as an alternative to social rented housing. A number of suggested alternatives were proposed:

• A new private sector tenancy, that affords security for a longer period than the SAT - to sit between the SAT and the assured tenancy. Some respondents pointed to the Irish approach which has a two-stage tenancy period - initially for 6 months, extended for 3.5 years unless the tenancy is terminated at the 6 month point. The notice period lengthens as the length of tenancy lengthens.
• A tenancy similar to the Scottish Secure Tenancy ( SST), but without the right to buy.
• Some respondents suggested that homeless households should continue only to be housed in the private rented sector under an assured tenancy.
• A tenancy designed to address specific conditions required to safely discharge a homelessness duty. The Scottish Council for Single Homeless suggested that this would include a minimum length of tenancy, grounds for repossession, affordability and quality - both physical and management standards.

Housing quality and management

3.142 The second area identified by respondents was the quality of the stock and housing management, as follows:

• Registration - There was general support for the recent provisions to register landlords.
• Accreditation - was considered a key tool for both ensuring that vulnerable tenants could choose a good quality landlord and property and for influencing standards across the sector. However, it was noted that tenants needed to be made aware of the scheme and how to use it if the approach were to be successful.
• Tenancy deposit schemes - it was suggested that consideration be given to introducing a mandatory tenancy deposit scheme to protect tenants from landlords who withhold the deposit unreasonably.
• Regulation - there were various calls for increased inspection and regulation of the sector, typically from housing association and tenant and community groups. Typically these respondents argued that because the PRS charges market rents, which are considerably higher than RSL/ LA rents, and because these rents are likely to be covered by HB (where tenants were classified as low income and homeless), then the difference between the RSL rent and PRS is equivalent to a subsidy to the PRS. Consequently, the PRS should be subject to regulation and inspection. However, this view was not generally held: landlords in particular warned against further measures to regulate the sector. The Scottish Consumer Council cautioned against further interventions until the outcomes of the PRS review are known:

"Too often policy relating to the private rented sector has been decided on the basis of limited evidence, particularly on the impact of regulation on the market. If the burden of regulation is too high, private landlords will leave the sector which will further disadvantage tenants by reduced supply and higher rents." (Scottish Consumer Council)

Enforcement

3.143 There was a widespread view that there was already a good framework of legislation and regulation. However, there was a general view, including from among local authorities, that more could be done to enforce existing provisions. Indeed, a number of respondents suggested that full and proper use of current provisions should be a pre-requisite to developing further measures. Additional measures to improve standards in the sector included:

• Local authority action - inspection to ensure that landlords are operating within the law: this would cover issues such as HMO licensing, registration and accreditation.
• Dispute resolution - effective mechanisms to resolve disputes between tenants and landlords were suggested by landlords as well as by other organisations. These were felt to be needed to address issues raised by both tenants and landlords. There was a concern that going through the courts was costly and very time-consuming. Four models were proposed: local authority mediation, to move towards dispute resolution between landlords and tenants; a private rented sector tribunal; an expanded role for the private rented housing panel to cover tenancy relations issues; and the appointment of an ombudsman for the private rented sector.

Question 12: Do you think there is sufficient engagement between the public sector and private landlords? If not, what else should national and local government be doing?

3.144 There were 172 responses to this question (44% of total respondents); 33 (19%) of the responses thought there was sufficient engagement between the public sector and private landlords, while 130 (76%) thought there was not, and 9 (5%) were 'undecided'. Local government respondents were more likely to respond 'Yes' to this question, compared to housing associations and private sector organisations. There was general support, from respondents that mentioned it, for the Scottish Government's proposed review of the private rented sector, particularly from local authorities.

Main Themes

3.145 There was a mixed reaction to this question with regard to both the level of engagement between the public sector and private landlords and also the extent to which further action is required. Generally the view was that engagement had improved but this was currently insufficient. The responses tended to emphasise that engagement should be focused on increasing awareness and understanding between the public and private sector and ensuring that a balance is achieved between supply, subsidy and standards in the sector.

Recent Improvements in engagement

3.146 Local authorities generally had a more positive view that engagement had improved in recent years - through landlord registration, private landlord forums, housing advice, local housing strategies, and the development of leasing schemes. The development and implementation of private sector housing strategies was also seen as a potential vehicle for future engagement. However, there were also concerns that further engagement would be influenced by landlord views on the implementation of the landlord registration scheme and the Local Housing Allowance.

3.147 According to some local authorities, the question of engagement needed to be set within the context of many landlords' perceptions of over-regulation of the sector. Some responses from the private sector tended to support this, citing over-regulation as an issue. One suggestion was that landlords could be encouraged to participate in landlord forums or other schemes where membership allowed a discount on landlord registration fees. Another view was that this would impact on the resource capabilities of local authorities to undertake registration. Training for landlords and a more positive promotion of the sector by the Government were also cited as areas that could improve engagement.

3.148 One local authority did feel that engagement was already a challenge as there is no single representative body for private landlords. However, some local authorities working in rural areas were of the opinion that it was important to engage with the sector as it may offer the only route into rented accommodation in rural communities. One rural local authority advocated more engagement through representative organisations such as the Scottish Rural Property and Business Association ( SRPBA) and Scottish Association of Landlords ( SAL).

3.149 SAL argued that local authorities had engaged more with the sector but that the quality and level of that engagement varied across Scotland. SAL felt there needed to be more engagement at a strategic level across local authority areas and reinforcement of the cross-tenure approach of the local housing strategy - a view supported by the Scottish Rural Property and Business Association ( SRPBA).

3.150 Local authorities also cited the need to ensure adequate Government resourcing of the provisions of the Housing (Scotland) Act 2006 if engagement between sectors is to be improved.

Further improvements in engagement required

3.151 The housing association sector felt that engagement had moved forward in recent years but that more needed to be done through the extension of private landlord forums and other initiatives. Some housing associations felt that engagement with the private rented sector had not improved sufficiently and should be progressed by local authorities through local housing strategies and the expansion of private landlord forums. This would include greater involvement of housing associations in private landlord forums and discounts on landlord registration fees being offered to private landlords who engaged more directly with the public sector. Other points raised include:

• Increased engagement should be based on the expansion of regulation and commitments to minimum quality and management standards.
• Registration and accreditation could place more responsibility on landlords to engage.
• The impact of the Local Housing Allowance on the ability of local government to engage with the sector.
• Some housing associations felt that some landlords were unwilling or unable to engage.

3.152 Equalities groups felt that, while there were concerns over housing costs and standards in the sector, engagement had been more progressive. However, they wanted any review of the PRS to consider how accessibility and meeting particular housing needs could be improved.

3.153 An individual suggested that a national group should be set up by the Government with representation from those with an interest in the sector - a view supported by a private sector organisation. Another suggested that rural areas would benefit from local authorities, community councils and landowners engaging to find solutions. Some tenant and community groups took the view that private rented sector tenants should be allowed to engage more through membership of tenants' and residents' associations.

General Policy Direction

3.154 Some housing associations and other stakeholders (e.g. academics, equalities groups, tenant and community groups) appeared to question the overall policy direction suggested. This included concerns over the cost of engagement with the sector and Government subsidies to a sector which is profit-led at the expense of social renting. They also highlighted continuing issues with housing quality standards in the sector, the need for regulation and the perceived lack of security of tenure.

Question 13: What other options should we consider for increasing the supply of private rented housing for low income and homeless households?

3.155 There were 176 responses to this question (46% of all respondents).

Main themes

3.156 There was a considerable divergence of views with regard to increasing supply of PRS stock for households in need. In general, local authorities in rural areas (although not all) or those with supply issues were more supportive of using the PRS, emphasising the important role of the PRS in their areas. Other local authorities were more cautious, making the point that the PRS has a role but this should not be over-emphasised in the context of the wider housing system.

3.157 Among some local authorities and others including housing associations, there was a concern that options to increase supply would have to be set in the context of improved property standards and management. Rents / affordability for tenants was also cited as an issue, as was security of tenure.

3.158 Notwithstanding these reservations, a number of options were suggested for increasing PRS supply, including the extension of leasing and managing arrangements, more use of empty properties, and rent deposit guarantee schemes. It was also suggested that changing the homelessness legislation's definition of permanent accommodation to include a short assured tenancy would make it easier to use the PRS for homeless households.

Increasing supply and the local housing context

3.159 There were differing views within local government on increasing the supply in the private rented sector to meet these needs. One local authority took the view that the buoyant market had already expanded supply in this sector for the middle and upper end market, and for students. This had been influenced by buy-to-let and may now be a factor in exacerbating affordability pressures in parts of the city. Other local authorities felt that there could be a role for the sector in increasing supply to meet need, although these generally covered areas where overall supply pressures were already evident (including rural areas).

3.160 CoSLA also voiced concerns with regard to the introduction of the LHA and Broad Market Rental Areas ( BMRAs) and their impact on the ability to house homeless households, arguing that tenants in higher rental areas would be financially disadvantaged and others excluded from accessing tenancies. This view was also supported by a voluntary organisation working with homeless households.

3.161 Some local authorities raised issues over high rent levels and perceptions of high management costs in the sector and the impact on leasing arrangements. This included the interaction between higher rents and 'poverty trap' implications. Others felt that leasing schemes, while useful, did not contribute to the overall supply of housing. Highland Council stated that:

"…private sector leasing schemes do not necessarily increase the overall supply of housing. Because of the pressure on housing in many parts of Highland it should be recognised that simply increasing the use of the private rented sector for some groups such as homeless people may "displace" other groups who may rely on the private rented sector, such as incoming workers."(Highland Council)

Options for increasing supply

3.162 Options cited by local authorities to increase supply included:

• Changing the definition of 'permanent accommodation' under homelessness legislation to include some form of PRS tenancies, thus extending the option of the PRS to some homeless households.
• Providing incentives for landlords, such as rent guarantees and fast tracking housing benefit payments.
• Bringing empty properties back into use either through incentives (grants) or enforcement measures.
• Offering managing and letting services on favourable conditions for landlords (i.e. guarantees over void rent loss).
• Ensuring that innovative schemes are replicated through the publication of good practice guidance.

3.163 Housing associations viewed potential options as:

• Increased use of housing associations (through subsidiaries) to provide market-rent or mid-market accommodation; it was suggested that housing associations might require incentives to become involved in this market segment.
• Increased promotion and implementation of landlord leasing schemes.
• Increased use of rent deposit guarantee schemes; it was appreciated that most authority areas have rent deposit schemes, but suggested that measures are required to improve awareness and take-up.
• Bringing empty properties back into use through incentives or penalties on 'buy to leave'.

3.164 Local authorities were also generally supportive of landlord leasing schemes. However, one housing association said it was not convinced that this was a good objective or that low income and homeless households were best served by the sector. This was supported by others who felt that public subsidy should not be directed at a sector that did not offer 'secure' tenancies and that housing associations were best placed to meet these needs. In summary, there was a strong view that greater use of the PRS should be subject to increased security of tenure and continuous improvement in standards. For example, a housing association stated that:

"…concerns about tenants' rights need to be addressed when considering lets to low income and homeless households. We feel that the Scottish Government should increase security of tenure in the private rented sector and focus on standards of service in this sector."(Glasgow Housing Association)

3.165 One voluntary organisation wanted to see the encouragement of a sub-sector of PRS landlords, able to fulfil a semi-social role, who could let properties to homeless households. This would include links to accreditation and support systems for landlords.

3.166 Others cited wider initiatives such as a national campaign on empty properties and raising awareness of the options for bringing them back into use. Organisations such as the Cairngorms National Park Authority supported greater engagement with private landlords and providing incentives to encourage more affordable housing from the sector. Private sector organisations were also supportive of grants to enable private landlords and property owners to increase supply of rented properties. At the same time, the private sector was also keen for assurances over guarantees on rental income, repairs and dealing with anti-social behaviour.

Issues with increasing supply in the PRS

3.167 There were a number of issues raised by various respondents with regard to increasing the supply in this sector. Points raised by housing associations included:

• A view that the Local Housing Allowance may be a threat to the expansion of supply for low income and homeless households.
• There was also a more sceptical view of landlord leasing schemes, with another housing association claiming they were unaffordable and did not provide a long-term housing solution for the tenant.
• Concerns were raised (particularly by Glasgow-based associations) about the impact of the PRS on neighbourhood management, citing difficulties in engaging with landlords over common repairs and maintenance issues, anti-social behaviour and overcrowded properties.
• Concerns that the Government should examine the interaction between Buy to Let, supply in the PRS and the overall supply in the housing system.

3.168 Some individuals echoed these views, and expressed a need for increased regulation. SAL also raised the issue of the LHA and the lack of direct payment mechanisms as well as impact on rent levels being a threat to further expansion at the more affordable end of the market. It proposed a new scheme run by landlords to increase supply at the affordable end of the sector that would bring together various initiatives (including rent deposit guarantee schemes, accreditation, and housing support) in the PRS to meet the needs of homeless and low income households. There was support for a reduction in bureaucracy and regulation to initiate new supply and a scheme for tenant accreditation. Improved administration of housing benefit systems was cited by some respondents (representative and some voluntary organisations).

Question 14: How could more private landlords be encouraged to let to tenants on benefits and homeless households?

3.169 There were 174 responses to this question (45% of all respondents). However, consistent with the overall responses to cross-cutting themes, material relevant to this question was included either in an overview section or in response to question 10.

Main themes

3.170 The majority of responses to question 14 focused on measures to encourage landlords into the sector - maximising income, managing the quality of PRS properties and reassuring private landlords about their tenants. A minority of respondents (these were mainly tenant and community groups) considered that measures should not be put in place to encourage more landlords into the sector.

Financial measures

3.171 There was a general view that resolving financial barriers to housing low income and homeless households would be most effective. Consequently, a number of financial measures were suggested, as follows:

• Improving Housing Benefit administration was considered crucial. Indeed, as Shelter said: " Shelter's understanding is that landlords do not have concerns about letting to people who are homeless per se; rather that issues with payment of housing benefit act as a barrier". There was a strong view that landlords were concerned that taking on households dependent on Housing Benefit would result in delayed payment of rent and time spent chasing/resolving problems and/or rent miscalculations.
• Covering rent - some PRS rents may not be fully covered by Housing Benefit. It was argued that homeless and low income tenants were not in a position to fund the gap. It was suggested that local authorities look at ways of providing additional resources to tenants to prevent them falling into arrears.
• Single room allowance - several housing associations and local authorities noted that the PRS might be best suited to younger households. However, there are currently restrictions on the value of rent that Housing Benefit will cover for younger tenants (those under 25 years old). It was appreciated that benefit regulations are a reserved matter - nonetheless, several local authorities and advice agencies suggested that the case for change should be made to Westminster.
• Local Housing Allowance - Under the current system, tenants can elect to have their benefit paid directly to their landlord. This provides a reassurance that rent payments will be made. This will not be possible under Local Housing Allowance, which will come on stream for new tenancies in April 2008 ⁸. Landlords and other respondents expressed concern that tenants would be more likely to fall into rent arrears under the new system. Re-instatement of direct payment of rent to landlords would provide reassurance to landlords considering renting to vulnerable tenants. Shelter suggested, for example, that it might be helpful to facilitate direct payment of rent for all tenants who are housed as homeless.
  
• Rent deposit guarantee schemes - Rent deposit guarantees were felt to play a key role in providing reassurance to landlords about tenants' ability to afford their housing. It was suggested that existing schemes should be extended, that funding for rent deposit schemes should be put on a more secure footing (a ring-fenced budget for example), and that schemes needed to be promoted so that landlords and tenants became more aware of them.
• Tax incentives to house low income and/or homeless households. It was recognised that this is a reserved matter, but it was felt that the Scottish Government could lobby for changes.

Tenant measures

3.172 It was suggested that some landlords were reluctant to house low income and homeless households for non-financial reasons.

• Information about the prospective tenant. SAL considered that landlords often struggled to obtain useful information about prospective tenants, and that accessing information about people moving out of the social rented sector was particularly difficult. Two approaches were suggested. First, local authorities should be more willing to share information about tenants - for example, information about tenants' rent arrears and anti-social behaviour. Second, private landlords were generally supportive of the proposal for tenant accreditation. However, social landlords were concerned that private landlords would use this information to "cherry pick" tenants.
• Housing support for tenants. There was a strong view that housing support would need to be made more available to tenants within the PRS. Various types of support were mentioned, including information and advice on available properties, support to ensure tenants were aware of their rights and responsibilities, and support to enable people with disabilities to access the sector. However, respondents most often noted that support to enable households (and particularly homeless households) to maintain their tenancy was required. It was argued that, as well as improving housing outcomes for tenants, private landlords would be more willing to house vulnerable households if housing support was provided; there would be fewer problems with the tenancy and landlords could be reassured that the housing support role would not fall to them.
• Easier eviction - landlords suggested that they would be more willing to take on "marginal" tenants if they knew the tenant could be evicted fairly easily if problems arose with the tenancy.

Property measures

3.173 It was suggested that more people would consider becoming landlords, especially those only able to take on one or two properties, if good property management services were available. Factoring services and property management services provided by housing associations were proposed.

Leasing schemes

3.174 Leasing schemes, such as that currently in operation in Edinburgh, were proposed as a general approach that would address the financial, tenant and property risks that landlords face. The leasing organisation, on behalf of the local authority, would cover rents on the properties, manage the properties, and undertake repairs and maintenance. Because the scheme was considered to offer better security of tenure, as well as good standards of housing management and property condition, this approach had broad support across the range of respondents. The Edinburgh Tenants' Federation was generally supportive of the leasing scheme that now operates in Edinburgh, but in common with many RSLs and tenants organisations, questioned whether allocating resources to the PRS is the most cost effective approach to delivering accommodation for people in housing need:

" The experience here in Edinburgh suggests that Private Sector Leasing schemes provide a way of encouraging private landlords to let properties on a relatively long term basis as rents are guaranteed and support to tenants and the management of the tenancy is provided by the Council. However, we would be interested in exploring the extent to which this is an efficient use of public funding and not a wasteful diversion from the need for increased investment in affordable rented housing." (Edinburgh Tenants Federation)

Measures not required

3.175 There was a range of reasons for arguing that further measures were not required to encourage new landlords into the sector:

• Private landlords should not be providing accommodation for vulnerable households. Respondents considered that private landlords did not have the skills, experience and/or did not want to deal with tenants who may have housing support needs; housing quality was felt to be poor and the accommodation was considered expensive. It was suggested that this client group is better served by the social rented sector.
• There is no need to intervene. Private landlords are motivated by commercial considerations and will respond to market changes/demands.
• Further subsidy/resources should not go to private landlords. As one RSL said:

"We have to express deep concerns about any proposal to extend the use of the private sector to provide more accommodation for homeless and low income households, which we believe will again result in public money being siphoned off by the market for no long-term benefit". (Whiteinch & Scotstoun Housing Association Ltd)

Question 15: What other schemes or incentives might help us to recycle empty properties more effectively?

3.176 There were 186 responses to this question (48% of all respondents). Slightly more than half, 52%, did not respond.

Main Themes

3.177 One of the key themes identified by respondents was the need to place empty property issues within the wider analysis of the local housing market. Policy and initiatives needed to be devised in this context, with the most common approach suggested by respondents being a mix of incentives and powers to enforce action.

3.178 The main options that respondents were keen for the Government to consider were grants and loans, marketing of leasing schemes that empty property owners could take advantage of, other enabling schemes, compulsory letting and purchase, and reduction of council tax discount on empty properties.

Strategic context and incentives

3.179 A number of respondents emphasised the need to ensure that schemes or incentives were based on an understanding of the empty property problem in local market areas and that solutions were set within the wider strategic context (e.g. local housing strategies). At the same time, respondents outlined some of the difficulties in dealing with empty properties, including the identification of appropriate properties and their owners. Many of the schemes or incentives suggested in responses referred to current mechanisms or initiatives and their extension and/or adaptation. The overall response tended to support a mix of incentives and powers to compel property owners to address the issue.

3.180 Some local authorities and ALACHO took the view that schemes and incentives were only applicable in areas where there was an identified problem of this type and that remedial action could contribute significantly to overall supply. Many other local authorities and housing associations (particularly those in rural areas) did identify a problem and suggest specific solutions. Suggested incentives to bring properties back into use included:

• Offering grants or loans to owners linked to guarantees over leasing properties to households in need
• Marketing leasing schemes where social landlords could manage properties on behalf of owners (e.g. lead tenancies)
• Rural Empty Properties Grant (with revisions)
• In rural areas consideration of grant eligibility for infrastructure issues (such as connection to acceptable water supplies)
• The introduction of a homesteading scheme where empty properties are sold for a nominal amount to investors who are prepared to invest their own funds to bring empty properties back into use
• The use of rural housing enablers that assist in tackling affordable housing by helping rural communities to identify needs and to develop practical solutions to meet these needs.

Other measures to address empty properties

3.181 Across many stakeholder groups (housing associations, local government, tenant and community, and voluntary) measures suggested to discourage empty properties included:

• increasing the council tax liability on empty properties
• the use of compulsory purchase powers where appropriate
• the introduction of compulsory letting schemes where owners had not responded to incentives or other measures
• giving social housing providers first refusal on the purchase of empty properties in the private sector or those owned by other public sector bodies.

3.182 There appeared to be a wide consensus among many stakeholders (housing associations, some local authorities, private landlord bodies, architects) for the Scottish Government to consider the option of reducing or eliminating VAT on the refurbishment of empty properties. It was unclear as to how respondents viewed the specifics of this being taken forward, given that taxation is a reserved matter.

3.183 From stakeholders with an interest in rural housing issues (e.g. Cairngorms National Park Authority, rural property developers, SAL), there was a specific view that the Rural Empty Property Grant mechanism should be reviewed, extended and marketed more widely. The main aim would be to simplify the process and ensure that projects became financially viable.

3.184 General support also emerged across stakeholder groups for some form of revitalisation or increased focus on the Empty Homes Initiative linked to local housing strategies. The Chartered Institute of Housing suggested that one aspect of this could be the adoption of a policy champion approach - to drive the initiative forward within the organisation.

3.185 Shelter also advocated a more coherent approach to dealing with empty properties through local housing strategies and as a contribution to meeting commitments on permanent housing for all unintentionally homeless households by 2012. Shelter and a number of other respondents felt that the government should:

"…consult on adopting powers similar to Empty Dwelling Management Orders ( EDMOs) which exist in England and Wales."

3.186 It was also suggested that the government should review current initiatives focused on empty properties in light of the available evidence and develop appropriate responses. Good practice guidance on bringing empty properties back into use was mentioned by one individual respondent and a local authority.

3.187 Tenants and community groups also focused on empty properties in the social rented sector, advocating that more efficient management was required to bring these properties up to an acceptable letting standard. One group suggested:

"Void properties could be used as training initiatives to train those not in employment in building maintenance and repair skills, including energy efficiency measures with the finished article being lettable and a source of income."(Thornliebank Tenants & Residents Association)

3.188 This theme appeared to be supported by some other individual stakeholders who advocated that properties could be let to people who had assisted in repairing or improving the property. Highlands and Islands Enterprise also supported this social enterprise focus on empty properties linking this to employment and training opportunities. One charitable group thought that grants or loans for empty properties should be on condition of meeting environmental and renewable energy objectives.

Question 16: Do you agree that we should exempt new build social housing from the Right to Buy?

3.189 There were 245 responses to this question (63% of total respondents); 229 (94%) of the responses agreed with the proposition that new build social housing should be exempted from the Right to Buy, while 8 (3%) disagreed, and 8 (3%) were 'undecided'. The pattern across stakeholder groups provides evidence of a significant degree of consensus on this specific policy proposal - agreement ranged from 84 -100%.

Main themes

3.190 Almost all the respondents supported the suggestion to exempt new build social housing from the Right to Buy. An exemption was felt to play an important part in retaining good quality stock within the social rented sector, and would remove an existing barrier to the development of new social housing. There were views expressed, however, that the measure would have only a limited impact, and a wider range of exemptions or an end to the Right to Buy would be preferred.

3.191 Those who did not support the measure argued that the Right to Buy provided a valuable mechanism in creating mixed communities, and an affordable route into home ownership.

General response

3.192 The proposition that newly built social rented housing be exempted from the Right to Buy was supported by a very large majority of respondents who addressed the question. Respondents felt this measure was an important step in protecting the supply of affordable housing. South Ayrshire Council's response exemplified this basic point:

"Abolishing Right to Buy for all new build social housing would underline the commitment to the future of social housing and would assist in maintaining supply".

3.193 The introduction of the measure was also seen by local authorities and housing associations as an important support to policies of increased investment in social housing, for example :

"West Dunbartonshire Council would fully agree with exempting all new build social housing from the Right to Buy ( RTB) as there would be little value in funding new socially rented housing if the RTBapplies to new social housing".

3.194 Similarly, Midlothian Council argued that this exemption would support its new programme of social housing development.

3.195 Outright opposition to the proposal was very limited. Two housing associations argued that the measure was unnecessary, arguing that the modernised Right to Buy had dealt with the excessive incentives provided by the pre-existing scheme, while another saw continued merit in the operation of Right to Buy:

"As long as discount rates/cost floor rules are realistic ( RTB) can assist in delivering more balanced communities in some areas". (Blairtummock Housing Association)

3.196 The West of Scotland Forum of Housing Associations referred to the existence of some division of opinion:

"Our members have different views on this question. In areas dominated by rented housing, the Right to Buy can be a useful way of promoting more mixed communities, and current exemption and discount arrangements are seen as providing adequate protection against the loss of stock. Other landlords, working in areas where tenure patterns are more diverse, see a greater need to safeguard new housing".

3.197 A firm statement of the case for leaving the Right to Buy untouched was made by the Walker Group - one of the few private sector bodies to comment:

"We do not agree that you should exempt new build social housing from the Right to Buy. We also do not agree that you should deny existing tenants the Right to Buy. Housing policy should be aimed at trying to meet people's aspirations particularly those on low incomes. If a tenant can meet his aspirations by buying the house he occupies, or ultimately, the one he hopes to occupy, he should be given every encouragement to do so".

3.198 One local authority and Shelter drew attention to one potential exception to the policy: tenants who have the preserved Right to Buy as a result of forced removal through demolition.

A step in the right direction, but not far enough?

3.199 While the overwhelming majority of respondents supported the proposed exemption of new build properties from the Right to Buy, many considered that in itself it would have limited impact.

3.200 Support for the measure, particularly among housing associations, and tenants and residents organisations, was often expressed in terms of the measure being a step towards a much more general limitation on or even abolition of the Right to Buy. The response from Dunbritton Housing Association was typical of this view:

"The proposal to end the RTBfor future new build does not go far enough. Government should be bold and radical - as it is with other proposals in this paper. It should decide at least to end RTBfor all new tenancies. In addition, we would seek a review now of the extension of RTBto housing association tenants in 2012" .

Developing mixed communities

3.201 While most respondents supported restrictions on the Right to Buy, there was a degree of acknowledgement that the policy had helped create tenure diversity in communities. Consequently, responses from six housing associations and two local authorities argued that the introduction of a general exemption from the Right to Buy should be accompanied by measures to ensure that new developments were "mixed tenure" rather than solely social housing. For example, Cloch Housing Association stated:

"No, new Social Housing developments should be allowed to be exclusively rented; unless there is a robust owner occupied sector close by".

3.202 A few of the housing associations that commented on the issue of mixed tenure, as well as the Chartered Institute of Housing, COSLA and Federation of Local Associations In Renfrewshire, argued that if the Right to Buy was ended as a national policy local authorities should retain some degree of flexibility in decisions to sell to existing tenants, at locally agreed discount levels, in line with local housing strategies. Indeed, the CIH noted that:

"The current 'one size fits all' RTBpolicy has been too inflexible to address local needs: changes to the policy should therefore not have further 'one size fits all' consequences. The aspirations of many tenants for home ownership must be acknowledged, but the needs of people looking for affordable rented housing must also be considered".

3.203 There was also recognition among respondents that ending or restricting the Right to Buy would still leave scope within other policies to promote access to home ownership.

Question 17: Do you agree that we should subsidise local authorities in areas of need to use their prudential borrowing capacity to build new council houses?

3.204 There were 207 responses to this question (53% of total respondents); 168 (81%) of the responses agreed with the proposition that the Government should subsidise local authorities in areas of need to use their prudential borrowing capacity, while 22 (11%) disagreed and 17 (8%) were undecided. Local government were particularly supportive of this proposal - 84%. While the majority of housing associations (72%) agreed with the proposal, a significant proportion of associations (28%) were either not in agreement or undecided. Private sector responses mirrored this pattern - 28% either disagreed or were undecided.

Main themes

3.205 A very large majority of respondents supported the view that subsidies should be provided to local authorities in areas of need to enable those authorities to use prudential borrowing capacity to build new council houses. The proposition was supported by respondents in all categories (except for the sole response from a political party branch) but "unqualified" support for the proposal was strongest from individual respondents and tenant bodies.

3.206 Only 12% of those who responded rejected the proposal entirely. The main opposition came from "minority responses" among housing associations, local authorities and private sector firms. For example, about one quarter of private sector respondents argued that housing associations were the best vehicle for the future development of social housing. Most supporters of the proposal among local authorities, housing associations and professional bodies added qualifications to their support.

Qualified Support

3.207 For Local Authorities, who would be the agents of such a new policy, the main concerns were over the limitations of the policy rather than the principle of council housing development. Authorities that had already embarked on new building programmes using prudential borrowing without central government subsidy - e.g. East and West Lothian - were enthusiastic in their support for the policy.

3.208 Other authorities - particularly those whose debt position would not enable them to make use of prudential borrowing powers - were concerned that the policy would direct resources to areas where borrowing capacity existed and not to where housing need was greatest. These authorities were concerned that demonstrated "need" should be the prime criterion, with mechanisms (e.g. debt write off) put in place to allow councils with "need" to develop new housing irrespective of their historic debt position. The view of a number of authorities was well expressed by East Renfrewshire Council:

" This will not be an option for all local authorities, some of which will have an acute housing need, and these areas should not be disadvantaged by the inability to engage in this route of provision, by vital subsidy being rerouted to areas that can".

3.209 City of Edinburgh Council argued that subsidy should not be focussed at all on authorities with prudential borrowing capacity:

"We believe strongly that it would be mistaken to target subsidy where prudential borrowing is an effective alternative. The focus of any new subsidy regime should be to support authorities who have a shortage of affordable homes and for whom prudential borrowing is not an option".

3.210 A few councils were concerned that any subsidy made available to local authorities should not be at the expense of support to housing associations though the view was also expressed by several councils that a "level playing field" should be created in terms of subsidy to housing associations and local authorities.

3.211 The views of housing associations fell into a graduated "spectrum", from fairly warm support to outright opposition to the proposal - 17% of association respondents being opposed.

3.212 For most housing associations, their place on the "spectrum" of support was related to the strength of their concern that any new subsidy to the local authority sector should not result in a diversion of funds from housing association development or any form of competition between councils and associations for a "pot" of funding. Even the associations which expressed clear support for the proposal generally added that they did so on the basis that this policy would increase social housing provision. Many others made it clear that their support was conditional on the assumption that the policy would increase public expenditure on social housing.

3.213 Several associations also stated that they were not opposed to the policy but considered that it would have very limited effect as few councils would be in a position to make much use of the powers.

3.214 The comments of the Scottish Federation of Housing Associations effectively summed up the majority view of housing associations:

" Subsidy should be targeted where housing supply need is greatest and a prudential borrowing regime may not be of use to local authorities where there is a burden of high debt and high rent levels. We would stress that any subsidy to local authorities must not be at the expense of the Housing Association Grant programme."

Opposition

3.215 A major expansion of the development role of local authorities would meet some opposition. Among the minority of housing associations opposed to the proposal as set out in Firm Foundations, there was concern that the introduction of new "players" would lead to competition for scarce sites and even specialist staff. Some housing associations took the view that expansion of the development role of local authorities did not sit easily with other aspects of the government's housing policy focused on rationalisation of the number of development focused providers.

Other Comments

3.216 A common theme in comments from respondents of all types - including local authorities, housing associations, private individuals and organisations and representative and political organisations - was a concern that allocation of resources in line with prudential borrowing capacity should not override considerations of housing need.

Question 18 Do you agree that we should introduce large scale competitions for subsidy?

3.217 There were 228 responses to this question (57% of total respondents); 86 (38%) of the responses agreed with the proposition that the Government should introduce large-scale competition for subsidy, while 131 (57%) disagreed, and 11 (5%) were 'undecided'. Support was generally conditional - almost two out of three who supported large scale competitions qualified their support. In terms of stakeholder groups, it was clear that the majority of housing associations, 74%, disagreed with the proposal. About one third of local government respondents also disagreed, with 58% agreeing. Many of the other stakeholder groups tended to err on the side of disagreeing with the proposal (50% or above disagreeing). Private sector respondents showed a greater level of support - 61% agreeing.

3.218 The consultation document sets out in outline a proposed new approach to the procurement of housing association housing, whereby all subsidy would be channelled to one developer who would take the lead in providing RSL housing over a housing market or other large area. The developer would be selected on the basis of the resources - including land - it brought into the programme, and on the efficiency and effectiveness with which it proposed to use them. It was suggested that, initially, these developers would be housing associations, but that in the longer term the possibility of private sector house builders or developers participating in the programme would be considered. Further, more detailed consultation on these proposals is to be undertaken.

Main Themes

3.219 The themes which emerged most strongly were all arguments against the proposal. Most frequently mentioned was the possible negative impact on the physical and design quality of housing association schemes. Respondents, particularly housing associations, referred to " design mediocrity" risks, the erosion of quality in England as a result of competition, and the need for housing which was "built to last" or had lower cost in use. Architecture and Design Scotland stressed the long term benefits of investing in quality of place. More generally, there was adverse comment on how competition had impacted on the housing associations sector in England, with much higher rents and lower space and design quality.

3.220 Many respondents questioned whether the proposal would reduce costs, arguing that high land costs, construction industry capacity/inflation and higher building regulations/standards were the main factors behind high and rising costs in Scotland.

3.221 A number of housing association respondents made the point that lower rents in Scotland were one of the main causes of higher HAG rates. Some of this group pointed out the drawbacks of higher rents, while others argued for a review of rent levels. For example, CML noted that there was not a consistent rent policy in Scotland, and felt that that could be re-examined, particularly with respect to new build housing. Another respondent endorsed competition, but subject to the introduction of rent capping.

3.222 Several respondents argued that there was no evidence that economies of scale were important in reducing costs. They made reference to what they considered the very limited achievements of consortia such as Devanha. For example, the Glasgow West of Scotland Development Forum said that:

"Development Practitioners with direct experience confirmed that current or recent initiatives like the Glasgow Joint Procurement Initiative, Larach or Devanha were unable to achieve significant efficiencies….the scope for such initiatives is limited in the Scottish context."

3.223 It was also argued that earlier HAG competitions had not resulted in any savings, or only at the expense of quality.

3.224 Several respondents argued against the underlying assumption that RSLs had free reserves which could be used to reduce build costs, emphasising their need for adequate reserves and the demands on reserves of the Scottish Housing Quality Standard ( SHQS). The issue of charity law - the lawfulness of the reserves of an RSL with charitable status (some 70% of the total in Scotland ⁹) being used to benefit another - was raised by a number of respondents.

3.225 The Council for Mortgage Lenders questioned whether more than one bid could be guaranteed in some parts of Scotland.

Support for the proposal

3.226 Unqualified support for large scale competitions was strongest among private sector organisations/developers and individuals but relatively small numbers from these groups responded to this question. Overall, around two thirds of private sector organisations supported the proposal.

3.227 There was some support from housing associations - around a quarter supported it conditionally or unconditionally, but the strongest opposition came from this sector. The position of local authorities was more positive - just over half of local authorities supported the proposal, the majority of them with some concerns or conditions.

Other themes

3.228 Other significant issues raised by respondents - particularly in the housing association sector - included:

• The implications for community based housing associations, which may tailor the product to their intimate knowledge of their community, and engage the community more fully in design issues (Southside Housing Association and other RSLs).
• The concern that appointing a supplier in a monopoly position would create difficulties, particularly if there was any slippage. (Dunedin Canmore, Edinburgh City Council and others) It was argued that cities would need two or three, or even four or five contractors.
• The unsuitability of competitions for the procurement of specialised housing for disabled people.
• The economic impact on rural communities of the loss of local procurement (Fyne Homes Ltd).
• The unsuitability of the proposal for large-scale, area-based regeneration programmes, unless focused on these areas. The proposal was considered to disregard the important role of housing in regeneration - it is not just a housing supply problem. (Maryhill Housing Association and others)
• A small number of respondents said that private developers should not be considered for the lead developer role. A small number expressed the concern that competition would result in the dominance of large, English-based associations.

Question 19: If not, how would you ensure that public subsidy is used to build as many good quality RSL houses as possible?

3.229 There were 167 responses to this question (43% of all respondents). Non-response was relatively high at 57%.

Main themes

3.230 A number of alternative approaches to delivering new social housing were suggested. Most commonly, RSL respondents suggested joint procurement partnerships, while the use of cross subsidy in mixed tenure developments was also suggested by a range of respondents.

General response

3.231 The alternative suggested by the largest number of respondents was that local partnerships for joint procurement would be more appropriate - an alternative (see above) that another set of respondents had judged to be relatively unsuccessful to date in securing cost efficiencies.

3.232 Linked to this was the issue of economies of scale - one social housing organisation suggested that the procurement model it was working on, with large schemes in excess of 1,000 houses to be developed over four years with partners, could secure savings of between 10% and 15%.

3.233 A much smaller number of respondents proposed ways in which cross subsidy within mixed tenure schemes might work, with either housebuilders or housing associations building mixed-tenure schemes and cross-subsidising the affordable housing across the development as a whole; for example, large scale mixed tenure projects funded on a gap funding basis, similar to the funding of Urban Regeneration Companies ( URCs).

3.234 A small number of respondents proposed wider debate or review on appropriate levels for social rents - commenting on the absence of a consistent rent policy across Scotland (Council for Mortgage Lenders). The Glasgow and West of Scotland Forum of Housing Associations drew attention to the absence of comment in Firm Foundations on the impact of rents and affordability on costs.

3.235 Other alternatives proposed by a number of respondents included:

• Benchmarks/performance indicators/ HAG targets.
• Focussing on tried and tested house types.
• Removing annuality and end year pressures, to allow three/four year programmes.
• Addressing land supply issues by securing the release of local authority or other public sector land at low cost - even though some recognised the problems inherent in that.
• Using affordable housing policies through the planning system to secure land. Many of the responses to Question 9, are also relevant to this question.
• Making greater use of low cost home ownership, thus reducing HAG
• Focusing on the construction sector, not housing associations, in improving training.
• Using modern methods of construction
• Using equity and debt funding for larger projects and for intermediate tenure (Places for People)
• Possibility of using Scottish Futures Trust as a new financing vehicle, particularly for infrastructure (as suggested by the CIH, which stated that it was an example of a new financing vehicle which could potentially help to alleviate some of the pressures on housing finance).

3.236 The most detailed responses were from the CIH and from Places for People, both of which discussed options such as PFI/ PPP, funding mid rent and shared equity through cross subsidy from housing for sale development and using the equity in the existing stock and reserves to raise additional funding.

3.237 Places for People suggested that accessing equity funding for intermediate tenure would more appropriately align the funding model to the longer term nature of these projects, thus reducing the initial debt burden. It argued that this could offer the Government an effective vehicle to capture some of the capital growth. The alternatives proposed by the SFHA were procurement consortia and three to five year rolling programmes.

Question 20: Do you agree that we should subsidise the development of houses for mid-market rent?

3.238 There were 211 responses to this question (54% of total respondents); 130 (62%) of the responses agreed with the proposition to subsidise development for mid-market rent, while 61 (29%) disagreed, and 20 (9%) were 'undecided'. However, out of those who agreed, around a third qualified their agreement. These qualifications are discussed below along with the other main key themes.

3.239 Views did appear to differ among stakeholder groups, with varying levels of support. For example, while 82% of housing associations supported the proposition, local government registered a lower degree of support at 58%. Support was also high among the private sector and voluntary/charity respondents. However, over a quarter of local government respondents disagreed with the proposal and 16% were undecided. The largest proportion of disagreement came from tenant and community organisations, with 62% not in favour.

Main themes

3.240 There was a fairly high level of support for subsidy for mid-market rent developments. Respondents argued that mid-market rent could play an important role in delivering mixed communities and broadening choice for households. However, there were some concerns regarding the source of subsidy - it was felt that development of mid-market rent should not replace development of affordable rented housing; consequently funding should be in addition to subsidy for social rented housing.

3.241 Some respondents were keen to explore the role of mid-market rent more fully - to determine its target market, the amount of housing required and the implications of developing mid-market rent on existing sectors.

Support for mid-market rent subsidies

3.242 Across the respondent groups, support for mid-market rent subsidies varied significantly, from around a quarter of tenant and community groups to around two-fifths of housing associations and private sector respondents. A significant proportion of those who supported the proposition recognised the role that mid-market rents could potentially play in widening tenure choice and how these properties might be a vehicle for the delivery of mixed communities. Many respondents recognised the gap in the market that mid market rents could fill, as one housing association suggested:

"Mid market rent provides choice in the rental market for households on low income who are not in priority for social rented housing and cannot afford market rents." [Castle Rock Edinvar Housing Association]

3.243 A small number of housing associations commented on how their organisations were utilising mid-market rents successfully and had developed these properties without any top-up subsidy.

3.244 Some respondents acknowledged mid-market rents as a potentially useful tool for promoting labour mobility with the potential to enhance economic growth of an area.

Evidencing the potential demand for mid-market rents and linkages with the private rented sector

3.245 Further research exploring the demand for this sub-sector was proposed by many respondents. Moreover, several respondents suggested that the definition and boundaries of mid-market rents needed to be made clear, as the term intuitively suggested a rent which was set at a median market rent, as opposed to the term mid-rent, a rent higher than a social rent and lower than a market rent. The local housing strategy and the strategic housing investment plan were identified as the documents in which robust evidence of the demand for mid-market rents should be documented.

3.246 Two organisations mentioned having experienced problems with mid-market rent development: further research and guidance might help minimise difficulties in the future, with housing associations learning from the experience of others.

3.247 Several respondents sought further guidance regarding the proposed target market of this tenure. There were questions relating to the length of these tenancies; many respondents were uncertain if there was an expectation that these properties would be developed as short-term lets to incoming workers or short stay workers, or as potentially longer-term options where house prices were higher.

3.248 A number of respondents raised the issue of the unexplored relationship between the lower end of the private rented sector and mid-market rents and suggested this should be examined. These respondents speculated whether these sub-sectors were mutually exclusive, and if the lower end of the private rented sector was a de facto mid-market rent.

Source of the subsidy and social housing

3.249 The pivotal issue for many respondents was the source of the subsidy. Many expressed concern that this subsidy would reduce the level of subsidies to social housing. This concern largely derived from a perceived lack of clarity in the consultation documents regarding the subsidy source, that is, whether it would be funded from new money or resources transferred from mainstream social housing developments.

3.250 Many respondent stakeholder groups, with the exception of the private sector, commented that these subsidies should not curtail the provision of social housing; thus, these subsidies should be allocated from new funding and not simply transferred from the funding allocated to provide social housing

3.251 Although not explicitly concerned with the subsidy, many respondents raised issues relating to the proposed role of mid-market rent. For example, they asked whether mid-market rent was to be developed in preference to social housing; and what length of tenancy agreement would be available to tenants. Respondents also asked whether the tenure would be flexible - for example, if a tenant became unemployed, would their tenancy change or would they need to top up their housing benefit?

3.252 One theme which recurred across the groups and was particularly prominent within the tenants and community groups was the tension between delivering mixed communities while discriminating on price (that is, different groups of tenants paying different prices for a very similar product). The Tenant Participation Advisory Service Scotland commented:

"[It] would create a two tier system which would stigmatise social housing more than at present. Also, it is not clear what 'extra' if anything people would get for their higher rent." [Tenant Participation Advisory Service Scotland]

Question 21: If so, should the subsidy be awarded as part of the competitive regime for awarding HAG that we are proposing?

3.253 There were 135 responses to this question (35% of total respondents); 54 (40%) of the responses agreed that subsidy for mid-market rent should be awarded as part of the competitive regime for awarding HAG, while 66 (49%) disagreed and 15 (11%) were 'undecided'. The greatest degree of support for the proposal came from local government and the private sector, 64% and 64% respectively. Conversely, the majority of housing association respondents, 63%, did not agree with the proposal - a view generally shared by tenant and community organisations and professional/representative bodies.

Main themes

3.254 The majority of respondents disagreed with the suggestion that funding for mid-market rent should be part of the HAG regime. It was felt that organisations had insufficient evidence currently to make a competitive case for mid-market rent funding - both in general terms and because the market would change too quickly to have confidence in demand information. It was also suggested that large-scale competition would have an adverse impact on the delivery of appropriate housing - rural areas might be disadvantaged, while cost considerations might impact on the quality of the housing.

3.255 A significant minority of respondents supported the suggestion, arguing that an integrated approach to subsidy allocation would provide a better fit with assessment of housing need.

3.256 It should be noted that many respondents did not provide any detail as to why they agreed or disagreed. Those that did, however, made a wide range of comments; the key themes are discussed below.

Concern over insufficient knowledge of demand for mid-market rents

3.257 Respondents expressed concerns over the demand for mid-market renting. It was suggested that detailed market analysis should be conducted prior to development of mid-market rented housing in an area. Many responded that the demand will vary across the country and thus, guidance should not be prescriptive as has been the case previously:

"[…] when every HAG-funded development had a requirement for so many shared ownership units irrespective of market demand. In my experience sales either failed to materialise and properties were brought back into mainstream renting." [Hillhead Housing Association 2000]

3.258 There were also concerns expressed in relation to risk and uncertainty due to the nature of the product and the dynamics of the market. Thus, even if the market indicated potential demand, there might be a significant length of time between the market analysis and the response through housing development and completion of homes. One housing association offered a possible flexible solution to this:

"[P]art of the existing Homestake programme could be used; with the fall-back position being that poor take up could lead to reversion to Homestake." [Cairn Housing Association]

3.259 However, a few housing associations noted that they had already introduced mid-market rents successfully without the aid of any subsidy.

Support for allocating funding as proposed

3.260 Underpinning the support for this proposal was the desire for a move towards a holistic subsidy framework for the delivery of mixed tenure developments based on flexibility of delivery. Many noted that an integrated approach would need to ensure that the proposed developments were aligned with the local authority's assessment of housing need. Furthermore, if adopted, this approach should be assessed, similar to the process for Homestake:

"[It] should be seen as an integral part of any mixed tenure development (as Homestake currently is) and be awarded accordingly." [Aberdeenshire Housing Partnership]

3.261 Another reason for supporting this proposition was given by Grampian Housing Association; it suggested that embedding this subsidy within competitive process would "allow an averaging out of subsidy across a more mixed programme".

Support for mid-market rent separate competitive process

3.262 A smaller number of respondents supported competitive bidding. The view was that mid-market rents had not been tested in some geographical areas and they would need to be piloted to ensure effectiveness. There was a view that tensions between funding social rented properties and mid market homes for rent needed to be tested.

3.263 Other respondents were in favour of a separate ring-fenced funding stream for mid-market rents, which could be allocated concurrently with HAG. The argument behind this approach was that funding for social housing should not be affected by the delivery of mid-market rent housing.

Against competitive bidding

3.264 Several themes emerged from respondents who were against the proposed approach. One was a concern that by promoting large scale competitions, small rural developers that could potentially deliver mid-market rent housing might be deterred from submitting a proposal; thus, choices could be constrained further in rural areas.

3.265 Other respondents questioned whether the proposed process was mainly focused on cost minimisation and, if so, one undesirable impact could be a reduction in quality. The following quotation from the Alliance of Fife Housing Associations (Fife, Glen, Kingdom and Ore Valley Housing Associations) illustrates this concern:

If Scottish Government sets Quality Performance Standards (now Building standards 2009, EcoHomes excellent/higher SAPratings) the only cheap way of delivering the product is via modern methods of construction with prefabrication drastically reducing construction times - this will reduce finance costs and lead to cost reduction. If it's competition we'll get the same developers/no innovation/spec cut to the very minimum needed to get by and surely none of us want that! [Alliance of Fife Housing Associations]

3.266 Overall, respondents who were not in favour of the proposition claimed that competition in this regard was wasteful and might reduce quality.

3.267 In addition, a primary concern among the majority of respondents was to ensure that this subsidy should not impact negatively on the subsidy for social housing. This was linked by some to the need for local authorities to fulfil the 2012 homelessness commitment and the new social rented supply required for this.

Question 22: If not, how would you increase variety in social housing?

3.268 There were 155 responses to this question (40% of all respondents). 60% of respondents did not provide feedback on this question.

Main themes

3.269 A wide range of approaches to increasing variety in social housing was suggested. These fall under three broad headings: recognition of the variety that is available from the products currently being used; using allocations policies more creatively and flexibly; and increased investment and improved delivery.

Current variety in social housing

3.270 Some respondents suggested that there already were a variety of products available, including Homestake, shared ownership and shared equity, as well as the core social rented stock and questioned whether further diversification was needed. There was a view that increasing variety was not the main issue facing the sector - overall available supply was the key priority for many respondents.

Investment and delivery

3.271 Increased investment and improved delivery was advocated by many respondents. Some noted that more funding would increase the volume as well as the variety. One housing association suggested that the level of HAG should be increased if the properties meet sustainable housing objectives. Another housing association pointed to the HAG targets being based on a three-person equivalent and this would be a constraint on injecting variety into the current market. The Alliance of Fife Housing Associations suggested:

"If grants could be awarded to organisations other than registered RSLs along the lines of the GROgrant scheme for market rents, then this would have the effect of increasing the range of providers and promote variety." [Alliance of Fife Housing Associations]

3.272 The greater use of planning agreements was advocated as a method for increasing variety, using these to 'pepper-pot' social housing, and leading to a better mix of tenures and choice in neighbourhoods. A further suggestion to increase variety within new developments was the use of a larger pool of architects - although this may have been based on more design and aesthetic variation rather than social housing product. Linked to this point, a few respondents expressed concern that bulk procurement might lead to a "homogenised housing product" and thus, diminish variety.

Allocations policy

3.273 There was a general view among respondents that more creative use of allocation policies to promote mixed and sustainable communities was a desirable policy objective. More flexibility around the development and implementation of allocation policies was a recurring strand, particularly among housing associations and tenants and community groups. While this would not increase the variety of stock in the short-run it was argued that by widening the tenant base the demand for diverse properties would increase:

"Need will always be the basis for deciding access to most social housing, but bolder thinking is needed, to address more directly the underlying tensions identified in the Government's recent research on allocations… For example: by allowing social landlords to allocate a proportion of their annual re-lets on the basis of factors other than need alone, where this would contribute to wider community sustainability objectives." [Glasgow and West of Scotland Forum of Housing Associations]

3.274 At the same time as expressing a desire for increased flexibility, many recognised that within the current housing market context (high need levels in many areas) it was difficult to rationalise allocating social housing to households who had no or lesser housing need. This question of equity was repeated several times, especially with regards to meeting the 2012 homelessness target. One housing association suggested:

"[A] new and much tighter definition of homeless is required, to ensure that all those in housing need (overcrowded, disabled, elderly etc.) who choose not to apply as homeless have a fair chance of re-housing." [Loreburn Housing Association]

3.275 One proposal, suggested by a number of respondents, which may ease this tension and increase variety, was to consult a wide base of opinions. One tenants and residents group commented:

"[T]he Scottish Government must engage in the debate relating to tensions in legislation regarding protecting the needs of homeless households against enabling a housing system that is flexible, provides opportunity for movement and enables sustainable communities."[East Lothian Tenants and Residents Panel]

3.276 Flexibility, with respect to tenure was also raised. A flexi-tenure was suggested, allowing households to stay in the same property should their financial circumstances change, which could increase the variety of households and tenants.

Question 23: Do you agree that we should encourage landlords to look at means of adjusting the mix of their stock in the interests of achieving more sustainable mixed communities?

3.277 There were 191 responses to this question (49% of total respondents); 162 (85%) of the responses agreed that landlords should be encouraged to meet this objective, while 21 (11%) disagreed and 8 (4%) were 'undecided'. However, a significant proportion of those that agreed (nearly two-fifths) qualified their response.

3.278 There was a very strong degree of support for this proposal, with 93% of housing association and local government respondents agreeing. There was also strong support from other stakeholder groups such as the private sector (82%), professional/representative bodies (87%) and tenant and community organisations (71%). The majority of individual responses also agreed with the policy direction proposed.

Main themes

Support for empowering social landlords to diversify their stock

3.279 Many of the respondents recognised the merit of sustainable diverse communities. This is summed up by ALACHO:

" … [T]his is fundamental to a vision of good housing provision, and [we] welcome further thinking on how it might be achieved." [ ALACHO]

3.280 Several housing associations and local authorities commented that they already worked towards achieving mixed communities and that there were many good examples of this across the country. Respondents also highlighted the need to consider this in a rural context as well as the more obvious urban settings:

"In many rural communities owner occupation is the mono-tenure and high prices mean those on low incomes are increasingly unable to make their homes in rural Scotland. The leakage of RTBcouncil housing out of the low cost home ownership market has compounded this problem." [Rural Housing Service]

3.281 However, practitioners were keen to ensure that policies implementing mixed communities were not prescriptive. As one housing association commented

"A blanket policy to change [some] social rented housing to owner-occupied properties does not ensure a mixed community. There are many examples of low cost home ownership developments now having a high number of properties available for private let."[Muirhouse Housing Association Ltd]

The means for adjusting stock: open market sales

3.282 Some respondents were positive about open market sales as an approach to reconfiguring the social housing stock; although they acknowledged that this should be exercised with caution. Issues were raised, however, over whether local authorities should have to agree to such measures, or whether housing associations would have the autonomy to decide. The overall view was that this should be set within a strategic context and based on an understanding of the local housing market.

3.283 Respondents commented on the capital receipts from these sales - all of these comments supported recycling the receipts back into social housing. However, there were queries as to how the revenue should be recycled tax efficiently, whether it should be used to fund new developments or conversions only, or whether it could be used to help achieve SHQS. The Joseph Rowntree Foundation commented on an example that is employed by the Joseph Rowntree Trust:

"This is the … scheme of selling alternate vacants on estates ( SAVE). Under this scheme the JRHTsells every other property that becomes vacant and uses the funds to purchase housing in owner occupation areas or increase the social mix on planned new build estates."[Joseph Rowntree Foundation]

3.284 Some housing associations raised the issue of charitable status and requiring clarification over their eligibility to deliver mid-market rental and open-market products.

Concerns with the proposed methods of adjusting stock

3.285 Although the feedback provides evidence of strong support, many respondents raised issues with the proposed methods of achieving this goal. A few expressed their opposition to the open market sales of social housing. Alternatives suggested include:

• Rather than selling stock, especially low demand units, shared ownership could be offered to households on the waiting list.
• Instead of introducing mid-market rents and disposing of social housing properties, the aim should be to widen the social housing tenant base. This would require increasing the stock in this sector, and encouraging a wider range of households to move into the sector

Mixed communities

3.286 The above mentioned Joseph Rowntree scheme illustrates how proceeds from open market sales can be used to implement the pepper-potting model. Many other respondents raised the concept of pepper-potting as a good model to emulate.

3.287 A number of organisations commented that an often overlooked tool for mixing tenure is right to buy. These respondents suggested it has had a positive contribution in sustaining mixed communities.

3.288 A few respondents mentioned that increasing tenure choice would improve the options for people with disabilities:

"It is important for them [ DPHS(Fife) customers] to remain in their area of choice as their support exists there - however, currently it is not always possible as the required house-type may not exist. Therefore a mixed community of house-types and stock may be helpful as it may lead to more choices and may lead to people deciding to aspire to move on but within their own area rather than move out of an area. This may be of particular assistance to those who have built support around their needs."[Disabled Persons Housing Service (Fife)]

Concerns with the proposal

3.289 Other concerns voiced were around the motivation for achieving sustainable mixed communities and whether they were achievable and/or replicable. Three local authorities welcomed the opportunity to re-structure the stock:

"We feel mixed tenure developments are more beneficial to the creation of real communities." [Comhairle nan Eilean Siar]

3.290 A few respondents commented that mixed communities offered the opportunity to "dilute" the problems among a small minority of social tenants through better management. Others noted their disappointment with the tone of the proposition and the references to the single tenure housing estates - noting that the majority of mono-tenure estates were actually owner-occupied. One respondent considered that social rented estates could also be sustainable:

"[O]wing to the right to buy and development of small sites by housing associations there are relatively few communities where some degree of mixing does not exist, but equally some of Britain's most sustainable and stable communities are single tenure." [Dundee City Council]

Question 24: Do you think that subsidies for development should be provided to bodies other than registered social landlords?

3.291 There were 220 responses to this question (57% of total respondents); 114 (52%) of the responses agreed that subsidies for development should be provided to bodies other than registered social landlords, while 81 (37%) disagreed and 25 (11%) were 'undecided'.

3.292 The greatest degree of support came from private sector respondents, with 91% agreeing with the proposition. Other groups of respondents largely in favour included voluntary/charity (67%), professional/representative (61%) and local government (59%). Support was less prevalent among tenant and community organisations (63% disagreeing), housing associations (48%) and individuals (38%). In addition a number of respondents were undecided, with 25% of local government responses taking this position.

Main themes

3.293 Views on the proposition that subsidy for development should be available to non-registered bodies were mixed. Typically, respondents supported allocating subsidy to not-for-profit organisations, while support for subsidies to the private sector was more limited (although stronger among private developers). It was suggested that where private developers did receive subsidy, it might be appropriate for the stock to be transferred to the social rented sector, or for housing associations to provide housing management. There was a clear view among respondents (with the exception of private developers) that organisations receiving subsidy should be subject to some form of regulation.

Support for subsidies to other not-for-profit bodies very widespread

3.294 Where there was support for the extension of subsidies, this tended to be for extension to other not-for-profit bodies such as local authorities, development trusts and community land trusts, as these were considered to be well-suited to the role of providing affordable housing. There were some notable exceptions - one large local authority did not support any extension of subsidies, even in a rural setting, other than to a community land trust.

Support conditional on regulation

3.295 Almost all who responded favourably to the concept of subsidies being extended to bodies other than housing associations did so conditionally - the condition being that regulation would have to be extended to those bodies. For example, Glasgow Homelessness Network argued that:

"If the other subsidised bodies were being used to house vulnerable households or households with legal homelessness rights then we would question how this would be monitored and whether the same processes would be in place in terms of referral and nominations between different landlords."

Support for subsidies to private sector

3.296 While not all developers and housebuilders responded to this question, those that did favoured subsidy being extended to their sector. There was some support for subsidies being extended to rural landowners for the provision of affordable housing both for sale and for rent. Specific reference was made by a number of respondents to a successful scheme at Kincardine O'Neill in the late 1990s, which achieved low unit costs.

Cost advantages - the pros and cons

3.297 One individual suggested that there was a strong case for private sector organisations being subsidised to carry out development but not management, because they were more cost effective as developers, rather than as managers. One large housing association pointed out that the interest from developers was confined to development, not management.

3.298 Some disputed whether the private sector could provide units at a lower cost. The CIH, while supporting the extension of HAG to private developers, stressed that it should not be assumed that private sector developers would be able to produce housing more cheaply than RSLs. They advocated further work on this before moving in this direction. One academic response suggested that the evidence from England was mixed.

3.299 The Highland Housing Alliance stated that the automatic assumption that the private sector could do things more cheaply and effectively than the public sector often proved to be difficult to evaluate or justify.

Question 25: What sorts of protection should be offered to tenants in these circumstances?

3.300 There were 163 responses to this question (42% of all respondents), mostly very brief comments.

Main themes

3.301 There was a strong view - except among developers - that housing built using subsidy should be treated as social rented housing, or with terms and conditions very similar to those of social rented housing. This would give the tenants (broadly) the same rights and protection as tenants in the social rented sector in terms of security of tenure, housing conditions and landlord services.

3.302 Not all respondents agreed that this level of regulation and tenancy rights was required. For example, the Scottish Rural Property and Business Association ( SRPBA) advocated longer short assured tenancies and limiting funding to accredited landlords, but suggested that landlords' commercial interests would generally lead to the delivery of a good service:

The majority of landlords are responsible. Tenant satisfaction is of great significance when the profitability and reputation of a business are concerned. Content customers/tenants leading to longer tenancies and a good reputation leads to people actively seeking out landlords who operate to a high standard. ( SRPBA)

Security of tenure

3.303 Respondents felt that it was important that tenants living in publicly subsidised housing should have security of tenure. The six month short assured tenancy ( SAT), typically used by private sector landlords, was generally not considered acceptable.

3.304 A significant proportion of local government, tenant/community group, and housing association respondents argued that tenants should have a Scottish Secure Tenancy ( SST) without the right to buy, or an assured tenancy ( AT).

3.305 However, not all organisations considered an SST necessary.

• Some indicated that some form of long lease would be appropriate. For example, one housing association said:

" The current security of tenure provisions do not necessarily have to be the sole template used. If a variety of different letting models were developed it should be possible to develop an appropriate lease which provides reasonable, but variable safeguards". (Trust Housing Association).

• Some suggested that a model tenancy agreement, which safeguarded tenants' rights, should be developed and stipulated as the basis for grant funding. This approach was felt to offer a greater degree of flexibility than the tenancy agreements that are currently in place.
• Two rural local authorities stressed the need to provide flexible tenure arrangements, which would respond to different tenants' needs. It was also felt that such arrangements would be more attractive to developers and thus ensure their interest in the initiative.
• None of the developers indicated that an SST or equivalent would be required.

Standards

3.306 It was argued that subsidised housing should be developed to an acceptable standard - possibly to that required of housing associations - and that the stock should be maintained at an acceptable level: the Scottish Housing Quality Standard was suggested as an appropriate minimum.

3.307 Ensuring good quality management was also considered important. Typically, organisations suggested some form of regulation to ensure that landlord services were adequate, with some suggesting that private developers accessing subsidy should be subject to the same regulatory framework as registered social landlords. For example, one housing association stated:

"Private landlords should be regulated and require to be registered" (Dunbritton Housing Association)

3.308 Others proposed making use of the recent PRS initiatives; they suggested that registration and accreditation would provide a good framework for ensuring good standards of housing management.

Affordability

3.309 Controls were considered necessary to manage rent levels and rental growth. It was suggested that constraints on rent levels and growth could be attached to grant conditions.

Management

3.310 Some respondents considered that private developers would not wish to manage the stock they had built, preferring either to transfer it to housing associations or delegate the management of the properties to housing associations. This was considered a desirable outcome, as practice within the sector, underpinned by a regime of regulation and inspection, would ensure that tenancies would be secure, properties would be maintained to a good standard, and a high quality of housing management would be delivered.

Question 26: Do you think that the Scottish Government should vary Right to Buy discounts by (a) locality and/ or (b) type of property?

3.311 There were 193 responses to this question (50% of total respondents); 94 (49%) of the responses agreed with the proposals to vary RTB, while 69 (36%) disagreed and 30 (15%) were 'undecided'. Very few respondents provided detailed responses addressing the principles of the proposal.

3.312 60% of the local authority responses fully supported the proposal, as did around the same proportion of housing associations (58%). One in six local authorities and about one quarter of other social housing bodies were opposed to the measure. Opposition was strongest from individuals and tenant/community groups, with more than half of these respondents opposed. Opinion among professional bodies was fairly evenly divided.

Main themes

3.313 A striking feature of the responses was that support for and opposition to the measure often reflected the same underlying view. That is, some respondents supported the measure as a step towards restricting further right to buy while others rejected the measure on the grounds that right to buy should be further restricted or abolished.

3.314 Relatively few respondents addressed themselves to the specific merits of the proposed measure. Among those who did, there were two main views. One group argued that the measure would introduce welcome flexibility and enable RTB to be more closely aligned to local housing strategies and housing need, while others argued that the measure would introduce unnecessary and unhelpful complications to the process.

Greater local flexibility

3.315 There was a view among local authorities that a flexible, locally controlled system of RTB would be preferable to/easier to operate than the process of obtaining pressured area status. It was clear that some local authorities envisaged (and thus implicitly supported) a scheme whereby the decision over RTB "rules" would rest with them rather than with central government. Some local authorities saw the proposed scheme as opening the way to ending sales of specific house types and not just variations in discounts. Thus one council stated:

"…Council would like to look at the shortage that exists in 2 or more bedroom properties and apply RTBexemptions where necessary".(West Dunbartonshire Council)

3.316 The minority of local authorities that opposed the proposal did so on the grounds that it would introduce complexity or possible inequity to RTB or that a more fundamental review of RTB would be preferable. One council made the observation that variation in RTB terms by property type could affect the willingness of tenants to accept tenancies in properties which were RTB "exempt".

3.317 The views of housing associations tended to mirror those of local authorities but with even stronger support for the ending of the RTB. Among housing associations, most opposition to the proposal was essentially on the basis that it did not go far enough.

3.318 Very few of the responses from individuals offered reasons for their topline response. Tenant and community groups expressed the strongest opposition to the proposal, with a clear majority against. In most cases where an explanation was given, opposition was associated with the view that more radical restrictions on RTB were needed. However, in a minority of cases, the view was expressed that variation in the terms of RTB would be unfair or unworkable.

3.319 The most extensive and densely argued comments on the proposals came from Shelter, with fairly extensive comments (split between questions 16 and 26) also made by Professors Glen Bramley and Hal Pawson. Both of these contributions - in contrast to the bulk of the comments of local authorities and housing associations - recognised that RTB had created benefits and served policy objectives and so supported its continuation in some form. Shelter stated that:

"in one area, RTBsales may be quite benign, genuinely introducing greater diversity; in other areas, their impact may be to seriously undermine attempts to ease pressure in local housing markets"

3.320 Shelter argued for the introduction of locally determined RTB policies, on the condition that local authorities improved the analysis of their local housing markets. Similar views were expressed by the Scottish Council for Single Homeless.

Question 27: Do you agree that ALMOs can provide a satisfactory alternative to stock transfer?

3.321 There were 163 responses to this question (42% of total respondents); 65 (40%) of the responses agreed that ALMOs provide a satisfactory alternative to stock transfer, while 64 (39%) disagreed and 34 (21%) were 'undecided'. Among housing associations and local government, the level of agreement was relatively low, 49% and 38% respectively. However there was a significant degree of 'undecided' responses - over a third in local government. Overall the greatest degree of disagreement came from equalities, tenant and community organisations and voluntary/charity organisations - around half of those responding from these groups disagreed.

Main themes

3.322 A key theme from respondents was that further work would be required to determine how the ALMO structure operating in England could be adapted to fit a Scottish context, given the differing housing finance regimes and the changing regulation and inspection framework in Scotland. This lack of information led to a polarisation of initial opinion.

3.323 Many local authorities responding to this question expressed a view that the ALMO model could really only represent a viable alternative option [to large scale voluntary stock transfer or in-house retention] if this represented a means of accessing additional finance support. Such support could involve a number of measures such as HM Treasury write-off of housing debt, financial support to meet a proportion of financing costs associated with new borrowings made by the ALMO and access to additional revenue support subsidy linked to achievement of value for money outcomes.

ALMO benefits?

3.324 CIH noted a review in 2006 by DCLG that highlighted a number of positive outcomes that ALMOs have achieved:

" ALMOs have been very successful in meeting the housing objectives of the Government and the expectations of local people, in particular in achieving the Decent Homes standard, improving services and increasing tenant involvement in decisions… ALMOs have also supported the creation of local jobs; helped develop local businesses and secured greater tenant involvement in the decision making about investment in their homes and the services delivered."

3.325 ALACHO and the Scottish Housing Best Value Network ( SHBVN) argued that the concept of ALMOs, as presented in Firm Foundations, was insufficiently clear on the benefits and solutions offered by ALMOs. Further, the absence of a link to regeneration issues was of concern. It was suggested that the Scottish Future Trusts concept, with associated service companies (possibly including ownership or high stake-holding by customers and community) similar to ALMOs or leisure trusts, may provide a model which would better serve the needs of some communities.

3.326 The views of housing associations were mixed, with some welcoming the concept of ALMOs, largely as the experience in England suggested that these could provide a satisfactory alternative to large scale voluntary transfers. Some argued that ALMOs could help improve services or release funding for housing improvements. It was also felt to be important that ALMOs should be 'arms length' with board members acting independent of local government and political parties. However, reservations were expressed about their application in Scotland if no debt write-off were available.

Debt write-off

3.327 Many respondents noted that the outcome of discussions on debt write-off between the Scottish Government and HM Treasury, as mentioned in Firm Foundations, would be pivotal to introducing an ALMO model in Scotland. If ALMOs were to offer a solution, it would be essential that the model developed could bring adequate leverage on the overall funding for any landlord to make the effort worthwhile. It was not evident how the transfer of stock into an ALMO would enable achievement of the SHQS if the primary barrier to achieving compliance was financial constraints and the local authority was already performing well. Respondents stressed that there was often not a direct link between poor performance and failure to achieve the SHQS.

3.328 ALACHO and SHBVN also highlighted that the ALMO model operating in England linked additional subsidy to improvements in performance.

Need for 'case by case' consideration

3.329 There was a common view expressed by local authorities whose proposals for stock transfer had been rejected by tenants that consideration of additional financial support, both to deliver the SHQS by 2015 and to secure the long term sustainability of the HRA, was urgently required.

3.330 The Chartered Institute of Housing supported looking at ALMOs as one mechanism to lever in additional funding to address housing quality issues where large scale voluntary stock transfer had been unsuccessful. This view was based on a need to ensure that tenants who had voted 'No' to transfer were not penalised by a lack of investment. It was suggested that successful adaptation of the ALMO model to the Scottish context would require measures be put in place to tackle historic housing debt and access to public and private finance.

Longer-term planning

3.331 Many local authorities also commented that the policy horizon needed to look beyond 2015 to support long term sustainability. The English ALMO model may not provide the long term stability in terms of funding and investment by having funding linked to bidding rounds and the outcome of a cycle of inspections. This could lead to a short term approach to planning and housing investment.

Housing association opposition

3.332 A number of housing associations were opposed to ALMOs, viewing the concept as a means of rewarding underperforming local authority landlords with financial assistance as well as redirecting funding away from strongly performing landlords.

Question 28 Do you think that additional help from Government to enable landlords to meet the SHQS should be linked to improvements in the landlord's performance?

Question 29: If so, what measures do you think would be beneficial? If not, why not?

3.333 There were 181 responses to this question (47% of total respondents); 90 (50%) of the responses were in favour of the proposal to link SHQS subsidy to landlord performance, while 51 (28%) disagreed, and 40 (22%) were 'undecided'.

3.334 The main stakeholders supportive of this proposition were tenant/community organisations (82%), individuals (58%) and the private sector (50%). Support from local government, housing associations and professional/representative bodies was less forthcoming with less than half of local authorities and less than one third of housing association responses agreeing. In addition, there was a significant degree of 'undecided' responses across stakeholder groups.

Main themes

3.335 Half of respondents agreed with the suggestion that additional help to meet the SHQS should be linked to performance. For example, one housing association said:

"Additional help should only be given if alternatives have been fully explored including mergers, transfer, etc. and if given should very definitely be linked to overall performance of the social landlord and not just achievement of the SHQS."(West of Scotland Housing Association)

3.336 It was felt that the measures would play an important role in assisting organisations that were currently struggling to achieve the SHQS, thus improving the overall quality of the social housing stock. By linking the funding to evidence of improvement, it was felt that the initiative would drive further performance improvement in the sector and, critically, ensure that resources were used effectively.

3.337 We would note that about one quarter of favourable responses included qualifications, generally by arguing that exceptions should be made where failure to meet the SHQS resulted from either structural reasons or historic costs reasons. An example of such a qualification follows from one housing association:

"We believe that this should be directly linked to performance in certain circumstances. Where a landlord is a poor performer in terms of unsatisfactory service delivery or poor governance then support should not be provided. Poor performance regarding the SHQS, however, should not be penalised if it is a consequence of structural complications, especially if the landlord is a debt-funded/ LSVTorganisation which becomes required to meet higher standards (and therefore increased costs) after contracts had been agreed at the time of transfer of the stock."(Link Group Ltd)

3.338 Almost all respondents wrestled with how best to achieve the SHQS without rewarding poorly performing organisations. Underpinning this was a desire to make best use of the available resources - prioritising areas in greatest need and, to a lesser extent, prioritising organisations that would spend the money most effectively - and ensure that tenants do not suffer if their landlord is performing poorly. This is summed up in the comments of one local authority:

"As an authority who has invested heavily in its stock for a considerable period of time we find this a difficult question to answer. We do not wish to see any tenant reside in poor quality properties; however we have managed to invest in our stock, retain a low debt position and still deliver low rents and good quality housing management, and to see those, who have not taken the decisions we have, be rewarded with additional subsidy creates a certain level of concern that poorer performance is rewarded and not those who are performing well." (Angus Council)

Link between performance and achievement of the SHQS

3.339 There was a strong view that a link between failure to achieve the SHQS and landlord performance has not been demonstrated. Two broad themes emerged here.

3.340 First, it was argued that many landlords were unable to achieve the SHQS because of historical funding arrangements. This was linked to the fact that the SHQS was introduced after the stock transfer policy and therefore that the original business planning mechanisms used for this by many housing associations had not factored in SHQS requirements. At a basic level, the argument was that work now required as part of the SHQS had not been considered in the business planning process including sale price, investment plans and rental guarantees.

3.341 Second, respondents argued that organisations in some parts of the country were particularly disadvantaged in attempting to meet the Standard. The main concern was the capacity of rural authorities to meet the environmental requirements in the Standard, especially in areas with no mains gas supply.

3.342 There was also discussion as to what constituted poor performance - with a number of landlords noting that their costs were higher because of their circumstances - for example, operating in low demand and/or regeneration areas.

Addressing poor performance through additional SHQS funding

3.343 There was a strong view, particularly among housing associations, that poor performance should not be addressed using SHQS penalties, but should be dealt with by the regulator. Two main points were raised. First, it was felt that the delivery of the SHQS should not be compromised - support should be given where it was most needed. And second, that poorly performing organisations should be treated the same, regardless of whether or not they were meeting the SHQS.

3.344 However, it was generally accepted that organisations receiving additional resources would be expected to use these funds effectively; and that provision of additional support should be contingent on the organisation demonstrating effective and efficient use of funding.

Differential support for housing associations and local authorities

3.345 A number of respondents - typically housing associations - noted the different funding support that was being proposed for housing association and council housing, as set out in the example below.

"While additional financial support may be a last resort, Communities Scotland has consistently refused to concede even the possibility of such support. It is unclear why financial support should now be potentially on offer to local authorities unable to meet the SHQS, but not to housing associations."(Wellhouse Housing Association)

Measures

3.346 Respondents were asked to suggest approaches to delivering additional help from Government to enable landlords to meet the SHQS. A range of measures to improve the quality of the stock were suggested.

3.347 Additional funding was the most frequently-made suggestion. Funding approaches included:

• Direct grant to support the delivery of SHQS. Typically, this was linked to a requirement for evidence of a clear plan to bring the stock up to the SHQS, with some respondents suggesting that funding should only be released where there was evidence that progress against targets was being achieved.
• Debt write-off to improve the general financial position of the organisation. This would release resources to be spent on improving the quality of stock (rather than servicing debt) and would increase borrowing capacity.
• Allowing other funds/receipts to be used to finance SHQS measures - for example, it was suggested that retention of RTB and land receipts would assist in meeting the SHQS.
• Mixed tenure blocks were considered a problem, as some of the works required a financial commitment from the owners within the block. Increased Private Sector Housing Grant ( PSHG), to enable owner-occupiers to better afford their contributions to work affecting common parts was suggested. One local authority added that a " better and more flexible" PSHG was required, where monies could be targeted at addressing issues such as environmental and security improvements for mixed tenure properties.

3.348 Some respondents suggested that any additional resources should be targeted. A number of specific measures were raised:

• To support environmental improvements. Typically, this was suggested where failure to meet the SHQS was seen to result from structural issues relating to the stock, rather than from a general failure to meet the SHQS. It was suggested that resources might be targeted at rural areas, for example, those areas with no main gas supplies.
• To ensure that the SHQS was delivered without compromising rent affordability. For example, TIGHRA suggested that assistance should be provided to local authorities that demonstrate improved performance while seeking to maintain affordable rents.
• To support organisations that had used all reasonable means to try and meet the Standard. Authorities that had attempted to transfer their stock were particularly highlighted here. For example, The City of Edinburgh Council commented:

" Assistance should be targeted on those authorities who have limited prudential borrowing capacity and where tenants have rejected stock transfer proposals rather than spread too thinly across authorities who already have the investment capacity."

• To assist stock transfer landlords, who had transferred before the development of the SHQS and who had therefore not made provision for delivering the SHQS in their business plans. The works required to meet the SHQS might not have been planned for or might have been programmed to take place after the 2015 deadline for meeting the Standard.

3.349 Many respondents considered that a strong business case would need to made for additional funding, demonstrating that other funding options had been exhausted, and setting out a viable implementation plan on how the SHQS would be met. It was stressed that close performance management and review of the use of any additional funds would need to be undertaken (against these business plans) to ensure that resources were being used effectively.

3.350 Some respondents suggested that funding should be allocated for innovative approaches to delivering the SHQS - for example, one landlord suggested funding to enable "buddying" of a well-performing landlord with one performing poorly.

Question 30: Do you agree that we need to find new ways of focussing on the quality of place/open space and greenspace within deprived neighbourhoods?

3.351 There were 207 responses to this question (54% of total respondents); 198 (96%) of the responses agreed there was a need to find new ways of focusing on the quality of place/open space and greenspace in deprived neighbourhoods, while 4 (2%) disagreed and 5 (2%) were 'undecided'. Given the overwhelming support for the proposition, there were no significant differences between stakeholder groups.

Main themes

3.352 The quantitative analysis shows that almost all respondents said that there was a need to find new ways of focusing on the quality of place/open space and greenspace within deprived neighbourhoods, with respondents typically pointing to the value that green and open spaces have within communities. For example,

"The opportunity to garden should be seen as a social justice issue. Many people in deprived areas do not have access to ground for cultivation so cannot share the healthy exercise, diet, stress release and community benefits of gardening."(Scottish Allotments and Gardens Society)

"Research by Forward Scotland into the links between sustainable development and health and wellbeing has found that there are clear correlations between the quality of local environments and individuals' wellbeing. Improving this quality will involve creating attractive streetscapes and green spaces in some circumstances, but this should only be done as part of a wider strategy to ensure those spaces are regularly maintained, safe (e.g. well-lit) and respected by the community to encourage use and avoid deterioration."(Forward Scotland)

3.353 Green and open space was felt to be extremely important. In particular, respondents considered good quality open/green space to be a crucial element of place-making, contributing to the development of attractive, sustainable communities and improved health and wellbeing. However, a number of issues were raised about the delivery and management of green and open space:

• Ensuring the on-going quality of spaces was a significant concern. Indeed, it was noted that poor maintenance compromised the value of some green/open spaces to the local community. For example, Argyll and Bute Council noted that a ' poor quality environment can perpetuate a cycle of deprivation'. Edinburgh Tenants Federation considered that the immediate priority for developing green and open space should be " rundown deprived areas where these aspects are neglected and a lack of long-term maintenance and improvement further compounds the problem".
• Play areas and other green and open spaces were considered an important community resource. It was noted that they could attract anti-social behaviour; and it was stressed that measures to discourage anti-social behaviour needed to be designed into new spaces and implemented for existing spaces: " Open space has to be carefully planned in terms of maintenance and potential anti social use" (Cloch Housing Association)
• It was stressed that proposals for open and green space should be developed in consultation with communities and stakeholders. As Architecture and Design Scotland noted : "Early consultation is fundamental. Best practice shows that it is essential to carry out community consultation and engagement, not only throughout the design and construction of places, but also to monitor the outcomes."

Specific responses

3.354 While these themes were developed across all respondents, there were a number of issues that were of particular interest to different types of respondent.

3.355 The responses from tenant and community organisations focused on the need for improved policing and maintenance of these areas, community involvement in regeneration and maintenance plans, and the need for improved play areas and youth facilities.

3.356 A few local authorities and representative bodies identified the link with the new SPP11, which provides requirements for an Open Space Strategy, and the requirement to address issues of environmental quality in local development plans.

3.357 Some housing associations identified a mismatch between the focus on increasing affordable housing development and reducing unit costs, and the development and on-going maintenance of public open space. Some associations argued that open space was the first element of a development to go when finances were tight, and one housing association saw the Government's proposals for a competitive funding regime as a particular threat, because it would serve to drive subsidy down. By contrast, bodies that represented house builders were keen that allowing for open space did not detract from the amount of land available for housing.

3.358 A few housing associations identified their Wider Role functions and funding as being appropriate for this form of regeneration:

"Our experience is that RSLs are uniquely placed within our communities and with the local resources to deliver Wider Role. In the circumstances, we suggest that these scarce resources are focused on providers with a track record of delivery against a robust action plan containing specific measurable outcomes." (Fyne Homes Ltd).

3.359 Some associations expressed surprise that the link between open space and regeneration was not identified in Firm Foundations.

3.360 There was strong support from a range of respondents for a set of agreed standards, such as that developed by Greenspace Scotland. CIH described a Community Environment Standard for Scotland which it had developed, with a set of measurable criteria and benchmarks, and an action plan. A few respondents called for these guidelines to be applicable to new and existing neighbourhoods, and to be tenure-neutral.

3.361 A few commentators noted that this question was not directly relevant to remote rural areas, as deprivation is not neighbourhood specific in these communities. However, there were calls for flexibility in the way new proposals were introduced, to make them applicable to these areas, with allocations available to address the forms of deprivation that exist in these areas.

3.362 A limited number of respondents commented on the limited level of detail on open/green spaces in Firm Foundations, and particular concern was expressed about how the focus on quality of place/open space would be achieved.

Question 31: Do you have suggestions for approaches that are not resource intensive and that include stakeholders?

3.363 There were 171 responses to this question (44% of all respondents). 56% of respondents did not provide feedback on this question.

Main themes

3.364 Only a limited number of responses explicitly addressed the question to provide some detail or ideas on how to improve open/green space in ways which are not resource intensive. Instead they tended to focus on particular aspects of open/green space provision, such as who to consult or where funding could come from. Local authorities and housing associations were most likely to respond to this question, while the longest, most detailed responses came from environmental groups.

3.365 The key issues to delivering green and open space were consultation, design and planning, and planned maintenance. However, a small number of respondents did argue that it would not be possible to improve the quality of green and open space significantly without a substantial resource commitment.

Principal approaches to delivering green and open space

3.366 A number of issues emerged as being key in delivering improved green and open space.

3.367 Consultation. Consultation was considered the basis for any approach. This consultation should involve the local community and other stakeholders, including local authorities, housing associations and developers, as this example sets out.

There is also the very real fear that if consultation is not carried out with all relevant stakeholders the wrong type of 'green/open space' will be put in place encouraging vandalism along with the other issues surrounding this. Once agreed on the type of space all stakeholders need to be made aware of likely issues surrounding this.(Fife Federation of Tenants and Residents Associations)

3.368 There were mixed views on whether consultation would be resource intensive, but a number of respondents suggested ways of managing the cost of consultation, including the use of local facilities as the venue for consultation events, and using specific tools which encouraged and enabled consultation, including tools developed by Planning Aid, such as "planning to act", Placemaking (as developed by Project for Public Space) and Greenspace Scotland's 'Strategic Greenspace Partnership' model.

3.369 Planning. Developing a clear masterplan and development brief was considered essential in articulating development proposals. These documents would provide a basis for on-going consultation and inform procurement strategies. One respondent suggested that the requirement for a masterplan " could be included in grant/funding conditions where such apply" (Architecture and Design Scotland).

3.370 Respondents argued that proposals for improving open and green spaces needed to include an indicative and realistic timetable so that the community could follow progress. Proposals also needed to include a clear maintenance plan for the future, including financing, to ensure the quality of the space would be sustained.

3.371 Costs. Several respondents stressed that they did not think it was possible to improve the physical quality of place/open space and greenspace without significant resources. This response came from five of the 22 local authorities that responded to this question, as well as some housing associations and private sector organisations.

"Regeneration strategies and proposals demand an intensity of resources to manage the change process. Regeneration failures, by and large, are attributable to a lack of sustained resourcing."(Geddes Consulting)

Other measures

3.372 A number of other ideas were put forward, including defensible space - some local authorities commented that where residents had responsibility for an area (e.g. larger gardens, community gardens, allotments or where they pay for the maintenance), there was greater 'ownership' of the place and less requirement for substantial resources. This approach could be further promoted by establishing good neighbourhood awards or garden competitions.

3.373 Measures to sustain the quality of the environment were also supported, including estate inspections by volunteers to monitor the area and identify problems; neighbourhood compacts to ensure services are delivered across organisations; and greater use of factoring services to provide maintenance services.

3.374 There were also suggestions that local volunteer groups, social enterprises, employability teams and training schemes should be encouraged to become involved. This could reduce costs and, where services were paid for, ensure that they were benefiting local businesses and their staff.

3.375 Development of guidelines, including a national bank of design guidelines, which includes high quality notional estate/open space layouts, was also mooted. These could be used to stimulate debate amongst tenants/residents; providing an early focus for discussion, thereby encouraging people to become involved in consultation events.

3.376 Community involvement - there was support for local community organisations developing their own plans, solutions and volunteers, with the support of agencies such as local authorities, housing associations, or Greenspace Scotland. Community audits could also be undertaken to help local people identify aspirations for the future. Community involvement was identified as particularly resource efficient, though it was noted that significant levels of support were required for them to succeed.

3.377 Planning requirements - Greater use could be made of the planning system, for example, by requiring developments to provide an area of open space that would be the responsibility of the property owners where the properties themselves had little or no garden space.

Question 32: Do you agree that the lead role (and recipient of any resources) to undertake this work should be open to a range of stakeholders?

3.378 There were 160 responses to this question (41% of total respondents); 128 (80%) of the responses agreed that the lead role to undertake open and greenspace works should be open to a range of stakeholders, while 29 (18%) disagreed, and 3 (2%) were 'undecided'. There was a relatively strong degree of support from both local government and housing association respondents, 73% and 78% respectively. The private sector, tenant and community organisations, voluntary/charity as well as professional/representative bodies showed even greater levels of support. Individual responses had a higher level of disagreement at 41%.

Main themes

3.379 Respondents tended to favour selecting the lead agency according to the type of initiative being developed and/or maintained. Local authorities were the most quoted preferred route where a specific organisation was identified. The following table provides a breakdown of which groups were considered most appropriate to take the lead role in managing environmental improvements.

Lead organisation

3.380 The vast majority of respondents thought that the lead role should be dependent on the type and nature of the project, how it was to be funded, local structures and the capacity of local organisations. However, respondents often suggested that the lead role was likely to be taken either by the local authority or an RSL:

"If a lead role position is to be taken, the CIHwould support local authorities and RSLs in this capacity as they already have a strong track record of getting community projects off the ground as evidenced by wider role initiatives and social enterprise. There is the scope to link this into CPPs"( CIH)

3.381 Other respondents suggested that a wider range of stakeholders be eligible for consideration for the lead role:

"The lead role can be a range of bodies and doesn't have to be the local authority. It would be beneficial for a range of Stakeholders e.g. Greenspace Trust, to be authorised to take the lead role as one organisation may have more involvement in an area than another, and it would make more sense for them to be responsible for resources and the project." (West Dunbartonshire Council)

3.382 It was also suggested by some respondents that measures should be available to enable the local authority or housing association to take control of projects, should that become necessary.

Organisations

3.383 A significant minority of respondents identified their preferred option for lead organisation. The largest group among these respondents considered that the lead role should lie with the Local Authority. It was seen as the key strategic player, and as the organisation with greatest internal resources:

"We think that there must be a clear link to community planning processes and strategic outcomes sought for any area, and therefore while it would make sense to have the right organisation undertaking any work on behalf of themselves and other providers in a neighbourhood, the local authority should be in the lead for agreeing how funding should be spent". ( ALACHO)

3.384 However, respondents typically stressed that the local authority should only fulfil this role in full consultation with a diverse range of stakeholders. It was also suggested that the authority may wish to delegate control of the project to an appropriate local organisation, such as a housing association:

"Overall, the local authority is likely to be in the best position to take a lead role in neighbourhood environmental works. It should be required, however, to demonstrate joined up working within the authority and a range of other stakeholders". (East Lothian Council)

3.385 Housing associations were also identified as an appropriate lead organisation: they were felt to have close links to the local community, experience in wider action initiatives, and access to some funding sources that were not available to other organisations.

"[We} would suggest that developer RSLs with Community and Business Initiatives Teams are particularly well placed to lead on this due to their ability to take an overview of wider regeneration aims. RSLs and Councils can work together to identify the priorities for any area and the RSLcan take the lead in involving other community partners".(Dunedin Canmore)

3.386 Finally, there were a number of calls for the lead organisation to be a locally controlled organisation, such as a development trust, a community organisation or a community planning partnership:

"The direction should be dictated by Community Planning Partnership there is a wide range of stakeholders involved in these areas and by having the lead from a main group this would perhaps ease the burden on them".(Association for Public Service Excellence ( APSE))

3.387 There were some reservations around community groups leading these projects, and it was stressed that they would need support to take on a lead role. It was also suggested that if an initiative were led by a community group, an initial trial period would be needed to ensure they had the capacity to organise and oversee the project effectively.

Organisational issues

3.388 Respondents raised a number of issues which they felt would need to be addressed regardless of who undertook the lead role. These included:

• A need to ensure accountability across the partnership.
• Recognition that some partners may be better placed to bring in other resources/gain match funding. However, it was stressed that organisation with greatest access to funding should not necessarily be the lead organisation.
• The lead organisation must work in partnership with the other stakeholders, including the local community.

3.389 It was suggested that model partnership agreements would be helpful. In particular, they would provide a framework for enabling all stakeholders to be involved and for ensuring accountability.

Question 33: Do you agree with the features and principles we have set out here for a modernised regulation framework?

3.390 There were 185 responses to this question (48% of total respondents); 158 (85%) of the responses agreed with the features and principles of the modernised regulation framework, while 21 (12%) disagreed, and 6 (3%) were 'undecided'. Local government and private sector respondents all agreed with the general thrust of the proposal and housing association responses also provided strong support (97%). Those groups that disagreed tended to be tenant and community organisations (31%) and individuals (24%).

Main themes

3.391 There was majority support for the principles outlined for modernising the regulation framework. A more proportionate and less bureaucratic, tenant focussed approach was welcomed. This view is summarised in the comments of one tenants group:

"We consider that tenant participation should be strengthened and tenants should have more of an input into how the services are delivered, managed and regulated. This will include increased resources, funding and support. We also consider that regulation of landlords should be done by an independent body with knowledge of the social rented sector and an understanding of the issues facing tenants and landlords." (Clackmannanshire Tenants and Residents Federation)

3.392 A number of housing associations asked for further clarity on the role the sector would have in setting performance standards and timescales for any required compliance. Associations also considered it important that the performance framework focused on outcomes rather than processes. Concerns were expressed over the ability of the regulator to cap rents and impose fines.

Merits of the existing regulation framework

3.393 It was acknowledged by several housing association respondents that Communities Scotland's performance standards had helped to raise standards of practice across the sector. The current standards were felt to cover a very broad range of functions, many of which could not be easily measured. Some felt that focussing purely on a small range of measurable targets might not lead to improvement in the overall quality of services delivered.

3.394 Some housing associations noted that the existing regulation framework had provided reassurance to private sector funders and it was felt important that the new framework maintains confidence in the sector. Respondents noted that the regulator needed powers similar to Communities Scotland in order to provide this confidence. There was felt to be a risk that diluting these powers could increase the perceived risk of lending to housing associations and thus drive up the cost of such lending. Clearly, this would be contrary to the overall objectives of increasing housing supply.

Risk-based self-assessment and safeguards

3.395 The CIH argued a number of appropriate safeguards needed to be put in place when considering a self-assessment approach:

• It needs to be evidence based
• There should be a common set of frameworks or guidance
• Spot checks by the regulator should be available
• Self-assessors should be properly trained and accredited

3.396 CIH supported a move to what it saw as a more proportionate inspection regime, reducing the burden for well-performing organisations, whilst allowing poorer performers to receive support. It was also hoped that the move toward a single scrutiny body would help reduce duplication and streamline joint service inspections.

3.397 Local authorities were broadly supportive of the principles and viewed the greater emphasis on a proportionate risk-based approach, coupled with self-assessment, as being more appropriate to the circumstances prevailing within local authorities.

3.398 CoSLA highlighted its work with the Scottish Government, following the Crerar Review, to establish a more straightforward structural framework and a more coherent approach to scrutiny. Local government was committed to a scrutiny system that better meets the needs of communities and welcomed greater scrutiny responsibility, placing tenants at the centre of this process.

Concerns among tenants and other groups

3.399 The response of tenant groups was mixed. Some were supportive of the underlying principles, particularly the intention to increase tenant involvement in the regulation and inspection process. Conversely, some groups expressed concern that the proposals would lead to the dilution of the role, a weakened Regulator, and a reduced number of inspections possibly leading to poorer quality housing services.

3.400 Whilst supporting the principle of protecting and promoting the interests of tenants, there was concern amongst equalities organisations that introducing a regulation framework with an emphasis on self-regulation by landlords might not be the most effective way of protecting tenants and supporting improvements to housing services and communities.

Question 34: How would you like social housing regulation to be organised?

3.401 A total of 184 responses were received for this question (48% of all respondents). 52% of respondents did not provide feedback on this question.

Main themes

3.402 As discussed under question 33, the regulatory framework being proposed by the Crerar Review was generally welcomed, along with the risk-based, proportionate approach to regulation advocated by Firm Foundations.

3.403 Some housing associations commented that the complexity of the responsibilities and activities of housing associations meant that a separate specialist regulator would be the appropriate mechanism for the regulation of social landlord activities. Others noted that generic aspects of the organisations, such as finance and governance, could be dealt with by a central regulator. However these respondents felt that there should be a specialist inspection for housing services, where the staff have a strong understanding of the sector.

Other regulators

3.404 Several housing associations highlighted the role in the sector of the Care Commission and the Office of the Scottish Charity Regulator and suggested that the regulator (for social housing) should be integrated into a group of regulators all working within agreed parameters, but with a lead regulator focussing on the quality of housing services provided to tenants. Several housing associations noted that regulation and audit should be seen to be separate, and as such, were opposed to the regulatory function being combined with Audit Scotland / Accounts Commission. One housing association commented that if there were a need to maintain a separate housing regulatory body, this should only be a short-term measure until a new unified regulatory framework was put in place.

Performance Standards

3.405 A number of housing associations responded to the suggestion that the Scottish Government should take responsibility for developing performance standards. It was emphasised that good quality information and research were required to support this process, that the sector should be actively involved in securing this, and consulted fully in the development of appropriate standards.

3.406 The Equality and Humans Rights Commission (Scotland) highlighted that any new regulator should provide advice to the Scottish Government in setting standards, but should expect leadership from the Government in developing equality standards, particularly in changes to the regulatory structure that can help marginalised and discriminated against social groups.

3.407 The Royal Environmental Health Institute of Scotland commented that Environmental Health Officers were already involved in regulating housing standards both in terms of general fitness for habitation, and in some areas the licensing of HMOs and private landlords. The Institute viewed this skill base as being invaluable in the regulation of the sector and advocated that Environmental Health Officers were included in the staffing establishment of the new regulatory body.

Public investment and regulation

3.408 Reservations were expressed at the suggestion that the regulator should be able to communicate directly with funders where, in the opinion of the regulator, the landlord was deemed not to be a suitable investment partner. There was support amongst housing associations for the principle of equitable protection for all social housing tenants, but also an expectation that this would extend to other tenants where public resources were allocated for housing provision. This referred to the suggestion that HAG could be distributed to the private sector.

3.409 CIH supported the proposal for an independent regulatory body, with specialist panels comprising expert members. It argued that the creation of a single national scrutiny body could be a successful means of organising regulation. The body could have core staff, expert in external scrutiny, with access to a range of professionals with knowledge in the relevant area under scrutiny. A single body was said to have the potential to deliver better value for money, but it needed to be properly resourced. In addition, the empowering and inclusion of tenants in regulation and inspection panels and active involvement in the inspection processes themselves should be promoted. This was felt to be particularly appropriate where the focus was protecting tenants' best interests, but also to incorporate the wider agenda of community engagement.

Links with democratic accountability

3.410 CoSLA commented that the current inspection regime paid little regard to the democratic process which exists in local authorities. It argued that moving to an outcome focussed process under the best value regime, with the audit responsibility being transferred to the Accounts Commission, would increase local authorities' autonomy and help ensure the better delivery of ministerial targets at a local level by removing unnecessary 'red tape'. CoSLA acknowledged that housing associations were constituted and financed differently to local authorities. It proposed that the regulation and inspection of housing associations should continue to be carried out by an independent agency. Under this proposed new inspection process, local authorities and housing associations should operate under the same performance standards.

Separation of roles

3.411 ALACHO and SHBVN broadly supported the features and principles of the proposals. The separation of roles of Government and regulator was welcomed. These bodies viewed the scrutiny of housing services provided by local authorities as being best met through the existing Best Value inspection regime and the role of the Accounts Commission. A separate housing regulator was considered to have the potential to introduce dislocations and duplication for local authorities, and lack clarity for their customers, although it was felt it could work well enough depending on the groupings of regulators. One specific issue highlighted was that there may be merit in exploring whether any publicly funded housing provider - whether social renting or private sectors - should come within the ambit of the regulator.

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