Branch Eye - July 2009

Welcome to this ezine issue

We hope it gives you a real flavour of our region's activities and priorities. After another successful conference in March, we've pulled together a programme of activity for the year which we hope reflects members' interests. We're working closely with the National Housing Federation and Shelter to collectively address key housing issues in the South East, while actively encouraging education opportunities and raising awareness about membership. We are also working with other regions to share learning. I hope you will be taking part in our activities over the next few months.
Claire Martin, CIH South East Chair

Future proofing the South East

Roger Bootle, Managing Director of Capital Economics and former Chief Economist of HSBC, was one of the key speakers at this year's CIH South East conference in Brighton.

He is one of the most highly-respected economists in the City and former Group Chief Economist of HSBC. His expertise is his knowledge of the world economy, specifically the monetary economy. This is evident in his books 'Money for Nothing - Real Wealth', 'Financial Fantasies' and the 'Economy of the Future'.

As part of his presentation, Roger first commented on the conference's optimist and courage in inviting a economist to give the opening presentation! He first examined the overall economy - past, present and future. 'I think this is going to be the worst economic downturn in the UK since the war, except for the one immediately after the war.'

'No one knows about the future, but we are very conscious of the uncertainties. My own view is that this downturn is going to be quite long lasting. The public sector has a key role in this - we can and should look to the public sector to help get us out of this. But the simple fact is that financial resources are becoming limited. With public borrowing rising to £200billion pa, the pressure will be on for cutbacks. There is a real feeling of scarcity.'

In terms of Roger's inflation outlook, it has a big impact on the housing sector in general, and social housing in particular. 'Whenever there's a problem with asset values, if there's inflation, there's hope. And it's a difficult outlook for pay - people have been taking on financial commitments at their current level of affordability. But pay isn't going up by very much. In fact a lot of people may be taking pay cuts, or becoming unemployed.'

He is pretty certain that Retail Prices Index inflation will turn negative year on year (ie deflation), and Consumer Price Index inflation will also tip into a negative figure. 'My own view is that, in the next few years, there is a danger of slipping down into more generalised deflation.'

Roger's interest rate outlook is for more cuts. 'My view is that the bank is moving on a path to move official interest rates down to 0, with basic interest rates remaining low over a period of years. Long-term interest rates will fall in this environment as well.'

He then focused on what house prices should and would be if people didn't think there was going to be a major change in the market, instead of being substantially affected by speculative influences. He felt housing market was 20% overvalued and may fall by that amount, or even further.'

'Current mortgage affordability doesn't suggest any real strain at all, which is encouraging. But that's only part of the picture - it doesn't account for the burden of a mortgage over the owner's lifetime. Initial affordability is completely different to what it was historically, with unemployment or a fear of becoming unemployed.'

The measure that Roger pays a lot of attention to is the house price to earnings ratio - the number of years' earning that the average person has to pay to afford the average property. 'Another thing to look at is the yield of property to rent, which has recently plunged, showing it isn't about supply and demand. Rents have to move higher to reach an equilibrium. Gross yields need to be something like 8-9% for them to be a viable proposition.'

And then there's the issue of affordability. 'If you assume current mortgage rates, house prices are already at a fair value. If you look at long-term mortgage rent, house prices have got 9% to fall. If you look at the house price to earnings ratio, they've got another 20-23% to fall. All in all, the housing market has a lot further to fall - my 'guestimate' is that it has somewhere between 25-35%.'

With capital values falling sharply, small pay increases, unemployment set to rise sharply, and job uncertainty everywhere - the degree of arrears and repossessions will reach the level of early 1990s. And the numbers of households experiencing negative equity will double the figure of early 90s (around 30m).

'I don't think the banking issue that will be resolved very soon. Balance sheets are weak, assets are falling, and the economy is weakening with the problem of further bad loans. And their culture is devastated. We are gradually moving to nationalising the banking system which, in my view, should have been done straight away. When house prices have perceived to have bottomed - that's the point when banks will start lending again.'

In terms of the social housing sector, is there a future for low-cost housing provision? 'Yes, our culture of home ownership is part of the problem, not the solution. It's just not suitable for some people and yet the government puts homeowners in a privileged position. And isn't that part of the problem? Home ownership has been at the centre of every cyclical boom or boost in this country. The sensible thing to do is stop the problem right at the start and stop the pandering to home ownership.'

Turning to the South East, Roger doesn't think it's right to imagine there's a major regional dimension to this downturn. 'This is a problem shared throughout the whole UK economy - although there are some minor differences, particularly the housing boom and financial services.

'If there's one good thing that could come out of this ghastly situation which could have been avoided, it's a realisation that we can't all get rich by buying and selling each other's houses.'

Read the full 2009 conference review online

Thank you to all our conference sponsors

The CIH South East wishes to acknowledge and thank the following organisations for their support and sponsorship at this year's Conference and Exhibition in Brighton.

Book onto our Home Ownership Conference

Now in its fourth year, the South East Home Ownership Conference has gone from strength to strength, attracting housing professionals in leasehold management from throughout the region. The theme of this year's conference is the housing market - how are we dealing with adversity and what does the future hold?

This conference, on 12 October this year, is driven by the CIH South East Home Ownership discussion group, which was set up in 2004 to provide a forum for people working in leasehold management in the South East to come together, exchange experiences and share good practice.

Through a number of interactive morning and afternoon workshops, we aim to provide an update on homeownership products and a legal update. Other workshop topics include income recovery during the credit crunch, dealing with difficult customers and management fees.

Benefits of attending

• Be updated on the current home ownership products.
• Hear the latest legal updates.
• Get information about income recovery in the credit crunch and the benefits for homeowners.
• Take part in specialist workshops, and discuss your issues.

• Learn about providing innovative advice and share examples of best practice.

Who should attend?

This conference will be of interest to all staff working in leasehold management.

Download the programme (pdf - 916kb)

More information

Contact Verity Fifer
e: verity.fifer@cih.org
t: 07827 805131

Our regular policy and practice update

Michelle Chivunga, South East Policy and Practice Officer (right), gives an update on the region's policy work over the last few months, and national plans for the year ahead.

Changes in national and regional structures

The housing market is experiencing major challenges as the industry welcomes another new housing minister (John Healey), has two new regulatory bodies, and new economic reforms are starting to take shape following the Review of Sub-National Economic Development and Regeneration (SNR).

The Review focused on finding ways to strengthen regional, sub-regional and local economic performance by strategically integrating the economic regeneration agenda with other key areas of service delivery and partnerships. Regional development agencies (RDAs) will be responsible for driving economic growth and regeneration through a Single Integrated Regional Strategy.

The new Local Democracy, Economic Development and Construction Bill aims to extend power to local authorities as they deliver on economic objectives. It will be important to keep up with changes until the SNR legislation is passed. These key changes will have a profound impact on housing activity at both national and regional level, but especially challenging given the present difficult economic circumstances.

The emergence of the Homes and Communities Agency (HCA) and the Tenant Services Authority (TSA) are other key developments influencing regional policy agendas.

Key impact for the South East:

• TSA recently released a discussion paper with results of its national conversation and consultation on its proposed regulatory process for affordable housing. It sets out 14 core national standards for social landlords.
• Catalyst Housing Group, the newly-appointed HomeBuy agent for the South East region, received £154.5 million from HCA's recent £2.8 million of grant funds. This funding stream should help to boost the supply of social home building. Catalyst is expected to produce 995 rental properties and 726 low-cost ownership properties.

Governance structure in the South East:

• The governance arrangements in the South East region have changed as working arrangements are streamlined to fit in new regional structural changes. A proposed new regional structure reflects the changes in the South East:
• Governance by local government: South East England Councils and the South East England Development Agency (SEEDA). A joint body will be responsible for preparing a Single Regional Strategy (replacing the South East Plan and Regional Economic Strategy). Since April these two bodies began working together with delivery agencies.
• Two decision-making boards: South East England Partnership Board (made up of members of SEEDA and the region's council leaders) and the Strategy Board. The first will be the regional planning body until the SNR legislation is passed and will be responsible for signing off the Single Regional Strategy, the regional delivery plan and the annual monitoring report. The latter will be responsible for steering various elements of the Regional Strategy including allocating Strategy funding.
• Delivery boards (eg Housing, Transport Board), together with a small number of working groups to help steer specific aspects of the Regional Strategy and support the Strategy Board. Stakeholders will continue to play an important role in the new regional strategy process at both the member and technical levels, but won't be part of the formal decision-making process.

The CIH South East region policy focus

Regional structures
The policy group has been working closely with other regional partners to deliver on the regional agenda. There has been direct involvement with the Regional Housing Forum (RHF) and Regional Housing Board (RHB) through CIH South East representative, Sharon Smith, and CIH South East Policy and Practice Officer, Michelle Chivunga.

Sharon has chaired the RHF for the last three years and also been part of the advisory team for the RHB. Given the changes in regional structures, there will be a review into the contribution that CIH South East members will make towards supporting new arrangements once they are in place.

In the meantime, representation at the South East Housing Forum will continue with Michelle attending meetings. Sharon will step down as Chair of the Forum in September, becoming the CIH South East representative on the South East Housing Coalition which incorporates members from Shelter and the National Housing Federation.

Housing and the economy
The CIH South East policy team aims to drive debate around housing and the economy with our new coalition partners. This coalition aims to represent the region by raising its profile, focusing on issues that are of major significance in the region.

Prior to the coalition, CIH South East policy group produced a report into the impact of the credit crunch on the South East housing market which outlined some of the problems experienced as a result of the economic downturn. Here is a snapshot of this report and other recent key statistics on our region.

The economic crisis: The housing market has been hit hard following the economic crisis. More details about the impact for the South East region can be found in our report about the credit crunch.
Download the report: Impact of the credit crunch for the South East housing market (pdf - 972kb)

The region has faced high price inflation, rising unemployment, high repossession levels and high levels of waiting lists for social housing. Below are some statistics showing the impact of the credit crunch:

• Statistics from Nomis show an unemployment rate of 5.3% in the period January to March 2009. In the same time period in 2008, unemployment rate was just 3.9%, a 1.4% difference.
• Jobseeker's Allowance claimants continue to increase with a total of 153,608 claimants in April 2009, a shocking 122.3% since April 2008.
• House price inflation is steeper in the South East (7.9%) compared to the UK average (5.1%).
• House repossession orders have increased by 10% during the last quarter of 2008 (4,855 orders).
• Despite an average annual house price fall in the South East approaching £38,000, the region continues to be faced by challenges of housing affordability.
• The South East region had over 200,000 people on the social housing waiting list in 2008.

Future policy work
Policy work will help to support and inform various South East events in the year including Homelessness and Economy, Home Ownership conference and our House of Commons event.

If there is any area that you would like to see covered, we urge you to send your views to Michelle.

Michelle Chivunga, South East Policy and Practice Officer
Chartered Institute of Housing, 9 White Lion Street, London, N1 9JX
t: 020 7520 3389
e: michelle.chivunga@cih.org

Introducing your new student representative

Julie Watson-Cowen has been studying for her Housing Diploma at Southampton Solent University for the past three years. Here she explains why she decided to take on the role of student representative with CIH South East.

'I have been working on my Diploma in a group of about 26 students from a variety of organisations and job roles within housing. I was surprised by how many fellow students had little idea of the important work of CIH and how influential it could be. And there seemed to be a general lack of enthusiasm for converting their student membership to full membership when completing the course.

'Joining the regional committee is a good way for me to get much more involved with the work of CIH South East. Hopefully I will be in a position to inform other students of the benefits of the CIH which, after all, is our professional body. I'm looking forward to being able to contribute in a practical way, particularly with our showpiece event - the Brighton conference.

'My current post is Housing Enabling Officer at Havant Borough Council. My main role is to ensure that affordable housing is delivered to meet the identified needs of our customers. This requires my full involvement with developers, housing associations and the planning officers here at the council. But we're a small borough and so my previous experience in housing, namely homelessness and private sector leasing, is still used to the full. I wear many different hats.

'The experince that I will gain from being more involved with CIH will undoubtably be of benefit, giving me a broader knowledge of national and regional policy.

'And the benefits of studying at Southampton Solent University - how long have you got? The course has covered subjects directly relating to my various roles. The fact that I was studying for the Diploma helped secure my current job. Each of the modules has benefited my work in some way or another, from devising questionnaires, delivering presentations, writing reports, understanding organisations' governance procedures and, most importantly, being able to question whether things actually work or not. I've also gained a lot of specific technical knowledge, for example in planning and design, and also an appreciation of the bigger housing-related picture.

'My customers are now usually developers, architects, housing associations and other officers within Havant Borough Council. I feel that they have benefited because my studies have made me better informed. I can now play a more useful role within my own organisation and get involved with projects outside my job remit.

'My passion is development - even as a youngster I loved drawing houses. I am very conscious that many of the developments we currently see fall short in their sustainability standards and design. I'm hoping to become an accredited assessor for the CABE 'Building for Life' programme and would like to see myself getting more involved with the actual development of affordable housing in the future.'

Julie Watson-Cowen, Student Representative
t: 02392 446507
e: julie.watson-cowen@havant.gov.uk

More than bricks and mortar

Professor Avi Friedman, Professor of Architecture and Town Planning at McGill University's School of Architecture in Montréal, gave an enlightening and inspiring presentation at this year's CIH South East conference in Brighton.

Avi received his degree in Architecture and Town Planning from the Israel Institute of Technology, his master's from McGill University, and his doctorate from the University of Montréal. In 1988, he founded the Affordable Homes Program at the McGill School of Architecture, which he currently directs. He is known nationally and internationally for his housing innovation and is a practicing architect and author.

Professor Avi Friedman presented his views on what makes balanced, sustainable communities.

'There is a domino effect to what happened - the model that brought us all down was because we wanted to build and own as big as we could. Once you do this, you consume an enormous amount of natural resources. And then you need to get to them, by consuming oil and gas. We were sleeping at the switch, and then we woke up one morning to recognise the consequences - climate change.

'We're all pondering our way for the future: how should we house ourselves? We need to take a U-turn. We have abandoned the principles of building our communities. Sustainability is a term to be used, rather than attempting to satisfy our needs without thinking about the generations that come afterwards.'

Avi feels that the elements we need to consider are the economy, society, culture and the environment. He has explored this fully in one of his books: Sustainable residential development.

He highlighted the importance of supporting relationships. 'Riding a bicycle has a positive effect on the environment and your health. Everything we do needs to build and designed with a life-cycle approach. How should we house ourselves in the 21st century? We need to revisit the fundamentals.'

He cited the example of a new community in Québec. 'We began by altering the landscape, building a community in the forest where we didn't have to cut down any trees. We avoided dynamiting rocks when we built the roads, and we've been able to wrap trees around the design without damaging them.

'In terms of climate, we need to live in coexistence with our climatic system. In the past two years I've work in Iqaluit, the largest community of the Canadian territory of Nunavut, where we've designed a sustainable neighbourhood. We first started by looking at the wind direction and sun patterns so that we could build energy consumption into the community's design.'

Avi believes that ownership is something that can be valued, narrowing the gap between those who have and those who will never have. 'In Porvio in Finland, for example, they broke every law in the book to enable people to buy.

'But what is the relationship between our homes and our communities? We are living in tough times, and our lifestyles are giving rise to patients. 9% of all kids have type 2 diabetes. Our homes and communities must be our exercise machines, and they need to be designed that way. For example, when we ride a bike, we feel better and we behave better. In Québec, entire communities are designed for healthy living, with walking paths and bike lanes. It's the best gift you can give a child.'

Can technology help us in sustainability? Avi believes that we need to change the design of our next homes. 'People shouldn't be forced to buy more than they can afford to. With new flexible construction methods, we should be offering components and menus offering choice for people for their own home. And they should be quicker - we built a home on campus at McGill University over 12 days. We can create homes that are delivered much faster and that are nicer.'

He finished by talking about the current economic situation. 'Sometimes the media wants us to believe that the world is about to come to an end. I believe that, when you look at life, some will see the empty half of a glass and some will see the full half.

'The economic slowdown is an amazing time for opportunities. It's a time to think, change, wake up and look at nature. We will be able to retool the economy in a way that will work for the future - seeking new leaders and new ideas. We������¢���¯���¿���½���¯���¿���½re now in the process of greening the planet and, in the coming years, we will see green energy, hybrid vehicles and green buildings.'

What is the next move? 'We need to learn lessons - if we resume our ways by ignoring our lessons of the past, we'll be making a grave mistake. We all need to wake up and move forward very quickly, retooling our minds and retooling our industries with new minds.'

Benefit from our regional events

Another opportunity for you to sign up for some really useful regional events over the coming months.

15 July 2009
Homelessness and the economy, Brighton
Effectively preventing homelessness remains at the heart of the government's work. Communities and Local Government is working with other departments to ensure services are targeted at the most vulnerable groups to prevent homelessness and improve access to services and opportunities. This one-day event provides an overview of progress in a number of homelessness policy areas, particularly in the South East. The day will feature practical advice and guidance on effectively preventing homelessness. It's aimed at housing officers, managers and frontline practitioners in local authorities and housing associations. Contributors include Helen Keats, Communities and Local Government and Liz Slater, Southampton City Council.
Full programme and online booking via the CIH website
Contact Verity Fifer
e: verity.fifer@cih.org
t: 07827 805131
Or download the booking form (pdf - 788kb)

12 October 2009
Home Ownership Conference, The Hawth Theatre, Crawley
Now in its fourth year, the South East Home Ownership Conference has gone from strength to strength, attracting housing professionals in leasehold management from throughout the region. The theme of this year's conference is the housing market - how are we dealing with adversity and what does the future hold?
Full programme and online booking via the CIH website
Contact Verity Fifer
e: verity.fifer@cih.org
t: 07827 805131

15 October 2009
TSA Regulation event for Residents, The Crew Club, Brighton
Full programme and online booking available shortly
e: verity.fifer@cih.org
t: 07827 805131

Useful bookmarks

• Presentations from our 2009 conference
• Calendar of events
• Recent regional news
• Recent national news

Pass it on...
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Next issue
The next South East Regional Eye will be emailed in October 2009. The deadline for all copy is 18 September 2009. If you have anything you would like included, you can email Gill Varley - gill@sparkleweb.co.uk.

South East Regional Eye is the quarterly ezine of the Chartered Institute of Housing South East, developed and edited by Sparkleweb Ltd.

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