A tough demanding challenge

Once a problem that "dare not speak its name", the phenomenon of "low demand" for housing is now a issue rarely out the headlines. It dominates discussion about future investment requirements, development decisions, management practice and even the viability of the housing profession itself. While attempts are made to downplay the North-South divide, regional diversity in housing demand increases apace, underpinned by social and economic changes which have particularly affected the North of England, spreading dissent among different regional interests jockeying for influence in shaping the future emphasis of housing capital investment.

Despite its high profile, however, much of the current debate about low demand has been dominated by anecdote, certain notorious cases and rather loose analysis which collapses together issues such as "difficult to let", "area abandonment" and "neighbourhood decline" in too cavalier a fashion. A more informed discussion is therefore needed of the main factors which affect patterns of demand, policies being initiated by social landlords in response to these challenges, and the effects of different measures in different contexts. These issues were the focus of research commissioned by the Housing Corporation and just completed by a team from the Centre for Regional Economic and Social Research at Sheffield Hallam University.

The experiences of low demand at the neighbourhood level reported by the RSLs and local authorities across the Midlands and North of England will come as little surprise to anyone with experience of living or working in an area of social disadvantage. Some landlords talked solely about housing-related problems, but most referred to issues affecting the wider neighbourhood - in particular crime and anti-social behaviour, economic decline and high rates of unemployment, a poor reputation, a lack of community cohesion and poor service provision. Housing-specific concerns centred on a series of management headaches commonly related to demand problems. These included high turnover, void properties, rent arrears, financial concerns and poor stock condition.

Talking to RSL and local authority staff about how they respond to changing demand it became clear that landlords are engaged in a "learning process as they struggle to devise new "rules of the game" in a landscape radically different from the one which fostered their earlier development. The thinking that has traditionally governed issues of housing access, finance, management and development has been driven by a model of "rationing" - of regulating the queue of people waiting for a desired product and service. This model has been outstripped by fundamental shifts in local housing markets in parts of the North and Midlands, requiring a quite different set of "post-rationing" principles to anchor the array of initiatives being tried out.

The report refers to the notion of a low demand "learning curve", illustrated below, as a way of expressing this shift in emphasis in landlords' response. Generally speaking, the more experience a landlord has of managing low demand the more refined their understanding of the problems and the more encompassing their response.

The 'Low Demand Learning Curve'

• Objective = secure rental income
  
• Focus = voids, turnover, maintenance
  
• Analysis = management indicators
  
• Interventions = management initiatives

    

• Objective = secure future investments
  
• Focus = neighbourhood management
  
• Analysis = neighbourhood profiling
  
• Interventions = management and neighbourhood

Landlords outside the "heartlands" of low demand often believed that demand problems were the result of a dip in neighbourhood fortunes that innovative intervention could reverse. Their attention raised by management indicators, such as high void levels and turnover rates, they often responded through a package of measures designed to tackle specific problems believed to be the cause of the neighbourhood's demand problems. The objective was to turn around the area within a limited time-frame through initiatives in housing management.

Strategies were therefore typically devised through attracting new tenants, filling properties and thereby maintaining rental income. However, front-line staff often questioned the wisdom of this approach, suggesting more deep-seated reasons for the neighbourhood's demand problems, recognising the limits of housing interventions and the need for inter-agency co-operation to tackle the wide range of social and economic problems.

In contrast, local authorities and RSLs working in areas of entrenched decline and with longer histories of grappling with the challenges of low demand had, to varying degrees, accepted that renewal was not a feasible option. Although seeking to avoid labelling any area as "beyond redemption", these landlords recognised that even the most tenacious "joined-up" efforts might not turn around the process of decline. This had obvious implications for community support, residential mobility, and the survival of local services and amenities.

Long-term responses are now being developed in such areas, focusing on neighbourhood management (rather than just housing management) and involving a more committed (though perhaps smaller) resident population. Many of these landlords had previously been stung by the failure of short-term housing management initiatives and forced into recognising low demand as a deeper problem, beyond the reach, as it were, of straightforward housing management measures.

The experiences of these landlords challenge the assumption, intact in the current government's regeneration programme and evident within the recent report of the Policy Action Team (PAT) 7 on Unpopular Housing, that areas in decline can somehow be "turned around" by management intervention, as long as it is sufficiently ambitious or innovative. Planning for decline presents a huge challenge to a sector weaned on growth and development. It is, however, a challenge that is unlikely to go away, and the need to discuss strategies for coping with decline will become ever more pressing.

In an attempt to facilitate this process of how to manage decline, the report includes a section on the wide range of practical measures being introduced by landlords in the face of changing patterns of housing demand. But what about the future policy dilemmas presented by changing demand and the challenge of managing decline? The phenomenon raises crucial questions about the future options for investment, management and partnership working:

Investment
The research team suggests that the dramatic shifts taking place in local housing markets demand a rethink of the principles behind the resource allocation decisions made by the Housing Corporation through the Approved Development Programme and by the Government Regional Offices in the Housing Investment Programme. The increasing disparity between the challenge of decline in "the North" and the pressure for development in "the South" complicates the process of making decisions about relative need that have traditionally shaped the pattern of capital funding. It is therefore essential to increase the flexibility of capital finance and acknowledge regional differentiation in order to meet ever more diverse housing needs and requirements. Where the pattern of demand is fragile, more support will be required for selective demolition and planned capital disinvestment, with linked re-investment through other funding streams.

Management
Housing services are often the first to diagnose neighbourhood decline and to bear the brunt of arising problems. It is therefore in the interests of RSLs, and the neighbourhoods in which they work, that they take the lead and direct radical thinking towards acting on an integrated neighbourhood-centred approach to managing decline. As yet, despite all the policy talk, there are very few large-scale, inter-service neighbourhood budgets actually in operation. It would be valuable to launch a pilot programme of such initiatives, which would reverse the tradition in housing expenditure and be revenue, rather than capital, intensive in the early stages.

Pro-active partnership working
Many of the factors directly related to why households choose to move out or not to move into a neighbourhood, which are therefore the key determinants of changing demand, are outside the control of RSLs and local housing authorities. It is therefore essential to forge neighbourhood partnerships, not just as a 'salvage operation', but to shape factors affecting demand once they start to emerge. However, although partnership working may be widely recognised as essential in principle, familiar difficulties remain in securing action across service or departmental boundaries.

Finally, any approach to tackling the syndrome of severe neighbourhood decline needs to be inoculated with a dose of realism about what can be achieved. Regeneration funding will not reverse the process of decline if the lack of real jobs across swathes of the North of England and the Midlands remain. No amount of enlightened housing management can solve problems created by the closure of the factories, mills and ship-yards that estates were built to feed. Landlords in such areas need to be operating a twin-track response - dealing with measures devised to cope with the here and now, while simultaneously thinking ahead with other landlords and agencies and planning for the future.

It is this challenge - of combining judicious short-term "sticking plaster" responses with a hard-headed appraisal of the longer-term prospects for an area - which will loom above all others as social landlords in areas of entrenched decline move the idea of neighbourhood renewal off policy reports and into their action and business plans for the next five or ten years.