Last edited 05 Jul 2016

Affordable housing


[edit] Introduction

Affordable housing is a generic term used to describe housing that is affordable to lower or middle income households. In the UK it has taken on a particular meaning defined in the National Planning Policy Framework (NPPF) in a way which implies that state intervention is necessary to make housing affordable: rented housing, affordable rented housing and intermediate housing, provided to eligible households whose needs are not met by the market.... Homes that do not meet the above definition of affordable housing, such as “low cost market” housing, may not be considered as affordable housing for planning purposes.

The combination of changing demography and lifestyles in the UK, exacerbated by population growth and lack of construction means there is a severe housing shortfall. An Institute for Public Policy Research report in 2011 suggested this shortfall will reach 750,000 homes by 2025 (ref IPPR The good, the bad and the ugly: Housing demand 2025). As a consequence, house prices have increased dramatically and at the end of 2013, the average house price in the UK was £165,515 (ref Land Registry House Price Index November 2013).

The availability of affordable housing has been further reduced by the sale of council houses during the 1980's through the Right to Buy scheme.

Because of this, the government has introduced a wide range of measures under the banner 'Affordable Homes Programme'. These include:

In addition, local authorities set affordable housing targets based on local circumstances, such as demand and supply, the costs of housing and wages. They can then use instruments such as Section 106 agreements to help deliver affordable housing. Section 106 agreements (sometimes called planning obligations or planning gain) are obligations attached to land that is the subject of a planning permission. Planning obligations are used to mitigate or compensate for the negative impacts of a development or to prescribe the nature of a development.

Section 106 agreements can be used (amongst other things) to secure affordable housing, to specify the type and timing of this housing and to secure financial contributions to provide infrastructure or affordable housing.

The National Planning Policy Framework (NPPF) suggests that affordable housing includes:

Affordable housing should include provisions to remain at an affordable price for future eligible households or for the subsidy to be recycled for alternative affordable housing provision.

However, the NPPF states that “…the costs of any requirements likely to be applied to development, such as requirements for affordable housing, standards, infrastructure contributions or other requirements should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable.”

In addition, the Growth and Infrastructure Act, introduced in 2013 to reduce the red tape that the government considers hampers growth, allowed developers to renegotiate economically unviable section 106 agreements on stalled housing developments. This has had a particular impact on affordable housing provision.

A report by the Bureau of Investigative Journalism in 2013 (The Housing Crisis, Get the data: The crisis in the UK's affordable housing supply system) found that the total number of affordable homes built in England actually fell 4.1% in 2011/2012 and the Bureau's assessment of 82 of the biggest housing developments in 10 major cities found just 40% complied with local affordable housing targets.

On 4 January 2016, as part of its plans to deliver 200,000 affordable starter homes over the next 5 years, the Prime Minister announced that the government would directly commission thousands of new affordable homes on publicly-owned land. See Government to commission affordable homes on publicly owned land for more information.

[edit] Small site exemption

In November 2014 Eric Pickles MP, Secretary of State for Communities and Local Government announced plans to make clear that Section 106 agreements should generally not be sought from the smallest housebuilders on sites of 10 homes or fewer, including self-build, extensions and annexes. In very rural areas, sites of 5 homes or fewer should not face the charge. See Section 106 exemption for more information.

However, in a landmark case at the High Court in July 2015, Justice Holgate quashed government policy on affordable housing exemption thresholds, as a result of the which, planning guidance on planning obligations was amended to remove paragraphs 012-023. In addition, the vacant building credit policy was quashed.

West Berkshire Council and Reading Borough Council challenged the policies arguing that the consultation process had been unlawful. Justice Holgate accepted that the government had failed to take into account "obviously material" considerations.

See R (on the application of West Berkshire District Council and Reading Borough Council) v Secretary of State for Communities and Local Government for more information.

A spokesman for the Department for Communities and Local Government said they would seek permission to appeal against the judge's decision, and in May 2016, the Court of Appeal restored the policy. Housing and Planning Minister Brandon Lewis said, " Today's judgment by the Court of Appeal restores common sense to the system, and ensures that those builders developing smaller sites – including self-builders - don't face costs that could stop them from building any homes at all." ref 11 May 2016.

NB In June 2014, the Northern Ireland Executive proposed requiring developers of five or more dwellings to provide an element of social housing. Ref Planning Portal.

[edit] Redefining affordable housing.

In his speech to the Conservative party conference in October 2015, Prime Minister David Cameron said “For years, politicians have been talking about building what they call “affordable homes” – but the phrase was deceptive. It basically meant homes that were only available to rent. What people want are homes they can actually own. …Those old rules which said to developers: you can build on this site, but only if you build affordable homes for rent…we're replacing them with new rules…you can build here, and those affordable homes can be available to buy.”

This is thought to be a key part of the government's strategy to build 200,000 starter homes over this parliament, homes sold at 20% less than the market value to “…hard working people under the age of 40.” Redefining affordable homes to include starter homes will give greater flexibility to local authorities and developers. There will be a cap on the cost of these homes, of £450,000 in London and £250,000 elsewhere.

See Conservative party conference affordable housing for more information.

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