Send your thoughts to: planningpolicyconsultation@communities.gsi.gov.uk
Affordable Housing Re – definition
Background
1. This is an excellent opportunity to
restore one of the areas of planning control that has led to its serious loss
of credibility. What is being referred to in planning circles as 'affordable'
is seen as ridiculous by those faced with paying up to and over half their
income in rent and/or mortgage payments to keep a roof over their heads.
Those in the PRS (the fastest growing sector) see the safety net of social renting
becoming less available. It should be a
main purpose of the planning system to provide an adequate supply of housing
that can be paid for through about 30% of gross household income (the other purpose
is ensuring that all housing is sustainable).
If this is not possible through home ownership (and Government
statistics should be able to reveal the extent to which households could reasonably
afford to buy – subject to Bank of England estimates of interest rates and a
normal 5% discount) then the remainder would have to be accommodated in rented
accommodation. In the absence of any
rent controls in the PRS (that should be on the Government agenda), it will be
the social rental sector that must meet these needs.
2. Providing
a reasonable and realistic definition of ‘affordable housing’ is one of the few
areas of written guidance that does justify considered change and should not be
regarded as part of the perpetual meddling by this and previous governments.
3. Decisions on what policies should be
introduced, applying new or old definitions, should always attempt to analyses
planning for housing as a system and take a systemic approach.
Definitions
4. The current definition of affordable
housing follows the original High Court judgement that found there to be a
material planning difference between a home that could be afforded by a local
person, taking into account local earning potential, and one that could
not.
"Affordable housing: Social rented, affordable
rented and intermediate housing, provided to eligible households whose needs
are not met by the market. Eligibility
is determined with regard to local incomes and local house prices.
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."(emphasis added)
This
definition of eligibility makes no reference to Housing Benefit, Help to Buy,
Funding for Lending or any other discounting through public subsidy or the bank
of mum and dad.
5. "Social
rented housing is owned by local authorities and private registered providers
(as defined in section 80 of the Housing and Regeneration Act 2008), for which
guideline target rents are determined through the national rent regime. It may
also be owned by other persons and provided under equivalent rental
arrangements to the above, as agreed with the local authority or with the Homes
and Communities Agency."
No
amendment is required to the definition of 'social housing', although this
should not be within the definition of 'affordable housing ' if the 'national
rent regime' requires public subsidy.
6. "Affordable
rented housing is let by local authorities or private registered providers of
social housing to households who are eligible for social rented housing. Affordable
Rent is subject to rent controls that require a rent of no more than 80% of the
local market rent (including service charges, where applicable)."
This
definition does require amendment
as, in many if not most parts of the country, 80% of market rents would
not satisfy the 'eligibility' criteria’ relating to local incomes. If there is a public interest or planning
benefit of retaining a category of houses rented at 80% of market rents then
this should be the subject of some special justification. What is unacceptable is to continue to call
it ‘affordable’ and include it in the Glossary as such.
7. The consequence of corrupting the
original definition through the ‘national
rent regimes’ and the reference to 80% of market rents has contributed
substantially to house price/rent inflation and s106 obligations have acted
like a conduit passing various public subsidies straight into the pockets of
developers and landowners. ‘School-boy economics’ explains that
increasing demand without a commensurate increase in supply will cause an
increase in price and, therefore, the level of unaffordability. There isn’t a
housing supply model that suggests that prices can be reduced where there is less
than 1% annual increase in supply, mostly by developers intent on maintaining
if not increasing prices.
8. In fact there
could be a significant impact on prices if most of the 200,000 new dwellings built
each year were small/2 bedroomed properties.
A substantial increase in supply of what are already intrinsically the
cheapest form of property could reduce prices in that particular sector. Incidentally, there would still be a supply
of larger properties for households larger than the average of 2.4 people due
to the downsizing of some of the 8 million household looking for attractive
‘right-sizing ‘options
9. "Intermediate
housing is homes for sale and rent provided at a cost above social rent, but
below market levels subject to the criteria in the Affordable Housing
definition above. These can include shared equity (shared ownership and equity
loans), other low cost homes for sale and intermediate rent, but not affordable
rented housing."
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."
Consultation Q1.
Do you have any comments or suggestions about the
proposal to amend the definition of affordable housing in national planning
policy to include a wider range of low cost homes?
10. The eligibility criteria are based on the
Court's justification for distinguishing 'affordability' as a material
consideration being the relationship with local earnings is logical and
must not be changed.
11. In fact the system would work as
intended: to provide genuinely affordable housing, if the eligibility criteria
were consistently applied. The
Glossary/definitions should be brought into line by removing the
"affordable rent" category that is an abuse of language, and ensuring
that "social rent" is affordable relative to local wage levels.
12. There is no reason why intermediate
housing or even low cost houses for sale (including Starter Homes) could not be
included, so long as the eligibility
criteria are met. There is a difficulty in that the affordability in terms of
purchase of all or some of the equity is conditional on the interest on
loans. In these circumstances the affordability should be based on a Bank
of England estimate of the interest over 20/25 years and not any current (loss leading)
deals that might be available and a 5% deposit.
13. There is also a case for including
self/custom building by individuals or associations of individuals within the
definition of 'affordable housing' subject in each case to the submission of a
business plan showing that the house(s) would be provided (to a liveable
standard to allow for self-finishing) at
a price to meet the eligibility criteria relating to local earnings. This
would remove the existing disincentive for LPAs to support self/custom building
due to the exemption from s106 obligations and other tariffs that already apply
to affordable housing. There would also
be the opportunity for self/custom builders to share the equity with a
Registered Provider that could have provided and retained ownership of the
land/serviced plots on which the houses were built.
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