An honest re-defining of affordable housing

The Government has extended (to 22 April) the consultation on amendments to the NPPF in respect of the definition of affordable housing, prompted by the expectation that Starter Homes will be part of the Housing and Planning Act when it has worked its way through the legislative process.  Those thinking of responding could reference the following.

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.

Garden Cities and local food systems

The reason that I am not a fan of new settlements is that I feel that a substantial amount of new development should be in the form of smaller dwellings, many in the form of co-housing and commissioned by associations of individuals (see Housing and Planning Bill and opportunity to sign up to registers held by Local Planning Authorities after 1 April).  New settlements are more likely to perpetuate the current unsustainable levels of under-occupation of our housing stock that using new build to balance the size of houses and households.

Having said that, the Government has continued with its support for new settlements with a call for expressions of interest in the recent publication of "Locally-led garden villages, towns and cities" found through Google but with expressions of interest required by 31 July 2016!  How local opinion will be ascertained within the next 4 months and how these proposals would fit with existing and emerging development plans is a puzzle.

Those wanting to contribute to this 'debate' might be interested in the email sent to the Communities Secretary.

Dear Sir or Madam

Having read through the latest promotion of garden villages, towns and cities I would be interested to know whether this is an amplification of the advice at para 52 of the NPPF or intends to change it in any way?

Para 52. states,  "The supply of new homes can sometimes be best achieved through planning for larger scale development, such as new settlements or extensions to existing villages and towns that follow the principles of Garden Cities…."

It was and is a fundamental principle of garden cities (and sustainable development) that the urban areas are functionally related to the surrounding rural hinterland  that should include zones for market gardening.  it seems to be the case that in the desire to see more housing being built the important contribution that should be made by local/regional food systems is being overlooked.  If Para 52 of the NPPF remains as Government policy should DCLG not be reminding those submitting expressions of interest that the related use of the surrounding rural area will be fundamental to their prospects of success?

Yours sincerely

Custom building - and a back door to co-housing

The Government is keen to see the level of self/custom building increased from about 8% of housing supply to something approaching 20% that will still be among the lowest in the world.  A substantial contribution from this sector is need if the 1m new dwellings by 2020 promised by the Government in 2015 is to be achieved.

All local planning authorities (LPAs) are being required to have registers available by 1 April 2016 for those wanting to self or custom build.  This under the 2105 Self Building Act and the Registers might have to change when the Housing and planning Bill passes into law as it is likely to include the scope of associations to register their interest to include those wanting to co-house.

There will then be a requirement for LPAs to provide the land on which the demand shown in the registers can be expressed. The target is for 50% to be met in three years and 100% within five.  I take this to be a rolling horizon so that people can expect to be on the registers for between 1 and 5 years with an average of 3?  There is nothing to stop people  registering in different local authority areas although councils might give priority to those with local connections.  If councils fail to provide suitable land/serviced sites the remedy would seem to be that those on the registers could try to self provide and use the council's failure as an argument at appeal in a similar way to the argument used by volume builders that there isn't a five year housing land supply.  This would be in addition to political pressure being applied through councilors, parish councils, members of parliament and the media.

In many parts of the country it is highly unlikely that the registered demand will be met without reserving sites on large allocated and permitted sites.  Logically 20% of such sites should be reserved for self/custom builders to move towards the Government's target.  However the Department of Communities and Local Government seems to think that 'requiring' this approach would be contrary to the spirit of localism and should emerge from the duty placed on councils to find effective ways to meet the registered demand.  If this approach is not adopted then self/custom build sites might be additional to the Local Plan allocation or contribute to the windfall 'allowance'. Such sites should still be in suitable and sustainable locations. 

We should be queuing at planning offices on 1 April (if not before) with our pens set to express our demand as individuals or associations of individuals for opportunities to create our own homes.  This is also appears to be the only way that co-housing will be privileged through the planning system even if some co-housers see themselves as commissioners of custom built dwellings rather than builders.

And a committee of the House of Lords has recommended that the Government reinstate a Code for Sustainable Homes and the Zero Carbon Homes target.