Affordable housing Q & A DCP Section 7.3

This section is devoted to issues raised by the provision of affordable housing as a component part of housing developments in line with PPS3 and previously PPG3 and advice in Circular 6/98 both of which have been cancelled. The subject is considered separately from the mainstream housing sections in this manual, due to the particularly complex and specialised contentions that have arisen over the past decade or so. Rural exception affordable housing is discussed at (9.1323).

Q & A    7.3/10

I would be interested to hear of any cases/experiences where applicants have amended applications to avoid a requirement for affordable housing or similar thresholds.

There are several devices that may be used by housing developers to avoid a requirement for affordable units of which the commonest is a reduction in the density of a development. However, such a move may fall foul of the requirement in PPG3 that housing developments should use land fully. Another ploy is to propose that sites be developed in distinct phases.

In relation to the provision of affordable housing, what is the position where there is insufficient social housing grant or none at all, to ensure that the requisite number of units are provided? In particular what happens where a local plan policy requires provision at a particular level irrespective of the ability of a registered social landlord (RSL) to meet its costs of providing the housing?

The need for and level of affordable housing raises many difficult issues. Circular 6/98 remains the main source of guidance although the deputy prime minister has published "Delivering affordable housing through planning policy". Paragraph 17 of the circular states that in deciding whether to use a condition or planning obligation to secure affordable housing account should be taken of "the needs of developers and registered social landlords who must ensure that schemes are financially viable-including the need to raise development finance- and who may well need to operate within certain time limits." Local authorities are advised to simply ensure that the affordable housing is delivered rather than prescribe which partners developers should use to ensure delivery. This suggests that it will always be incumbent upon the developer to comply with the planning requirements irrespective of the amount of social housing grant which might be available. In practice it might well be that a registered social landlord could only afford to fund a lesser number of units relative to that sought under a local plan policy due to the finance available and this would allow the developer to ‘discount’ the purchase price of each unit thereby easing the cost to the RSL. This emphasises the benefits in some circumstances of engaging a RSL at an early stage to ascertain whether there are limitations on purchasing the number of affordable units which a local authority might be seeking under its policies.

Alternatively where no funding is available a better option might be to secure the provision of low cost housing units or make a one off financial payment which would contribute towards pooling funding on another site. As you suggest local authorities will use this as an alternative if provision on site could not be guaranteed.

Given the wide range of options available and the lack of clarity within the circular, the views of readers on this issue would be welcomes.

Response

The requirement to provide affordable housing, where appropriate policies apply to allow it, should not be dependent on the availability of public subsidy. One mechanism that has been developed to fund affordable housing is "Additionality"; the idea that the affordable housing produced via the planning system should be additional to that created by public subsidy. The idea is that the rise in the land value of a development site, caused by the granting of planning permission, is used to fund the affordable homes. Under "Additionality" it is the landowner which ultimately subsidises the affordable housing.

I have written two articles which explain this idea and the relationship to the development of London’s affordable housing planning policies. These are "Means to an End" Planning 13 March 1998 and "Affordable Housing Options" regarding the Three Dragons research work on affordable housing planning policy delivery in London Planning 14 September 2001.

You have reported cases on a number of occasions relating to whether or not affordable housing should be provided as part of retirement flat developments. I seem to recall that conclusions on this question have gone either way. Can you direct me to any of these decisions and comment on any pattern that is emerging?

A large number of such cases are summarised in Development Control Practice at (7.3331) which demonstrate a variety of decisions based on the characteristics of each particular scheme in the context of planning policies and local need. A recent decision in Watford reported in Planning 20 June p17 demonstrated what is perhaps the commoner finding that affordable housing is not appropriate in the case of retirement or sheltered housing schemes. Taking a general view of the matter, it is extremely unsatisfactory that the development control system has not been able to provide a consistent and precise policy basis across the country enabling developers and local authorities to estimate affordable housing requirements with any certainty.

Response

I have to disagree with your point that most sheltered housing appeals have found that affordable housing is not appropriate. Provided there is an up to date housing plan policy on affordable housing, which is underpinned by sufficient evidence of housing need and having taken account of all of the criteria in paragraph 10 of Circular 6/98 there is no reason why a council cannot defend its position on appeal.

A careful analysis of appeal cases where there has been dispute on this point shows that in a clear majority of decisions an inspector has determined that retirement housing schemes proposed justify exemption from an affordable housing requirement. As you say, this does not take away from the fact that decision makers are quite entitled to seek such provision in the terms of the Circular and local policies, as shown in McCarthy & Stone Developments Ltd v Stockport MBC [2000], but considerations such as lack of viability deriving from physical or management problems are commonly overriding.

My client was granted permission to convert a building to 13 one-bedroom flats. There is now the possibility of creating two additional units within the building. However, if an application is submitted for two units does the original permission come into effect with regard to affordable housing as this development has not been constructed? If it does, would this change if the application for the two additional units were made after the completion of the 13 units?

PPS3 Housing advises a national minimum threshoId of 15 dwellings before a requirement for an element of affordable housing is applicable. I am assuming that this is the case here, and also that it would not be necessary to significantly alter the permitted scheme to accommodate the extra two units.  Clearly, there is no obligation on your client to provide any affordable units if the present permission were to be implemented. If an application for the two additional units were now to be made it would doubtless be seen by the local authority as a blatant attempt to manipulate affordable housing thresholds. However, I cannot see how a refusal of planning permission for the two extra units could reasonably be sustained at appeal on the basis that no provision has been made for the affordable housing requirement for a 15 unit development, particularly in view of the fall-back available to your client.  In hindsight, perhaps the local authority should have been alerted by the initial submission of a scheme just two units short of the threshold and considered whether a refusal was justified on the basis of underdevelopment. This stance has been accepted in a number of appeal cases. In an example from Croydon, it was considered that the site of a proposed 14 apartment scheme was capable of accommodating at least 15 units without any serious harm (DCS No. 047-416-672).

I submitted an application for a small 14 unit housing development and specified within the description on the application form that 5 affordable units would be provided, this being 36 percent of the total. This description was accepted but the report to planning committee indicated that there should be 6 affordable dwellings. This brought the total affordable provision to 43 percent which was felt to be closer to the plan policy target of 40 percent.  Planning permission was issued with an amended description, not agreed with the applicant or agent! My concern is that the local authority figure is not expressed in terms of 40 percent being a minimum target, and in the case of smaller developments the number of affordable units is simply not obtainable by the percentage method. Where this has cropped up before, local authorities have accepted rounding down of the numbers. Could you provide some guidance in relation to the acceptability of the practice of requiring more than the "target" percentage?

As might be expected there is no government guidance relating to this fine point of interpretation of policy application. Neither can I find an instance of it arising as a particular issue at appeal. On the face of it would seem to be slightly unreasonable for local authorities to seek to round up a "target" requirement, although their motives for so doing are, no doubt, worthy enough in the light of affordable housing need. However, I am not surprised that, as you say, most authorities accept that to be fair the requirement should be rounded down in this type of situation.

The conditions the Planning Officers Society and the planning inspectorate recently produced included one on affordable housing. Clearly imposing conditions relating to affordable housing could improve our performance in terms of 8/13 week targets. Some colleagues are sceptical whether imposing conditions would adequately deal with affordable housing. Have authorities who already use them experienced any problems and will others who have not previously used them now do so? If conditions are acceptable for affordable housing, could they be used for open space provision and financial contributions? Any thoughts/comments/experiences would be welcome. DS.

The recently published condition on affordable housing seems to meet the circular 11/95 tests. As it has a form of official endorsement, it would be reasonable to use it. Section 4.43 of Development Control Practice considers whether conditions requiring a planning obligation can be used and the wording of such a condition from a 2005 appeal decision is quoted (DCP reference: 100-038-941). Circulars 11/95 and 5/05, however, both proscribe this practice and, in view of this advice, I would not recommend using such conditions. I have little direct experience of the use of affordable housing conditions, however, but perhaps other readers can comment on their experiences. JH.


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