Service charges prove problematic to affordable housing provision

The potential service charges associated with converting a former hotel in west Sussex to residential use were sufficient to persuade an inspector that an appellant should make a financial contribution towards affordable housing rather than make provision within the development itself.

A section 106 obligation required that 40 per cent of the units should be affordable. The appellant argued that this would render the scheme unviable and had led to the development becoming stalled. As a consequence, no provision should be made, the company claimed. The council, following advice from the district valuer, stated that 14 mixed tenure flats (31 per cent) or 18 shared ownership flats (40 per cent) would be viable.

In agreeing largely with the council’s evidence the inspector agreed that a profit of between 17 per cent and 19 per cent was possible using the type of affordable units suggested by the council and after taking account of appropriate sales values for the open market units, build costs and contingencies. Nonetheless, the service charges for the management and maintenance of the property would be relatively high and registered social landlords would not be prepared to absorb such charges. The council operated a programme with a development partner whereby 100 per cent affordable units were built on council-owned land. Consequently, the inspector amended the obligation to require the payment of £2.4m towards off-site provision as a means of ensuring that the development progressed with open market housing only within the building.

Inspector: Christina Downes; Hearing


Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Sign up now
Already registered?
Sign in

Join the conversation with PlanningResource on social media

Follow Us:
Planning Jobs