Monday, 15 September 2014 10:14

Affordable housing threshold under fire

Written by  Ruralcity Media
Affordable housing threshold under fire

THE Rural Services Network has urged the government to abandon proposals to exempt smaller developments from affordable housing requirements.

The Department for Communities and Local Government has been canvassing opinion on proposals to introduce a 10-unit threshold for Section 106 affordable housing contributions.

The Rural Services Network (RSN) has already responded to a government consultation on the proposals.

In a further move, RSN chief executive Graham Biggs has now written to communities minister Brandon Lewis over the issue.

"The 10-home threshold would be nothing short of ruinous for the provision of affordable housing in rural areas," said Mr Biggs.

Currently 66% of affordable homes in rural areas came through Section 106 Agreements, he added.

Most developments were small, said Mr Biggs. The vast majority were below the ten unit threshold - not least because the smaller the scheme, the less the local opposition.

"Without an obligation to provide any affordable homes, this supply will virtually dry up."

The letter was sent to Mr Lewis on behalf of the members of the Rural Services Network – and in particular its local authority, community and housing provider members.

A copy of the letter can be seen here. The RSN has also produced a briefing note outlining concerns regarding the 10-unit threshold proposal.

RSN members who share these concerns are being urged to write urgently and directly to Mr Lewis. They are also urged to contact their local MP.

Copies of the letter and the briefing note have been sent to MPs representing rural constituencies urging them to contact the minister as well.

One in three of new rural affordable homes are achieved through the Rural Exception Site route, the letter says.

If the ten unit threshold was imposed, the "hope value" would increase significantly that all new homes could be sold at full market value.

This would make it extremely difficult to persuade owners to part with land on the special terms usually applying to Rural Exception Site.

In the rural context, a policy which required local planning authorities not to require an affordable housing contribution from sites of less than 10 units had no rational or purpose.

"Its consequences would be no less than catastrophic," the letter says.

"It also would fly in the face of localism and would seriously undermine the national planning policy framework. Such a proposal has clearly not being rurally proofed."

To meet these concerns, the letter calls on the government to exempt – at the very least – all sites in villages of less than 3,000 population.

There is clear precedent for such an exemption limit – and preferably towns and villages of less than 10,000 population – from the removal of an affordable housing requirement, it adds.

Meanwhile, a group of cross-party MPs has brought a bill before Parliament to protect rural housing communities from the government's proposals.

Led by Lib Dem MP Tim Farron, the group believes the proposals risk drying up the supply of affordable homes in small communities.

The bill, which has the backing of five MPs from all parties, would give local authorities the decision on the most appropriate threshold, rather than central government.

Mr Farron said: "If the government does not accept our bill, it will hurt rural communities as we seek to provide enough homes for local people of all ages."

Removing the obligations would virtually cut off one of the two major routes which guaranteed the supply of rural affordable homes, he added.

It would also risk affecting the other key mechanism - rural exception sites - making it harder to guarantee a supply of land.

"This could ratchet up the price of land, which would even backfire back onto small builders while delivering windfall gains for speculative land traders," said Mr Farron.

People in this conversation

  • Guest (John Reynolds)

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    There really does have to be a lower threshold. It is unrealistic for builders of say 5 houses or less to provide this benefit.
    (Retired builder- not a developer, 35 years experience as local councilllor on Planning Committee)

    from Buntingford, Buntingford, Hertfordshire SG9, UK
  • Guest (Cllr Carl Clark)

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    This will be bad for communities and councils as developers will opt for smaller developments to come under the threshold.

    from Thetford, Norfolk, UK
  • Guest (Derrick Dyas)

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    Why is it unrealistic for builders on small sites to provide this benefit. There is a desperate affordable housing shortage in rural areas and anyone who has an opportunity to develop should have a moral responsibility to contribute.
    Contributions can be by way of on site provision (1 in 5 no problem) or a commuted sum which can be passed on to a Rural HA for off site development as does Stratford on Avon DC.
    We are talking local people here not some urban migrants with no local connection.

    from Solihull, West Midlands, UK
  • Guest (Mary Anson)

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    The more affordables per site, the higher the cross subsidy which inevitably is passed onto the non-affordables, making the purchase price too high for first time buyers.
    Parish councillor, Cornwall

  • Guest (Derrick Dyas)

    In reply to: Guest (Mary Anson) Report

    But Mary, there are ways to include First Time Buyers in to the definition of "affordable housing" and in reality, open market market housing will rarely be affordable for them. However, this will, of course, depend upon local market conditions and I understand that some areas of Cornwall are pockets of deprivation as opposed to high demand areas like the South Hams of Devon.

  • Guest (Mary Anson)

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    Hi Derrick, I agree with you in part, and have no particular issue or solution either way with 'affordable' housing. However, anything which pushes up the price for the non-affordable homes will inevitably further increase the demand for affordables. It's the issue of cross subsidisation which distorts the market so much and contributes to both inflation and demand, and thus to more social housing need. Section 106 affordables are difficult to move on from as they cannot command a market price.

  • Guest (Graham Townsend)

    In reply to: Guest (Mary Anson) Report

    Open market prices are not dictated by the s106 requirements but by the market. Developers will sell their OMs for as much as they can get. Affordable requirements hit developer's margin to a degree, but mainly the land price. We need a debate about reasonable uplift then guidance to inspectors in viability appeals. I resist giving up affordables to allow agricultural land (c£25k ha) to be bought for £750k ha. Using discounted market sales at fixed % of OM can avoid falling behind the market.

  • Guest (Derrick Dyas)

    In reply to: Guest (Mary Anson) Report

    Mary, I am not sure that I understand your point about S106 affordables being difficult to move on from? They are generally not subject to "market" conditions - that is their beauty. The price for the "market" housing is determined not by the financial costs of the scheme (including x-subsidy) but by the max' price a purchaser is willing to pay. There is so much leeway available to developers to reduce costs - especially with rural developments on both S106 and "exception" sites.

    from Solihull, West Midlands, UK
  • Guest (mike)

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    sorry but the only people buying rural affordable houses are the children of rich incomers to village not the original village workers who have already had to move ,it is totally fake

    from Devon, UK

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