As the government announces a package of proposed planning reforms, John Perry says an opportunity to put the need to build more homes that people can afford centre stage has been missed.
Affordable homes built when developers get planning permission for market housing schemes make a vital contribution to meeting needs. The government’s latest consultation shows they were worth £4 billion last year, and we already know they produced more than 18,000 homes or 43% of the affordable housing built in 2016/17, mostly without grant.
It’s extraordinary then that when the government listed its objectives for this week’s package of planning reforms, increasing the supply of affordable housing wasn’t one of them. Emphasising its continued importance would have signalled that the government intended to halt the steady erosion of ‘section 106’ powers that began under the coalition government.
At a time when more and more people are in need of genuinely affordable homes, the numbers are sobering. In 2013 a study of the 82 largest housing developments in ten major cities by the Bureau of Investigative Journalism found that only 40 per cent of them complied with local targets for affordable housing. And last year Shelter research carried out in 11 local authorities across England showed that 2,500 affordable homes were lost in just one year on schemes where developers submitted viability assessments, equivalent to a 79% reduction in affordable housing compared to the levels required by council policies. We explore the issue of the gaping loopholes in viability tests further in this year’s UK Housing Review, which will be launched later this month (March).
There are several indications that the government recognises the problems. It highlights the abuse of viability tests which lead to contributions being renegotiated and – all too often – eliminated altogether. It says that contributions should capture a higher proportion of the increase in development values that planning permission brings. And it argues that the system needs to be more transparent so that communities can see what is planned and whether developers are delivering it.
If building affordable homes is a key objective, then the tests of section 106 agreements come at two stages. First, are robust requirements being set in the original agreement? And second, are they being adhered to over the period before sites are built out? The government is clearly concerned about both these stages. On the first, it says that one option could be for contributions to be set nationally and be non-negotiable – perhaps intended more as a threat than as a viable reform.
Making policies more open to local scrutiny will certainly help focus attention on their importance. The revised National Planning Policy Framework (NPPF) encourages councils to agree affordable housing contributions at pre-application stage, thus avoiding contentious viability assessments. But the new requirements focus firmly on home ownership and private renting. The NPPF says that at least 10% of homes in market schemes should be for affordable ownership, except if the development is intended for ‘affordable’ private rental. Starter homes are included in the definition but any separate specification for affordable renting by social landlords is entirely absent.
On ensuring that affordable housing actually gets built, the weakness of the proposals will show in areas where local plans aren’t in place or where their affordable housing requirements aren’t enforced. New guidance on viability assessments calls for them to be done on an open book basis, but there is nothing on how local authorities should challenge evidence provided by developers if they argue that a council’s affordable housing requirements are no longer feasible. Whether the viability test loophole which was created by the coalition government will now be closed remains to be seen.
The reluctance to give a rousing endorsement of the use of developer contributions to provide homes to let by councils and housing associations is apparent from the prime minister’s speech. It focused almost entirely on home ownership, and when it mentioned renting it was the private sector that received attention.
This might be fine if the measures “to clean up the rental market and bring down the cost of renting” were really likely to have a widespread effect. But as the government’s statistics make clear, it’s the private sector that’s driving the steep increase in homelessness.
To truly fix our broken housing market, we need to make sure we are building the right homes, in the right places, at the right prices. The solution is more genuinely affordable homes, including homes at social rent, built by social landlords, and the planning system has a vital role in delivering them. An opportunity to put this centre stage has been missed.
Original post: Chartered Institute of Housing