Housing Core Strategy Review Issues and Options

Housing Issues and Options

7 Issues and Options

7.1         The delivery of affordable housing is probably the greatest housing challenge that the Borough faces over the coming years. Current delivery figures are significantly below the target set by the London Plan (200 units a year). Whilst a major component of the target figure is based on delivery from the Borough’s strategic sites there is also a significant proportion that needs to be delivered from other sites within the Borough. Demand for all types of housing, including affordable housing, is insatiable and however many homes are built it will never begin to satisfy the demand. This may lead to difficult choices having to be made if the Council is serious about delivering more affordable homes. Part of the purpose of this document is to promote discussion on the subject. Some of the issues that need to be taken into account are mentioned below:

7.2         The unique characteristics of the Borough: The Royal Borough has some unique characteristics which make the delivery of on-site affordable housing more challenging than elsewhere. Being the smallest Borough in London in terms of size there is a severe shortage of land on which to build and when development opportunities do come up invariably they are on small sites. It has the highest property prices in the United Kingdom. It is a very desirable location for individuals and organisations to invest in real estate which contributes to pushing prices even higher, making it difficult to provide a diversity of housing for all tenures. The Borough’s coherent and rich historic townscape which forms the basis of its attractiveness as a desirable place to live means that there are fewer development sites and those that do come forward are often severely constrained because of townscape considerations. Apart from the strategic sites, the opportunities to provide affordable housing on-site are therefore limited. 

7.3         Affordable Housing Targets: Core Strategy Policy CH1 makes a provision to deliver the maximum amount of affordable housing and reflects the London Plan target of 200 additional units per year from 2011/12 to 2027/28.  However, the Annual Monitoring Report (AMR) shows that the Borough’s affordable housing target has not generally been met since 2006/07 with just 22 units permitted in 2009/10 and 61 in 2010/11. 

7.4         Affordable Housing Thresholds: Current planning policy requires a provision of 50% affordable housing on any residential development in excess of 800 sq m gross external floorspace. 800 sq m is considered large enough to accommodate 10 units. Whilst the policy acknowledges that at 800 sq m the development may be too small to accommodate on- site affordable housing the existing threshold of 1200 sq m has also proved difficult to administer, both in terms of negotiation and on site provision. The delivery of one or two affordable units creates challenges for a Registered Social Provider (RSL) and fails to provide a suitable housing mix on a site. The issue of thresholds needs reviewing.     

7.5         Financial Viability: In practice it has been found that the existing 50% floorspace target has never been close to being achieved as it is subject to a financial viability assessment. The viability assessments which have been received by the Council (and independently checked) demonstrate that the high costs of delivering the 50% affordable floorspace target make schemes unviable at this level. This results in either a commuted sum being taken; affordable housing being provided elsewhere or provision on-site which is significantly below the 50% floorspace policy requirement.  Should the 50% target be retained, or indeed is any target realistic, or should the policy revert to obtaining the ‘maximum reasonable amount’ of affordable housing to go on a site? 

7.6         Community Infrastructure Levy: The Government is considering introducing a new mechanism for paying for affordable housing through the Community Infrastructure Levy (CIL). The developer/applicant will pay a financial contribution through CIL for the provision of affordable housing but the Council/ Registered Social Landlord (RSL) will have to provide the housing including the site. Accepting financial payments in lieu of affordable housing could be viewed by some as an attractive option, especially on smaller sites where a much higher market value could be obtained and a high levy could be set. The money could be ring fenced for housing delivery. However, there may be disadvantages – there is a shortage of available sites in the Borough to provide appropriate mixed tenancy developments and the cost of land is high. Development outside the Borough boundary may enable more suitable developments to come forward with much higher delivery numbers and an appropriate mix of market and affordable units, but it may not be popular with those who have a close link with the Borough. How should the Council proceed?    

7.7         Affordable Rent: The Government has also introduced a new affordable housing tenure called ‘Affordable Rent’. This tenure will be available to those on the Council’s housing register. However, the rents charged may be much higher and can be up to a maximum of 80% of the market rents. Whilst a higher level of rent would enable affordable housing providers to deliver more affordable units recent evidence has shown that a level above 45% would be unaffordable to those in the most need. 

7.8         Whist it is desirable to provide affordable housing on-site, experience has demonstrated that it has not been successful in tackling housing need within the Borough. This leads to the question whether (a) We should carry on broadly with the current system of seeking on-site provision or (b) seek in kind off site provision or (c) shift in principle to a contributions based approach? The following sections deal with the different aspects of these questions in greater detail.