Housing Core Strategy Review Issues and Options

Housing Issues and Options

9 Issue: Community Infrastructure Levy (CIL) and Commuted Payments (payments in lieu of on - site affordable housing)

Issues

9.1         Currently the Borough seeks contributions in lieu of on-site affordable housing only in certain circumstances. Such as in the case of modest increases in residential floorspace (currently 800 sq m to 1200 sq m) the Council accepts a financial contribution, which is placed in the Borough’s Affordable Housing Fund. The Fund is only used for the provision of affordable housing in the Royal Borough. An amount per sq m is required (£2,500 per sq m at present) and monitored annually. The amount can be adjusted to reflect actual costs of providing affordable housing within the Royal Borough. The payment could also reflect the financial benefits to a developer for securing a site solely for market housing, rather than a mixed scheme.  

9.2         A new mechanism to secure financial contributions for affordable housing could be through CIL (see para 7.7). However affordable housing is currently excluded from CIL[5] but amendments to the CIL regulations are expected later in the year which may include provisions to allow funding of affordable housing.  If the Government decide not to use CIL in this manner then a similar approach could be adopted by accepting financial contributions in lieu of affordable housing secured through a s106 legal agreement. This could be based on a standard formula, but one that reflected the different viability rates within the Borough.  Delivery through CIL would mean a financial contribution from the applicant, placing the responsibility for building the units on the Council or on Registered Social Providers who act on their behalf.  This could be advantageous in terms of transparency and ease of negotiation, but could result in delivery issues – for example, finding land on which to provide the units in a Borough where there is virtually no spare land and where the cost of land is the highest for residential land in the United Kingdom. This could mean a very high financial contribution through the CIL process and/ or delivery outside the Borough boundary.  

9.3         If the Government amends the system to allow for provision of affordable housing through CIL, or financial contributions in lieu of affordable housing are adopted as the Council’s preferred position, it gives rise to further choices; these are also set out in the options below:


[5] The Community Infrastructure Levy (CIL) was introduced in 2010 to fund necessary infrastructure – for example health facilities, schools, roads -through a levy charged on developments of 100 sq m or more.  By 2014 it will replace the planning obligations (Section 106) regime as the principal means of infrastructure delivery.

Options 

Option 1: Continue with the current policy which is in kind and on site delivery except on smaller schemes with a floorspace of between 800 sq m and 1,200 sq m. 

Pros 

    • It can promote a diversity of housing in the Borough.
    • Thecurrent approach is tried and tested for smaller schemes below 1200 sq m.  It is readily understood, and allows for revisions based on viability.
    • The approach takes account of viability of schemes from the outset, and affordable housing is considered alongside a range of other planning obligations. This can permit some flexibility. 

Cons

    • The approach is very time-consuming to those involved, and can be expensive to administer.
    • Because the s.106 approach requires agreement, it can be resource intensive, and, ultimately yield relatively small numbers of affordable housing units or floorspace.
    • The range of competing planning obligations required to mitigate a development can result in the level of affordable housing being reduced. 

Option 2: Use CIL (or s106 agreements) to collect payments for affordable housing.  Amend the policy to use the Community Infrastructure Levy (CIL) or s106 if CIL does not come forward, to secure contributions to affordable housing.  The provision of affordable housing will then be the responsibility of the Borough, and could be provided within or outside of the Borough. 

Pros

    • A significant level of affordable housing may be delivered which could start to address housing need.
    • The policy would promote growth in market housing, and because the requirement for on-site affordable housing is removed, a wider range of market housing units could be sought (conventional units as well as ‘super-prime’ units).
    • If money is spent to provide affordable housing where land values are cheaper, it could result in additional affordable housing being provided. This could still be part of a mixed and balanced community with a mixture of market and affordable units.
    • The Borough could examine using the money to provide affordable housing outside of the Borough, or even outside of London.  Again, by identifying lower-value land areas, it could be possible to provide a greater number of affordable housing units which reflect housing need. Again, this could still be part of a mixed and balanced community with a mixture of market and affordable units. 

Cons

    • There can be additional challenges arising from spending contributions to deliver affordable housing: site availability, delivery, management.
    • Delivery of affordable housing units on land administered by other authorities, may require partnership arrangements and agreements that a number of units may be given over to the host authority, thus reducing the ‘net gain’ to address housing needs of this Borough.
    • It may not be popular to those prospective tenants who wish to have an RBKC location for family or work reasons.
    • May not promote a diversity of housing within the Borough boundary.