Housing Core Strategy Review Issues and Options

Housing Issues and Options

10 Issue: The Threshold for affordable housing

Issues

10.1         London Plan Policy 3.13: Affordable Housing Thresholds (July 2011) states that “Boroughs should normally require affordable housing provision on a site which has capacity to provide 10 or more homes....” . Requiring affordable housing based on 10 units did not work well in the Borough where, until the policy changed, 9 unit schemes were common. The Core Strategy now sets out a calculation showing 800 sq m to be the equivalent to 10 residential units. This seems well suited to the context of the Borough and it is not proposed to be changed.   

10.2         However, this threshold has also been deducted from the affordable housing floorspace calculation, essentially giving developers the first 800 sq m of new floorspace ‘tax free.’   

10.3         The policy operates at three levels -

    • No affordable housing requirements below 800 sq m.
    • On-site provision/commuted sums in excess of 800 sq m but less than 1,200 sq m.
    • On-site provision only in developments of 1,200 sq m and above.

10.4         Table 1 below illustrates a range of scheme sizes and how the affordable housing policy works in practice.  As shown a 1,200 sq m scheme (broadly equivalent to 15 units) would require a maximum of 17% on-site affordable housing by floorspace. This is because the policy allows discounting the first 800 sq m. 

10.5       Therefore we need to consider if smaller schemes below 800 sq m should contribute towards the provision of affordable housing targets in the Borough. This is especially important given that many of the sites coming forward in the Borough are small and the effect of this discount is far more significant as the table below shows.

Table 1: Affordable Housing Policy in Practice

a

b

c

d

e

f

Total floorspace (GEA) Sq M

Equivalent units (approx)

Floorspace liable to affordable housing requirement in CH2

 

Affordable housing floorpsace sought (GEA) Sq M

Equivalent affordable units (approx)

Affordable housing floorpsace sought as % of total

Formula:

 

=a - 800

=c x 0.5

 

= d / a

1200

15

400

200

2

17%

2000

25

1200

600

7-8

30%

3000

37-38

2200

1100

13-14

36%

5000

62-63

4200

2100

26

42%

10000

125

9200

4600

57-58

46%

Note: The table is for illustrative purposes.  *The formula follows the approach in Policy CH2, where 50% of floorspace is sought on-site, as affordable housing, in excess of the first 800 sq m.  On schemes of 1,200 sq m and greater, the total GEA floorspace (column a) deducts the first 800 sq m (column c).  50% of the resulting floorspace (the formula in column d) is then sought as affordable.

Options

Option 1: Maintain the status quo: affordable housing (contribution or floorspace) would only be sought on the floorspace ‘in excess’ of the first 800 sq m. 

Pros

    • It can aid viability of smaller schemes because the requirement is linked to the scheme size.
    • May enable more smaller sites to come forward.
    • The approach places a greater reliance on the larger – strategic – sites in the Borough. These are known development sites with known infrastructure requirements, and delivery can be assisted through site allocations, development briefs or other provisions. 

Cons

    • The current delivery mechanism does not recognise the predominance of smaller sites in the Borough and is not tailored to the RBKC context.
    • Some very large sites – where the policy requirement for on-site affordable housing is proportionately higher, have proven unviable at the policy compliant percentage.  This places a greater reliance on smaller sites to deliver the Borough’s total affordable housing requirement.
    • Operationally, the approach has not delivered the level of affordable housing envisaged.  Although this may not be entirely due to the policy – other factors have played a part – it suggests that the policy needs reviewing.  

Option 2:  Once the affordable housing threshold of 800 sq m has been reached, all the net additional floorspace is liable for an affordable housing contribution and the first 800 sq m is no longer discounted. 

Pros

    • Basing the affordable housing requirement on the total floorspace, instead of the excess above the threshold, could result in greater affordable housing delivery from qualifying schemes.
    • The policy would require a greater contribution from smaller sites in the Borough.
    • It may enable more on site and in kind housing units being delivered fulfilling the concept of mixed and balanced communities
    • It may enable more sites in the Borough to be eligible for affordable housing contributions and it is more tailored to the type of sites that come forward in RBKC.
    • It is more in line with the approach to affordable housing of other boroughs. 

Cons

    • Seeking a larger proportion of qualifying floorpsace for an affordable housing contribution, especially for smaller sites may make certain schemes unviable.
    • There may be an opportunity cost in so far as money for other infrastructure contributions may not be available as more resources would go towards affordable housing delivery. 

Option 3: Increase the threshold for on-site provision for example to 1,600 sq m of floorspace[6], and requiring financial contributions through s106 or CIL (if taken forward) on schemes below this net increase in floorspace. 

Pros

    • It may avoid the delivery problems on smaller sites just over the 1200 sq m threshold.
    • This approach may assist housing delivery, particularly the delivery on the small to medium sites.  It would allow more flexibility.
    • The approach would be likely to secure an increase in financial contributions which could be spent to improve the delivery rate of affordable housing elsewhere where land costs may be lower.
    • It could reduce the time and complexity of negotiation, instead securing a transparent payment would speed the system up and it may be easier to administer from a Registered Social Landlord perspective. 

Cons 

    • Financial contributions in lieu of on-site or in-kind provision can have added complications to the delivery of affordable housing – e.g. finding the land to provide housing is extremely difficult in the Borough given the shortage and very high cost of land. Land may need to be found elsewhere.
    • Allowing a greater number of schemes to provide contributions instead of units may not promote housing diversity at the local level.

[6] 1,600 sq m (GEA) would be broadly equivalent to 20 units.  Based on past development trends, an increase to this level would increase the occurrence of financial contributions sought in lieu of affordable housing by around 50-60%.  Beyond this, point the schemes are large, but a much fewer number.