Housing Core Strategy Review Issues and Options

Housing Issues and Options

11 Issue: Affordable Housing: Targets

Issues

11.1         The Core Strategy adopts the London Plan target requirement of 200 additional affordable units per year.  The target is based on known housing need, and also on viability evidence, taking overall supply of housing into account.  This is calculated by examining the capacity of the larger sites in the Borough to accommodate housing. 

11.2         The 50% target for provision of affordable housing within Policy CH2 is based on the Strategic Housing Market Assessment (SHMA) identification of housing need, and on viability evidence.  The Affordable housing Viability Assessment 2010 provides a ‘reality check’.  The Council commissioned this independent study of the affordable housing policy, which assesses policy at the strategic level (not on a site-by-site basis). In summary the ‘Affordable Housing Viability Study’[7] reported that:

  •  A figure of 40% affordable housing floorspace is generally viable, and this was subsequently updated to 46% in 2010.
  • 50% affordable housing floorspace is deliverable in some circumstances; there is no justification for adopting a lower target as need far outweighs supply.
  • Affordable housing threshold of 10 units would be financially viable in most circumstances.
  • Within the Royal Borough, a 10 unit threshold equates to the 800 sq m threshold within the policy. A floorspace figure has been used because it makes it harder for a developer to get round compared with a policy based on units.

11.3         Therefore, the 50% target on qualifying sites is based on: (a) sound evidence– as it is based on the level of affordable housing needed, and (b) realistic– because it is grounded in an assessment of what is viable, in most cases.  Monitoring of affordable housing delivery in recent years shows, however, that the target is not close to being met. 

11.4         The Core Strategy states that the implementation of Policy CH2 will be dependent upon a ‘viability test’ as to what would represent the ‘maximum reasonable amount’ of affordable housing provision on a site (Core Strategy CH2 criterion p).

 11.5         These site-by-site viability tests almost always result in a level of affordable housing which is substantially less than the 50% headline target. 


[7] RBKC Affordable Housing Viability Study, 2009 and 2010

Options

Option 1: Continue with the current policy, seeking a 50% on-site floorspace requirement, subject to viability, on qualifying sites.

Pros

    • The policy provides a degree of certainty and transparency.  Adoption of a target allows an agreed and understood starting point.
    • The policy requires the applicant to demonstrate reasons (economic, site or policy considerations) as to why the target should not be provided, which allows a range of considerations to be included in decision making. 

Cons

    • The absence of a headline target may hinder negotiations, meaning that the starting point is always lower than the known level of need.
    • In practice, issues of viability and securing a maximum reasonable amount are greater considerations than rigid adherence to a target, which itself may rarely be delivered. 

Option 2: Remove, or reduce, the headline target of 50% of affordable housing floorspace to be delivered, but maintain and emphasise the importance of the ‘maximum reasonable amount’ subject to viability considerations. 

Pros

    • The policy approach would closely follow the London Plan approach to affordable housing.  This is widely understood by developers across London.
    • This approach would be closely aligned with how affordable housing is secured in practice.
    • This approach recognises that 50% is generally unattainable on a site-by-site basis. 

Cons

    • Although the target may not regularly be met, it was based on evidence.  Its removal, or reduction, could send a signal to developers that it is no longer so important.
    • Without a target, there is a lack of transparency, understanding and certainty on which to build in valuation assumptions as to the cost of land.  This may, in the longer term create more problems than it could solve in terms of affordable housing delivery.