APPENDIX 1
POLICY COMMISSION BLUE PAPER
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RESPONSIBLE BODY Policy
Commission for Care, Health and Housing |
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PROJECT NAME Affordable Housing – Low
Cost Homes for |
REFERENCE NUMBER H2/06 |
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1. PURPOSE OF ENQUIRY AND PROPOSED OUTCOMES 1.1
To identify challenges to the provision of affordable housing on the 1.2
The Local
Area Agreement sets out the aim to, “Provide healthy, safe, affordable
housing accommodation according to the needs of 1.3
A need to
better communicate and promote the concept of affordable housing. 1.4
To act as the
core working party for the Housing Market Assessment to underpin the
strategic policy framework of the Housing and Employment Development Plan
Document |
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2. RECOMMENDATIONS 2.1
To confirm that the Council accept and are
comfortable with the new definitions of ‘affordable housing’ and ‘low cost
market housing’ as set out in Planning Policy Statement 3 and “Delivering
affordable housing” These definitions have been set
by Central Government through Statutory guidance 2.2
To develop detailed planning policies on low cost
market housing to meet the needs of 2.3
To carry out further work to assess the viability of setting up a
Housing Trust. This should include
homes with a continuing discount.
This
recommendation has been developed in response to consultation exercises
undertaken across the 2.4
The Council investigates the feasibility of introducing a tiered tariff
system for affordable housing to compliment the current threshold
system. Any tariff system should be
based on value rather than the number of units and should apply in all
circumstances. This recommendation has been developed in response
to consultation undertaken with private developers and a site visit to Milton
Keynes Council 2.5
That any changes to existing affordable housing policy thresholds
brought in as part of the Housing and Employment Development Plan Document
should be phased in over a minimum of six months and involve consultation
with developers and other stakeholders. The recommendation of a six month minimum is suggested as a response
to developers informing us that they need time to plan development viability
and financial appraisals for the purchase of land. 2.6 That the Council develops
design statements/specifications for large developments (the definition of
‘large’ to be determined) to set out the Council‘s vision for particular
development sites. This
recommendation is included as a result of talking to other councils in the
South of 2.7
Neighbourhood
Involvement Workers should be funded by developers as a condition of
planning, for large (the definition of ‘large’ to be determined)
developments. The role of these workers would be to bring residents together
in order to encourage the building of sustainable communities, rather than
just houses. This recommendation builds on a site visit to 2.8
To ensure that the provision of affordable housing and low cost
market housing is maximised on large sites.
The definition of ‘large’ is yet to be determined but for example:
Council owned land at Pan. However, development
of sites must have a sympathetic approach to the environment, quality of life
and sustainable community issues. 2.9
That the Housing Department seeks to increase the level of investment
for affordable housing brought to the 2.10 That
specific policies are developed for affordable and low cost market housing in
rural locations. Cllr
Erica Chair of the Policy Commission for Care, Health
and Housing
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3. BACKGROUND TO ENQUIRY ABBREVIATIONS & ACRONYMS PPS 3 - Planning Policy
Statement 3 – Housing DCLG – Department of Communities and Local Government DPD – Development Plan Document RSS – Regional Spatial Strategy NHF – National Housing Federation UDP – Unitary Development Plan RSL – Registered Social Landlord LDF – Local Development Framework ( CPA - Comprehensive Performance Assessment GOSE – Government Office of the South East SEERA – South HMA -
Housing Market Assessment DEFINITIONS 3.1
The definitions set out below in paragraph 3.3 have been made in
“Delivering Affordable Housing” (Communities and Local Government. 2006. Arriving at an over-arching definition 3.2
The Government accepts that
there is a distinction between ‘affordability’
and ‘affordable
housing’. What this new guidance aims
to do is set out in clear terms the types of housing that are considered as ‘affordable housing’ and what is ‘low cost market housing’. 3.3
The Government has adopted this definition of
affordable housing because it wishes to ensure that developer contributions
are used to help provide genuinely affordable housing for households in need
over the long term. The definition includes homes owned or managed by private
sector bodies and provided without Government grant, and new models of
affordable housing. 3.4
Affordable housing is one of the
following types of housing: ·
Social Rented Housing
·
Intermediate Rented Housing
·
Discounted ·
Shared Equity Housing 3.5
Affordable housing should also ·
be available at a cost low enough for people to afford, determined
with regard to local incomes and local house prices ·
be retained for future eligible households or ·
if these restrictions are lifted, for any subsidy, such as a
discounted % sale price, to be recycled for alternative affordable housing
provision. Social Rented Housing
3.6
Currently on the Isle of Wight ‘Social Rented
Housing’ is rented
housing owned and managed by Housing Associations, for which guideline target
rents are determined through the national rent regime. 3.7
It may also include rented housing owned or managed by other persons
and provided under equivalent rental arrangements to the above, as agreed
with the Isle of Wight Council or with the Housing Corporation as a condition
through regulation or contract to meet the criteria. 3.8
On the Intermediate
Rented Housing
3.9
Intermediate rented homes are provided at rent
levels above those of social rented but below private rented. Discounted 3.10
Discounted sale homes have a simple discount for
the purchaser on its market price, so the purchaser buys the whole home at a
reduced rate. The unsold equity share would be retained and this discount
would follow on to the next owner, e.g. as used by Merlion Housing Shared Equity Housing 3.11
Shared equity housing describes the situation
where more than one party has an interest in the value of the home e.g. an
equity loan arrangement or a shared ownership lease. There may be a charge on
the loan, and restrictions on price, access and resale. 3.12
Shared ownership is a form of shared equity
under which the purchaser buys an initial share in a home from a housing
provider, who retains the remaining share and may charge a rent. The
purchaser may buy additional shares (‘staircasing’), and this payment should
be ‘recycled’ for more affordable housing. In most cases, a purchaser may buy
the final share (‘staircase out’) and own the whole home, though this may be
restricted in some rural areas. Other products that are available include
Home Buy housing schemes. What affordable housing is not: 3.13
If a housing scheme does
not: ·
Provide accommodation at a cost low enough for people to afford,
determined with regard to local incomes and local house prices; ·
Provide accommodation retained for future eligible households; or if
these restrictions are lifted, for any subsidy to be recycled for alternative
affordable housing provision. Then it is not considered as
‘affordable housing’ 3.14
For example: homes sold at a
discounted price should
only be considered affordable housing if they meet the criteria in the
definition above. If they do not, even if offered at less than market price,
they should be considered ‘low cost market housing’ and thus are outside the
definition of affordable housing. Housing Trusts 3.15
A ‘Housing Trust’ or ‘Community Land Trust’
(CLT) is a mechanism for the democratic ownership of land by the local
community. Land is taken out of the
market and separated from its productive use so that the impact of land
appreciation is removed, therefore enabling long-term affordable and
sustainable local development. 3.16
The value of public investment,
philanthropic gifts, charitable endowments, legacies or development gain is
thus captured in perpetuity, underpinning the sustainable development of a
defined locality or community. Through CLTs, local residents and businesses
participate in and take responsibility for planning and delivering
redevelopment schemes. 3.17
What do CLTs do? Activities include: ·
Developing affordable housing to rent or buy for members of the
community. ·
Enabling residents on lower incomes to acquire an economic interest
in the success of their community. ·
Developing land for affordable workspace and retail units. ·
Providing and maintaining community facilities for social and public
services. ·
Managing green spaces, conservation areas and providing access for
new entrants to farming. ·
Promoting resident involvement, local democracy and active citizenship. THE NATIONAL AND REGIONAL
CONTEXT 3.18
On 3.19
Planning Policy Statements (PPS) set out the
Government’s national policies on aspects of planning in 3.20
The policies in this PPS should be taken into account by Local Planning
Authorities and Regional Planning Bodies in the preparation of their Local
Development Documents and Regional Spatial Strategies. PPS3 seeks to achieve ·
a wide choice of high
quality homes, both affordable and market housing, to address the requirements
of the community. ·
increased opportunities for
home ownership and ensure high quality housing for those who cannot afford
market housing, in particular those who are vulnerable or in need. ·
improvements in
affordability across the housing market, including by increasing the supply
of housing. ·
a sustainable, inclusive,
mixed communities in all areas, both urban and rural 3.21
The Barker Review
recommended that the 3.22
Achieving a mix of housing 3.23
Local Authorities need to plan for a mix of
housing on the basis of the different types of households that are likely to
require housing over the plan period. This will include having particular
regard to: · Current and future demographic trends and profiles. · The accommodation requirements of specific groups, in particular, families with children, older and disabled people. · The diverse range of requirements across the area, including the need to accommodate Gypsies and Travellers. 3.24
Based upon the findings of the Housing Market
Assessment, Housing Needs Survey and other local evidence, Local Authorities
should set out in its Housing and Employment DPD: · The likely overall proportions of households that require market or affordable housing. · The likely profile of household types requiring market housing e.g. multi-person. · The size and type of affordable housing required. Market Housing 3.25
One of the Government’s key objectives is to
provide a variety of high quality market housing. This includes addressing
any shortfalls in the supply of market housing and encouraging the managed
replacement of housing, where appropriate. 3.26
Local Authorities need to plan for the full
range of market housing. In particular the need to deliver low-cost market
housing as part of the housing mix. It
should be noted that low cost market housing is no longer considered by the
Government to fall under the definition of affordable housing. Housing and
Employment DPD 3.27
In our Housing and Employment DPD we need to: ·
Set an overall (i.e. plan-wide) target for the amount of affordable
housing to be provided. · Set separate targets for social-rented and intermediate affordable housing where appropriate. · Specify the size and type of affordable housing that, in our judgement, is likely to be needed in particular locations and, where appropriate, on specific sites. · Set out the range of circumstances in which affordable housing will be required. The national indicative minimum site size threshold is 15 dwellings. · In particular, as the new definition of ‘affordable housing’ excludes ‘low cost market housing’ when deciding upon the proportion of Affordable Housing to press for it will be necessary to take into account the amount of low cost housing that the developer proposes to provide on the site. This means that different solutions may be sought in different circumstances. Affordable housing will be considered first and if additional subsidy is available then this can be used to bring forward low cost market housing. · Set out the approach to seeking developer contributions to facilitate the provision of affordable housing. In seeking developer contributions, the presumption is that affordable housing will normally be provided on the application site so that it contributes towards creating a mix of housing. 3.28
Where viable and practical, Local Authorities
should consider allocating and releasing sites solely for affordable housing,
including using a Rural Exception Site Policy, to provide for affordable
housing in perpetuity. 3.29
New
housing market forecasts, commissioned from Oxford Economic Forecasting by
the National Housing Federation, indicate that by 2011 people in the South
East will be faced with an average house price of more than £322,000, nearly
40% higher than today. 3.30
The
house price to income ratio in the South East has spiraled in only eight
years from a very expensive but manageable for some 4.8, to today's
unaffordable figure of nearly nine. In many parts of the region, the
situation is considerably worse. The 3.31
The South East
is producing only three quarters of the new affordable homes it needs each
year: ·
Last year a
total of 25,692 homes were built in the South East. Of these 5,870 were
affordable homes for people unable to buy in the open market. ·
Affordable
housing represented 23% of all new homes produced in the region last year. ·
The draft South
East Plan (Regional Spatial Strategy) suggests that 35% of all new building
in the region to 2026 should be affordable homes: around 10,115 of a proposed
regional planning total of 28,900 homes a year. ·
Right to Buy
and other sales in the region of 2,766 homes offset nearly half of all new
affordable homes built last year. So, for every two homes built one was sold.
·
On average,
each local authority in the South East had a net gain of just 42 new
affordable homes after taking into account the effects of sales of affordable
housing. THE LOCAL CONTEXT 3.32
The ·
18% of households on the ·
25% of ·
90% of ·
The average house price on the ·
The average gross annual income for residents on the ·
This would enable an average earner to afford a £60,000 property based
on a mortgage of 3.5 times income ·
Typical first time buyer housing on the ·
Buy to let properties are providing a good
supply of rented housing but there are issues over gaining access to rural
rented housing with average three bedroom houses in Ryde renting at £610 per
month compared to £795 per month in the West Wight. ·
The
affordability gap is even greater for many households who are much worse off
than the average would suggest. An analysis of applicants on the Common
Housing Register indicates an average head of household income of £6230.38.
This would allow only a £21,800 mortgage. On the basis of the National
Housing Federation (NHF) definition of affordability, i.e. 25% of income for
housing costs, this would suggest an ability to pay of only £30 per week. In
reality this means that for 90% of Island House holds using a mortgage to
purchase any type of home will be extremely difficult. 3.33
Some 81% of existing homes on the 3.34
The Isle of Wight Council has set out its
policy for ‘affordable housing’ in the Unitary Development Plan and
Affordable Housing Supplementary Planning guidance. It is
important to understand that the Councils current interpretation of
Affordable Housing is set out in these documents that were adopted in 2001. 3.35
This Statutory Plan will remain the governing
document until it is replaced by the Island Plan Housing and Employment
Development Plan Document. Until this document is in place the 3.36
The following is set out in the UDP at policy
h14 as the definition of affordable housing: “The scale and type of provision will be considered in relation to local needs however, the Council is seeking to achieve housing on appropriate sites to be developed and handed over to a Registered Social Landlord at a discounted price (50% market value). Mechanisms will need to be put in place to ensure such provision remains in affordable use in the long term”. Members will therefore appreciate that this might be a difficult definition for developers to understand and attempt to work with us and implement”. 3.37
Our Supplementary Planning Guidance adopted in
September 2004 goes further than this by stating: “Notwithstanding Circular 6/98, the Council does not envisage that
low cost ‘market housing’ will contribute towards meeting the identified
affordable housing needs of the 3.38
The Island Plan Core Strategy sets out the
overarching policy aim for affordable housing on the 3.39
In the Core Strategy affordable housing is
defined as housing built or acquired by a Registered Social Landlord that is
provided with a subsidy to enable the selling price, rent or combination to
be lower than the prevailing market place in the locality and which is
subject to mechanisms that ensure that the housing remains affordable for
those who cannot afford market or sub-market housing. 3.40
Sub-market housing is defined as housing that
is provided with a subsidy to enable the selling price, rent or combination
to be lower than the prevailing market place in the locality and which is
subject to mechanisms that ensure that housing is adaptable to meet the needs
of residents and to achieve a balanced housing. 3.41
The 3.42
The 3.43
The Island Plan Core Strategy will have to be
changed to meet the revised definitions as set out in “PPS3” and “Delivering
Affordable Housing” (Department of Communities and Local Government, 2006) 3.44
The 3.45
It will enable the Council to meet its
Comprehensive Performance Assessment (CPA) objectives for the management of
housing markets. Specifically, the remit of the HMA is to ·
confirm that the ·
establish a strategic policy context in
which the housing market operates ·
examine the housing market and how it
operates, principally looking at the dynamic between dwellings and households ·
understand recent and current trends in
supply and demand for housing ·
assess the impact of economic and
demographic trends on the housing market ·
understand potential future trends in supply
and demand ·
identify the different tenures required in
the housing market area ·
assess the overall shortfall of housing
relative to demand and how this breaks down by area, tenure etc. given
current policy and to consider options to intervene to readdress imbalances 3.46
As part of this process a new Housing Needs
Survey has been commissioned which studies the demand for housing across the
Island and now contains the latest findings for the 3.47
It is important that the correct size mix of housing is
provided. The following table
sets out the scale of need for social rented housing as identified by the
Housing Market Assessment 2006: Social Rented Housing
(1) Actual need: Number of
people currently in social rented housing plus the total on the register less
the proportion of those on the register who already live in social rented housing. (2) Need in five years: Newly forming households times the number of HNS
respondents who indicated a wish for moving into social rented housing plus
actual need. GVA
Grimley. Housing market assessment.
2006 3.48
The annual shortfall of affordable housing on
the island over the next five years is 1595. 3.49
Alongside this report Three Dragons and 3.50
There is insufficient subisdy available to
build the amount of affordable housing that the |
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4. CONSULTATION 4.1. The
recommendations contained in this report have been produced against an
extensive background of consultation. The Commission has worked through
formal and informal meetings, stakeholder groups, a dedicated email address,
through consultation at a Housing Summit and through the Housing Strategy
Consultation. 4.2. Consultees included two
other local authorities: ·
East Hants
District council, 4.3. Individuals
seen / representations received from: ·
Carol Alstrom, ·
Barratt Homes ·
Mr Morris Barton, advisor to developers ·
Dr Paul Bingham, Director of Public Health,
Isle of Wight NHS Primary Care Trust ·
Mr Ashley Curzon, Head of Regeneration, ·
Leigh Edwards, KingsOak ·
English Partnerships ·
The Federation of House Builders ·
Conal Grier and ·
Glen Hepburn, advisor to developers ·
Housing summit attendees (held on ·
Cllr Gill Kennet, Housing champion ·
Sharon Packer, Rural Housing Enabler ·
Neil Payne, developer ·
Martyn Pearl, ·
Mr Christopher Scott, developer ·
Mr William Smith, developer ·
Margaret Wright, South Wight housing 4.4. In
addition to the Policy Commission’s work, views and information has been
gathered as part of the development of the new Housing Strategy. This includes the Housing Summit, Housing
Needs Survey and Housing Market Assessment. |
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5.1
There is a new set of definitions for
affordable housing and low cost market housing that should bring clarity and
allow a consistency of approach between the council, housing associations and
private developers. 5.2
The 5.3
The Isle of Wight Council must work with the
private sector to develop new models that deliver affordable and low cost
market housing for 5.4
The Isle of Wight Council must ensure that
it sets appropriate threshold levels, based on market evidence, when
negotiating provision of affordable housing by private developers. 5.5
The Isle of Wight Council must ensure that
consultation with developers is paramount in any changes that are made and
that changes are phased in over time to allow the regeneration of the 5.6
The Isle of Wight Council must be a
strategic leader in setting design statements on the type of housing it would
like to see built. These design statements would have to be ensured through
planning guidance and appropriate policies. 5.7
The Isle of Wight Council must ensure that sustainable
communities are built rather than just producing a collection of houses. The expectation should be that private
developers will provided the same community based services as Housing Associations. 5.8
The Isle of Wight Council must set a level
of affordable housing and low cost market housing that will ensure that
developments still come forward and this needs to be done with the full
co-operation of private developers. 5.9
The Isle of Wight Council does not receive
enough external funding to deliver the affordable housing and low cost market
housing that the new housing survey suggests is required by the Council it
requires and therefore needs to explore alternative methods of funding
provision. 5.10
The |
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To develop detailed planning policies on low
cost market housing to meet the needs of Risks: If we do not deliver
policies for low cost market housing we will be subject to examination by the
Planning Inspector and this will delay the delivery of our Housing and
Employment DPD and lead to a reduction in output of affordable housing. Risk Mitigation: Develop policies for low cost
market housing and ensure that these are incorporated within Housing and
Employment DPD. Risks: The risk to the
Council of not investigating this possibility is a reduction in reputation
with private development partners. Risk Mitigation: Regular Housing Enabling
newsletter to communicate changes to policy objectives. That any changes to existing affordable
housing policy thresholds should be phased in over a minimum of six months
and involve consultation with developers and other stakeholders. Risks: Developers will purchase
land and plan developments on the basis of current policy and then will not
be able to bring forward schemes if planning policies change after they have
planned schemes in detail. The risk is that this will halt development on
some sites. Risk mitigation: Involvement of private developers in discussions over changes to Housing and Employment DPD That the Council to develop design
statements/specifications for large developments (the definition of ‘large’
to be determined) to set out the Council‘s vision for particular development
sites. Risks: There is a possibility that
developers can only afford to make a certain level of contributions on a site
and therefore other community benefits may have to reduce as a result. Neighbourhood Involvement Workers should be
funded by developers as a condition of planning, for large (the definition of
‘large’ to be determined) developments. The role of these people would be to
bring residents together in order to encourage the building of sustainable
communities, rather than just houses. Risks: There is a possibility
that developers can only afford to make a certain level of contributions on a
site and therefore other community benefits may have to reduce as a result. Risk
mitigation:
Involvement of private developers in discussions over changes to Housing and
Employment DPD. Risks:
The risk to the Council is to its reputation. There is a specific requirement
to meet the housing needs of rural towns and villages on the Risk
Mitigation: Involvement of Town and Parish Councils in policy development. |
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Recommendation 8: To
ensure that the provision of affordable housing and low cost market housing is
maximised on large sites (large to be determined for example Council owned land
at PAN), but that the development of sites must have a sympathetic approach to
the environment, quality of life and sustainable community issues.
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The risk to the Council of not developing rural policies is
reputational. There is a specific requirement to meet the housing needs of
rural towns and villages on the |
Financial Risk
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Risk |
Score (probability
& impact) |
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The annual revenue budget for
homelessness contains limited resources for temporary accommodation. If the supply of affordable housing is not
sufficient this may impact upon the Council’s ability to remain within this
budget. |
2 & 3 = 9 |