9 May 2018
"The changes to the definition of Affordable Housing is to be welcomed, as it should - in time - help to increase housing choice and supply overall."
The Government’s acceptance that the housing market in England is broken and needs fixing is resulting in many proposed changes aimed to increase the scale of housing delivery across the country.
National, regional and local statistics published by the Office for National Statistics, local authorities and commented on by groups such as The Chartered Institute of Housing and The National Housing Federation show that the lack of affordable dwellings to own and to rent is part of the problem faced by many.
An area of action for the Government is to create conditions that can help to widen the supply of housing because diversifying the housing market can help to widen it. There is an increasing role to be played by small and medium sized house builders and for local authorities, often working in partnership, to build more homes.
The supply of affordable homes as a planning obligation required under the planning system has failed to deliver the scale or scope of housing required. As a result, the delivery of affordable housing as part of an otherwise market housing scheme is often seen on appeal by the Secretary of State as a substantial benefit of development.
The National Planning Policy Framework (NPPF) requires Local Planning Authorities to use their evidence base to ensure their Local Plan meets the full, objectively assessed needs for market and affordable housing and to identify key sites critical to the delivery of housing in their relevant area. However, the current definition of Affordable Housing dating back to March 2012 is dated and it is relatively narrow covering social rent, affordable rent and intermediate housing. The definition even states that homes not in this definition may not be considered as affordable housing for planning purposes. Application of a narrow definition is now seen as having impacted supply not least on sites where viability is marginal.
The NPPF Consultation Proposals place a greater emphasis on planning for delivery of a wider choice of housing tenure including a new definition of Affordable Housing and seeking development of entry level sites for first time buyers on land that would otherwise be exception to local policy.
A key aspect of the consultation is the widening of the definition to also include starter homes and discounted market sales housing.
Starter Homes has been highlighted as a new approach by the Government for many years although, at points, it looked like the prospect was unlikely to materialise. Now that the Government intends to include starter homes, which is defined under statute as part of affordable housing for planning purposes, this can be planned for going forward in housing schemes.
Discounted market sales housing is proposed to be sold at a discount of at least 20% below local market value with eligibility determined about local incomes and house prices. It is likely through future guidance that provisions will be put in place to ensure the housing remains at a discount for future eligible households.
Consultation on the NPPF ends on 10 May 2018 and so there remains time in which to respond. The changes to the definition of Affordable Housing is to be welcomed as it should in time help increase housing choice and supply overall.
Landowners, land promoters and house builders currently negotiating planning applications and planning appeals for housing through the system should factor in the emerging new definition. Negotiations on planning obligations to be contained in a s.106 legal agreement should seek to account for the pending change and the mix for detailed schemes should do the same.
Some local authorities might be reluctant to introduce the new definition where they have concerns over evidence on housing needs locally and evidence on local incomes and house prices by which to measure some of the new housing tenures. The Government should work with stakeholders to further explain the tenures and what constitutes appropriate evidence and explain this in an update to the Planning Practice Guidance.
As with any new approach, time is needed for this to bed in and to be tested but development should seek to factor the change in now to try to avoid making changes retrospectively to development schemes.
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