A Worrying Development for Affordable Housing – April 2018

Affordable housing crisisIf you’ve travelled around major UK cities, like London, you’ve no doubt seen new residential properties being built on, what looks like, any available plot of land. Former office buildings are being transformed into apartment blocks; entire estates are being created where Army barracks or University campuses used to be; and, as DIY warehouse superstores close down, residential blocks are springing up in their place. There seems to be a major residential building boom taking place. But the problem is that only a small percentage of those homes are actually deemed affordable housing.

Developers obligation

Theoretically, developers are obligated to provide affordable housing when planning permission is granted by the local authority. This is either as part of a Section 106 Agreement, that’s negotiated between the developer and the authority, or through the Community Infrastructure Levy, which was introduced in 2010 to accelerate the process of providing affordable housing as part of new residential developments.

However not all Section 106 Agreements are adhered to by the developer or adequately enforced by the local authority. But there is a move, through the revised National Planning Policy Framework (NPPF) to agree the affordable housing commitment at the pre-planning application stage. This would effectively circumvent a developer’s argument, after a viability study has been carried out, that providing affordable homes wouldn’t be a profitable undertaking.

Challenging times

One of the issues is that the developers are able to challenge the local authority affordable housing guidelines. This has resulted in the loss of many potential low-cost homes. It’s estimated that over 2,500 such residences are being lost each year through these kinds of challenges. In 2013 a study was carried out of over eighty of the largest residential developments across ten UK cities. Only 40% of those developments actually met local affordable housing targets. A recent study by Shelter Research concluded that, because of developer’s viability studies submitted after planning permission was granted, over 2,500 affordable homes are being lost each year. When compared to local authority targets, that equates to nearly an 80% reduction in low-cost housing.

Robust rules

It appears that the only way to ensure developers honour their commitment, is through stronger national guidelines and robust reinforcement of those guidelines at a national and local level. But it appears that the government doesn’t want to delay or derail the current level of developments by tightening the rules or bringing in more stringent requirements. One solution would for the government to rely less on developers and, instead, fund councils and housing associations to build homes. Local councils could then be in direct control, and be directly responsible, for providing affordable housing in their local area.

So, although the overall level of residential building remains high, the percentage of affordable housing will continue to drop. The government has a target of 50,000 new homes to be built in England each year. Not only is it falling short of that target but, in real terms, the UK is losing more than its gaining. While expensive apartment blocks and sprawling estates continue to proliferate, it’s only those who can somehow get onto the housing ladder, or can purchase buy to let properties, that benefit. Unless something is done at a national level, more families each year will be left out in the cold when it comes to having a home to call their own.

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