Agenda Item 11 Report PP24 /16 Policy & Programme ......a set of high-level Recommendations for the SDNPA to improve the delivery of affordable housing in the National Park. These

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Agenda Item 11 Report PP24/16

Report to Policy & Programme Committee

Date 15 December 2016

By Affordable Housing Task & Finish Group

Title of Report Affordable Housing Project Update

Recommendation: The Committee is recommended to

1) Endorse the recommendations of the Affordable Housing Task & Finish Group as set out in Section 2 of this report and recommend to the Authority for approval.

2) Agree to an extension of term for the Task & Finish Group until the NPA meeting in March 2017 as set out in Section 3 of this report

3) Note the Landowners Conference to be hosted by the SDNPA on 3 February 2017 to help raise awareness of the shortage of affordable housing in the South Downs National Park as set out in Appendix 4 of this report.

1. Summary and Background 1.1 An options paper was produced towards the end of 2015 detailing options which could be

considered to formulate a distinctive SDNPA approach to the provision of affordable housing (below 11 units) through the allocation of SDNPA developers contributions from S106 agreements for affordable housing.

1.2 The full paper provides a background to affordable housing policy, an outline of how affordable housing is currently delivered in the National Park, and identifies opportunities for future improvements to affordable housing delivery whilst also ensuring affordable housing remains in perpetuity for the community. Several models for the delivery and operation of affordable housing for rent and sale are discussed, including niche models that could meet the needs of rural communities not being met by the current market. Options are provided for potential methods of involvement for the SDNPA in affordable housing provision. The main recommendations from the paper are detailed in Appendix 1.

1.3 Following the agreement of Committee Chairs, the paper was taken to a Members Strategic Session on the 26 May 2016. The object of this session was to provide Members with information on the issues surrounding the provision of affordable housing within the South Downs National Park, an opportunity to discuss and debate how the SDNPA can improve delivery of affordable housing (ensuring it remains in perpetuity), and to provide a steer on a preferred approach.

1.4 At the strategic session a single action was agreed to establish a Member Group to review the options paper in more detail in a smaller group of members (with an interest or expertise in housing). This group was appointed by the SDNPA Chair and an Affordable Housing Task & Finish Group was formally established by the P&P committee on 21 July 2016. The relevant extract from the minutes of the meeting are at Appendix 3. Terms of Reference for the Group are detailed in Appendix 2.

1.5 The Affordable Housing Task and Finish Group met on the 23 June and the 29 September to review research and hear further presentations. After much discussion and deliberation, conclusions were reached and detailed in section 2 of this report.

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1.6 A summary of the Affordable Housing Project (phase 1), with current associated work streams and milestones is detailed in Appendix 5.

2. Recommendations from the Affordable Housing Task and Finish Group No. Recommendations as listed in the Affordable

Housing Options Paper (Appendix 1): Member steer from Affordable Housing Task and Finish Group

1 SDNPA should establish a Special Purpose Vehicle or Limited Company to enable the funding, construction and/or management of affordable housing, working in partnership where appropriate.

Agreed

Comments to note;

A company should be established with the ability to borrow in order to finance purchases (as an additional funding option. See Appendix 6 for examples.)

Legal advice is currently being sought (under the existing SLA with WSCC)

2 SDNPA should establish informal partnerships with specialist Housing Associations and Affordable Housing Providers to enable direct intervention in the provision of affordable housing. SDNPA should discern which provider is most appropriate, on a case by case basis.

Agreed

Comments to note;

SDNPA should not be tied to just one housing partner

3 SDNPA should adopt the scalability principle to allow a cost-effective, strategic approach to small-scale housing delivery. This will allow the partners to design, build and manage multiple, similar small-scale schemes across the National Park. Scalability could allow clusters of homes across several sites to be designed in partnership with SDNPA to ensure appropriate appearance and sustainability and taken through the planning application process.

Agreed

Comments to note;

In-house design officer and Design Review Panel should work on a SDNPA approach and design that can be adapted to suit the landscape

4 Social Rent and Low Cost Private Rent are recommended to be the most appropriate tenures for SDNPA and its partners to provide and manage, as the most affordable model for tenants.

Agreed

Comments to note;

Tenures should be needs-led, which may vary from parish to parish.

5 SDNPA should accept land-in-lieu of affordable housing on market-led development sites through S106 where offered or as an alternative to reducing the number of affordable homes where viability is a constraint (providing the land given is suitable for housing). SDNPA could then facilitate the provision of the lost affordable housing units in whole or part.

Agreed

Comments to note;

Only if suitable land offered and fit for purpose. Not likely to be offered, but we should be open to all possible opportunities

6 SDNPA should consider more creative ways to deliver affordable homes with S106 developer’s contributions or other funding sources, such as grant funding or prudential borrowing. This could include;

a.) Adding value to market-led schemes by funding sustainability enhancements or preferable tenures

Agreed

Comments to note;

Each opportunity should be assessed on its merit

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b.) ‘topping up’ the affordable housing provision on market-led schemes by increasing the number of affordable units or part-funding units where viability is a constraint

c.) Where there is no available land or opportunities for new-build affordable housing provision, SDNPA should consider converting existing open market housing stock or redundant buildings for use as affordable housing, which provides considerable sustainability advantages over new build (subject to ‘value for money’ assessment)

d.) Use land (purchased or donated) to build affordable homes ourselves

If no S106 or grant funding is available, affordable homes should be delivered through prudential borrowing, based on a sound business case

3. Role of Task and Finish Group 3.1 Extending the term of the working group until 31 March will provide an opportunity for

Members of the Task and Finish Group to look at how the outcomes of the Landowners Conference and what format would be best to ensure continued Member engagement in the project.

4. Land Owners Conference 4.1 The aim of this conference is to bring together landowners, Rural Housing Providers,

Planning Officers and specialist legal and financial experts to promote and aid delivery of rural affordable housing by exploring ways to utilise unused land/buildings, and to bring an income to landowners by making their assets work for them.

4.2 The conference will take place on 3 February 2017 at the South Downs Centre. See agenda for full details in Appendix 4

5. P&P Considerations 5.1 This subject was discussed at the Members Strategic Session on 26 May 2016 and was an

agenda item at Policy & Programme Committee on 21 July 2016

6. Other Implications

Implication Yes*/No

Will further decisions be required by another committee/full authority?

Yes - NPA

Does the proposal raise any Resource implications?

Yes - Officer time. This project is currently being led by the Major Projects Co-ordinator on a part-time basis and it is anticipated that the ongoing project will require full time resource. Additional costs for specialist advice on individual proposed schemes can be factored into the build costs or covered by housing partners who already have this resource. Further legal advice will be necessary for the establishment of a special purpose vehicle. Cost will depend on the complexity of the special purpose vehicle (recommendation pending)

How does the proposal represent Value for Money?

We will maximise efficiency in allocating S106 developers contributions for affordable housing and minimise the risk of repaying the contribution to the developer if it is not spent within the claw-back period. Existing officer skills are being utilised to deliver the majority of the project. Individual housing delivery schemes will generate a long term investment and/or additional income for the SDNPA

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or any future charitable arm.

Are there any Social Value implications arising from the proposal?

No

Has due regard been taken of the South Downs National Park Authority’s equality duty as contained within the Equality Act 2010?

Yes

Are there any Human Rights implications arising from the proposal?

None

Are there any Crime & Disorder implications arising from the proposal?

None

Are there any Health & Safety implications arising from the proposal?

None

Are there any Sustainability implications based on the 5 principles set out in the SDNPA Sustainability Strategy: 1. Living within environmental limits 2. Ensuring a strong healthy and just

society 3. Achieving a sustainable economy 4. Promoting good governance 5. Using sound science responsibly

This contributes to principle 3 of the Sustainability Strategy.

7. Risks Associated with the Proposed Decision 7.1 Failure to spend S106 commuted sums for affordable housing before the claw-back period

Risk Likelihood Impact Mitigation

Lose S106 Affordable Housing financial contributions

Almost Certain

Moderate Formalise a distinctive SDNPA approach to the provision of affordable housing through the allocation of commuted sums from S106 agreements

AFFORDABLE HOUSING TASK & FINISH GROUP Gill Mattock (Chair), Heather Baker, Helen Jackson, Robert Mocatta, Jo Carr

South Downs National Park Authority

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Contact Officer: Claire Mattingley, Major Projects Co-ordinator Tel: 01730 819259 email: [email protected] Appendices 1. Affordable Housing in the South Downs National Park, Annex 3

2. Affordable Housing Task & Finish Group – TOR 3. Minutes of P&P Committee on 21 July 2016 4. South Downs Landowners Conference – Agenda 5. Affordable Housing Project, Phase 1 – Summary with work

streams and milestones 6. Eastbourne Homes Financial Model - Example

SDNPA Consultees Chief Executive; Director of Countryside Policy and Management; Director of Planning; Chief Finance Officer; Monitoring Officer; Legal Services, Business Service Manager

External Consultees None Background Documents None

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Agenda Item 11 Report PP24/16 Appendix 1

Affordable Housing in the South Downs National Park, Annex 3 – Main Recommendations

Major Corporate Options A3.1 The general findings of the Affordable Housing Paper and its supporting research have led to

a set of high-level Recommendations for the SDNPA to improve the delivery of affordable housing in the National Park. These recommendations relate to long-term ambitions and assume that SDNPA should focus its resources on providing small-scale, rural and sustainable affordable homes where the private and social housing markets are failing to deliver.

A3.2 These recommendations will require approval by the National Park Authority and are likely to require resources and procedural changes. If approved these would need input from Senior Management and Heads of Teams across the Authority.

A3.3 The Policy and Programme Committee members ‘Think Tank’ prior to each meeting is the appropriate forum to debate the issues and would be a good opportunity to debate these recommendations prior to approval by the National Park Authority. The Think Tank could be supported by attendance from Hastoe and other housing providers as appropriate.

Recommendation 1: SDNPA should establish a Special Purpose Vehicle or Limited Company to enable the funding, construction and/or management of affordable housing with its Housing Association partner.

Recommendation 2: SDNPA should establish informal partnerships with specialist Housing Associations and Affordable Housing Providers to enable direct intervention in the provision of affordable housing. SDNPA should discern which provider is most appropriate, on a case by case basis.

Recommendation 3: SDNPA should adopt the Scalability principle to allow a cost-effective, strategic approach to small-scale housing delivery. This will allow the Housing Association partners to design, build and manage multiple, similar small-scale schemes across the National Park. Scalability could allow clusters of homes across several sites to be designed in partnership with SDNPA to ensure appropriate appearance and sustainability and taken through the planning application process.

Recommendation 4: Social Rent and Low Cost Private Rent (at a genuinely affordable level) are recommended to be the most appropriate tenures for SDNPA and its Housing Association partner to provide and manage, as the most affordable model for tenants.

Recommendation 5: SDNPA should accept land-in-lieu of affordable housing on market-led development sites through S106 where offered or as an alternative to reducing the number of affordable homes where viability is a constraint (providing the land given is suitable for housing). SDNPA could then provide the lost affordable housing units in whole or part with its Housing Association partner.

Recommendation 6: SDNPA and its Housing Association partners should consider more creative ways to deliver affordable homes with commuted sums and other funding sources. This could include adding value to market-led schemes (by funding sustainability enhancements or preferable tenures) or ‘topping up’ the affordable housing provision on market-led schemes (by increasing the number of affordable units or part-funding units where viability is a constraint). Where there is no available land or opportunities for new-build affordable housing provision, SDNPA could consider converting existing open market housing stock or redundant buildings for use as affordable housing which provides considerable sustainability advantages over new build, subject to ‘value for money’ assessment.

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Affordable Housing Task and Finish Group Terms of Reference

Role of Task and Finish Group

• The remit of the group is to consider a distinctive SDNPA approach to the provision of affordable housing on rural sites through the allocation of SDNPA commuted sums from S106 agreements for affordable housing*; and

• to make recommendations to the P&P committee and /or NPA as to a preferred options of vehicles/partnerships for facilitating the delivery of such affordable housing.

Term

• The Task and Finish Group will meet between June and the end of July 2016. The term of the working group may be extended by the P&P committee in July 2016.

Membership

• The Task and Finish Group will be appointed by the Chair in consultation with the Chair of P&P and its membership will comprise [Jo Carr, Gill Mattock, Heather Baker, Helen Jackson and Robert Mocatta].

Roles and Responsibilities

• The Task and Finish Group will consider the existing evidence and seek any additional evidence around the models adopted by partner authorities it feels necessary to support the development of recommendations in relation to the SDNPA approach to affordable housing.

• The Task and Finish Group will ensure that its recommendations are consistent with the emerging draft Local Plan policies. It is not its role to question or change these policies – other than through the involvement of individual members in the scheduled discussions of LPMWG.

• The Task and Finish Group will be guided by the initial discussions and conclusions of the Member think tank on 26 May, particularly in relation to the importance of design quality and meeting local needs.

• The initial findings of the Task and Finish Group will be presented to the P&P committee for consideration in July 2016.

• The Task and Finish Group will be advised by the Director of Planning, who will provide relevant and timely information to support the group.

Meetings

• The members of the task and finish group will appoint a Chair from amongst their number.

• The Task and Finish Group will have no decision making powers.

• Support to the Task and Finish Group will be provided by staff from the planning performance team and the Director of Planning.

Amendment, Modification or variation

• Amendment, modifications or variation of these terms of reference can only be made by resolution of the Policy and Programme Committee or by resolution of the full NPA.

*In line with Govt policy, for sites between 6 – 11 units the SDNPA receive a monetary contribution

31 May 2016


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Extract from Minutes of P&P meeting held on 21 July 2016

STRATEGY, PLANS & POLICY

ITEM 11: AFFORDABLE HOUSING PROJECT UPDATE 1. Committee member Helen Jackson introduced the item as a member of the Affordable

Housing Group.

2. The Committee considered the report from the Affordable Housing Group (Report PP13/16) and commented: • Their support for more affordable housing to be made available in rural areas. • The difficulty of building affordable homes without market housing, and the high costs

that could be involved. • The Right to Buy scheme had reduced the amount of affordable housing available for

rent, and the view of the Affordable Housing Group that any affordable housing built by the SDNPA must remain as rented accommodation in perpetuity.

• The New Homes Bonus scheme was a possible source of funding. • Their support for the establishment of an Affordable Housing Task &Finish Group,

which should meet again in early September and report back to the next meeting of the Committee on 1 November 2016.

• The need for Members to be publicly supportive of Affordable Housing in the National Park within their own areas.

3. In response to Member queries, Claire Mattingley (Planning Agencies Coordinator) clarified: • There was a variety of grant funding streams available, including the Community Land

Trust and Homes & Communities Agency, however these were not always applicable and other funding such as S106 money and ethical buildings societies were being considered.

• The Affordable Housing Task &Finish Group would continue to work closely with all relevant Housing Authorities including the Hampshire Alliance for Rural Affordable Housing, of which the responsible officer was also Chair, and Action in Rural Sussex.

• The proposed Landowner conference would inform landowners of how the provision of rural affordable housing could benefit them, and the funding available.

• The Terms of Reference would be amended to state that the term of operation of the Task &Finish group would be reviewed by the Committee at its meeting on 1 November 2016.

4. The Director of Planning stated • The affordable housing threshold for National Parks allowed the SDNPA to levy

commuted sums from new developments of between six-10 houses for affordable housing elsewhere in the National Park.

• Legal advice was being sought as to whether the evidence gathered in support of the emerging South Downs Local Plan could support the levying of commuted sums from developments of up to 5 houses, especially in cases where larger sites were being deliberately divided up into developments of fewer than six houses.

5. RESOLVED: that the Committee: 1) Noted the outcome of the Members Strategic session held on the 26 May 2016, as set

out in Appendix 2 to Report PP13/16, 2) Endorsed the recommendations of the Affordable Housing Group held on 23 June 2016,

as set out in Section 3 of Report PP13/16, noting that further decisions will be required by the Authority in due course,


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3) Formally established an Affordable Housing Task & Finish Group, with the membership and Terms of Reference, as amended by the Committee at the meeting,

4) Endorsed a proposed Landowners Conference to be hosted by the SDNPA to help raise awareness of the shortage of affordable housing in the South Downs.

landowners, rural housing providers, Planning

to aid delivery of rural affordable housing by


25


26

Affordable Housing in the

South Downs National Park

Affordable Housing Project, Phase 1 - Summary with work streams and milestones


27

Background Summary

SDNPA responsibilities as a National Park and a Planning Authority

SDNPA Purposes and Duty The SDNPA’s Duty to “foster the social and economic wellbeing of the local communities within the National Park” includes the need to ensure residents can

afford the costs of a decent home.

SDNPA Management Plan – 2.21 OUTCOMES FOR TO WARDS A SUSTAINABLE FUTURE

Outcome 9: Communities and businesses in the National Park are more sustainable with an appropriate provision of housing to meet local needs and

improved access to essential services and facilities.

SDNPA Corporate Plan

We will develop strategies, support or lead strategic overarching partnerships and projects which deliver our third objective to build sustainable

communities. We will develop strategies, support or lead strategic overarching partnerships and projects which deliver our fourth objective to be a confident

and secure organisation exercising effective influence delivering shared outcomes through excellent customer service, providing value for money and

generating income to support our work (exploring opportunities for developing and delivering chargeable activities including: Affordable Housing

development model)

SDNPA Strategic Housing Market Assessment

The SHMA analysis indicates that 294 additional households per year require affordable housing (using a 30% income threshold). The AMR figures confirm

that 68 affordable units were delivered in 2014/15 and only 35 in 2015/16.

National Parks England Position Statement

Often a different planning approach is required in National Parks to elsewhere in recognition of their sensitivity. One example is the provision of housing.

House prices tend to be higher in National Parks, and the NPAs adopt policies to specifically address the shortage of local needs housing, rather than catering

for large scale and inappropriate housing development.

The DEFRA Vision and Circular for English National Parks; paragraphs 78-79

National Park Authorities have an important role to play in the delivery of affordable housing and respond to local housing needs through planning policies.

The NPPF (paragraph 54)

In rural areas, planning authorities should be responsive to local circumstances and plan housing development to reflect local needs, particularly for

affordable housing including through rural exception sites, where appropriate.


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Obstacles preventing the delivery of genuinely affordable homes in National Parks

The Housing and Planning Bill (October 2015)

The new bill has shifted the focus of affordable housing from rental models to ownership models and has introduced several new housing-related measures

such as starter homes. More significantly, the Government accepted a voluntary deal from the National Housing Federation (representing Housing

Associations) to roll out the Right to Buy initiative across most existing rented affordable housing stock. This deal was accepted by the Government and the

extended Right to Buy scheme has since been confirmed. This will lead to a shift in affordable tenures from rent to sale models both in new-build, and in the

replacement of rented homes sold-off through the Right to Buy initiative. The new policy will significantly and adversely impact the number of affordable

homes for rent in rural areas.

The reinstated NPPG threshold for affordable housing (May 2016)

The changes follow the Government’s successful appeal against the decision to quash policy guidance for S106 contributions on small sites following a joint

Claim by West Berkshire District Council and Reading Borough Council in July 2015. The return of the policy guidance to the National Planning Practice

Guidance (NPPG) restricts the ability to impose affordable housing and tariff style planning obligations on developments of 10 homes or less (5 homes or less

in designated rural areas). It is ostensibly aimed at encouraging smaller builders to progress sites which otherwise would be unviable.

In addition, in these areas, affordable housing and tariff style contributions should only be sought from developments between six and 10 units in the form of

cash payments, commuted until after the completion of the units within the development. This gives rise to practical concerns for authorities as to how

affordable housing will be delivered in a way that meets the needs of local people.

Market failing to provide affordable homes

Evidence of severe housing need in this area (including local housing needs assessments and housing waiting lists), and the relatively high house prices and

lack of supply of affordable homes in the National Park is evidence that the market is failing to provide sufficient numbers of affordable homes for local

communities. Many affordable housing providers and developers will not deliver small-scale schemes due to the relatively high project management and

construction costs and sustainability is often seen as an additional unwelcome cost rather than a priority.


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SDNPA Intervention

There is a clear case for SDNPA to provide a solution to this market failing, in pursuit of its statutory Duty to “foster the social and economic wellbeing of the

local communities within the National Park”.

Most planning authorities take a planning management role, securing affordable housing only on rural exception sites or by quota on market-led sites

through the planning application process.

Intervention by the SDNPA through one or a number of Delivery Vehicles outlined in the paper could be effective at delivering more and better affordable

housing in the National Park.

The level of involvement could vary from supporting and facilitating third party providers, to building and managing affordable housing directly or through

partnership with a housing provider.

Examples of intervention by other local authorities can be found on page 14, section 5.5 of the Affordable Housing Paper and include;

Direct commissioning of new affordable Homes (New Forest National Park and Winchester City Council) Setting up a separate arms length management company (Eastbourne Borough Council – Eastbourne Homes) Joint venture partnership with a housing association (Brighton & Hove City Council and Hyde Martlett Housing)

Equity stake investments in partnership with a housing provider (East Hants District Council) Better use of S106 agreements including transfer caps and waivers for the Housing Authority to spend commuted sums elsewhere in the district (Arun

District Council, Lewes District Council, Chichester District Council)


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Affordable Housing Project, Phase 1 – Work Streams and Key Milestones

Affordable Housing Options Paper – SMT and Chairs briefed (9th February 2016)

Quick Wins

(Annex 1)

DM Team

Advice

(Annex 2)

Policy Team

Main Recommendations

(Annex 3)

Affordable Housing Task and Finish Group

Housing

Partnerships

Major Projects

Coordinator

Landowners

Conference

Major Projects

Coordinator

May 2016 Members strategic session held – to

review recommendations and seek member steer.

Speakers from HCA, Village Homes and AiRS.

Working Group initiated to review in further detail

Director of

Planning and

PSMT to agree

and implement an

action plan for

QW2 – QW10

Work with Policy

Team to see how

the advice can be

incorporated into

local plan with a

guidance note or

SPD for affordable

housing

Note: Awaiting

guidance

following the

new Housing

and Planning

Act and action

on hold due to

the change in

the local plan

timetable. Work

to recommence

on AH in Nov 16

16

Note:

Improvements

to help facilitate

Affordable

Housing Delivery

included in DM

Improvement

Plan. Work to

commence in

2017

April 16 Joined

HARAH (Hampshire

Alliance for Rural

Affordable

Housing) SDNPA

Chair Officers

Group

May 16 Working

closely with

Chichester DC

Rural Housing

Enabler and

supporting CDC

initiatives

Feb 16 Obtained

heads of terms

from local rural

housing providers

–

Nov 16 Attending

East Sussex

Housing

Development

Officers meeting

July 2016 Report from working group to P&P

Committee seeking endorsement of

recommendations of the working group, to formally

establish an Affordable Housing Task and Finish

Group and the proposed Landowners Conference

Sep 2016 Affordable Housing Task and Finish Group

to review further detail and agree

recommendations for a report to go to P&P for

approval/endorsement

Dec 2016 AH Task and Finish Group to take a report

with recommendations to P&P for endorsement

July 2016 Proposal

approved P&P

Committee

Oct 2016 Finalise

draft agenda and

confirm speakers

and facilities

Nov 2016 Produce

final agenda and

conference

brochure

Dec 2016 Send

invites to all

known SDNP

Landowners

3rd Feb 2017

Landowners

Conference

Mar 2016 AH Task and Finish Group to take report

with recommendations to NPA for approval and

update on outcome of Landowners Conference


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KEY:

Work stream Milestone completed Future milestone Notes


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Annex 1 – Quick Wins

What we should do now A1.1 The findings of this Paper and its supporting research have informed a list of ‘Quick Wins’

which summarise short-term improvements that SDNPA and its planning service could

implement in the short term to better facilitate and protect the delivery of affordable

housing.

A1.2 These improvements do not require significant resource or procedural changes and could be actioned by Heads of Teams within the Planning Directorate.

A1.3 These actions do not require any member approval as they relate to administrative processes and functions at the discretion of the Director of Planning.

QW 1: SDNPA senior managers should meet with recommended Housing Association partners to

explore and set up a ‘partnership agreement’.

Completed: Senior managers of SDNPA and Hastoe met on 6 January 2016. The Partnership Agreement now sits within the Main Recommendations.

QW 2: Raise awareness of affordable housing requirements among DM and Link Officers. Briefings

and training are needed to ensure current policies are followed and S106 agreements are securing appropriate levels and tenure of affordable housing.

The Planning Project Manager provided specific Briefing Notes to DM and Link Officer Colleagues in

October 2015. Further briefings and trainings should follow to ensure this Quick Win is completed.

QW 3: Urgently review any pending planning applications that provide no affordable housing (where contrary to the relevant planning policy).

These applications should be considered for refusal or scrutinised thoroughly before accepting

viability arguments. Review any decision made on behalf of SDNPA by a Host Authority where a

reduction in affordable housing has been agreed to ensure consistency.

QW 4: Introduce a Viability Checklist and require applicants to provide all requested information before a reduction of affordable housing is considered.

Completed: This Viability Checklist was produced by the Planning Project Manager and approved by Director of Planning for use from October 2015.

QW 5: Introduce an Affordable Housing Viability Guidance Note to clearly establish:

The requirements of SDNPA referring to the DEFRA Circular 2010 (paragraph 78-79) and

the Local Plan with links to the S106 template including capped transfer price and claw-back

mechanisms;

The land value expectations and methodology of viability assessments including benchmark

value setting (recommended to adopt the BNP Paribas approach);

That Social Rent is the preferred tenure mix in market-led S106 quota schemes and

Intermediate Rent or Low Cost Private Rent tenures as a second preference;

That Shared Ownership tenures are only accepted if the share-owning profile is scrutinised

to ensure it represents good value for money for the shared-owner;

That Self-Build and Custom Build tenures are only acceptable as part of the affordable

housing mix if a long-term covenant is in place to restrict the resale price to a genuinely

affordable level and secure in perpetuity (guide: 60 to 80% of market value).

Target rent levels to reinforce S106 negotiations and increase affordability (potentially – this

point will need further investigation).


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file://///southdowns.gov.uk/data/Planning/planning_policy/local_plan/Affordable_Housing/SDNPA_AH/DM%20Info%20Folderfile://///southdowns.gov.uk/data/Planning/planning_policy/local_plan/Affordable_Housing/SDNPA_AH/AH%20Viability%20Appraisal%20Checklist.docx

A Guidance Note may be preferable to a Supplementary Planning Document (SPD) as it is simpler

and quicker to introduce. It is also safer than making changes to emerging SDNP Local Plan polices

as national planning policy on affordable housing is going through a period of substantial evolution

and Government is making continual changes. A Guidance Note would be more easily adapted to ensure its continued compliance with national policy.

We are advised that setting the tenure type and mix in local plan policy (or at least published

guidance) will provide a better basis for negotiating at the application S106 stage. The

recommended tenure types are based on the findings of this paper. They may not be suitable or possible in every case but it is the most affordable target and starting point for negotiations.

QW 6: Introduce a National Park Authority-specific S106 template. To include preferred

affordable housing tenures and capped transfer prices. Occupancy criteria and the cascade

for spending commuted sums should also be included. A review and claw-back mechanism

should be included to secure greater levels of affordable housing in later phases or additional

contributions following completion where lower levels of provision have been successfully

argued through viability appraisal negotiations.

A S106 template is being progressed by WSCC Legal Officers in liaison with the Planning Project

Manager. Arun District Council officers to provide example clause-wording for the transfer cap and

rent levels. Roll-out to Host Authorities to follow which may require 12 variants for agreement. Training will be required through the Development Working Group.

QW 7: Link Officers to review all S106 agreements before completion by Host Authorities on

behalf of SDNPA – as currently required by paragraph 201 of the S101 contracts.

Link Officers report minimal time being allowed by Host Authorities for input and sometimes they

are not consulted within the S101-required timeframe. This is resulting in below-policy levels of affordable housing being secured without SDNPA scrutiny.

QW 8: Urgently increase in-house viability expertise to ensure SDNPA officers and members can

understand and challenge viability appraisals put forward by developers and negotiate

robustly. Consider building additional in-house viability expertise to offer specialist support to colleagues.

Recommended by the Joseph Rowntree Federation’s paper: Balancing Housing Numbers and

Affordability and reflects the finding of a Guardian case study. Widely available standardised

Viability Toolkits are also available to reduce reliance on consultant advice. This action will save costs in ongoing District Valuer or viability consultant advice.

QW 9: SDNPA should seek to secure the cost of Social Rental or Intermediate Rent properties

(and the consequential level of rent charged) in Section 106 obligations, by capping the

transfer price at a genuinely affordable level (guide: 45% to 70% of market value).

This is already in place at Arun District and other local authorities are pursuing this.

QW 10: Evidence of housing need (such as Housing Needs Surveys) must be robust (and

potentially independently produced) to clearly distinguish genuine need from aspirational desire to live locally. This will encourage support and trust in this evidence.

This approach has been recommended by a range of Housing Associations and Housing Officers in

response to concern over the reliability of housing evidence and the desire to meet only genuine local

need.


34

http://www.housinglin.org.uk/_library/Resources/Housing/OtherOrganisation/JRF_rethinking-planning-obligations.pdfhttp://www.housinglin.org.uk/_library/Resources/Housing/OtherOrganisation/JRF_rethinking-planning-obligations.pdfhttp://goo.gl/3J16Ra

Annex 2 – Advice

What we could do A2.1 The findings of this Paper and its supporting research have informed a list of ‘Advice Notes’

which provide medium-term options for SDNPA and its planning service.

A2.2 These options may require approval by an SDNPA committee and in some cases may

require resource or procedural changes. If approved these would need input from Heads of Teams across the Authority.

A2.3 The Local Plan Members Working Group is the appropriate forum to debate the issues and

advice raised below. Where formal approval is required to implement any changes based on

this advice, recommendations could be taken to Planning Committee. Approved changes

could be implemented in the Development Management process through a Guidance Note

or Supplementary Planning Document (SPD). A Guidance Note would be simpler and

quicker to introduce and more easily adapted to ensure its continued compliance with

national policy which is going through a period of substantial evolution and Government makes continual changes.

Advice Note 1: SDNPA should seek Social Rent tenures as first preference through planning

applications for market-led S106 quota schemes, as the most affordable housing type for lower

income households in need within the National Park. Intermediate Rent and Low Cost Private Rent

tenures should be a second preference set at a genuinely affordable rent level in perpetuity. [See Section 4(b) Rental models]

Advice Note 2: If SDNPA seeks to deliver affordable housing schemes directly or indirectly, rental

tenures are recommended as the most affordable housing type and as a long term investment

opportunity. Social Rent or Low Cost Private Rent (at a genuinely affordable level) are the most appropriate tenures. [See Section 4(b) Rental models]

Advice Note 3: SDNPA should accept Low Cost Market Sales tenures where a long-term

covenant is in place to cap the resale price at a genuinely affordable level (guide: 60 to 80% of market

value) to ensure local housing needs are met in perpetuity. [See Section 4(c) For-Sale models]

Advice Note 4: Should SDNPA seek to deliver for-sale affordable housing schemes directly or

indirectly, 'Do It Yourself' Shared Ownership tenures should be considered as a more financially and environmentally sustainable model. [See Section 4(c) For-Sale models]

Advice Note 5: SDNPA should seek funding from the HCA (as identified above) through a suitable

Housing Association Partner to support the viability of rental schemes in particular. [See Section 5(b)

Funding and Construction Costs]

Advice Note 6: SDNPA should continue to indirectly support CLTs and Cooperative Housing

Associations in the form of professional support and funding (as appropriate and as resource allows)

to facilitate the provision of small-scale, rural and sustainable homes exempt from the Right to Buy

initiative. [See Section 5(c) Delivery Vehicle Options]

Advice Note 7: SDNPA should continue to work with Rural Housing Enablers from AirS and

HARAH and send officer and member resource to the various meetings, as required. SDNPA would

need to ensure any exclusivity agreement with HARAH does not prejudice the ability of SDNPA to

work with other partners to deliver affordable housing in Hampshire. [See Section 5(c) Delivery

Vehicle Options]

Advice Note 8: SDNPA should sub-contract all future affordable housing management work to a

Housing Association partner to secure best value for money under the Scalability principle. Hastoe

and Petersfield Housing Association should be assessed for competitiveness and quality of offer.

[See Section 5(d) Property Management Options]

Advice Note 9: SDNPA should adopt the Scalability principle to deliver a strategic approach to the

provision of small-scale rural housing by scaling-up from an individual small scheme to multiple small

schemes across the National Park. A cluster of similar small-scale schemes could be designed, built

and managed as a portfolio including the exchange of land uses within or outside of the National

Park with partners. [See Section 6(b) Scalability]


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Advice Note 10: A scalable model housing type (size, design features, tenures etc) should be

established to enable Housing Association partners to design and seek planning permission for

suitable schemes faster and reduce costs. This could be known as the ‘South Downs Home’ model,

perhaps based on the Bimby Toolkit and varied depending on local vernacular or the five broad

character areas identified in the Preferred Options Local Plan: Coastal Plain, Dip Slope, Western Downs, Scarp Slope, Western Weald,. [See Section 6(b) Scalability]

Advice Note 11: In addition to a primary partnership with a specialist Housing Association,

SDNPA could establish light-touch partnerships (such as a Memorandum of Understanding of

‘preferred partner’ status) with other appropriate registered or non-registered Housing Associations

(such as Landspeed and Petersfield Housing Association) to allow ad hoc working on relevant

schemes to utilise their specific expertise and innovation. [See Section 6(d) Potential Housing

Association Partners]


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Annex 3 – Main Recommendations

Major Corporate Options A3.1 The general findings of the Affordable Housing Paper and its supporting research have led to

a set of high-level Recommendations for the SDNPA to improve the delivery of affordable

housing in the National Park. These recommendations relate to long-term ambitions and

assume that SDNPA should focus its resources on providing small-scale, rural and

sustainable affordable homes where the private and social housing markets are failing to

deliver.

A3.2 These recommendations will require approval by the National Park Authority and are likely

to require resources and procedural changes. If approved these would need input from Senior Management and Heads of Teams across the Authority.

A3.3 The Policy and Programme Committee members ‘Think Tank’ prior to each meeting is the

appropriate forum to debate the issues and would be a good opportunity to debate these

recommendations prior to approval by the National Park Authority. The Think Tank could be supported by attendance from Hastoe and other housing providers as appropriate.

Recommendation 1: SDNPA should establish a Special Purpose Vehicle or Limited Company to

enable the funding, construction and/or management of affordable housing with its Housing

Association partner.

Recommendation 2: SDNPA should establish informal partnerships with specialist Housing

Associations and Affordable Housing Providers to enable direct intervention in the provision

of affordable housing. SDNPA should discern which provider is most appropriate, on a case

by case basis.

Recommendation 3: SDNPA should adopt the Scalability principle to allow a cost-effective,

strategic approach to small-scale housing delivery. This will allow the Housing Association

partners to design, build and manage multiple, similar small-scale schemes across the

National Park. Scalability could allow clusters of homes across several sites to be designed

in partnership with SDNPA to ensure appropriate appearance and sustainability and taken through the planning application process.

Recommendation 4: Social Rent and Low Cost Private Rent (at a genuinely affordable level) are

recommended to be the most appropriate tenures for SDNPA and its Housing Association

partner to provide and manage, as the most affordable model for tenants.

Recommendation 5: SDNPA should accept land-in-lieu of affordable housing on market-led

development sites through S106 where offered or as an alternative to reducing the number

of affordable homes where viability is a constraint (providing the land given is suitable for

housing). SDNPA could then provide the lost affordable housing units in whole or part with

its Housing Association partner.

Recommendation 6: SDNPA and its Housing Association partners should consider more creative

ways to deliver affordable homes with commuted sums and other funding sources. This

could include adding value to market-led schemes (by funding sustainability enhancements or

preferable tenures) or ‘topping up’ the affordable housing provision on market-led schemes

(by increasing the number of affordable units or part-funding units where viability is a

constraint). Where there is no available land or opportunities for new-build affordable

housing provision, SDNPA could consider converting existing open market housing stock or

redundant buildings for use as affordable housing which provides considerable sustainability advantages over new build, subject to ‘value for money’ assessment.


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Eastbourne Homes Financial Model

This is a worked example from Eastbourne Homes of a fully funded build/purchase for rent at

market levels and LHA rate. This shows no subsidy (S106/HCA grant etc) and gives the financial

modelling for the following scenario.

Build/Purchase Cost Table, showing profit & loss after costs

SUMMARY

Purchasing a 3 bed property at £190K on local housing allowance (LHA) rates:

£1,215.10 loss p.a.

Purchasing a 2nd 3 bed property at £185K on market rent (MR):

£2,533.75 surplus p.a.

The key point is that to bring rents down you have to bring the borrowing down. You can do this by;

a) Using S106 contributions

b) Obtaining HCA grant

c) Generating sale or rent profit through commercial activity

For instance, a local authority could build/purchase one property for sale at market value and use

the profit to cross subsidise other properties for affordable rent (the number would depend on the

level of profit).

In terms of ‘Right to Buy’, as the properties are not owned by the local authority or registered

housing provider, as the company is a separate legal entity. Therefore RTB doesn’t apply.

The borrowing model: A local authority would borrow from the PWLB at 2/3% depending on the

term and would lend to the housing company at 4.5% (it has to be market economy rate to avoid

state aid). This gives the housing company a rate much below what would be available to them

directly but also gives the Authority an income. The Authority would have a fixed and floating

charge over the asset. Early repayment is allowed (if it is in the interest of both parties) and a

marginal variation of the rate where it is agreed by the parties (that doesn't break state aid rules).


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Agenda item 11 - Affordable Housing1.1 An options paper was produced towards the end of 2015 detailing options which could be considered to formulate a distinctive SDNPA approach to the provision of affordable housing (below 11 units) through the allocation of SDNPA developers contribu...1.2 The full paper provides a background to affordable housing policy, an outline of how affordable housing is currently delivered in the National Park, and identifies opportunities for future improvements to affordable housing delivery whilst also en...Member steer from Affordable Housing Task and Finish GroupRecommendations as listed in the Affordable Housing Options Paper (Appendix 1):No.AgreedSDNPA should establish a Special Purpose Vehicle or Limited Company to enable the funding, construction and/or management of affordable housing, working in partnership where appropriate.1Comments to note;A company should be established with the ability to borrow in order to finance purchases (as an additional funding option. See Appendix 6 for examples.)AgreedSDNPA should establish informal partnerships with specialist Housing Associations and Affordable Housing Providers to enable direct intervention in the provision of affordable housing. SDNPA should discern which provider is most appropriate, on a case by case basis.2AgreedSDNPA should adopt the scalability principle to allow a cost-effective, strategic approach to small-scale housing delivery. This will allow the partners to design, build and manage multiple, similar small-scale schemes across the National Park. Scalability could allow clusters of homes across several sites to be designed in partnership with SDNPA to ensure appropriate appearance and sustainability and taken through the planning application process.3AgreedSocial Rent and Low Cost Private Rent are recommended to be the most appropriate tenures for SDNPA and its partners to provide and manage, as the most affordable model for tenants.4AgreedSDNPA should accept land-in-lieu of affordable housing on market-led development sites through S106 where offered or as an alternative to reducing the number of affordable homes where viability is a constraint (providing the land given is suitable for housing). SDNPA could then facilitate the provision of the lost affordable housing units in whole or part.5AgreedSDNPA should consider more creative ways to deliver affordable homes with S106 developer’s contributions or other funding sources, such as grant funding or prudential borrowing. This could include; 6a.) Adding value to market-led schemes by funding sustainability enhancements or preferable tenuresb.) ‘topping up’ the affordable housing provision on market-led schemes by increasing the number of affordable units or part-funding units where viability is a constraint c.) Where there is no available land or opportunities for new-build affordable housing provision, SDNPA should consider converting existing open market housing stock or redundant buildings for use as affordable housing, which provides considerable sustainability advantages over new build (subject to ‘value for money’ assessment) d.) Use land (purchased or donated) to build affordable homes ourselves4.1 The aim of this conference is to bring together landowners, Rural Housing Providers, Planning Officers and specialist legal and financial experts to promote and aid delivery of rural affordable housing by exploring ways to utilise unused land/buil...Yes - NPAYes - Officer time. This project is currently being led by the Major Projects Co-ordinator on a part-time basis and it is anticipated that the ongoing project will require full time resource. Additional costs for specialist advice on individual proposed schemes can be factored into the build costs or covered by housing partners who already have this resource.We will maximise efficiency in allocating S106 developers contributions for affordable housing and minimise the risk of repaying the contribution to the developer if it is not spent within the claw-back period. Existing officer skills are being utilised to deliver the majority of the project. Individual housing delivery schemes will generate a long term investment and/or additional income for the SDNPA or any future charitable arm.7.1 Failure to spend S106 commuted sums for affordable housing before the claw-back period

Agenda Item 11 - Appendix 3 -Agenda Item 11 Appendix 4 - editedAgenda Item 11 Appendix 5Agenda Item 11 Appendix 6