Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by The Berkeley Group (AFH 11)

  Founded in 1976, The Berkeley Group has been a quoted company on the London Stock Exchange since 1985. It is now one of the UK's leading high quality development companies, known best for its domestic housing projects operating under brand names such as Berkeley Homes, St George, St James (a joint venture with Thames Water), Crosby Homes, Thirlstone and St David.

  In line with Government strategy, the Group leads the way in urban regeneration in England and Wales. Over 90 per cent of its units are built on urban and brownfield sites including undertaking an increasing number of mixed use schemes and GLA records show Berkeley to have been the largest residential developer in London 1995-99.

  For these reasons we believe our experience may aid the committees research and I respond in accordance with the particular questions posed by the committee.

  Brian Salmon is Berkeley's Group Planning Executive and has led the company's planning and design function for 24 years.


  The definition of "Affordable Housing" is key to ensuring a flexible approach to the provision of affordable housing. Many UDP's seek to limit the definition of affordable housing to that required for rent with often only very limited reference to special groups such as key workers. Many definitions specifically preclude low cost market housing. The advice from central government (circular 6/98) specifically sets out wide parameters and these are being largely ignored by local government.

  It is important when looking to the future for "affordable housing" that its definition provides for as wide a range of tenures as possible. Future innovations and changes in demand must be provided for.

  The current DTLR definition should be included incorporating as it does housing for rent with investment of social housing grant (SHG) by Housing Corporation and Local Authorities. Shared ownership and low cost home ownership with the investment grant to provide varying levels of affordability. The inclusion of social housing grant in shared ownership provides for a differing level of affordability to shared ownership without grant.

  The definition should also include key worker housing for rent and shared ownership delivered by registered social and/or private sector companies/institutions with or without grant investment.

  Student accommodation and sub-market renting tend to be groups unable to rent in some locations. They should also be included in the definition.

  To genuinely support a policy of mixed communities the widest range of affordable options should be incorporated in a comprehensive government definition.

  The committee should be aware that the evolving policies in the government's Green Paper on planning suggest identifying sites for affordable housing. These will, we believe, run contrary to the accepted and valued concept of building sustainable, mixed communities.

  Berkeley supports the concept whereby private developments should facilitate the development of a proportion of social housing as a general social responsibility.


  The practise currently dictating scale of affordable housing is driven by the estimation of need. Estimates are set out in surveys commissioned by local authorities. Circular 6/98 makes it clear that without need being demonstrated no requirement for social housing can be applied. It also goes on to set parameters which must be satisfied relating to location. Most London Boroughs have ignored these parameters in preparing local plan policies, presuming that need can be demonstrated on any site in their Borough. The definition of need varies from Borough to Borough and the criteria for measuring need relative to affordable housing needs radical research. An acceptable and simple technology to establish need relative to each site is essential if this is to continue to be a major driver for affordable housing.

  The Green Paper suggests both tariff and site assessments to be applied in Local Development Frameworks. If this comes to fruition the need for a simple technology to establish need is equally necessary. UDP/Local Plan Inspector's are not currently equipped to challenge the assumptions behind the Housing Need Surveys and it is imperative that a simple, easily understood methodology is identified.

  I have not encountered policies to distinguish location of affordable housing either in regional guidance or local plans. Some local plans are moving towards the suggestion of a percentage of private provision, ie SDS but scale of social housing will then depend on how many private properties are built.

  Finally, to move towards a properly managed provision of affordable housing the needs surveys must be widened to include all of the options set out in the wider definition which we seek in the previous paragraphs. The Housing needs Surveys only accept rented accommodation as being truly Affordable and being capable of meeting the need s identified. Clearly this is an incorrect assumption. Housing Policies must be based on these Circular 6/98 criteria if we are to work in partnership with the Public Sector in providing balanced sustainable communities


  Berkeley believe that in designing a development it should not be possible to determine which of the dwellings is provided to satisfy social needs by external appearance.

  We would expect and promote that the design, construction and style of affordable and private housing should be similar. The facade and fenestration of a building and its setting within the external landscape should be capable of integrating seamlessly with any new development proposal. The internal specification will vary as it does with the private sector product.

  To maintain this policy the investment of social housing grant must be adequate.


  Broadly the supply of new housing is inadequate and therefore affordable housing supply follows suit where it is being required as planning gain.

  New housebuilding levels are at the lowest for 77 years in the middle of a housing market boom.

  Our experience shows the following as reasons for this situation:

    —  main cause of housing shortage is lack of land allocation through the planning process;

    —  this was initially because out of date forecasting was used but later because Plan Monitor and Manage failed to provide the technology to plan positively for housing;

    —  government forecasts for housing were inevitably challenged and the Government failed to require adequate figures in Regional Planning Guidance and the Shire Counties followed suit in ducking their obligation to plan responsibly for housing. This happened in the rest of the South East in spite of external panel advice in the plan process promoting substantially greater targets;

    —  the negative institutional culture in Planning Authorities has used delay at all stages of the plan process that identifies new housing land;

    —  local Authorities are under resourced, in terms of planning officers and legal officers;

    —  all of the issues are re-examined when a planning application is submitted resulting in further delay and dilution of the approval of housing permissions. This is partly due to consultees with no responsibility for housing being given a high profile; and

    —  Planning Gain issues now add to further delay in the actual provision of housing.

  At boom times for house sales private enterprise starts in England have shown the following average quarterly figures over the past three and a half:

  This represents a uniform all time low figure of production.

  However if one looks at the average quarterly starts for affordable housing there is critical evidence to show a sharp downturn in provision.

  This represents only 60 per cent of the production achieved in 1998.

  Clearly the supply is dismally inadequate of both market housing and affordable housing but the affordable housing provision is in critical decline.

  Supply and resources are therefore totally inadequate and the situation is worsening.

  The development industry has a role in promoting and facilitating and enabling affordable housing development as a component of any new residential/mixed use project. We do not consider it the responsibility of the development industry to provide the finances and additional subsidy in resource to maintain/increase the existing supply. This is a social issue that the State must accept responsibility for and fund adequately.


  Planning gain can make a contribution by setting aside a proportion of a residential development to meet affordable housing requirements. It is our view that this proportion should be modest and structured in a way which allows market forces to govern the major part of development otherwise the market will not be able to create values sufficient to finance the appropriate proportion of affordable housing. As noted above, the market should also be applied to the affordable element to ensure the widest mix of affordable categories.

  The cost to developments of providing substantially higher proportions as suggested by the Mayor of London and many Boroughs attacks the viability of projects on regeneration sites because of higher existing use values or alternative uses.

  Neither the theories expounded in the Three Dragons report to the Mayor nor the changes proposed in the Green Paper will make any difference to this fundamental economic truth. The current start figures for social housing demonstrate that excessive planning gain demands are merely choking supply. 50 per cent of nothing is nothing.

  Berkeley looks to government to guide the release of more urban housing land so that overall housing figures can increase. We also firmly believe that, so long as percentages in the region of 25 per cent are required for affordable housing, the market will be able to assist in providing a growing total of mixed affordable housing.


  The future long term provision and funding of affordable housing should be reviewed in detail. It is clear that the demand for housing including affordable housing is not going to be met by either the existing level of direct investment of through the current planning gain mechanisms.

  The aim must be to achieve a balance between the provision of social housing as part of the planning gain package and an additional provision which sits alongside the current system which enables a financial input providing long term investment for affordable housing from Institutions.

  On site, on a scheme by scheme basis, we aim for a balance to be met in the form of a quantum of pure social rented housing and very low rental levels that can be provided in relation to shared ownership/key worker and intermediary housing. We know that if the same provider (RSL) is responsible for both rented and these other forms of tenure, then the rented accommodation can enjoy significant cross-subsidy.

  On both large and small sites the delivery of affordable housing needs to be reviewed as part of a total inclusive funding package.

  (RPG 9) Regional Planning Guidance for the South East (2001) includes under Policy H4 the following sentence.

  The Regional Planning Bodies should monitor the overall regional provision of affordable housing against a provisional indicator of 18,000 to 19,000 affordable homes a year in the ROSE area which excludes London. This figure should be reviewed in the light of the cumulative results of Local Needs Assessments.

  Also under this policy it suggests that Development Plans should monitor the provisions of affordable housing targets and the housing strategy to meet it. This may lead to revision in the appropriate development plan policies and to ensure affordable housing is provided where it is needed.

  This is to be balanced against the overall figure for all housing of 39,000 per annum for the first five years.

  Thus the assumption is that overall some 48 per cent of all development is to be social housing across the South East.

  I remember Professor Crow's independent panel striking a for a much higher overall figure and clearly the affordable housing figure now remaining in the document is unachievable without a massive influx of public money.

  The private sector cannot provide this level of public housing consistently and the Mayor of London's research in the Three Dragons report confirms and emphasises this.

  The answer to the question is that targets are to be welcomed in government reports if they are in the widest sense achievable. This one clearly is not and therefore of no use whatsoever particularly when one reflects that only 12,500 affordable housing units were started last year in the whole of England.


  Briefly the Mayor's research on London suggest that some 43,000 additional homes annually will be needed to address the London situation. 28,000 of which should be affordable. To address this need massive infrastructure investment would be needed to improve transportation nodes to cope with the additional traffic volumes. This would be in addition to the enormous levels of public subsidy that will be also be required

  This target is compromised by the RPG9 statement that 23,000 houses overall are to be planned for London per annum in the Mayors SDS.

  Clearly it is not the intent of government to address this kind of target. We wait to find out whether the Mayor of London's SDS addresses the issue.


  One must qualify the answer by considering the low volume of the overall social housing provision. This significantly limits the number of proposed schemes.

  Regeneration, particularly in Birmingham Centre is creating a mixed city centre community. Planning has the ability to promote this style of regeneration if a proper balance between regeneration and social housing provision is adopted by the authority.

  The sort of percentage (in the region of 50 per cent) suggested by the guidance mentioned in the previous paragraph would not have allowed regenerated mixed use projects to leave the starting block in Birmingham and for the future the outlook is becoming bleak, especially in the South East where Government and local authorities are increasingly looking to the developer to take responsibility for their housing shortfalls. Again, we believe that the provision of Affordable Housing is a social issue; one that the State must accept responsibility for.


  The genuine assessments of need as set out in the South East are probably not totally achievable within the bounds of London. Land outside London is likely to be needed even with the most sustainable urban solutions.

  It is sensible that areas outside London which are on Transportation Nodes and adjacent to existing urban areas be prioritised for this use.

  The aim is not necessarily the use of Greenfield but to utilise Brownfield locations in the Green Belt to relieve the pressure.

  It must be remembered that the most optimistic arguments put forward by the Government on Brownfield development still expected 40 per cent of housing to be on Greenfield sites. This fact must be accepted and adequate land allocations identified and secured.

  The sequential test in PPG 3 has resulted in Local Authorities reviewing their allocated sites and removing those with poor sustainability credentials. This has reduced land availability for this 40 per cent.


  This particular question, I believe, is a "catch all". It is trying to identify who should be responsible for the funding and delivery of affordable housing. We would argue that, if it can be demonstrated there is a cost to individuals, business and the local/wider economy, resulting from the obvious shortage of affordable housing, that responsibility for its delivery and provision might need to extend to those organisations as well?

  I believe it is safe to say that it is recognised there is a short fall in decent affordable housing for many market groups, both people on housing benefit, through to the intermediary groups.

  It is also safe to say, that the availability of decent affordable housing would have a positive impact on individuals, businesses and the economy.

  Whilst the responsibility to ensure the provision of affordable housing must stay with the government there is scope for communities to support housing provided through institutional finance which could be co-ordinated by the growing functions of the RDA"s and promoted in a "Community Plan".

  Berkeley is already carrying out schemes where the RDA has been assembling land.


  In reviewing the issues identified by the questions, matters can be summarised as follows:

    —  definition of "Affordable" should be widened so that a broad umbrella exists to encourage the mixed community aspect;

    —  the "needs surveys" require research and their associated methodology re-evaluation, to increase their usefulness in providing for "mixed communities" because currently the system provides impossible targets;

    —  quality of Affordable housing should be maintained to fit seamlessly into the broader environment in a sustainable way. We should be wary of "quick fix" solutions;

    —  the current supply of affordable housing is dismally inadequate and we should look to increasing land release for market housing to prime the pump proportionally;

    —  planning gain can only be part of the supply. Independent Government Finance perhaps via the RDA's and the bringing in of institutional support must be added to help the supply of affordable housing;

    —  resources should be balanced to provide the broadest range of affordable housing to ensure satisfaction to the widest mix of needs. Housing service providers in the cities have a high priority because of the need to keep the city functioning. They are its life blood;

    —  regional Planning Guidance targets are only of use if they have any basis in reality. The ones identified in this report clearly have not;

    —  affordable housing targets are clearly not being met;

    —  the creation of mixed communities in the broader sense has been achieved in some identifiable locations but the concept needs time to mature before schemes are finished and results can be drawn;

    —  whilst insufficient pressure is being applied to speed the release of Urban land it is inevitable that needs will force Greenfield Development. Radical policy to prime urban regeneration is necessary to protect the Greenfield issue and to re-energise our cities. This sustainable way forward could be to create a presumption in favour of residential and mixed use development of Brownfield Land. This would need only a revision to PPG3 to enact; and

    —  the pump priming provided by such a policy would open opportunities for the Community to embrace the shortfall in affordable housing through the energy created by Urban Regeneration in a sustainable way.

B N Salmon,

Group Planning Executive

The Berkeley Group

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