Memorandum by Levvel Consulting (AFH 29)
Levvel are affordable housing planning and development
consultants and are actively involved in the delivery of affordable
housing. In addition to frequently reviewing local authority policy
on affordable housing and negotiating a range of affordable housing
types and tenures on large strategic sites around the UK, we are
specialists in analysing local authority housing needs surveys
and needs assessments.
We are national consultants advising a number
of large house-builders including McCarthy & Stone, Persimmon,
Berkeley Group, George Wimpey and Wilson Connelly and a number
of medium size regional developers. In addition, we assist land
owners and commercial developers in affordable housing related
We are very concerned about the trend of local
authority practice in regard to negotiations for affordable housing.
We are experiencing that planning negotiations are becoming much
more protracted than they should be resulting in delayed housing
development and often "planning by appeal". This is
very frustrating, as we believe that the current planning system
could work well if the process was more effectively policed by
Government Office and the DTLR.
We make our representations in a positive way
to assist the Government in providing further guidance and advice
as to best practice for the delivery of affordable housing.
1.1 My name is Stuart Woodward. I am a Chartered
Surveyor, (General PracticeHousing) and an Associate Member
of the Association of Building Engineers and Director of Levvel
Consulting Ltd. I hold a degree of Bachelor of Science, (with
Honours) in Surveying awarded by the University of Reading.
1.2 Levvel Consulting Ltd undertakes a wide
range of professional development consultancy work and are specialists
in the field of affordable housing. Our consultants have backgrounds
from the private, public and housing association sector and have
considerable experience of implementing, financing and co-ordinating
the provision of the full range of affordable housing initiatives,
including new-build, conversion, refurbishment, contaminated,
brownfield and greenfield sites, urban regeneration, infill and
rural schemes, incorporating all tenures including temporary leasing
and sale, including sheltered, general and special needs. Our
clients are major landowners, developers, house-builders and housing
associations. We are employed to assist nationally in all planning
and delivery negotiations relating to affordable housing.
1.3 Levvel has carried out a detailed review
of over 130 local authority housing and planning affordable housing
policies, within the last three years. This review includes an
examination of Local Plan policy, including supplementary planning
guidance and Housing Strategy, Housing Investment Programme Statement,
affordable housing land supply and social housing grant funding
resources. In addition Levvel have carried out in-depth analysis
of a number of Housing Needs Surveys across the UK and a review
of local authority housing needs assessment. We have been recently
commissioned to carry out a full affordable housing policy review
for a local authority area in the South-West that includes a large
personal interview housing needs survey in conjunction with the
Housing Needs Consultant ORS, Swansea.
1.4 In addition to the Consultancy Company,
the Directors of Levvel have set up a private sector affordable
housing company, Affordable Homes UK, that specialises in the
delivery of intermediate, (key worker) affordable housing. Two
developments have been constructed this year that will provide
a discount market rented scheme and a fixed equity shared ownership
scheme, both for Key Workers and neither requiring any public
1.5 I have structured this statement to
respond to the headings identified in the Press Notice 57/2001-02.
2.1 The issue of the definition of affordable
housing is often clouded in debate at Plan Inquiry session or
Roundtables by the issue as to whether low cost market housing
is "affordable" housing. Confusion occurs because Circular
6/98 defines affordable housing, (paragraph 4) as either "subsidised"
or "low-cost", (suggesting perhaps low cost market housing
is not subsidised). This debate is not a relevant issue in the
definition of affordable housing.
2.2 Paragraph 9 Circular 6/98 identifies
that "definitions should be framed to endure the life of
the plan for instance through reference to the level of local
incomes and their relationship to house prices or rents, rather
than to a particular price or rent". Thus in simple terms,
the local authority should carry out a thorough housing needs
assessment, (not just an affordable housing needs survey), to
identify the need for housing across all household income groups.
In addition it should identify any housing stock imbalances within
its limited land supply and seek to evenly address that imbalance,
through new provision. Thus if there is a shortage of first time
buyer properties, it should encourage the supply of such housing
to reduce the number of households that will fall into the need
for affordable housing because of lack of supply, (low cost market
housing priced at the lowest quartile price would be appropriate).
Next it must identify the household income that is required to
afford to rent or buy on the open market and identify the number
of households who are likely to need affordable housing. Such
accommodation will need to be below the open market price and
priced at a level that is affordable for such households.
2.3 Thus, the definition of affordable housing
should be defined locally by identifying first as to whether there
is a shortfall in lower quartile priced housing, (low cost market
housing) and second by identifying the range of households who
require different priced subsidised affordable housing of any
type, tenure, size or ownership. Finally, the local authority
should monitor on an annual basis the supply/need for affordable
housing including low cost market housing and reflect any fine-tuning
in the specific housing requirements through the Housing Strategy
2.4 In conclusion, we believe that the definition
outlined in Circular 6/98 is correct as it covers a range of affordable
housing solutions. It is clear however, that many local authorities
and housing needs consultants do not understand or misinterpret
government guidance and thus exclude everything apart from low
cost social rented housing.
3. SCALE AND
3.1 Most local authorities in our experience
only carry out an assessment of the need for affordable housing
in the absence of assessing the market as a whole. Therefore,
for example, the local authority will have very limited knowledge
of the need for private sheltered housing or other special needs
housing or even the need/demand for private housing. Instead and
again often in our experience, the local authority will assess
the gross need for affordable housing, (which often aggregates
up to three to six times the total land supply) and attempt to
shoe horn this figure into a very limited land supply.
3.2 The DTLR Guide "Local Housing Needs
Assessment: A Guide to Good Practice" provides detailed advice
as to how to carry out a robust housing needs assessment. This
is regularly ignored or amended by local authorities/housing needs
consultant, with a consequent result that the outcome from some
housing needs surveys is a recommendation for all social rented
housing, (ignoring other affordable housing types/tenures) at
a percentage identical to the Regional indicator, (see section
3.3 Reasons for the poor quality of local
authority housing needs assessment are likely to be lack of resources,
(financial and suitably trained staff), over reliance on external
housing needs consultants and lack of understanding of the methodology
of housing needs surveys, (including local authorities, Planning
Inspectorate and the house building industry as a whole).
3.4 Sufficient government guidance exists
to allow the system to work correctly if actually understood by
all participants. A better way forward is to encourage private/public
sector housing needs assessments, funded by both sectors, to enable
ownership and acceptance of affordable housing policies on both
sides of the fence. Assessment should also inform the top down
assessment for the need for housing overall in the respective
3.5 In conclusion, there is without doubt
a need for affordable housing. However, until housing needs assessments
are carried out correctly in line with Government guidance and
the full range of housing needs considered, it is difficult to
comment on the actual scale and location of the demand for affordable
housing in the UK.
4. THE QUALITY
4.1 The house-building sector sets high
standards for development, adequately controlled by local authority
design and amenity standards. Affordable housing should be built
to the same standard to ensure it is identical to adjacent private
market housing. This also provides additional cost benefits as
the developer will provide their standardised house types.
4.2 The quality of existing affordable housing
should be reviewed regularly by local authorities to ensure that
any difficult to let or vacant stock is either refurbished/redeveloped
to suit changing household needs. It is not uncommon for local
authorities to seek high percentages of affordable housing from
new development, when a large percentage of the existing public
and private sector stock is vacant.
4.3 Developer financial contributions, in
lieu of on-site provision, particularly on smaller marginal sites,
should be encouraged to fund such initiatives.
5. THE ADEQUACY
5.1 The existing supply of affordable housing
is inadequate, (predominantly in the South of England and Midlands)
and/or the wrong type/tenure, (Midlands/North England), leading
to a surplus of affordable housing stock in some areas.
5.2 The reasons why there is an increasing
need for additional affordable housing in some areas are:
insufficient land being released
for new housing to meet new household formationdemand and
supply are out of balance;
increasing house prices due to low
interest rates and shortage of new homes;
there is a shortage of new homes
because of the belief that building on greenfield sites is discouraged.
Complications arising from developing brownfield sites mean that
the supply of all housing is being slowed down;
there is a shortage of new homes
because the planning system is taking too long to determine planning
applications, (partly due to unreasonable high demands of affordable
housingif the local authority doubles the amount of affordable
housing required and expects nil land value, the land owner/investor
will not release the site);
increasing house/land prices, (caused
by the undersupply), excludes housing associations from competing
for open market land because Housing Corporation Total Cost indicators
have not kept pace with the price inflation; and
Right to Buy and Right to Acquire
Council and Housing Association properties is decimating the affordable
housing stock, particularly in high value areas.
5.3 The reasons why there is surpluses of
affordable housing stock in some areas is because:
local authorities have not properly
assessed the nature of the existing housing stock;
local authorities have not properly
assessed the nature of the housing needs in the area including
the need for different types of affordable housing; and
insufficient funding is made available
to local authorities with large vacant/difficult to let public
and private housing stock to enable larger programmes of refurbishment/redevelopment
to take place.
5.4 There is a significant under provision
of Social Housing Grant funding being made available by Government
to provide more social rented housing. Despite a doubling of the
Social Housing Grant programme, any benefit has been mainly absorbed
due to increased grant rates, (due to rent restructuring) and
increase in house prices. In the last dozen or so Local Plan Inquiries
we have attended we have determined that the authority concerned
has barely enough Social Housing Grant funding available, either
through the Housing Corporation or through Local Authority Social
Housing Grant, to fund a quarter of their new anticipated affordable
5.5 The supply of land for affordable housing
has dramatically reduced because:
significant increase in land prices,
(due to shortage of available land);
an insufficient increase in the Registered
Social Landlords price capping set by the Housing Corporation,
(Total Cost indicators);
a move to develop more brownfield
sites that have other significant costs, (eg decontamination);
an increasing planning gain shopping
list from local authorities, many of whom would not have carried
out a thorough economic assessment on the ability of sites to
provide significant increases of planning gain.
5.6 Direct market intervention by asking
for large percentages of affordable housing has such significant
impact on land values that such requests will be strongly resisted.
This is starting to lead to a huge number of planning appeals
as the validity of new Policy is questioned by both land owners
5.7 A better system would be one where affordable
housing providers including RSL's could compete on the open market
for some sites, (as the 1990s) and some of the affordable housing
supply being provided on large sites is set at a maximum of 25
per cent provision, with allowance to reduce this percentage where
there are demonstrable abnormal/particular costs.
6. THE EXTENT
6.1 The maximum subsidy available to a developer
to provide affordable housing is the total open market value of
the affordable housing land. Therefore, the maximum contribution
a developer can make is to provide the affordable housing land
at nil cost. If further subsidy is required, such shortfall must
be made good with additional Social Housing Grant. Any additional
subsidy requests in addition to other planning gain requirements
are unlikely to be accepted, particularly if the site has an alternative
use, (with no affordable housing requirement).
6.2 Therefore, local authorities that seek
eg 50 per cent affordable housing with no Social Housing Grant
are in our experience asking the developer/land owner to provide
between 60-70 per cent of the site value at nil value. If the
site is burdened by other abnormal/particular costs such as decontamination
or piling and the local authority seeks other planning gain from
the developer for community benefit, eg parks, education, highway
contributions etc, this effectively removes most/all of the residual
land value of the site as a whole. Thus land owners will decide
not to sell the site. This will further constrain land supply
and new housing provision resulting in further increases in house
7. HOW RESOURCES
7.1 The mix and quantum of types of affordable
housing (for sale or for rent) will change throughout the period
of the life of the Local Authority Plan. Thus the local authority
should carry out a thorough assessment of housing needs and update
this fully every year through proper monitoring.
7.2 It is our experience that this is rarely
done correctly or adequately. Therefore, local authorities often
have a misconception as to the housing needs of their area and
instead continue focussing on their statutory obligations which
is to provide sufficient housing for the homeless and provide
only social rented housing for those homeless households moving
from temporary accommodation.
7.3 Social housing grant is required where
social rented housing is to be provided, (see above). Social housing
grant however, should rarely be used to provide shared ownership
housing, (or any similar affordable housing sale scheme), as it
is not required to provide affordable "intermediate"
sale housing. A number of private sector affordable housing schemes
have been developed around the UK on this basis and are successful.
Active encouragement of the private sector to build and manage
non-grant funded shared ownership or equity shared housing, (fixed
or with limited stair casing) should be a priority of the Government.
Affordable Homes UK has successfully pioneered several schemes
in the last year and these could be used as examples of good practice
by the DTLR.
8. WHETHER TARGETS
8.1 Regional Planning Guidance targets are
not appropriate because they are derived from a top down assessment
of housing needs overall. Regional "guestimates" of
the need for affordable housing are often based often on inadequate
local assessments of housing need.
8.2 We have experienced in a number of affordable
housing Roundtables at Local Plan Inquiries, that local authorities
are automatically setting their revised affordable housing target
identically to the Regional Planning Guidance, without having
carried out a thorough assessment of housing need. We also believe
that some Planning Inspectors are heavily influenced by Regional
targets in assessing local authority targets, irrespective of
local housing needs assessments, (which of course should be robust).
9. WHETHER TARGETS
9.1 No, certainly not in the next few years.
The sole reason for this is because the fact that not enough land
is being made available for all types of housing, (meeting the
full range of need), including affordable housing.
9.2 I have outlined above the reasons for
the lack of supply of affordable housing that can be summarised
lack of Social Housing Grant funding
to meet social rented housing need;
reduced Total Cost Indicators;
lack of understanding by local authorities
on the full range of housing needs in local authority areas;
misinterpretation and abuse of the
planning system resulting in increasingly unreasonable demands
being made of developers for very large amounts of affordable
housing, often in the absence of any social housing grant funding;
lack of understanding by local authorities
about how affordable housing can be delivered by the private sector
as intermediate affordable housing which does not necessarily
require public subsidy;
loss of existing affordable housing
under utilisation of existing private
and public housing stock.
9.3 However, we do believe the current system
can work if further stricter and clear guidance is provided by
government to local authorities as to how to interpret existing
planning and housing guidance on the delivery of affordable housing.
In addition, much more work and encouragement is needed to engage
the private sector in partnering in the process of carrying out
housing needs assessment and analysis of housing need/demand.
10. WHETHER CURRENT
10.1 Yes, on large sites, where local authorities
have the appropriate commercial experience in assessing what a
development locally could reasonably provide to satisfy the full
range of local housing need. But no, where local authorities are
attempting to shoe horn private and affordable housing on very
small sites. The crucial test, outlined in circular 6/98, is to
ensure that any proposed housing mix will lead to a successful
11. WHETHER MORE
11.1 Categorically yeswe are not
building enough homes to meet the full range of housing need.
In addition, Greenfield development provides greater opportunity
to share the benefit of increased value of the site with the community.
The Government should be brave and acknowledge the housing problem
the UK is facing and implement policies that quickly bring forward
major new sites that could include major new settlements.
12. THE COST
12.1 The cost is high to all:
individuals suffer, as they will
become convinced that they may never be able to achieve the opportunity
of living in a decent home that will meet their need that they
usually aspire to own;
the business sector will suffer,
as it may not be able to sustain existing businesses or develop
in other areas if house prices are beyond the reach of most of
the public services will suffer,
as they will struggle to recruit and retain essential workers.
In addition, rigid pay scales prevent ability to provide further
incentives to employees to assist purchasing/renting a private
market home; and
the economy will suffer, as employees
will demand higher wages to meet continually rising housing costs.
This will feed inflation in the economy and generate an un-competitive
environment, not only in certain areas of the UK, but also internationally.