Memorandum by Cambridge City Council (AFH
41)
The City Council has always sought to maximise
what can be achieved through the planning system and through use
of social housing grant and of its own capital resources.
In the consultation on the Planning Green Paper
we have asked for powers to seek a higher percentage of dividend
for affordable/key worker housing (up from 30 per cent to 50 per
cent); for the removal of the threshold concerning the number
of houses or site area to be developed before we can negotiate
for affordable housing; and for powers to require developers bringing
new employment to Cambridge to make a contribution to help with
the additional housing needs they generate.
The Council will continue to take advantage
of any investment opportunities which will increase the provision
of affordable housing in the City. We have successfully supported
an application for key worker funds under the Starter Homes Initiative
which is beginning to provide some relief for 190 lower paid professional
workers such as nurses, teachers and police officers. We are supporting
a second round SHI bid for shared equity grants.
The creation of the Major Repairs allowance
has been welcomed as it allows more stable long-term planning
of repair and maintenance of the City Council's own housing stock,
however, it has been financed by ring fencing the council's basic
credit approval. This has had the effect of radically reducing
the element of basic credit approval available for use as social
housing grant. If this continues without a significant increase
in the amount of resource available we are at risk of not being
able to fund affordable housing development on all the sites that
are available. Given the current shortage of developable land
this would be completely unacceptable.
To date the 25 per cent spendable capital receipts
from the sale of council housing under right-to-buy legislation
are an extremely important element in supporting the city's housing
investment programme. In the current housing market we are seeing
a drop in the funding that is available form this source as current
valuations take properties beyond the reach of would-be purchasers.
The City Council has the prospect of becoming "debt free"
in a year or so. The impetus to achieve this status comes from
the revenue consequences for the General Fund, however the ability
to apply 100 per cent of these right-to-buy capital receipts would
have given some assurance to us being able to implement more affordable
housing in Cambridge where it is needed to support strong economic
growth. We view with dismay the proposal to pool capital receipts
given the very significant affordable housing shortfalls and pressures
in the Cambridge area.
David Roberts
Planning Policy Manager
INTRODUCTION
1. The City Council is the planning and
housing authority for Cambridge. The limited supply of building
land and the high cost of housing in the City is influenced by
many factors including rapid population and employment growth,
long distance inward commuting from areas of cheaper housing,
a lack of brownfield land and a tight Green Belt. The City Council
generally endorses the submission made to the Select Committee
by South Cambridgeshire District Council.
BACKGROUND
2. There are 44,657 dwellings in Cambridge
of which 8,329 are Local Authority and 2,758 Registered Social
Landlord (2000 HIP). So about 11,000 dwellings can be considered
to be "affordable", or about 25 per cent of the total
stock.
3. The Housing Need Survey (HNS 1998) showed
that 66 per cent of Cambridge households could not afford to buy
or rent a dwelling in Cambridge if they needed to move, and that
there were 4,817 households in housing need or about 11 per cent
of households. Of these 2,806 households were in need of rehousing.
The HNS will be updated in 2002 in a joint study with South Cambridgeshire
District Council.
4. The biggest supply of affordable housing
comes from Local Authority and RSL re-lets at around 800 a year,
but this must be balanced against the forecast rate of households
falling into housing need of around 700-750 a year (HNS 1998),
which may have subsequently increased given the rapid increase
in house prices and private rents over the past few years.
5. In recent years around 95 per cent of
new housing development in Cambridge has been on brownfield land.
In 2001 the ratio of average house prices (£126,000), to
average incomes (£21,000), in Cambridge, was 6:1, or twice
what can be supported on a three times income mortgage.
NEW BUILD
AFFORDABLE HOUSING—PAST
PRESENT AND
FUTURE
6. The supply of new affordable housing
since 1991 has primarily been achieved on Council or RSL owned
land rather than through planning system negotiations with private
developers. For example 286 affordable dwellings have been provided
at Kings Meadow and 66 at the Nuffield Road site, both being Council
owned sites that were previously in allotment use.
7. Regarding the contribution arising from
planning gain negotiations, although only 84 affordable dwellings
have so far been completed[24]
as part of larger private housing schemes over this period, there
is capacity for at least another 540 affordable dwellings on sites
either with planning permission, or under active negotiation or
awaiting a s106 agreement. Other "windfall" sites will
also continue to appear on which Planning can negotiate for affordable
housing. The City Council also has a 50 per cent share of the
affordable housing to be provided at Cambourne which could amount
to 400-450 dwellings on completion of the development in 2008-09.
The development of the Cambridge Northern Fringe Arbury Camp site
for up to 900 dwellings is likely to commence in the next year
with the redevelopment of the Sewage Treatment Works/the eastern
CNF for up to 1,900 dwellings taking place post 2005. Both of
these developments will yield considerable numbers of affordable
houses for Cambridge residents subject to any sharing agreement
with South Cambridgeshire District Council.
8. Over the longer term, subject to the
outcome of the Structure Plan and Local Plan reviews, in the post
2005 period parts of the Green Belt may be released for housing
development for 8,000 dwellings. 50 per cent of this total could
contribute another 4,000 dwellings (See paragraph 15 for derivation
of this percentage).
FUNDING AFFORDABLE
HOUSING
9. The current practice in Cambridge concerning
private housing developments is to negotiate a scheme whereby
the developer makes over either 30 per cent of the developable
area of a site or 30 per cent of the approved dwellings for the
affordable housing element. The land normally being transferred
to the RSL for a maximum price of £8,000 per plot (to ensure
that the schemes represent good value to the Housing Corporation,
and that the rents are affordable)—and involves a considerable
subsidy on the part of the landowner/developer compared to open
market value.
10. All affordable housing schemes provided
through planning gain are the result of negotiation. Usually the
City has negotiated for RSL units for rent as the best way of
meeting priority housing need. But even with cheap land the build
costs of the affordable housing element cannot be paid for on
the basis of the mortgage which could be raised by the RSL based
on the rental stream expected from future tenants. Hence the need
for further financial support from Social Housing Grant (SHG)
provided by the City Council using funds bid for from the Housing
Corporation. The exact level of funding cannot be guaranteed from
year to year and long term commitments are not possible. Cambridge
has been successful in this process in the past, but there is
no prospect of funding the number of units currently in the development
pipeline on past methods.
11. Cambridge is therefore considering what
alternatives exist to current practice such as:
— Shared Ownership/Shared Equity/Discounted
Ownership—where the occupier buys a percentage share in
the property either directly or by way of a lease from an RSL
freeholder. The occupiers mortgage reduces or removes the need
for SHG but even a 50 per cent share is beyond the means of many
households in housing need. There has been one recent example
in Cambridge, with further examples likely in the near future.
— Payment of a Commuted Sum—where
the developer pays a sum of money to the City Council in lieu
of discounted land so no SHG is needed for that site which is
developed for 100 per cent housing for sale. The commuted sum
can then be used to enable the provision of affordable housing
on other sites without the involvement of the Housing Corporation
or an annual bidding round. There has been one recent example
in Cambridge, though this option is not generally favoured locally.
— Sale of Completed Units—normally
from the developer to the RSL at a value equivalent to the RSL's
ability to fund a private mortgage without any SHG assistance.
The value of the discount will depend upon whether the aim is
housing for rent or for intermediate or key worker housing via
shared ownership/shared equity/a discounted price where the prospective
occupiers can afford to pay more.
— Land Banking—where the developer
sells or gives land on or off site to an RSL to be land banked
until SHG becomes available. Timing is uncertain and the land
will lie vacant until SHG arrives. This may detract from the value
of adjoining land and or lead to unsatisfactory designs and layouts
to enable development in stages.
OTHER ISSUES
AFFECTING THE
PROVISION OF
AFFORDABLE HOUSING
IN CAMBRIDGE
12. The current trend is towards higher
densities, more flatted schemes and terraces. This is often good
in urban design terms and to avoid the waste of land but is potentially
problematic for the provision of affordable housing as such schemes
are often difficult to build incrementally. The result being that
if SHG is delayed for a year the affordable housing cannot be
funded and the whole scheme can be delayed. The effect of this
can be intensified by the wish to avoid putting all of the affordable
housing together and instead to have it in either a number of
areas or at the extreme as individual properties within the private
housing. This can make the practical timing issues of development
even harder to address. RSL housing managers are also concerned
to avoid too much dispersal of the affordable housing as this
makes it more difficult for them to manage and can lead to neighbour
conflict.
13. A trend in city centre developments
towards the inclusion of such expensive items as underground car
parking, 24 hour concierge systems, and health and fitness clubs.
Such items require a heavy service charge to maintain them. The
view is that RSL cannot absorb these costs, that affordable housing
occupiers cannot afford to pay them and that it would be unreasonable
for the developer/the private occupiers to take on such an open
ended financial commitment.
14. The current Local Plan is up for review.
So far public consultation provides support for the continued
provision of affordable housing through the planning system. In
addition the plan now has to consider the housing needs of key
workers. A study into key worker housing has recently been completed
and demonstrated a need with 80 per cent of employers facing recruitment
difficulties linked to house prices. Addenbrooke's NHS Trust and
Cambridge University are keen to provide key worker housing for
their staff. This type of housing is unlikely to require SHG assistance
as it only has to be affordable to the target group of key workers
who will be able and willing to pay more to enter owner occupation
than the rents typically charged by the City Council or RSL social
housing. The study finds that key workers are overwhelmingly seeking
to become owner occupiers rather than seeking social rented housing
15. The new Housing Need Study will prove
the existence of need but not say how much we should be asking
for on each site. Currently the Local Plan sets a 30 per cent
standard. The draft Structure Plan specifies a range from 30-50
per cent. The figure chosen will affect the viability of sites
for housing development, especially brownfield ones. One option
will be to set a lower percentage on brownfield sites and a higher
one on greenfield sites released from the Green Belt. It may also
make alternative uses other than residential more attractive and
so perversely reduce the numbers of houses built in Cambridge
(through land being developed for non housing uses or left undeveloped).
There are also issues to do with creating successful new housing
areas in which people will want to live, community safety and
avoiding the creation of new areas of social exclusion.
SPECIFIC ISSUES
IDENTIFIED BY
THE SUB-COMMITTEE
16. The definition of "affordable":
In the past this has normally been considered to
mean housing for rent for those most in housing need, but increasingly
also it is being widened to encompass those who do not qualify
for or want social rented housing and who cannot afford to buy
within a reasonable travel time of their work. In regard to key
workers, the housing must be affordable to the specified group
of workers. In widening the definition to include key workers
and what has been termed "intermediate housing", the
danger is that the numbers of those in need will also expand beyond
the possibility of assistance through the planning system.
17. The scale and location of the demand
for affordable housing:
The Roger Tym Infrastructure Study[25]
notes that in the Cambridgeshire portion of the Cambridge Sub-Region
total housing completions have averaged just over 2,000 per annum
(2,023) whereas the RPG6 requirement is 2,800 per annum. To achieve
the RPG requirement would represent a 40 per cent increase in
annual completions. They continue: "The challenge is even
starker in relation to affordable housing. Although it is difficult
to pinpoint accurately, data supplied by the County Council suggest
that the minimum average output of affordable homes within the
Sub-Region in the period 1991-99 has been 255 per year. If a broad
affordable housing target of 30 per cent of total provision is
adopted, then it will be necessary to increase the output of this
type of housing more than threefold to some 840 annually."
In and around Cambridge future economic growth will be hampered
if enough housing is not provided and if that housing is not affordable.
The Deposit Draft Cambridgeshire Structure Plan forecasts a growth
of 38,000 jobs close to Cambridge between 1999 and 2016, a growth
rate of 1.3 per cent per year[26].
18. The adequacy of the existing supply
and the amount of resources available:
The planning system has had limited success in bringing
forward completed affordable housing schemes in Cambridge. This
has not been because of a lack of will on the part of the City
Council which does require 30 per cent affordable housing on qualifying
sites. In comparing this level of supply with the existing backlog
of need (see paragraph 3), it can be seen that it has not yet
made a serious reduction in it, even without considering the need
for intermediate or key worker housing. Housing Corporation funding
has so far been available to support this limited level of supply
but is expected to be inadequate in the future given the scale
of planned provision. Recent proposed changes to the spending
rules governing debt free councils will further limit the level
of its own resources that Cambridge can apply to solving its need
for affordable housing. The main input into the provision of affordable
housing is land. The marketplace is helping to find land and intensify
development in the private sector. However there is no equivalent
or similar mechanism for the public sector despite the extensive
housing areas owned by Councils and Housing Associations which
are often built to a low density. With land being so scare and
valuable in areas of housing stress more emphasis should be given
to making the best use of existing land holdings in these areas.
19. The extent to which planning gain
can fund the level of affordable housing required:
In expensive areas such as Cambridge the provision
of social rented housing is impossible without either publicly
owned land or the use of planning gain and often SHG. However
the provision of rented housing requires more subsidy than the
provision of intermediate or key worker housing as these occupiers
can afford to pay more for their housing. Providing more of this
housing will therefore allow more affordable housing to be provided
in total. But the question remains about how far it is wise to
push the percentage of affordable housing on each housing development
site beyond the 30 per cent currently sought in Cambridge. Clearly
there is no benefit in pushing to far if land does not come forward
for development. There will also be other calls on the planning
gain obtainable from a site to fund other infrastructure requirements.
Looking to the future, the main issue is how best to provide for
the middle ground between those who can afford appropriate market
housing and those who qualify for social rented housing—and
specifically for key workers. At the moment the degree of subsidy
provided to enable social rented housing is around 60-70 per cent
of the overall cost, but nothing has been available to the middle
ground even though the degree of needed subsidy would be much
reduced.
20. The City Council has supported the proposals
in the Planning Green Paper that affordable housing could be secured
from appropriate commercial developments and that the site area
threshold at which the affordable housing requirement kicks in
should be greatly reduced.
21. How resources should be balanced
between social housing and options for owner occupation for those
who cannot afford to buy (including shared ownership) and whether
any additional mechanisms are required to bring forward shared
ownership-type schemes:
Issues of social exclusion are important in replying
to this question. In Cambridge the public, house buyers and developers
have accepted a 30 per cent affordable rented housing element.
In seeking to push this element up a balance will exist at some
point where the development will no longer be attractive and there
is clearly no point creating more unpopular or failing housing
areas. Any provision of affordable housing above 30 per cent therefore
should be for subsidised owner occupation. New and improved mechanisms
are needed and some ideas for these have been flagged up in a
recent report on the future of low cost home ownership (LCHO)[27].
Housing Associations should be encouraged to enter the intermediate/LCHO
sector as facilitators to ensure that the benefit provided originally
by the landowner is not appropriated by the first occupier of
the subsidised housing. Land owning public bodies should be enabled/encouraged
to make provision for LCHO for key workers in their employ.
22. Whether current policies and practices
are leading to the creation of mixed communities:
The City Council has adopted planning guidance requiring
affordable housing to be provided in groups across a housing site
rather than in one location to address this issue. However the
city centre trend towards the provision of underground car parking
for private occupiers who can afford a service charge to pay for
it against surface parking for social tenants who cannot leads
to a clear marking out of differences of tenure which is difficult
to address given the funding restrictions of the Housing Corporation.
However the real problem is not with new developments but rather
with the pattern of single tenure provision made in the past.
This raises the issue about whether the future development or
redevelopment of publicly owned sites should also have a mixture
of tenure types rather than a monoculture of rented housing. Clearly
such provision is still required but it should be made across
a number of mixed sites rather than in one place.
23. Whether more greenfield development
is needed to meet housing need:
In the Cambridge area housing need cannot be met
without the development of extensive areas of greenfield land.
The Draft Structure Plan for Cambridgeshire expects that only
55 per cent of housing provision between 1999 and 2016 will be
on brownfield land. Around Cambridge greenfield development means
releasing land from the Green Belt. The last urban capacity study
undertaken by the City in 1998 found a capacity of 3,400 dwellings
total against a housing need of 2,806 dwellings (see paragraph
3). A significant amount of this capacity will be on small sites
below the threshold for the provision of affordable housing and
some of it will never come forward. Realistically only around
600-800 affordable housing dwellings could be achieved from this
scale of development subject to funding and market and site conditions.
If the Green Belt around Cambridge is not in the end released
for development the displaced development will move to other greenfield
sites beyond the outer edge of the Green Belt around villages
and market towns.
24. The cost to individuals, businesses
and the economy resulting from any shortfall in the provision
of decent, affordable housing:
A failure to provide enough decent affordable housing
would be likely to have the following effects in the Cambridge
area:
— an increase in the time spent commuting
and increasing traffic congestion;
— a spreading problem of house price
increases elsewhere away from Cambridge fuelled by commuters (already
seen in East Cambridgeshire towns such as Ely)[28];
— problems with the provision of public
services caused by staffing difficulties for key workers including
health workers at Addenbrooke's NHS trust, at Cambridge University
and elsewhere[29];
— Housing Associations cannot afford
to develop in the Cambridge area without the assistance of planning
gain. Hence they can only develop on sites where land can be secured
on the basis of a Housing Need Survey. Such provision is made
to satisfy local need and so there is no facility for people to
move to the area who cannot afford to buy on the open market.
This is clearly a barrier to labour mobility and leaves many employers
locally struggling to recruit staff for low paid occupations such
as bus drivers; and
— if basic public services and private
services cannot be provided in the Cambridge area its rapid economic
growth in the high tech sectors will be hampered to the national
detriment.
25. The public sector cannot increase income
levels to compensate for high house prices due to fixed national
salary levels. Just raising incomes locally gives an incentive
to move or stay but it also unjustly rewards those already well
housed in such areas of housing stress. If assistance with housing
costs is offered too widely there is a danger of reducing the
incentives for companies to relocate in UK to areas of cheaper
housing. The effect would be to ossify the economy. Landowners
would justly be concerned at the prospect of them providing such
wide ranging assistance. Hence in Cambridge we want to concentrate
assistance on those most in need and to key workers, most of whom
will be in the public sector ( whose services have to be provided
locally), and to those parts of the economy which have a special
need to be close to Cambridge such as higher education and science
based research and development.
24 At November 2001, over the last 10 years. Back
25
Implementing the Cambridge Sub-Regional Strategy, Roger Tym &
Partners, 2001. Back
26
Cambridge & Peterborough Joint Structure Plan Review, Deposit
Draft Plan, March 2002. Back
27
Swamps & Alligators, the Future of Low Cost Home Ownership,
JRF, 2001. Back
28
Research into Key Worker and Affordable Housing in the Cambridge
Area, 2002. Back
29
As 5. For Addenbrooke's, the study finds a shortage of staff causing
empty beds. It links this to high house prices making recruitment
and retention difficult, to fewer staff living locally and to
more long distance commuting. Back
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