Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by Royal Town Planning Institute (AFH 65)


  1.  The Urban Affairs Sub-Committee of the House of Commons Select Committee on Transport, Local Government and the Regions has resolved to undertake an inquiry into affordable housing.

  2.  The Government has committed itself to ensuring that all social housing meets set standards of decency by 2010. This will only be possible if decent houses are made affordable and affordable houses are made decent. The Committee is particularly interested in the following:

    —  the definition of affordable;

    —  the scale and location of the demand for affordable housing;

    —  the quality of affordable housing;

    —  the adequacy of the existing supply and the amount of resources available;

    —  the extent to which planning gain can fund the level of affordable housing required;

    —  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;

    —  whether targets in regional planning guidance are appropriate;

    —  whether targets on decent and affordable housing will be met by central and local government;

    —  whether current policies and practices are leading to the creation of mixed communities;

    —  whether more greenfield development is needed to meet housing need; and

    —  the cost to individuals, businesses and the economy resulting from any shortfall in the provision of decent, affordable housing.


  3.  Over the past 20 years or so, successive Governments have looked increasingly to private developers and the planning system to address one of the nation's more pressing social problems—bridging the gap between the demand for and supply of affordable housing. For the previous 100 years, public sector rented housing—provided first by local authorities, and later by housing associations with funding primarily from the Housing Corporation—had been the principal source of supply. This changed first, if only on a small scale, with the rural exceptions policy—local authorities could grant planning permission for housing on unallocated small sites, provided the housing was "affordable". The original version of PPG 3—Housing (January 1988) sanctioned the general use of planning agreements to facilitate the provision, by the developer, of an element of affordable housing on specified sites, and provided that the development plan included an assessment of the affordable housing requirement. Current policy—very much a development of that which evolved in the 1980s—is contained in DETR Circular 6/98 and the March 2000 revision of PPG 3.

  4.  The Institute is co-funding—with the Joseph Rowntree Foundation, the Housing Corporation, the Countryside Agency and the RICS—research by the Universities of Cambridge and Sheffield into the impact of the planning system on the production of affordable housing. The research is, as yet, incomplete and unpublished, though this submission does draw from some of its preliminary findings.

  5.  In this submission, the Institute concentrates on the town and country planning issues raised in the terms of reference for the Sub-Committee's inquiry—particularly the definition of "affordable" as it impacts on the planning system, the role of regional planning guidance and development plans, brownfield versus greenfield development, and planning gain.


The definition of "affordable"

  6.  In recent years, the term "affordable housing" has been adopted to cover housing made available at below market prices. This includes two different, but overlapping, sources of provision:

    —  by registered social landlords (RSLs)—ie what used to be known as "social housing"—where new construction, at least in recent years, has been primarily by housing associations, funded by the Housing Corporation; or

    —  by private housebuilders through planning obligations, within the framework set out in DETR Circular 6/98. This can include a range of different kinds of provision:

      —  low cost sites for building by RSLs;

      —  cross-subsidy of sites within a development, allowing some of the houses to be sold at a lower price;

      —  a proportion of lower-specification houses; or

      —  various forms of shared equity.

  7.  Except in the first of these categories—subsidised site provision for building by RSLs—it is important to recognise that the housing may not remain available to the social sector after the first occupants have moved on.

  8.  Given the importance of subsidised housing to both social and land use policy, the general lack of definitional clarity is not satisfactory. However, it is one thing to define what is meant by "affordable housing", but a totally different problem to define what "affordable" means in terms of house prices. This is an even more complex and sensitive area. What is "affordable" will vary over time and with geography. It has a direct relationship with household incomes, and so must also take account of the impact of housing (and other) benefits, alongside property prices.

  9.  Current advice to local planning authorities, in DETR Circular 6/98, suggests that a definition of "affordable" should be included in development plans. To the extent that this might help provide consistency and transparency in the local planning authority's (LPA's) negotiations with the housebuilders—required to produce the affordable housing on the ground—this is a reasonable line to take. However, it quickly becomes less practical when the requirement for personal and sensitive information, not normally available to the LPA, and likely rapidly to become out of date, is taken into account.

The scale and location of the demand for affordable housing

  10.  Whether potential households are able to realise their aspirations of separate accommodation depends not only on the total number of dwellings available in their area of choice, but also on the cost relative to household income. As income distribution has become increasingly unequal over the past 20 years or so, a larger proportion of households has become dependent on subsidy—whether of the individual (through housing benefit) or the housing itself (eg that provided by an RSL). The numbers involved will depend on the relationship between incomes and market prices in particular areas. Both of these are difficult to project with any degree of accuracy (see paragraphs 8 and 9, above).

  11.  London and the South East account for a large proportion of the affordable housing that is being produced through the planning system—somewhat over half of the total in England as a whole. Much smaller proportions are found in the northern regions, and certainly less than their proportion of total households. This reflects not only the relative distribution of need, but also the more buoyant private housing market and the higher land values in the South.

The adequacy of the existing supply and the amount of resources available

  12.  Research carried out for the Joseph Rowntree Foundation suggests that up to 50 per cent of the additional households projected nationally will not be able to afford market prices—whether renting or buying. Thus, a large proportion of the additional housing allowed for in RPG will have to be "affordable". Over the past decade, completions of new "affordable" housing have averaged 14,600 per annum, of which 82 per cent was built by the private sector.

  13.  Although not a direct measure, this clearly suggests that the need for affordable housing is not being met by new build, and is not likely to be under the current regime, and at present resource levels. A significant proportion of affordable need will have to be met by means other than new build—eg through assistance with the rehabilitation of the existing stock; releasing social lettings by helping tenants to buy in the private sector; or helping low income families to buy through shared ownership schemes. The Sub-Committee will wish to bear in mind, however, that there has been a significant loss of affordable housing over the past 15-20 years through the right to buy.

The extent to which planning gain can fund the level of affordable housing required

  14.  Any consideration of the contribution of planning gain must take into account the growing competition for the "gain" that now exists. Over the last 20 years, the scope of planning gain—in terms of the range of infrastructure and other facilities that LPAs might typically seek to have funded—has broadened rapidly, the more so in recent years. Affordable housing is thus in competition for the available funding, and the extent of its provision is very much dependent on the priority attached to it by the LPA. This can be seen very much as the weak link in an arrangement that relies so heavily on planning gain to subsidise affordable housing provision.

  15.  The Institute recognises that the planning system has a major role to play in achieving mixed communities and delivering affordable housing. It does have real doubts, however, as to whether it is legitimate, or sensible, to expect commercial housing development to subsidise affordable housing. If society wants to subsidise rents and purchase prices—as it did for 100 years—then it should do so openly. Government should face up to its responsibility to provide adequate public finance from general taxation so the RSL's, and their tenants, can afford to develop new housing. This means using taxation and other economic instruments, rather than alighting on the small number of housebuilders who develop sites large enough to make it worth everyone's while negotiating planning gain.

  16.  Nevertheless, if the Government is to retain the present basis for the delivery of affordable housing, there are arguments for spreading the load. It would not be unreasonable, for example, to extend the obligation to those commercial and industrial developments that are responsible for inward migration into an area, and so create a proportion of the unmet demand for affordable housing. A tariff-based approach could facilitate this.

  17.  The Institute strongly supports the tariff-based approach described in the recent DTLR consultation paper—Reforming Planning Obligations: Delivering a Fundamental Change. It does so for a range of reasons that there is no space to discuss here, but it would not want to give the impression that tariffs would be a panacea in easing the delivery of affordable housing. Difficulties that might be anticipated include:

    —  a fixed tariff will ignore the big variations in what is achievable on individual sites, and so may reduce affordable housing numbers;

    —  site-specific negotiations will still be likely, especially where the provision is on-site; and

    —  the LPA will have to determine the proportion of its tariff income that is to be devoted to subsidising affordable housing.

  18.  Recently, in an attempt to better align policy with those on social inclusion and urban renaissance, Government has come to regard planning agreements that provide for offsite provision of affordable housing as conflicting with policy to create mixed and balanced communities. Amended guidance to LPAs suggests this should only be a last resort. The Government has also adopted its target of 60 per cent of all new housing development on brownfield sites. Both these new emphases have the potential to reduce the development value available to cross-subsidise, and so run counter to the provision of affordable housing through planning gain.

Whether targets in regional planning guidance are appropriate

  19.  In line with Government policy, the general stance of regional planning guidance (RPG) is to keep a tight rein on greenfield housing land releases, in order to complement urban regeneration initiatives and help achieve brownfield development targets. Running counter to this, but a view increasingly heard—with the housebuilders well to the fore—is that the answer to the shortage of affordable housing in pressure areas is to allocate more land for housing; that it is the planning system that has failed those looking for affordable housing.

  20.  Housing targets in RPG are based on a complex series of calculations and projections. They are, nevertheless, devised so as to meet both market and subsidised housing needs. If, therefore, land for the non-market component is released, without there being a provider in place, there is a surplus of housing land relative to the effective demand. Without a separate use class for subsidised housing—to which, in the Institute's view, there are many valid objections—this land becomes generally available, and so undermines the fundamental policy stance.

  21.  Without a credible system for the delivery of houses, the consequences of allocating land are the same as for over-provision for any other reason. In the case of affordable housing, however, the problems are greater because virtually all the extra land will be greenfield, and extra provision will only exacerbate the processes of dispersion and social polarisation. The effects of this will be felt most strongly in the poorest existing urban neighbourhoods. There, the housing will become progressively degraded, and ultimately removed from the existing stock. But it is precisely this housing that currently provides the entry point for the least well off households in all tenures.

  22.  It is the role of RPG to provide a framework that places the provision of different housing types and tenures alongside each other, in the context of creating mixed and more balanced communities. A major focus of RPG, therefore, has to be to ensure that the rate of release of land for new housing does not undermine the vulnerable, entry-level housing that already exists.

  23.  However, RPG has only an indirect role in providing for affordable housing. In practice, a more localised and continuous process of assessment and response is required:

    —  RPG provides indicative estimates, but it is at district level that local authorities must take account of assessments of housing need and the existing housing stock in planning for an appropriate mix of size, type and affordability (PPG 3); and

    —  the aim of RPG and structure plans is to provide advice and information to assist local planning and housing need assessments to be carried out.

Whether current policies and practices are leading to the creation of mixed communities

  24.  In a situation where the new development each year equals only 1-1.5 per cent of total extant development, it is over-optimistic to expect a significant change in the shape and make-up of communities overnight. Further, the volume of affordable housing being delivered by current policies—even in the South East where proportions are greatest—is both inadequate when related to demand, and generally insufficient to skew the established make up of individual neighbourhoods or communities (see paragraph 22, above).

  25.  The theory is that affordable and market housing on the same site help achieve a social mix. The practice is often somewhat different. Smaller houses and plots, a different design, or a conspicuously meaner specification can identify the "affordable" element, leading to "ghetto" analogies. Developers are often resistant to this side-by-side arrangement, because of the perceived reactions of prospective purchasers of market housing, and regularly produce counter proposals for offsite affordable provision.

Whether more greenfield development is needed to meet housing need

  26.  See paragraphs 19-21, above.

The cost to individuals, businesses and the economy resulting from any shortfall in the provision of decent, affordable housing

  27.  This raises the much wider questions of a national spatial strategy (or rather, a lack of one) and urban policy. New housing is only a small fraction of the overall housing market, so new provision would have to be on a truly heroic scale to have any significant effect on prices.

  28.  House price rises in pressure areas are symptomatic of local economic overheating. The wider costs, mentioned in the inquiry terms of reference, are the result of failure to achieve a more even pattern of economic development across and between the regions. These costs are felt not only as shortages of affordable housing in pressure areas, but also as surpluses of "low demand" housing in large parts of the country-even including parts of London and the South East.

  29.  Simply building more houses, without addressing the regional and urban causes of the problem, will reinforce further the vicious cycle that is polarising neighbourhoods, removing houses from the pool of attractive stock, increasing commuting distances and car-dependency—and raising prices. These trends have been with us at least since 1945. They were made far worse by social housing and planning policies in the 1980s and early 1990s. More of the same is definitely not the answer.


  30.  In this necessarily brief submission it has not been possible to consider the complex issues surrounding the provision of affordable housing in any great depth. The Institute would be happy to expand on its views in oral evidence if this would be helpful to the Sub-Committee's inquiry.

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