Annex A
GUIDANCE ON INTERPRETATION OF PPS3 AND DELIVERING
AFFORDABLE HOUSING
PPS 3
Para 22—The percentage of affordable housing
defined in LDDs should be broken down into Social Rented Housing,
Intermediate Rented Housing and Intermediate Shared Equity Housing.
The relative proportions of these types of housing should follow
the evidence of the SHMA. This clarification should also apply
to paras 23, 24 and 29.
Para 25—Local authorities should be cogniscent
of the needs of the private rented sector and include assessment
of this in their SHMA.
Annex B—Definitions
First paragraph—if restrictions are lifted
for subsidy to be recycled for alternative affordable housing
provision. This should be clarified to be "Public Subsidy"
ie Grant.
DELIVERING AFFORDABLE
HOUSING
Annex A
Para 19—This para makes clear it is public
subsidy and not developer contributions or increase in market
value that should be recycled.
Annex B
Para 30—this uses the term "any subsidy"
with regard to recycling and is therefore at odds with para 19.
Para 38—Shared ownership—This states
that staircasing receipts should be recycled, but this is at odds
with para 19.
Annex C—This discusses what it terms Affordable
Housing Providers. Whilst it encourages a broad range from RSLs
through ALMOs to Unregistered Bodies it confuses Ownership and
Management. Local authorities do not like to use private sector
providers, despite PPS3's intentions, they have misunderstood
the differential between Ownership and Management, which is not
helped by the language in Delivering Affordable Housing. Institutional
investors will want to have their investment protected by being
declared as owner of a property. That property can then be managed
by an RSL, ALMO or Approved Manager under the Housing Corporation
scheme. Local authorities should be advised that the intent of
Annex C is to define appropriate affordable housing managers and
that ownership is irrelevant as long as the manager operates under
a suitable Service Level Agreement which meets criteria that all
of the parties agree are appropriate. This accords with para 48.
Annex D
Para 67—This confirms the Government's
intention that those accessing shared equity / ownership products
should be able to increase the size of their equity share until
they achieve full ownership. This should apply to all Intermediate
Tenures and not just the Homebuy products.
Para 72—This paragraph initially refers
to affordable housing that was grant funded but then goes on to
state that any subsidy obtained by the developer should be reinvested.
This is ambiguous and at odds with para 19. It should be clarified
that only Public Subsidy should be reinvested.
Para 83—Sets out the alternative sources
of subsidy. On-site developer contributions should be deleted
from this list so that it does not form part of subsidy to be
recycled, or if it is deemed to be part of the public subsidy
it should be quantified in the S.106 agreement so any increase
caused by house price inflation over and above it can be identified
and used to pay investors an improved yield.
Para 99—This refers again generally about
recycling receipts, and is ambiguous and contrary to para 19.
Para 100—This refers to private companies
"owning and managing" the stock which whilst encouraging
continues the confusion that the two have to be linked, ie all
private or all public.
SUMMARY
As can be seen from the above suggestions, investors
will have no problem with NAHP Grant or other "public subsidy"
being recycled but they do need to receive any staircasing receipts
over and above that to ensure long term yields are reasonable
for the risk they are taking.
With regard to the promotion of intermediate
tenures local authorities need to be guided further that their
requirements should reflect the SHMA and have due regard to the
viability of the development by use of the Housing Corporation
Economic Viability Assessment Tool.
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