Date: 24 April 2007 Item 7

Report by: The Hampshire Director of Environment, Portsmouth Strategic Director for Environment and Transport and Southampton Director of Environment

Affordable Housing

Written by: Sue Clark, tel: 01962 845890 email: [email protected]

Purpose and Summary:

At its last meeting the Panel asked for a report on affordable housing and the relevant targets set out in regional planning guidance.

In order to meet the targets in the South East Plan the number of affordable homes built will need to be substantially increased compared to the numbers achieved in recent years. Local authorities are recommended to take the action set out in the Recommendations below.

RECOMMENDATIONS:

That all local authorities be recommended to:

(i) place a high priority on maximising affordable housing completions, whilst having regard to the type of affordable housing and size of dwelling needed in their area; and

(ii) use every opportunity to lobby Government, MPs and the South East England Regional Housing Board to increase the amount of funding for affordable housing in Hampshire and South East England.

1. Introduction/Background

1.1 At its last meeting the Panel asked for a report about affordable housing and the targets set out in regional planning guidance.

1.2 Affordable housing is defined in Planning Policy Statement 3 Housing (PPS3) as follows:

"Affordable housing includes social, rented and intermediate housing, provided to specified eligible households whose needs are not met by the market. Affordable housing should:

- Meet the needs of eligible households, including availability at a cost low enough for them to afford, determined with regard to local incomes and local house prices.

- Include provision for the home to remain at an affordable price for future eligible households or, if these restrictions are lifted, for the subsidy to be recycled for alternative affordable housing provision".

Social rented housing is:

"Rented housing owned and managed by local authorities and registered social landlords, for which guideline target rents are determined through the national rent regime. The proposals set out in the Three Year Review of Rent Restructuring (July 2004) were implemented as policy in April 2006. It may also include rented housing owned or managed by other persons and provided under equivalent rental arrangements to the above, as agreed with the local authority or with the Housing Corporation as a condition of grant".

Intermediate affordable housing is:

"Housing at prices and rents above those of social rent, but below market price or rents, and which meet the criteria set out above. These can include shared equity products (eg HomeBuy), other low-cost homes for sale and intermediate rent".

1.3 Housing built for sale or rent without subsidy is called `market housing'.

1.4 Until the 1980s, local authorities were the main providers of affordable housing, with housing associations also providing some. However, the introduction of the `right to buy' for tenants and the ban on local authority housebuilding led to a reduction of local authority (and housing association) rented housing. More recently most local authorities have transferred their remaining rented properties to housing associations. Thus the latter are now the main providers of affordable housing.

1.5 New affordable homes for rent are provided either by housing associations purchasing land in order to construct properties on their own account or through the planning system, requiring either a percentage of homes built by private developers to be affordable or the provision of free and serviced land sufficient to meet the percentage of affordable units. Government funding is generally required in both cases, although less is required for affordable homes provided through the planning system because of an element of cross-subsidy from the market housing on the same site.

1.6 `Intermediate housing' is the generic term for low-cost home ownership and intermediate rent properties. It is for those who cannot afford open market housing but can afford more than social rented. This category includes shared ownership, where the occupier purchases part of the property and pays rent on the remainder. The Regional Housing Strategy states that during the two years 2006-08 just over half of all new affordable homes funded by the Housing Corporation in the Region are expected to be intermediate housing. This form of affordable housing requires less subsidy per unit than social rented housing.

2. Aims and Visions of Corporate and Community Strategies

2.1 This report supports the aims and visions of the three strategic planning authorities' corporate and community strategies by highlighting the need for additional affordable housing completions in order to meet the targets set out in the Draft South East Plan.

3. Policy Context

3.1 National policy on affordable housing is set out in PPS3. It highlights the importance of ensuring that public sector investment in housing results in a mixture of properties, in terms of both size and tenure, that contribute to a balanced housing market. It also states that the national indicative minimum site size threshold is 15 dwellings, but that Local Planning Authorities can set lower minimum thresholds where viable and practicable, including in rural areas. This could include setting different proportions of affordable housing to be sought for a series of site size thresholds over the plan area.

3.2 The Regional Planning Guidance (RPG) for the South East Region supports the provision of affordable housing but contains no specific targets other than a `provisional indicator' of 18,000-19,000 affordable homes a year in the whole Region. The Hampshire Structure Plan is similarly general, stating that local authorities should determine, on a site-by-site basis, the proportion of housing which will be affordable.

3.3 The draft South East Plan contains more specific guidance, with both sub regional and region-wide policies. Policy H4 in the Plan states:

"Local Development Documents will contain policies to deliver a substantial increase in the amount of affordable housing in the region....

Local Development Documents will set targets for the provision of affordable housing, taking account of the results of housing need and market assessments and having regard to the overall regional target that 25% of all new housing should be social rented accommodation and 10% other forms of affordable housing. ....

Local Development Documents will promote small scale affordable housing sites within or well-related to settlements, possibly including land which would not otherwise be released for development."

3.4 This target is very challenging and if it is to be achieved in Hampshire there will need to be a significant increase in the amount of affordable housing built. In recent years, many planning authorities have developed their local plan policies to secure more affordable housing on smaller sites. It is hoped that the increase in affordable housing completions seen last year will be sustained this year but even more affordable housing will be needed in the future.

4. Affordable Housing Targets in Hampshire

4.1 The percentage of new housing required to be affordable on sites in Hampshire varies by District from 15-40%, see Table 1 below. However, these percentages do not apply to all sites. In many areas sites of up to 25 dwellings do not need to provide any affordable housing, although in some places the threshold is as low as five dwellings. As a large number of dwellings are built on sites which are less than these thresholds the overall percentage of affordable housing which can be achieved is much lower than the headline target in the South East Plan (paragraph 3.3 above).

Table 1: Local Plan Affordable Housing Policies

District	Percentage of housing to be affordable	Site size threshold
Basingstoke and Deane	40%	Basingstoke town - 25 dwellings Settlements outside Basingstoke town with population > 3,000 - 15 dwellings Settlements outside Basingstoke town with population <3,000 - 7 dwellings
East Hampshire	35%	15 dwellings in all settlements with population > 3,000 (Alton, Liphook, Petersfield, Horndean, Clanfield, Whitehill/Bordon, Four Marks, Headley and Liss) 5 dwellings in settlements with population < 3,000; Special housing areas - 25 dwellings
Eastleigh	35%	15 dwellings/ 0.5 ha. More suitable smaller sites may also be used
Fareham	35%; 25% on identified sites	25 dwellings / 1 ha.
Gosport	40%	15 dwellings / 0.5 ha
Hart	25%	Urban - 15 dwellings / 0.5 ha Rural - 5 dwellings/ 0.25 ha
Havant	30%	15 dwellings / 0.5 ha
New Forest	35%	15 dwellings / 0.5ha; in built up areas >3,000 and allocated sites
Portsmouth	Sliding scale, 20 - 30%	10 dwellings
Rushmoor	15-30%.	25 dwellings
Southampton	25%	15 dwellings
Test Valley	40%	15 dwellings in settlements with population > 3,000, 5 dwellings in settlements with population < 3,000
Winchester	35% (40% in the MDAs, 40% in Winchester, 30% in some other settlements)	15 dwellings in settlements with population > 3,000, 5 dwellings in settlements with population < 3,000

Source: Local Plans adopted by Hampshire District and Unitary Councils

NB: the percentage figures above are not comparable with the percentage targets in paragraph 3.3.

4.2 The authorities in the Partnership for Urban South Hampshire (PUSH) are preparing a common affordable housing policy, which they hope to adopt across the sub-region. In doing this, the PUSH authorities are seeking to maximise the delivery of affordable housing to address local needs and ensure the Housing Corporation's resources are targeted to the area to help support the PUSH vision of managed growth.

5. Affordable Housing Completions

5.1 Over the last five years only 19% of all housing completed has been affordable housing. In 2005/06 completions of affordable housing were the highest for at least 10 years and 23% of all dwellings built were affordable housing. However, this is still well below the draft South East Plan's target that 35% of all new housing should be affordable. The number and percentage of affordable housing completions in Hampshire for the last five years is shown in Table 2 below. The attached appendix shows completions over the last four years by district.

Table 2: Affordable housing completions in Hampshire

	Year of completion (April to March)					Total 2001/06
	2001/2002	2002/2003	2003/2004	2004/2005	2005/2006
Net affordable housing completions	860	931	1,317	1,312	1,630	6,050
Total housing completions	4,815	5,600	6,762	7,618	7,006	31,801
Affordable housing as % of total completions	18%	17%	19%	17%	23%	19%

Source: Hampshire County Council Land Development Monitoring Database

5.2 Although there has been a welcome increase in the proportion of new homes which are affordable, the figure of 23% is still well below the draft South East Plan's target of 35%. Clearly, more needs to be done if the Plan's target is to be achieved.

6. Increasing the Amount of Affordable Housing

6.1 There are several actions which could help to increase the amount of affordable housing being built:

(i) Lower the site size threshold above which some housing must be affordable. The greatest opportunity exists where local planning authorities have relatively high thresholds; they should consider whether the thresholds could be reduced when next reviewing their affordable housing policy as part of the preparation of their Local Development Framework.

(ii) Increase the percentage of homes which must be affordable on sites above the thresholds. However, there is a limit to the amount of affordable housing which can be required on a site, otherwise the whole development could be made unviable, resulting in no housebuilding on the site at all. Moreover, affordable housing is not the only call on the scheme's finances: developer contributions will also normally be sought towards infrastructure and facilities such as transport improvements and new/expanded schools. Consequently, affordable housing targets of 50% or higher are unlikely to be viable without additional funding.

(iii) Local authorities could consider whether any suitable surplus land in their ownership can be used for affordable housing rather than being disposed of for general market housing. However it should be noted that the sale of surplus land provides finance for investment in other public functions; so the sale of land at below market price will be at the expense of these other functions. The amount of land provided from this source is therefore likely to be limited.

(iv) Consider requiring a greater proportion of affordable housing to be of the intermediate type, since its lower subsidy requirement means that more units can be provided for the same amount of public funding. This would also recognise the emerging range of private providers who can offer intermediate housing to complement the mainstream affordable housing provided by housing associations.

6.2 The level of funding for affordable housing is currently inadequate to deliver the scale of affordable housing required. Unless funding is increased, this will constrain delivery of additional affordable homes even if local planning authorities were to undertake all the actions listed above.

6.3 The timing of the Comprehensive Spending Review means that the level of funding for housing for the period beyond 2008/09 to 2010/11 will not be confirmed until late summer 2007. The most recent guidance published by the Government on Regional Funding Allocations was in July 2005. However, the South East Regional Housing Board has stated that:

"It is clear from the evidence base that this is insufficient to deliver the level of affordable housing required in the region. The Board will continue to use the evidence base to present the strongest possible argument in support of additional funding for the region."

6.4 The case for this increase in funding, which is being made by the South East Regional Housing Board, could usefully be supported by Hampshire's local authorities by lobbying the Government directly and through MPs.

7. Impact Assessments

7.1 Assessment of the Race Relations (Amendment) Act has been considered in this response but no adverse impact has been identified in terms of race, creed or gender.

8. Conclusion

8.1 The affordable housing targets in the draft South East Plan are very challenging and if they are to be achieved the number of affordable homes being built in Hampshire will need to be increased substantially. Local authorities should consider how to maximise the amount of affordable housing which can be achieved whilst meeting the housing needs in their area. Local authorities should use every opportunity to lobby government and MPs to increase the amount of funding for affordable housing in Hampshire and the South East.

1301/SC

APPENDIX

Affordable housing completions by district in Hampshire

This table shows the number of affordable homes built and that number as a percentage of all new homes built

Source: Hampshire County Council Land Development Monitoring Database