Planning Practice Note:
Affordable Housing Solutions in South Shropshire
Affordable Housing Solutions in Shropshire is the District Council's response to the pressing affordability problem experienced by local people, this is one of the worst nationally and the worst in the West Midlands. The average house price being ten times the average household income.
This Practice Note describes:
- The Policy as outlined in the document named above.
- What affordable housing is.
- Who is eligible
- Different types of development sites
- Housing Need in South Shropshire
Our own research indicates that we would need to build 280 affordable dwellings each year to meet the local needs for affordable housing. Whilst this is not possible, it is clear that in order help local people access affordable housing planning policies have needed to change.
THE POLICY
All housing developments within the District will continue to provide 50% affordable housing. In order to allow single plots to be available as open market housing, we require 50% of the cost of construction of an equivalent affordable house to be given to the Council as a contribution for affordable housing elsewhere in the District.
All housing developments on sites outside of the main settlements will only be for affordable housing. These are known as exception sites.
In order to retain attractive redundant traditional rural buildings, including barns in the countryside and understanding the costs associated with their careful restoration and reuse we are proposing to allow their use for open market dwellings so long as 50% of the cost of construction is given to the Council to provide affordable housing elsewhere.
The use of barns for affordable housing without a payment is still allowed, as is the building of single self-build dwellings for the local people in housing need within or on the edge of many of our villages. These must remain affordable forever.
Affordable houses should normally be no larger than 100sqm and because of changes in our definition of affordability (see below) such houses will have to potential initial maximum value. In this case, £120,000 ie £1200 per sqm. The resale value of these houses is to be linked to increases in the local housing market.
All affordable dwellings will be subject to appropriate legal restrictions on occupancy and value and will be subject to the Council's Equity Mortgage agreement.
It is a requirement that all dwellings will be built to high environmental standards achieving the Lifetime and EcoHomes standards currently met in all publicly funded housing developments.
Within our main settlements, of the 50% affordable dwellings required on mixed schemes it is expected that these should match the open market houses in terms of size and type, for all purposes they are identical and closely integrated.
For financial reasons it must be assumed that the affordable dwellings are evenly split between what we are calling Discounted Equity Mortgage houses and Social Rented Housing. The actual agreed mix of homes built will be subject to negotiation. Any changes to this would have to be agreed and would involve a payment to the council for provision to be made elsewhere.
WHAT IS AFFORDABLE HOUSING?
Affordable Housing in South Shropshire means housing of a good standard (that is built to the LIFETIME STANDARD and ECOHOMES "VERY GOOD" STANDARD) that is cheaper than that which is generally available in the local housing market.
Affordable dwellings should not normally exceed 100spm gross internal inhabitable floor space to be taken to include any attached or integral garaging.
WHO IS ELIGIBLE FOR AFFORDABLE HOUSING?
Affordable housing is available to local people in need. Someone is in local housing need when they:
- Can demonstrate a need to be housed locally; and
- Lack their own housing or live in housing which is generally inadequate or unsuitable for their current or future needs.
- Are unlikely to be able to meet their needs in the existing local housing market without some assistance; and
- Meet the following criteria:
- They must constitute a separately identifiable household;
- Members of the household must together have insufficient income to purchase an open market house in the parish in which the proposed dwelling is to be situated;
- The Criteria would have been met if no accommodation of the right size and price has become available in the last two years; and
- At least one member of the household must have strong local connections. This will normally be satisfied if at least three of the following descriptions apply to them:
- His/her parents were permanent residents in the area at the time of his/her birth
- He/she was a permanent resident in the area for at least 5 years and a child attending school, or for some special reason attended school outside the area but would have otherwise attended school in the area.
- He/she is currently a resident or previously resided in the area for a continuous period of 15 years as an adult
- He/she is currently employed in the area and has an open ended offer of employment in the area which he/she cannot accept unless they reside in the area
- He/she has a parent residing in the area
- In the case of a person over the age of 55, he or she has a son or daughter or step son or daughter living in the area
- He/she has the support of the parish/town council/meeting for their status as a "local person
- The only exception to meeting these three criteria is in respect of Key Workers involved in the provision of public services.
THE SOLUTIONS
FUNDING
- Put simply, funding for the affordable housing projects will come from 3 main areas:
- Public Housing Bodies, and
- Landowner/Developer contributions
- Affordable Housing Pot
Public Housing Bodies
Public Housing Bodies, such as Registered Social Landlords (RSL's) are, other than exception sites, only be able to purchase affordable housing at a rate at which can be paid from their own resources, either directly or through borrowing. This policy, this means that the RSL will have to pay for 50% of the Cost of Construction: defined as £1200 per sqm. Other funding will come from the developers of the site itself (please see below).
Developer Contributions
Landowner/developer contributions will form 50% of the cost of construction for social housing.
Under certain circumstances the developer may build less affordable housing paying the council a contribution to its affordable housing fund for the provision of affordable housing elsewhere.
Half of the affordable housing on a development site must be for Discounted Equity Housing sold at a fixed discount below cost of construction with the difference being made up by developer contributions.
The developer must ensure that the terms for acquiring land for residential development, and the terms for the cost of providing any cross subsidy for affordable housing are fully deductible from the purchase price of the land. The cost of the land should reflect the impact of this policy.
The alternative is that the affordable housing can be funded from the eventual profits of the sale of the market units.
SOCIAL RENTED HOUSING
Owned and rented by a Registered Social Landlord (RSL) with the level of rent set by the RSL being affordable to those in greatest need. RSL's are regulated by the Housing Corporation and have a primary objective of delivering social housing. Therefore the council does not consider it necessary to impose legal restrictions on cost, tenant allocation and future occupation.
PRIVATE AFFORDABLE RENTED HOUSING
The council will approve schemes for private rented housing where these are broadly subject to the same provisions and safeguards as Social Rented Schemes and will impose, through the use of Section 106 Planning Obligations, restrictions on costs, tenant allocation and future occupation.
SOCIAL SHARED OWNERSHIP
This allows the buyer to purchase between 25% and 90% of the full value of the property and pay rent on the remaining part of the equity to a RSL. This option is available in a limited number of circumstances, only as part of a comprehensive affordable housing solution for a site subject to it constituting no greater than 33% of the affordable housing on that site.
PRIVATE SHARED OWNERSHIP
The Council will view favourably schemes for private shared ownership housing where these are broadly subject to the same provisions and safeguards as an RSL.
DISCOUNTED EQUITY HOUSING FOR SALE
This option is available for local households in need to purchase their own property at a fixed discount below the Agreed Cost of Construction for that size and type of property.
SECTION 106 AGREEMENT
Section 106 Agreements/Obligations are legal agreements entered into under section 106 of the Town and Country Planning Act 1990 for the purposes of making a legally binding contract with developers and subsequent owners to secure community benefits such as financial payments of affordable housing.
EQUITY MORTGAGE
This is a method of taking out a second mortgage with the council to limit the prospects of affordable houses reaching the open market for resale.
More information or clarification on the Affordable Housing Policy please contact Planning Policy on the number below, or visit our website at www.southshropshire.gov.uk an click on the LDF link for the full document.
© Copyright South Shropshire District Council, Stone House, Corve Street, Ludlow, Shropshire, SY8 1DG. Tel: (01584) 813000 fax: (01584) 813128
email: planning@southshropshire.gov.uk
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