Memorandum by Westminster City Council
The City Council was one of the first local
authorities in the country to introduce an affordable housing
planning policy following the publication of the Planning and
Affordable Housing Circular in August 1996 and its revised version
in April 1998.
The City Council has negotiated over 800 units
of on-site affordable homes in some 25 schemes and many of these
have either been completed or are under construction. In addition,
over £25 million has been negotiated as financial contributions
agreed instead of on-site provision and £12 million of this
has been received. Much of this has been spent or is committed
to schemes to provide much needed affordable housing in Westminster.
This has been achieved in the centre of London
that has amongst the highest land prices in the country, if not
the world, but where the need for affordable housing is very acute.
The City Council is therefore very willing to give evidence to
the Sub-Committee and share with its views on what can be done
to deliver more affordable housing. The structure of the City
Council's evidence follows that set out in the Sub-Committee's
Press Notice. We have taken the liberty of including one additional
section at the end of the evidence on the impact on the provision
of affordable housing of the Government's proposals for the reform
of the planning system and in particular its proposed tariff system.
The Government's definition of affordable housing
encompasses low cost market and subsidised housing. There is confusion
over what is meant by low cost market housing. We consider it
to mean small unitsstudio and one bedroom flats let/sold
at market prices and these are not considered to be affordable
in Westminster. Others take it to mean shared ownership housing
where a proportion of the dwelling is bought and the remainder
Such is the demand for affordable housing in
Westminster (see below) that we define affordable housing as being
both social rented housing and subsidised shared ownership housing,
with the priority being social rented housing. Without subsidy,
housing in Westminster cannot be made affordable (the average
price is over £0.5 million). The shared ownership element
can be for key workers. The Government has not objected to this
approach but it is due to discussed at the UDP Inquiry later this
year. Many developers have objected to our definition.
There are currently approximately 52,000 households
in temporary accommodation placed by all London boroughs, of which
about 8,000 are in bed and breakfast. Westminster has approximately
2,400 households in temporary accommodation of which about 950
are in bed and breakfast.
Westminster's latest Housing Needs Study (completed
in 2001) determined a total affordable housing need of about 3,300
units per annum and a shortfall over the five years to 2006 of
11,425 affordable housing units. This compares to the average
total number of dwellings permitted in Westminster each year of
only 1,500 despite housing being given the highest priority in
the Council's development plan (UDP).
New affordable housing produced through the
affordable housing planning policy is of an extremely high standard
because it is provided in conjunction with private developments
and is often in areas where there has not traditionally been social
A significant element of continuing supply is
derived from re-lets of existing council and RSL stock. The City
Council's establishment of an Arms Length Management Company and
the consequent investment proposals will ensure that the decent
homes standard will be achieved for the City Council stock before
the Government deadline. This will not be achieved with RSL stock
and there is a concern at the under-investment in the repair and
upgrading of RSL stock.
Westminster's Housing Needs study demonstrates
that the annual shortfall of units, taking account of existing
supply and projected investment in new affordable homes is 2,285
units. Notwithstanding the extra £20 million investment committed
by the City Council for new homes, the current projected level
of funding from all sources is insufficient to reduce this shortfall.
The shortfall is also substantially in excess
of the entire number of market residential units being developed
in Westminster. In the last five years an average of 1,100 new
homes have been completed in Westminster annually. Increased funding
is required but development opportunities outside Westminster
also need to be more readily accessed.
This question itself raises a common misconception.
The provision of affordable housing through the planning system
is not a matter of planning gain but of good planning and this
has been bought about by the introduction of the circular on planning
and affordable housing (c/98 and its predecessor 13/96). It is
now as integral to planning as is good design or securing a mix
of uses. Quite simply, the developer has to provide affordable
housing to accord with local plan policy, in the same way he has
to meet all other relevant planning policies. If he fails to do
so, his application is refused on the basis that it is contrary
to the local plan. It is not different to any other policy. Whilst
it is secured by the use of s. 106 legal agreements, it is not
But, the planning system has always been about
the use of land, not about occupiers or about the value of the
developments. To use the planning system to control prices (eg
to provide affordable housing) is really using the wrong tool
for the job. The main tool has been through the use of public
money to the Housing Corporation to directly fund developments
by RSLs. But, this has clearly been inadequate and in recent years
the Housing Corporation's TCIs have not reflected the costs of
development in Westminster so that almost all of the affordable
housing provided in Westminster in recent years, and for the foreseeable
future, will be provided through the planning system.
This over reliance on private developments brings
a number of problems:
the local authority and the RSL have
no control over the timing of the developmentit is entirely
in the hands of the developer;
there is no guarantee over supplyin
an uncertain economic climate the developer will not implement
his planning permission and may seek a new permission for commercial
rather than housing use; and
housing developers compete at a disadvantage
with commercial developers in Westminster as the latter are not
required to provide affordable housing (the circular refers only
to securing affordable housing as part of housing developments).
We have tried to reduce this impact by requiring commercial developers
to provide housing to match their increase in commercial floorspace
and when the amount of housing required reaches 15 units (the
threshold for when affordable housing is required), then the affordable
housing policy applies in the usual way.
It is to the credit of local authorities that
they have managed to translate the Government's wishes into planning
policies to secure affordable housing from private developers.
But this has not been an easy ride for either local authorities
or developers and the policy is very complicated.
Whilst the planning system can contribute to
the provision of affordable housing, currently there is over reliance
on it and other methods must be used if the huge shortfall is
to be addressed. It is not just Westminster that is heavily reliant
on the planning system to deliver the bulk of affordable housing,
the same goes for other London boroughs.
However, the Government view seems to be that
the planning system should be doing more to provide affordable
housing and therefore is increasing the reliance on the planning
The level of unmet housing need dictates that
the majority of units provided should be social rented as the
economic status of the majority of those requiring housing precludes
any other effective provision. However, the need to foster balanced
and sustainable communities means that it is counter-productive
to develop concentrations of housing that are only social rented.
On larger developments we require a proportion (20 per cent as
a rule of thumb) to be reserved for subsidised shared ownership
housing. This provision gives some scope for developing an intermediate
market and assisting key workers.
In high cost areas the number of households
for which subsidised shared ownership might be an option would
be increased if the grant were increased to enable minimum equity
shares of 10 per cent rather than 25 per cent at present. It would
also be advantageous if an equivalent to the rural exclusion was
developed for the highest cost areas in order that a golden share
of the equity is retained to ensure shared ownership units are
retained in perpetuity. This would ensure that owners of shared
ownership properties could not purchase the entire property and
then sell the dwelling on the open market, but it would remain
as a shared ownership property.
Where there is a need for affordable housing,
then it is essential that Regional Planning Guidance does set
a target for the region as a whole and that this is taken into
account in the development plans and housing strategies of local
authorities and the Housing Corporation expenditure plans. These
targets may be set as a proportion of the total new housing or
as a set figure. But, the economies of different local authorities
will vary and the overall targets in each local authority will
therefore be differentsome will be lower and some higher
than the proportion set out in regional guidance. Therefore, the
regional guidance should not specify targets for affordable housing
for each authority within its area as this is best left to the
authority as it has the best knowledge of its local economy. Given
the current huge need for affordable housing, then it is essential
that each authority seeks to maximise the amount for affordable
housing provided. But this is not the same as simply setting a
high percentage because this could prevent housing development
taking place in favour of commercial development and therefore
achieve less affordable housing in the long term.
As outlined above the decent homes standard
will be met for the stock owned by the City Council within the
deadline. This target will not be met in relation to the stock
owned by RSLs. No current projection for the requirement for affordable
housing will be achieved without substantial and sustained increases
to grant funding.
The cost of new homes in Westminster (on average
in excess of £0.5 million) restricts access through this
route to a small percentage of the population. The predominance
of homeless households in the lettings to social rented accommodation
is reflected in a substantial reliance upon benefits. As a result
there is a polarisation that precludes the substantial part of
the population from establishing new households in Westminster.
The affordable housing planning policy has challenged the trend
of developing the enclave approach to private housing and the
continued use and development of the intermediate market (key
worker and subsidised shared ownership) offers improved prospects
for genuinely mixed communities.
There is no argument that the high house prices
in London and the South East are causing difficulties for people
to afford to live in the area. The rise in house prices since
1996 has been well documented. The impact of these prices is being
felt in some sectors of the economymost notably teachers
and nurses. The private sector has attracted less attention.
But in our view, the full impact has yet to
be feltfor two reasons:
All those who have already bought
houses are to some extent insulated from the problem. It is the
young and those looking to move to the area from elsewhere in
the UK who are disadvantaged. These numbers are relatively small
at the moment but will increase over timeso with house
prices forecast to continue to increase, the situation will continue
London continues to attract young
foreign people who come here to live and work for short periods
of time and are prepared to put up with relatively poor quality
and/or overcrowded accommodation as part of that experience. They
fill part of the gap left by the key worker problem.
I am not aware of any work that has been done
to assess the cost to the economy. Currently, the costs could
be expressed in terms of longer waiting times for NHS appointments
due to lack of nursing staff and impact on children's education
by teacher vacancies. In Westminster we have attempted to resolve
this problem by offering new teacher recruits housing from our
own Council stock or through nominations to RSL accommodation.
Any consideration of affordable housing must
have regard to the Government's proposals set out in its Green
Paper to change the current system of requiring developers to
provide affordable housing.
The Government propose to delete the current
circular on planning and affordable housing on which all planning
policies are based and on which basis all negotiations with developers
take place. It will be replaced by a tariff approach in which
the developer simply pays a cheque to the planning authority instead
of directly providing facilities or benefits that would otherwise
be required. The provision of affordable housing is therefore
downgraded from a planning policy requirement to just one of many
benefits to be met by paying a tariff. But rather confusingly
the paper states that affordable housing should still be provided
on-site which contradicts the tariff approach.
We are very concerned that there are inherent
contradictions in the Government's proposals. Affordable housing
must be provided on-site as part of the development and must retain
its planning policy status rather than be relegated to a planning
benefit. The deletion of the planning and affordable housing circular
is a retrograde step as planning authorities are now making it
work through their planning policies.
The one positive point from the Government's
proposals is the proposal to require commercial development to
provide affordable housing. This seems a logical step as it is
the commercial developments that in many cases create the need
for affordable housing in the first place and has three benefits:
More affordable housing will be provided
as it will be required from both housing and commercial developments.
It will create more of a level playing
field so that housing developers will not be at a disadvantage
in favour of commercial developments.
It will give local authorities greater
strength in negotiating with developers as developers will not
be able to use the threat of a commercial development to justify
reducing the amount of affordable housing they can provide.
Therefore, this one single change would make
an important contribution towards meeting our housing need subject
to the disadvantages caused by relying too much on the private
sector to deliver the affordable housing.