Memorandum by the Chartered Institute
of Housing (PGP 39)
PLANNING GREEN PAPER AND PLANNING OBLIGATIONS
1. INTRODUCTION
1.1 The CIH is pleased to make this submission
to the Committee's Inquiry into the Planning Green Paper and,
in particular, the new proposals relating to Planning Obligations.
In this submission, we have concentrated on how the proposed reforms
will affect the provision of affordable housing. We do, though,
have views about other aspects of the proposals and this submission
should be considered in conjunction with our response to the DTLR
on the Planning Green Paper and consultation on Planning Obligations.
2. SUSTAINABILITY
AND AFFORDABLE
HOUSING
2.1 We are starting from the premise that
one of the stated objectives of moving to a new system is to "continue
to support the objective of creating balanced and mixed communities
to promote sustainable development and social inclusion"
(para 4.21 of planning obligations paper). The Institute of
Public Policy Research (IPPR) recently undertook an Inquiry into
the Future of Social Housing, publishing its report Housing
United in 2000. It suggested adopting a set of policy goals
for a sustainable housing market. These are set out in an appendix
to this paper. In making this submission, the CIH considers the
concept of sustainability, as it relates to housing, to be broadly
aligned to these policy goals.
2.2 In many parts of the country, particularly
London, the South East and many rural areas, achieving these objectives
will require significantly higher levels of affordable housing
than are currently being provided. The Government clearly recognises
this problem with the setting up of the Affordable Housing Unit,
and recent announcements by Lord Falconer regarding the negative
effects that the lack of affordable housing has on labour markets
and on communities. There is a general reluctance regarding affordable
housing provision and the system needs to be strengthened to give
a higher priority to meeting affordable housing needs. Our members
have expressed concern that the planning system is failing communities
badly in some parts of the country.
3. THE PROPOSED
NEW TARIFF
SYSTEM
3.1 The new system will have a number of
consequences, some of which could be positive in relation to the
provision of affordable housing and sustainable communities, and
others that are, or could be, negative.
3.2 Moving from a system of on-site provision
to one in which a tariff charge is made could be equated to removing
a ring-fence. Under the current system, contributions in-kind
ensure that a specific purpose for the contribution is realised,
and affordable housing is often considered to be an appropriate
contribution on sites being developed for housing. Under the proposed
system, the contribution is a "liquid" contribution
and this gives more freedom to commit the cash generated to a
wide range of areas of expenditure in a less directly accountable
fashion.
3.3 CIH has considered the benefits and
dangers of moving from an in-kind contribution to a liquid cash
contribution and these are set out below. Our over-riding concern
is that the level of affordable housing secured from planning
obligations will fall significantly if the proposals are adopted
as they stand, and that new developments will be less, rather
than more, integrated in relation to house types and tenures.
We put forward a number of recommendations for ways in which the
positive features of the proposal can be retained, while the effect
of the negative ones are minimised.
4. BENEFITS TO
BE GAINED
FROM THE
TARIFF SYSTEM
Increased transparency and clarity
4.1 One of the major advantages to the new
proposals is that, if properly managed, a pre-set schedule of
tariffs will bring about greater clarity, transparency and certainty
to developers and local authorities. This could reduce the need
for negotiation that often turns out to be lengthy and frustrating
for all parties. In developing the details of the proposals, the
outcomes of increased clarity, transparency and certainty should
be a high priority.
Increased level of contributions
4.2 It is proposed that the new tariff will
be applied to a wider range of sites, both commercial and residential.
There is, therefore, the potential for the new proposal to result
in an increased overall level of contributions for developments
that will benefit the wider community, including affordable housing.
Removal of thresholds
4.3 Under the current system, affordable
housing policies can, in general, only be applied to developments
above the threshold levels set out Circular 6/98. Typically this
means sites of at least 25 units or one hectare, except in rural
areas where the higher costs of development frequently restrict
affordable housing provision in any case. The short-comings of
this system are that very little affordable housing can be developed
on small sites through planning obligations, even where the site
finances would otherwise allow this to happen. It also discourages
the development of sites that are just above the threshold levels,
and encourages the practice of developing larger sites in tranches.
4.4 The new system would enable authorities
to make charges on all developments, commensurate with the size
or cost of the development, and allow spending on developments
of any size. This could potentially benefit rural areas and other
areas where small sites are more usually available, although in
reality the high costs of land may dissuade authorities from developing
in these areas. It would also help to remove the perverse incentives
from the system.
5. DANGERS TO
AVOID IN
ADOPTING THE
TARIFF SYSTEM
Potential for less affordable housing to be provided
5.1 In many areas there is a lack of political
(and in some cases public) support for affordable housing. Giving
councils more flexibility in how the tariff is spent will almost
certainly result in less, rather than more, affordable housing
being developed at the local level, unless safeguards are put
in place (see recommendations).
Reduced mixing and sustainability
5.2 One of the advantages of on-site provision
of affordable housing is that a degree of mixing is automatically
achieved. The CIH has in the past been opposed to the use of commuted
sums, apart from in exceptional circumstances, for the reason
that it provides a means of evading the requirement to include
affordable housing on sites developed for market housing. Developers
largely favour this option that goes against the creation of mixed
developments and sustainable communities.
5.3 As it stands, the tariff proposal will
strengthen developers' negotiating position for payment of a cash
sum instead of on-site provision and would certainly provide a
means to reduce integration of house types and tenures on new
developments.
Leakage of tariff income
5.4 A liquid contribution is more difficult
to trace and the certainty of the outcomes is reduced. It is essential
that this money is understood to be additional locally derived
money, and that funding for main programmes is not reduced as
a result. Clearer guidance on what constitutes a "legitimate
purpose" for spending the tariff locally is required, to
prevent leakage into main programmes that should be financed through
other funding streams.
6. DEFINITION
OF AFFORDABLE
HOUSING
6.1 The CIH is disappointed that there are
no plans to revise the definition of affordable housing in relation
to planning obligations.
6.2 Many of our members are frustrated that
they are unable to specify the type of affordable housing to be
included on a site. The problem with the current definition is
that market housing sold at lower than market costs cannot be
differentiated from housing for rent or shared ownership, even
though these fulfil different purposes in the housing market,
and the former is not available to meet needs in perpetuity. Developers'
preference is to provide this low-cost market housing as their
on-site contribution, but this means it is not available to meet
needs in the long term.
6.3 As part of the process of developing
their Local Housing Strategies, housing authorities are being
required to undertake sophisticated analyses of the local housing
markets operating in their areas, covering all tenures and the
interactions between tenures. There are different types of affordable
housing, including housing to rent, a variety of types of shared
ownership and full ownership at low or discounted prices. Some
housing associations are even experimenting with flexible tenure,
in which the tenant can purchase their property by degrees, and
can sell equity back to the association if they fall on hard times.
6.4 The current definition of affordable
housing for planning purposes does not allow specification of
the different types of affordable housing. This means that there
is no mechanism for translating increasingly sophisticated analyses
of housing need into desired outcomes through planning obligations.
7. ALLOCATING
SITES SPECIFICALLY
FOR AFFORDABLE
HOUSING
7.1 The paper makes the suggestion to allow
authorities to allocate sites specifically for affordable housing.
Feedback from members suggests that the ability to allocate land
solely for affordable housing where there is a demonstrated need
would be a significant step to addressing the problem in high
demand areas, especially in rural areas where the number of exceptions
sites coming forward is diminishing. A mechanism for bringing
forward such sites as and when the housing is required is also
needed. We suggest that there could be a limit on the size of
such sites to, say, 15 units.
8. RECOMMENDATIONS
8.1 We have set out what we believe to be
the implications associated with adopting the new proposals for
planning obligations as well as the danger of neglecting the need
to revise the definition of affordable housing. We believe that
specific measures are needed to avoid those dangers, while retaining
the advantages gained. These are set out below.
Presumption towards on-site provision
8.2 The Government has undertaken to "...continue
to encourage local authorities to seek on-site provision as a
first choice" (para 4.21). CIH agrees with this, but believes
that firmer arrangements are needed to ensure that higher levels
of affordable housing and integrated housing developments are
actually achieved as a result of the proposals.
8.3 We suggest that where sites are being
developed for housing, or for mixed use that includes housing,
there should be a presumption that affordable housing will be
provided on-site. Where local authorities can demonstrate either
that better mixing would be achieved by providing the affordable
housing elsewhere or that there are other specific community needs
that are greater than the need for affordable housing, a cash
contribution could be sought instead. These needs must be articulated
in the Local Development Framework of a Local Action Plan.
8.4 We accept that there are areas where
there is a lower demand for affordable housing and a bigger need
for other infrastructure and community benefits. Our suggestion
would retain the flexibility to seek a cash contribution where
greater needs can be demonstrated. Contributions of land would
also be acceptable in certain circumstances.
8.5 Coupled with this expectation, local
authorities also need to have the power to require on-site provision
of affordable housing as the developers' contribution. Leaving
the matter to negotiation will certainly perpetuate the current
scenario where negotiations are often protracted, that the proposals
are intended to overcome.
8.6 Where on-site provision is requested,
the level of affordable housing and cost to the developer would
be determined by equivalence with the pre-set tariff levels, so
the benefits of greater financial certainty and transparency of
the proposed new system would not be lost.
Realistic targets for affordable housing
8.7 The paper suggests that the income generated
through the tariff should be spent to support local objectives
and priorities. This makes a lot of sense. It does, though, raise
the question as to how these priorities will be decided and the
mechanism for linking the spending of the tariff to them.
8.8 Local authorities have been set a number
of targets in recent years, in relation to Best Value, and through
the national PSA targets. Spending in these areas is likely to
take precedent when it comes to decisions over how the tariff
is spent. It is, therefore, essential that realistic targets for
affordable housing are set locally (in the LDF), based on regional
and local assessments of housing need, as well as deliverability
criteria such as funding and land capacity. The impact of generating
inward employment and other economic strategies on housing requirements
must be recognised. Unless targets are set, the need for affordable
housing will be played down in areas where there is a lack of
political support for affordable housing, to the detriment of
the whole community.
Test for the Local Development Framework
8.9 The Planning Green Paper sets out proposals
to better engage communities in the planning process. Specifically
it suggests that local authorities should be required to demonstrate
that they have involved communities in drawing up the Local Development
Framework. It is important that the effective involvement of people
who are in housing need is embraced as arrangements develop.
8.10 We agree that the Local Development
Framework needs to be tested to ensure that it is fit for the
purpose it is intended to meet. One of these tests should be whether
the LDF and relevant Action Plans are together delivering the
right amount of housing in the right place to meet needs, including
for affordable housing.
Spending the tarfiff
8.11 It is important that restrictions are
put in place to prevent the tariff income being spent on revenue
items and capital items that do not directly contribute to community
sustainability. CIH suggests that guidance is required on the
kind of purpose that would be considered to be "legitimate"
for spending the tariff.
Monitoring
8.12 Currently, monitoring of contributions
made through planning obligations is quite patchy and not very
accurate. Monitoring to establish spending patterns is essential
if the right outcomes are to be achieved.
Affordable housing definition
8.13 We suggest that authorities need to
be able to specify types and ownership of housing on particular
sites, where it supports mixed and balanced communities, and this
should be addressed in the Local Action Plans. Our proposed definition
for affordable housing is:
— homes for either rent or shared ownership
at below market levels, provided by local authorities and registered
social landlords; or
— homes for either rent or sale at
discount compared to open market value where a planning agreement
ensures that this discount remains available in perpetuity to
people identified as being in housing need.
8.14 Local authorities need to be able to
apply this definition in such a way that they can meet the specific
needs determined in local housing market appraisals and needs
assessments, to achieve the right balance between the different
types of affordable housing.
Merron Simpson
Policy Officer
March 2002
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