Memorandum by The Berkeley Group (AFH
Founded in 1976, The Berkeley Group has been
a quoted company on the London Stock Exchange since 1985. It is
now one of the UK's leading high quality development companies,
known best for its domestic housing projects operating under brand
names such as Berkeley Homes, St George, St James (a joint venture
with Thames Water), Crosby Homes, Thirlstone and St David.
In line with Government strategy, the Group
leads the way in urban regeneration in England and Wales. Over
90 per cent of its units are built on urban and brownfield sites
including undertaking an increasing number of mixed use schemes
and GLA records show Berkeley to have been the largest residential
developer in London 1995-99.
For these reasons we believe our experience
may aid the committees research and I respond in accordance with
the particular questions posed by the committee.
Brian Salmon is Berkeley's Group Planning Executive
and has led the company's planning and design function for 24
The definition of "Affordable Housing"
is key to ensuring a flexible approach to the provision of affordable
housing. Many UDP's seek to limit the definition of affordable
housing to that required for rent with often only very limited
reference to special groups such as key workers. Many definitions
specifically preclude low cost market housing. The advice from
central government (circular 6/98) specifically sets out wide
parameters and these are being largely ignored by local government.
It is important when looking to the future for
"affordable housing" that its definition provides for
as wide a range of tenures as possible. Future innovations and
changes in demand must be provided for.
The current DTLR definition should be included
incorporating as it does housing for rent with investment of social
housing grant (SHG) by Housing Corporation and Local Authorities.
Shared ownership and low cost home ownership with the investment
grant to provide varying levels of affordability. The inclusion
of social housing grant in shared ownership provides for a differing
level of affordability to shared ownership without grant.
The definition should also include key worker
housing for rent and shared ownership delivered by registered
social and/or private sector companies/institutions with or without
Student accommodation and sub-market renting
tend to be groups unable to rent in some locations. They should
also be included in the definition.
To genuinely support a policy of mixed communities
the widest range of affordable options should be incorporated
in a comprehensive government definition.
The committee should be aware that the evolving
policies in the government's Green Paper on planning suggest identifying
sites for affordable housing. These will, we believe, run contrary
to the accepted and valued concept of building sustainable, mixed
Berkeley supports the concept whereby private
developments should facilitate the development of a proportion
of social housing as a general social responsibility.
The practise currently dictating scale of affordable
housing is driven by the estimation of need. Estimates are set
out in surveys commissioned by local authorities. Circular 6/98
makes it clear that without need being demonstrated no requirement
for social housing can be applied. It also goes on to set parameters
which must be satisfied relating to location. Most London Boroughs
have ignored these parameters in preparing local plan policies,
presuming that need can be demonstrated on any site in their Borough.
The definition of need varies from Borough to Borough and the
criteria for measuring need relative to affordable housing needs
radical research. An acceptable and simple technology to establish
need relative to each site is essential if this is to continue
to be a major driver for affordable housing.
The Green Paper suggests both tariff and site
assessments to be applied in Local Development Frameworks. If
this comes to fruition the need for a simple technology to establish
need is equally necessary. UDP/Local Plan Inspector's are not
currently equipped to challenge the assumptions behind the Housing
Need Surveys and it is imperative that a simple, easily understood
methodology is identified.
I have not encountered policies to distinguish
location of affordable housing either in regional guidance or
local plans. Some local plans are moving towards the suggestion
of a percentage of private provision, ie SDS but scale of social
housing will then depend on how many private properties are built.
Finally, to move towards a properly managed
provision of affordable housing the needs surveys must be widened
to include all of the options set out in the wider definition
which we seek in the previous paragraphs. The Housing needs Surveys
only accept rented accommodation as being truly Affordable and
being capable of meeting the need s identified. Clearly this is
an incorrect assumption. Housing Policies must be based on these
Circular 6/98 criteria if we are to work in partnership with the
Public Sector in providing balanced sustainable communities
Berkeley believe that in designing a development
it should not be possible to determine which of the dwellings
is provided to satisfy social needs by external appearance.
We would expect and promote that the design,
construction and style of affordable and private housing should
be similar. The facade and fenestration of a building and its
setting within the external landscape should be capable of integrating
seamlessly with any new development proposal. The internal specification
will vary as it does with the private sector product.
To maintain this policy the investment of social
housing grant must be adequate.
Broadly the supply of new housing is inadequate
and therefore affordable housing supply follows suit where it
is being required as planning gain.
New housebuilding levels are at the lowest for
77 years in the middle of a housing market boom.
Our experience shows the following as reasons
for this situation:
main cause of housing shortage is
lack of land allocation through the planning process;
this was initially because out of
date forecasting was used but later because Plan Monitor and Manage
failed to provide the technology to plan positively for housing;
government forecasts for housing
were inevitably challenged and the Government failed to require
adequate figures in Regional Planning Guidance and the Shire Counties
followed suit in ducking their obligation to plan responsibly
for housing. This happened in the rest of the South East in spite
of external panel advice in the plan process promoting substantially
the negative institutional culture
in Planning Authorities has used delay at all stages of the plan
process that identifies new housing land;
local Authorities are under resourced,
in terms of planning officers and legal officers;
all of the issues are re-examined
when a planning application is submitted resulting in further
delay and dilution of the approval of housing permissions. This
is partly due to consultees with no responsibility for housing
being given a high profile; and
Planning Gain issues now add to further
delay in the actual provision of housing.
At boom times for house sales private enterprise
starts in England have shown the following average quarterly figures
over the past three and a half:
This represents a uniform all time low figure of production.
However if one looks at the average quarterly starts for
affordable housing there is critical evidence to show a sharp
downturn in provision.
This represents only 60 per cent of the production achieved
Clearly the supply is dismally inadequate of both market
housing and affordable housing but the affordable housing provision
is in critical decline.
Supply and resources are therefore totally inadequate and
the situation is worsening.
The development industry has a role in promoting and facilitating
and enabling affordable housing development as a component of
any new residential/mixed use project. We do not consider it the
responsibility of the development industry to provide the finances
and additional subsidy in resource to maintain/increase the existing
supply. This is a social issue that the State must accept responsibility
for and fund adequately.
Planning gain can make a contribution by setting aside a
proportion of a residential development to meet affordable housing
requirements. It is our view that this proportion should be modest
and structured in a way which allows market forces to govern the
major part of development otherwise the market will not be able
to create values sufficient to finance the appropriate proportion
of affordable housing. As noted above, the market should also
be applied to the affordable element to ensure the widest mix
of affordable categories.
The cost to developments of providing substantially higher
proportions as suggested by the Mayor of London and many Boroughs
attacks the viability of projects on regeneration sites because
of higher existing use values or alternative uses.
Neither the theories expounded in the Three Dragons report
to the Mayor nor the changes proposed in the Green Paper will
make any difference to this fundamental economic truth. The current
start figures for social housing demonstrate that excessive planning
gain demands are merely choking supply. 50 per cent of nothing
Berkeley looks to government to guide the release of more
urban housing land so that overall housing figures can increase.
We also firmly believe that, so long as percentages in the region
of 25 per cent are required for affordable housing, the market
will be able to assist in providing a growing total of mixed affordable
The future long term provision and funding of affordable
housing should be reviewed in detail. It is clear that the demand
for housing including affordable housing is not going to be met
by either the existing level of direct investment of through the
current planning gain mechanisms.
The aim must be to achieve a balance between the provision
of social housing as part of the planning gain package and an
additional provision which sits alongside the current system which
enables a financial input providing long term investment for affordable
housing from Institutions.
On site, on a scheme by scheme basis, we aim for a balance
to be met in the form of a quantum of pure social rented housing
and very low rental levels that can be provided in relation to
shared ownership/key worker and intermediary housing. We know
that if the same provider (RSL) is responsible for both rented
and these other forms of tenure, then the rented accommodation
can enjoy significant cross-subsidy.
On both large and small sites the delivery of affordable
housing needs to be reviewed as part of a total inclusive funding
(RPG 9) Regional Planning Guidance for the South East (2001)
includes under Policy H4 the following sentence.
The Regional Planning Bodies should monitor the overall regional
provision of affordable housing against a provisional indicator
of 18,000 to 19,000 affordable homes a year in the ROSE area which
excludes London. This figure should be reviewed in the light of
the cumulative results of Local Needs Assessments.
Also under this policy it suggests that Development Plans
should monitor the provisions of affordable housing targets and
the housing strategy to meet it. This may lead to revision in
the appropriate development plan policies and to ensure affordable
housing is provided where it is needed.
This is to be balanced against the overall figure for all
housing of 39,000 per annum for the first five years.
Thus the assumption is that overall some 48 per cent of all
development is to be social housing across the South East.
I remember Professor Crow's independent panel striking a
for a much higher overall figure and clearly the affordable housing
figure now remaining in the document is unachievable without a
massive influx of public money.
The private sector cannot provide this level of public housing
consistently and the Mayor of London's research in the Three Dragons
report confirms and emphasises this.
The answer to the question is that targets are to be welcomed
in government reports if they are in the widest sense achievable.
This one clearly is not and therefore of no use whatsoever particularly
when one reflects that only 12,500 affordable housing units were
started last year in the whole of England.
Briefly the Mayor's research on London suggest that some
43,000 additional homes annually will be needed to address the
London situation. 28,000 of which should be affordable. To address
this need massive infrastructure investment would be needed to
improve transportation nodes to cope with the additional traffic
volumes. This would be in addition to the enormous levels of public
subsidy that will be also be required
This target is compromised by the RPG9 statement that 23,000
houses overall are to be planned for London per annum in the Mayors
Clearly it is not the intent of government to address this
kind of target. We wait to find out whether the Mayor of London's
SDS addresses the issue.
One must qualify the answer by considering the low volume
of the overall social housing provision. This significantly limits
the number of proposed schemes.
Regeneration, particularly in Birmingham Centre is creating
a mixed city centre community. Planning has the ability to promote
this style of regeneration if a proper balance between regeneration
and social housing provision is adopted by the authority.
The sort of percentage (in the region of 50 per cent) suggested
by the guidance mentioned in the previous paragraph would not
have allowed regenerated mixed use projects to leave the starting
block in Birmingham and for the future the outlook is becoming
bleak, especially in the South East where Government and local
authorities are increasingly looking to the developer to take
responsibility for their housing shortfalls. Again, we believe
that the provision of Affordable Housing is a social issue; one
that the State must accept responsibility for.
The genuine assessments of need as set out in the South East
are probably not totally achievable within the bounds of London.
Land outside London is likely to be needed even with the most
sustainable urban solutions.
It is sensible that areas outside London which are on Transportation
Nodes and adjacent to existing urban areas be prioritised for
The aim is not necessarily the use of Greenfield but to utilise
Brownfield locations in the Green Belt to relieve the pressure.
It must be remembered that the most optimistic arguments
put forward by the Government on Brownfield development still
expected 40 per cent of housing to be on Greenfield sites. This
fact must be accepted and adequate land allocations identified
The sequential test in PPG 3 has resulted in Local Authorities
reviewing their allocated sites and removing those with poor sustainability
credentials. This has reduced land availability for this 40 per
This particular question, I believe, is a "catch all".
It is trying to identify who should be responsible for the funding
and delivery of affordable housing. We would argue that, if it
can be demonstrated there is a cost to individuals, business and
the local/wider economy, resulting from the obvious shortage of
affordable housing, that responsibility for its delivery and provision
might need to extend to those organisations as well?
I believe it is safe to say that it is recognised there is
a short fall in decent affordable housing for many market groups,
both people on housing benefit, through to the intermediary groups.
It is also safe to say, that the availability of decent affordable
housing would have a positive impact on individuals, businesses
and the economy.
Whilst the responsibility to ensure the provision of affordable
housing must stay with the government there is scope for communities
to support housing provided through institutional finance which
could be co-ordinated by the growing functions of the RDA"s
and promoted in a "Community Plan".
Berkeley is already carrying out schemes where the RDA has
been assembling land.
In reviewing the issues identified by the questions, matters
can be summarised as follows:
definition of "Affordable" should be
widened so that a broad umbrella exists to encourage the mixed
the "needs surveys" require research
and their associated methodology re-evaluation, to increase their
usefulness in providing for "mixed communities" because
currently the system provides impossible targets;
quality of Affordable housing should be maintained
to fit seamlessly into the broader environment in a sustainable
way. We should be wary of "quick fix" solutions;
the current supply of affordable housing is dismally
inadequate and we should look to increasing land release for market
housing to prime the pump proportionally;
planning gain can only be part of the supply.
Independent Government Finance perhaps via the RDA's and the bringing
in of institutional support must be added to help the supply of
resources should be balanced to provide the broadest
range of affordable housing to ensure satisfaction to the widest
mix of needs. Housing service providers in the cities have a high
priority because of the need to keep the city functioning. They
are its life blood;
regional Planning Guidance targets are only of
use if they have any basis in reality. The ones identified in
this report clearly have not;
affordable housing targets are clearly not being
the creation of mixed communities in the broader
sense has been achieved in some identifiable locations but the
concept needs time to mature before schemes are finished and results
can be drawn;
whilst insufficient pressure is being applied
to speed the release of Urban land it is inevitable that needs
will force Greenfield Development. Radical policy to prime urban
regeneration is necessary to protect the Greenfield issue and
to re-energise our cities. This sustainable way forward could
be to create a presumption in favour of residential and mixed
use development of Brownfield Land. This would need only a revision
to PPG3 to enact; and
the pump priming provided by such a policy would
open opportunities for the Community to embrace the shortfall
in affordable housing through the energy created by Urban Regeneration
in a sustainable way.
B N Salmon,
Group Planning Executive
The Berkeley Group