PPS3 News
1: What is a Local Housing Assessment?
The requirements for a Local Housing Assessment are set out as:
- Estimate housing need and demand in terms of affordable and market housing
- Determine how need and demand vary across the plan area (sub-market)
- Estimate needs of specific groups (key workers, homeless, BME groups, first time buyers, students, disabled people, older people, and Gypsies and Travellers)
[Draft PPS3 Annex B: para 4]
Fordham Research has just published a pioneering Local Housing Assessment for Oxfordshire which meets all these requirements. A summary can be found here (656Kb pdf)
2: Viability analysis
The issue of viability is given wide prominence in the new Draft. Instead of the value implications in previous guidance it is now very frank. The viability of sites in the context of affordable housing is mentioned, for instance in Annex C, in relation to land supply, and in relation to capital funding in para 24. In the latter case it says that:
'(The target for affordable housing should take account of public funding and) the level of developer contributions that can realistically be sought on relevant sites'
It is not yet clear how this relates to the Planning Gain supplement. In the latter the developers will have to calculate not only the conventional planning gain cost but also the amount of the (Local) Planning Gain Supplement (tax) that can reasonably be raised. This potentially causes conflicts of interest for developers. It certainly ought to be monitored and checked.
Fordham Research has 20 years of experience of calculating site viability for planning gain purposes. It is ironic that the use of the term 'planning gain' is now officially endorsed. In 1986 Fordham Research was founded as 'Planning Gain Consultants'. In 1991 the ODPM (or DETR) frostily said that the term 'planning gain' has no statutory status and discouraged its use. Now it is the official term!
Fordham Research has a wide range of viability analytical tools to help local authorities, including the Viability Ready Reckoner for use on smaller sites.
3: Shared Equity's role
Gordon Brown has announced a large expansion of funding for shared equity. This is to be welcomed, as it will certainly enable some households which could not otherwise obtain an equity interest, and hence if things go well make some capital gain which will enable them to obtain more suitable housing when they next move.
There are some points on the use of shared equity:
- In some places (mainly in the North) shared equity may indeed be a stepping stone to full ownership
- In most parts of the South and London in particular, there is little likelihood that any household within the Key worker definition will be able to 'staircase' to ownership.
- The only households that could move up a ladder from shared equity would be ones whose incomes increase greatly, and they are not likely to be key workers
- For key workers and others on incomes that are not likely to rise much during their adult lives, the important point is that there should be a wide range of sizes of shared equity available in a given market area. At present many households are stuck in small shared equity units since there is no chance of moving into larger shared equity, as there is none. A study for ODPM a few years ago showed that over a quarter of households that moved into shared equity moved back to social rent within a short time. This can be minimised if a suitable mix of sizes is built.
In short the move is to be welcomed, but the policy will have to be applied sensitively, using local evidence as to what is affordable and to whom. Most shared equity is nearly as expensive as the market, and so it is only available to a rather small fraction of those in housing need. It may also be of great value to those on lower incomes but who are not in housing need or to free up a social rented unit.
4: Bye bye Low Cost Market Housing
It is much to be welcomed that the Draft, at para 12 of Annex A says:
'Affordable housing differs from local cost market housing (which the Government does not consider to be affordable housing - see definition of affordable housing above)'
[The definition of 'affordable' in para 8 adheres to previous guidance in saying that it is 'non-market']
The statement that 'low cost market housing' is affordable has been Government policy since Circular 13/96, and was repeated in Circular 6/98 which is still the current Guidance. Thus this is a major change. It was not in any of the preceding drafts of PPS3.
Fordham Research has consistently shown, in Housing Needs Surveys since 1996, that low cost market housing is not affordable housing in the definition still used in the new Draft. We have convinced many Planning Inspectors of this. However many other Planning Inspectors, mindful of the Guidance, have allowed it as potentially affordable. It never has been. The emperor has finally been shown to have no clothes!
This change has strong implications for many Local Plans, in which low cost market is endorsed. New SPD can be issued to reflect its abandonment. This should greatly improve the chance of affordable housing that meets the housing needs.