It’s hard to build affordable housing in the UK – but some local authorities are fighting back.
There is an affordable housing crisis in England: Home Asking Prices Rise to Record in February. close to half Part of all affordable housing in the UK is provided through a Section 106 (S106) obligation: a requirement that local authorities impose on housing developers when planning permission is granted.But developers can use Financial Feasibility Assessment Arguing that if they were asked to provide affordable housing, they would not be profitable. That means not enough affordable housing is being built, so private developers can make bigger profits.
Fortunately, some innovative local planning authorities in England have already begun to address the threat of economic feasibility assessments to affordable housing. These approaches can be replicated in other areas or incorporated into national legislation. If campaigners advocate these approaches, they could make significant changes to the way local authorities provide affordable housing. Across the country, this would create a healthier but still flawed planning system and signal a desire for change.
Through S106, affordable housing is provided through the success of private housing developments. This means that the existence of affordable housing is linked to the market and depends on local housing demand. Within local authorities, areas with higher housing prices allow for more lucrative development, while developing challenging sites such as contaminated brownfields means higher development costs and less developer profits. Still, the city council has set a single level of affordable housing requirements for the entire region, usually based on the areas with the lowest demand. This means they can neither harness the potential of high-value areas to provide more affordable housing, nor adapt to the challenges of difficult locations.
But councils such as Eastbourne, Leeds and Ashford use a different approach: ‘Delineate affordable housing policies. Different regions need different levels of affordable housing, and use high-demand areas to provide subsidies to low-demand areas. This makes it harder for developers to use feasibility assessments to challenge affordable housing requirements and increase the amount of affordable housing built.
“…not enough affordable housing is being built so private developers can make bigger profits.”
Typically, S106 negotiations are held behind closed doors. This lack of transparency means campaigners cannot hold local planning authorities accountable for their decisions. Planning authorities should publish details of feasibility assessments and negotiations, which have already been done in councils like Ealing.
Many profit-hungry developers will try to renegotiate S106 to offer lower-priced housing if the development doesn’t appear to be making the expected money. While allowing developer returns in feasibility assessments creates the risk of underperformance, there is still a culture of breaking the promise of S106.But what happens when things develop ExceedHow is it doing after developers argue about lower levels of affordable housing? Currently in most places, there is nothing. Developers pocket the extra profits that would otherwise be used to fund affordable housing.However, the planning authority may attach a ‘A callback mechanism for the S106 protocol, which has been done in Salford. The clawback captures the financial benefit of outperformance used to purchase affordable housing. This not only encourages developers to be accurate in initial feasibility assessments, but also prevents S106s based on unrealistic assumptions.
Another option for planning authorities is to implement an affordable housing policy universally, leaving no room for negotiations or feasibility assessments. Cambridge used this method effectively, rejecting applications that did not meet its affordable housing obligations. New norms have been developed between developers and landowners where affordable housing contributions can be expected rather than seen as optional. Land values began to reflect this by lowering land values, and in turn, developers provided local planning authorities with plans consistent with affordable housing policies. Of course, these norms will take time to develop and, in part, rely on high demand for housing on the market, and developers will be drawn to development no matter what obstacles are encountered.
Most solutions so far have hinged on empowering planners in the dynamic between planning authorities and developers. The Mayor of London has opted for a different approach: building positive relationships by empowering developers looking to deliver affordable housing. Fast-track the developer through the planning system if the developer’s plan can demonstrate compliance, in this case by offering 35% of affordable housing. For developers, it makes the development process easier, less risky, and eliminates the cost of the feasibility process. A positive compliance culture has begun to emerge, improving affordable housing delivery in London.
For civil society, different types of movements are required to achieve different solutions. Policy-based solutions, such as delineating affordable housing, can only be implemented when local plans are developed or revised, which typically occurs every five years. Non-policy solutions, such as creating a culture of compliance, can be readily implemented but can be slow to embed. Rally events around specific developments and for the relevant parliamentarians help maintain vitality and direction, as well as stimulate demand for local residents.
Local authorities have room to innovate and hold developers accountable. But campaigners need to push planning authorities to make improvements. Once implemented, positive evidence of these changes should spur demand for national reforms, paving the way for wider improvements in England. At the end of the day, the only subset of truly affordable affordable housing is social housing – and we need more.Stay tuned for more of our new social housing campaign, which combines field organization with educational programs and national lobbying, led by Oak Foundation.
Image: iStock
